Page 17 - AEI Insights 2019 - Vol. 5, Issue 1

Furuoka et al, 2019

Conclusion
The basic problem in the European labour market is persistently high unemployment while
Asian countries does not seem to face this problem. The current study made an attempt to
compare labour market outcomes, namely unemployment rates, labour market institutions and
employment protection mechanisms, in Asia and Europe. Results of secondary data analysis
demonstrate that there is a remarkable difference in labour market outcomes, especially
unemployment rates, between the two regions. On the one hand, the main characteristic of the
Asian labour market is that the unemployment rates are more stable and relatively lower than
those in Europe. This means that unemployment rates of Asian countries are less affected by
economic conditions than those of European countries. On the other, Europe’s unemployment
rates are much more volatile and relatively higher than Asia’s. With the exception of the
Nordic welfare states, European countries generally show less capacity to absorb the shock
effects of economic crisis on unemployment than Asian countries.
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. 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 Asia than in Europe.

Main contribution of current paper could be its comparative analysis on the response of labour
market to economic crisis in Asia and Europe. The above differences between Asian and
European labour market outcomes can be explained by the unique characteristics of labour
market institutions and socio-cultural background of the two regions. 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. 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 population poses its own threats for some Asian countries. In
this regard, there is a possibility that both Asia and Europe may be able to benefit from non-
st
standard and flexible work systems which meet the needs of the 21 century workforce.

References

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