THE overall prospects for labour market in South Asia largely depend on the performance of India, which has a share in regional GDP of 80 per cent, the International Labour Organisation has said.
In its latest study on Global Employment Trends, the ILO said prospects for the labour market also depended on high levels of unemployment in some economies, high incidence of working poverty, especially in informal economy, high productivity sectors which absorb very little of the expanding labour force and low levels of education in comparison with other regions of the world.
It said while the region was expected to see a GDP growth rate of above five per cent, no change was likely in unemployment rate. Unless the region faced the policy challenge to move from job creation in the informal economy to creating productive jobs in the formal economy, there was "little hope" of substantially reducing the number of working poor.
The report predicted that the South Asian labour force was expected to grow at just over two per cent a year between 2003 and 2015, bringing in more than 13 million new labour market entrants every year.
"To halve working poverty -- 220 million working poor live in the region -- as well as to halve the unemployment rate by 2015, the region would need yearly GDP growth rates of 6.2 per cent," it said.
Referring to some latest economic developments, the ILO report noted that South Asian economies have shown resilience during the worldwide economic slowdown.
It said in 2002 the GDP growth would have remained higher than the actual 4.8 per cent achieved, but was negatively affected by adverse weather conditions and a decline in agricultural output in India, Nepal and Bangladesh.
The region remains strongly dependent on agriculture and thereby on weather conditions and internal and external demand for agriculture products. In India, for example, the agriculture sector contributes to one-quarter of GDP and employs close to 70 per cent of the labour force, it pointed out.
Some economies saw decline in travel and tourism due to SARS and the outbreak of the war in Iraq. Pakistan and Sri Lanka experienced a rise in growth in 2002 partly owing to strong government consumption in Pakistan and a strong service sector in Sri Lanka.
In 2003, the growth was slightly above five per cent as a result of return to high levels of agricultural production, the recovery in external and internal demand and continued improvements in political stability.
Value addition grew considerably in the Indian services sector and this too had a considerable impact on regional GDP growth performance, the report said.
It pointed out that in recent years, South Asia has experienced relatively low growth in per capita income. In relation to its population, the sub-region accounts for a very low share of global GDP and an even lower share of global exports.
The report said labour force participation rates remained "relatively low" in South Asia, compared with other regions of the world.
It said that in spite of steady and robust GDP growth during the past ten years, the overall employment situation has not changed. Even though the total number of employed increased by 112 million, this was only just enough to absorb the 11.9 million new entrants to the labour force every year during this period.
ILO said unemployment rates for the region remained essentially flat during the past ten years. This trend is also reflected in the unchanged employment-to-population ratio.
It said what might be more alarming was that the number of "working poor" increased during this period and accounted for 40 per cent of the total number of employed.
Most of the employment was created in the informal economy which accounts for more than 90 per cent of the total economy in India, the report added.