Page 73 - ASEAN-EU Dialogue 2018: Regional and Inter-Regional Economic Cooperation: Identifying Priorities for ASEAN and the EU

Despite this, the country’s unemployment rates have strong mean reversion tendency and
reverted to a much lower level as soon as the economy recovered in the mid-2000s. Again this
can be explained by the aging population theory (Serban, 2012). Since the aging population
issue is not as severe in these two countries as it is in Japan and Singapore, they are likely able
to overcome unemployment hysteresis more easily.

In recent years, changing work values and systems have also affected labour force participation
in Asia, especially among women. Female labour force participation varies across Asian
countries, reflecting differences in economic development, social norms and access to childcare
(Asian Productivity Organisation, 2018). Kinoshita and Guo (2015) highlighted three main
differences between Asian and Nordic countries that influence female labour force
participation. First, childcare benefits and services are more generous in Nordic countries. The
flexibility of the childcare system in Nordic countries reduces career breaks among female
employees with young children. Second, paternal roles in childrearing are given equal
emphasis as maternal role, resulting in higher work involvement for females. Third, family-
friendly policies and flexible working arrangements enable women (and men) to balance work
and family. Unlike the Nordic countries, the Asian region has less developed flexible work
arrangements. Particularly in Japan and South Korea, long and inflexible working hours
associated with full-time employment prevents qualified women to take up employment
(Kinoshita and Guo, 2015). Nevertheless, due to the effects of globalization, there is now a
growing awareness of the benefits of flexible working; hence an increasing demand for it
(Asian Productivity Organisation, 2018; Idris, 2014). In Thailand, for example, flexible
working arrangement has been found to increase female labour force participation (Asian
Productivity Organisation, 2018).

Conclusion
The current study made an attempt to examine labour market outcomes in Asia and Europe.
The main characteristics of labour market outcome in Europe is that unemployment rate would
be strongly affected by economic conditions. Thus, Europe’s unemployment rates are much
more volatile and higher. European countries generally show less capacity to absorb the shock
effects of economic crisis on unemployment. In addition, Europe appears to face a greater
problem with unemployment hysteresis, where unemployment rates tend to increase during an
economic crisis but do not immediately reduce to pre-crisis levels even after the economy has
recovered. On the other hand, the findings indicated that the main characteristic of the Asian
labour market is that the unemployment rates are more stable and lower. This means that
unemployment rates of Asian countries are less affected by economic conditions. Furthermore,
Asian countries show excellent capacity to absorb the shock effects of economic crisis on
unemployment in the region. Although some Asian countries also demonstrate a similar trait,
the severity of the problem is less because the effect of economic crisis on unemployment tends
to be smaller.

In the case of Europe, the persistently high unemployment rate may be caused by the provision
of generous unemployment benefits. This has produced a challenge for policymakers to make
a paradoxical balance between labour market flexibility and the employment protection.
Additionally, an aging population poses its own threats for some European countries. In this
regard, Europe may be able to benefit from non-standard and flexible work systems which meet
st
the needs of the 21 century workforce. In the case of Asia, the relatively lower unemployment
rates are mainly due to weaker unemployment protection mechanisms, the existence of a large
informal sector and the prevailing culture of self-help in the region. However, an aging

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