Page 76 - ASEAN-EU Dialogue 2018: Regional and Inter-Regional Economic Cooperation: Identifying Priorities for ASEAN and the EU

Chapter Thirteen
Labour Markets in Asia and Europe: A Comparative Analysis
Fumitaka Furuoka, Aida Idris, Beatrice Lim and Rostika Petrus Boroh

Introduction
This chapter compares labour market outcomes, particularly unemployment rates, labour
market institutions and unemployment protection mechanisms, in Asia and Europe. In the case
of Europe, unemployment rates would increase when a country faces an economic crisis and
would reduce when the economy recovers from the crisis. However, the problem is that the
level of reduction often does not reach pre-crisis rates. This appears to be mainly due to
provisions of the generous unemployment benefits in Europe, where policymakers often have
to make a paradoxical balance between labour market flexibility and employment protection.
By contrast, in the case of Asia, unemployment rates do not seem to be affected by economic
conditions. Some possible factors contributing to this trend include a weaker unemployment
protection mechanism, a strong existence of an informal sector and a prevailing culture of self-
help in the region.

For a typical example, the unemployment rates for the period of 1980-2015 in Germany and
Thailand are depicted in Figure 13.1. As the graph clearly indicates, the unemployment rates
for Germany are much higher than for Thailand. In Germany, the unemployment rates in the
1980s were around 6 percent and increased to around 8 percent in the 1990s. Much of Europe,
including Germany, faced an economic crisis in the mid-2000s. As a result, the unemployment
rates in Germany were around 11 percent during this period. After a slow recovery from the
crisis, by 2010 the rate had gone down to 7 percent. By contrast, unemployment rates in
Thailand were around 4 percent in the 1980s. Southeast Asian economies, including Thailand,
enjoyed a high economic growth in the first half of the 1990s, during which the unemployment
rates in Thailand were around 1 percent. Even when the region faced the Asian economic crisis
at the end of the 1990s, unemployment rates in Thailand jumped to only 3 percent. After its
recovery from the economic crisis, unemployment rates in the country decreased back to 1
percent (World Bank, 2018).

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