Page 14 - AEI Insights 2019 - Vol. 5, Issue 1

AEI Insights, Vol 5, Issue 1, 2019

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1980 1985 1990 1995 2000 2005 2010 2015

DENMARK FINLAND
NORWAY SWEDEN

Figure 2: Unemployment rates in Denmark, Finland, Norway and Sweden (1980-2015)
Source: World Bank (2018)

Main characteristics of labour market in Asia
The most salient characteristic of the labour market in Asia is that unemployment rates in the
region tend to be low even during periods of economic crisis. It would mean that
unemployment rate would not increase rapidly during the economic crisis in comparison with
European countries. In other words, unemployment rates in Europe tended to be affected by
economic condition. By contrast, in Asian countries, unemployment rates do not seem to be
affected by economic conditions. This raises the question of why many Asian countries have
consistently lower unemployment than European countries.
There are three main reasons which can explain the lower unemployment rate in Asia. Firstly,
there is still a lack of adequate labour protection in the region, so much so that unemployment
may be considered as a ‘luxury good’ (The Economist, 2018a). Simply put, Asians cannot
afford to be unemployed. In many Asian countries, social security for workers is
underdeveloped and unemployment benefits are patchy. Some countries, such as Thailand and
Malaysia, have various types of unemployment insurance. However, the level of protection for
unemployed workers is very weak. For example, in Thailand, they are entitled to receive only
1,650 baht (US$52) per month for six month. Secondly, there is a strong informal sector which
can readily absorb unemployed workers in Asian countries. Unemployed workers may earn
temporary income by becoming a casual day-by-day labour for manual jobs such as selling
lottery or washing dishes (The Economist, 2018a). Thirdly, the poor social security in Asia
could have originated from the Asian culture of self-help. According to Hofstede and Bond
(1998), most Asian societies share common cultural values such as masculinity and long-term
orientation, which promote the importance of hard work, sense of shame, thrift and financial
independence. Asians generally do not expect their governments to provide for their sustenance
and instead accept the need to look after themselves (The Economist, 2018b).

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