A Perspective on Labour Force Employment and Poverty Eradication
A Viewpoint from Pacific Asia
Zhang article, page 1 of 2
By ZHANG Junzuo
At the time of the 1995 consultation, ZHANG Junzuo was in the Department of Government, University of Manchester, UK.
|1. Labour Force Employment and Poverty Alleviation||3. Conclusion: Environment, Technology and Employment|
Table 1 Asia in the Fastest Economic Growth, 1985-92: Average annual % increase in real GDP
|Table 2 Differentiations in Reaction v. Environment & Development between Developed & Developing Countries|
Modern economic development suggests that labour force employment is an integral part critical for industrialization. Asia's recent economic development has amazed the world. In the developing countries of Pacific Asia**, the average annual growth rate in the early 1990s was 8.4 percent in real GDP against 1.6 percent for Latin America, 2.9 percent for the Middle East and North Africa, and 3.0 percent for the industrial countries. [World Bank, 1993: 28. Shibusawa (et al), 1992: 4.] The economy of the region maintains the fastest growth in the world (See Table 1). The central element of development strategy has been "open door" policy implementation (e.g. China, South Korea and Taiwan) and export-led growth, carried out by the restructuring of production (e.g. state/collective/ private sector, and foreign-invested sector), through the choice of technology, and the allocation of resources (external and internal capital, and labour) to relative labour intensive sectors and activities. [For instance, by 1989, Japan's share of total world exports was 9.4 percent, compared with the United States at 12.5 percent, while the "Four Dragons" together took 8.5 percent, and the ASEAN 2.6 percent. Shibusawa (et al), 1992:7-8.]
In spite of the economic development records, ecological problems are worsening and spreading in many Asian states, especially in those which are still underdeveloped. [See Harold Brookfield and Yvonne Byron (1993), South-East Asia's Environment Future. The Search for Sustainability. Singapore: Oxford University Press. Richard Louis Edmonds (1994), Patterns of China's Lost Harmony. A Survey of the Country's Environmental Degradation and Protection. London: Routledge. Philip Hurst (1990), Rainforest Politics: Ecological Destruction in South-East Asia. London: Zed Books Ltd. Vaclav Smil (1993), China's Environmental Crisis. An Inquiry into the limits of National Development. Armonk: M. E. Sharpe.] The major impediments to environmental protection include overall population growth, food deficiency, and resource degradation, etc. The fundamental cause is largely associated with widespread rural poverty, resulting from many causes, among them lack of farmland, poor health, insufficient education and skills, and they are linked to employment in one way or another.
Asia faces a new challenge to environmental sustainability of economic development in the coming century. Although the changing structure of the world economy will present a new set of problems and challenges, the controversy in the relationship between development and the environment, in connection with labour force employment and its relation to poverty and natural resource degradation, has become more complex under the new development.
The focus here is on the related issues rather than the perceptions and the incidence of poverty, unemployment and employment themselves. A new concept of sustainable development is introduced, considered being useful to analyze the issues discussed in this paper.
1. Labour Force Employment and Poverty Alleviation
Full labour force employment* is a goal for many Asian nations to order to solve the problem of poverty. The reason is simple. The co-existence of unemployment and poverty forms a vicious circle. "A person without education or skills has difficulty finding work, and when he or she finds a job, it is likely to be low paying and of uncertain duration. Related to poor health are which in turn are liked to low income and joblessness" (Oshima, 1990: 44).
In Asia's industrialized societies such as Japan and the "Four Dragons", most of their poverty has been alleviated since the 1960s. The main mechanism for achieving this was sustaining full employment over long periods.
Japan and the "Four Dragons" are densely populated and poorly endowed with natural resources. They relied on imported raw materials, making use of their human resources, and on an open market to achieve a rapid industrial transformation. Japan's comprehensive land reform in the 1940s solved the problem of rural poverty through land distribution, followed by provision of credits and services to cultivators. Cropping and cultivation became more multiple and intensive. More jobs became available in agricultural low seasons. Productivity rapidly increased, resulting not only due to the promotion of employment generation but also to the involvement of modern farming technology (e.g. fertilizer, and farm machinery). Annual agricultural productivity increased 6.3 percent per year during the 1960s (Oshima, 1990: 66). Heavy industries and technology intensive industries developed dramatically in the 1960s-70s because agriculture could give a sufficient supply. More jobs were created, and poverty declined much more rapidly than in the 1950s, as higher wages and jobs in higher paying industries and occupations became available. Japanese economy has become a leading power in the world economy since the 1980s. "By 1989 it already emerged as the biggest creditor country, with a net credit of approximately $400 billion" (Yeung, 1993: 4).
In Hong Kong, and Taiwan, later followed by South Korea and Singapore, poverty was reduced quickly after the fulfilment of full employment. Hong Kong experienced a fast leap from low paying employment, such as in construction, to better-paying employment in industry. Singapore achieved full employment through a massive public housing and infrastructure programme. In South Korea and Taiwan, China, jobs were generated by achieving a high level of agricultural and non-agricultural occupations and activities. Annual agricultural productivity increased 4.2 percent per farm workers per year in Taiwan in the 1960s, and 5.8 percent in South Korea (Oshima, 1990: 66). [Ezra F. Vogel (1990) notes that "the five societies (above) represent less than 1 percent of world's land mass and less than 4 percent of the world's population. Yet together they have become, with Europe and North America, one of the three great pillars of modern industrial world" (pp. 1-2). They have dominated in world trading, and in world's industries of textile, electronics, shipbuilding, and automobiles since the 1960s. Taiwan and South Korea have become the largest foreign currency holders in the world. Like New York and London, Tokyo and Hong Kong have also become big financial centres in the world. A significant portion of European and North American assets are controlled by citizens and companies of these five economies, which is far more the other way around. Since 1965, Taiwanese, South Korean and Hong Kong's export has increased more than a 100-fold, and Singapore's a 300-fold increase (Vogel 1990: 1-2; Yeung 1993: 5-6).]
These cases demonstrate that the technological levels have been critical in these societies, where industrialization has been rapid. Likewise, in countries such as Malaysia, Thailand and Indonesia in Southeast Asia, the major rural development effort to reduce the poverty was also through labour intensive works programmes -- construction of irrigation, drainage, roads, rural energy, afforestation, etc. [Unlike other countries in Asia, Malaysia's poverty level was low, due to the favourable climate for agriculture throughout the year, and a comparatively low population: farmland ratio.] Malaysia has become one of the world top ten fastest economic growth countries. Between 1970-80 Thailand rose by 6.9 percent annual growth of its GDP. The increase in its GDP even sped up to 8.6 percent between 1985 and 1992. [Yeung, 1993: 8. and The Economist, 1995: 26.] Together with Indonesia, they have been touted as the "newly industrializing economies" (NIEs).
Many developing countries in Asia have tried to promote employment generation in order to abolish poverty, but hardly with sustained success. Poverty reduction was slow and uneven (such as in India, Sri Lanka, and Bangladesh). China, as many other developing countries, has only been able to achieve a low level of poverty alleviation (as her income per capita is still very low).
Through several decades of efforts to promote modern agricultural technology, China has been self-sufficient in food production on its rather limited arable land. It has succeeded feeding 22 percent of the world's population on approximately 7 percent of the world total farmland. During the development process, changes in employment structure can be also reviewed as two periods, i.e. from 1949 to the pre-reform dawn of 1977, and the post-reform since 1978, along with her socio-economic development.
During the first period, rural economy generally achieved a drastic reduction in income differentiation through agricultural land reform and farm collectivization. Labour force employment in agriculture was relatively high, based on the dominant production structure of the people's commune system. [It has three tiers: the commune, the production brigade and the production team in which the ownership of the means of production was vested (Zhang 1992: 43).] Agricultural development strategy adopted by the Chinese Communist Party maximized labour use to increase productivity, by expanding the arable land and irrigation, extensive use of fertilizer, intensive cultivation (multiple- and inter-cropping, and deep plough, etc.). Data from Taylor shows that "average annual labour days expended per hectare in growing all major crops rose sharply between 1953 and 1978. For example, from 1953 to 1978, the labour intensity of raising rice, millet, and tobacco more than doubled; the labour intensity of growing sorghum, rapeseed, cotton, and hemp more than tripled; and the labour intensity of growing wheat, soya beans, peanuts, and sesame more than quadrupled" (1993: 277). Intensive use of labour was also shown in the large quantities of public works programmes -- rural infrastructure such as roads, irrigation canals, and dikes. Urban economy was dominated by state-owned industries, which occupied 79 percent of the urban work force. The development objective was to achieve industrialization under the state planning system. The industrial policies favoured "increasing capital intensity and labour productivity rather than expanding labour utilization"(Sabin, 1994: 945). Hence, the quality of the employment in state-owned sector was inordinarily different from that in the collective/self-employed sector, and it was intimately linked to the employees' living conditions. Employees of the state enterprises had job security, and much better wages than those who were working in the collective sector. They enjoyed social benefits including health care, housing, education and training, and pension. Because of this, they had a much higher social status and a better quality of life (Ibid).
The reinforcement of the employment motive began in 1978 when economic reforms were implemented. The Chinese government decided to transform the economy from the state planning to market orientation. A key aspect of China's new development strategy was to open the economy to the West and other more advanced regions, encourage foreign investment. This dramatic decision has allowed the evolution of different systems of ownership (collective, private, and Sino-foreign join ventures). In the early 1980s, the rural commune production system was abolished, replaced by the household responsibility system. [A contract specified a target output in farm production and the full responsibility for carrying out production was taken by the individual farm household (Zhang, 1992: 48).]
Peasants were encouraged to develop diversified production not only in agriculture but also in non-agricultural occupations. Rural employment outside agriculture grew by nearly 16 percent a year between 1980 and 1990. Rural industry has become the largest element in non-agricultural development. It employed 34.7 million of the over 97.6 million rural non-agricultural labourers by 1992 (Rai and Zhang, 1994). Apart from these new developments, urban private employment, as a non-state sector in China, is also rapidly increasing through rural to urban migration. One survey shows that by 1987 about one-quarter of the owners of private ventures in Beijing, the national capital, and a full three-quarter of their employees were from rural areas (Sabin 1994: 969). The reason behind this is that prior to 1978 the rural to urban migration was strictly controlled by governmental administrative measures, such as the household registration system and the urban grain ration system. "As such, the proportion of China's total population living in rural areas fell from 89 per cent in 1949 to only 81 per cent in 1980". [The issue of rural/urban population is complex. A separate calculation by Harry X. Wu (1994) indicates a drop from 88.3 in 1949 to 85.2 in 1978 and further to 78 percent in 1990.] (Taylor, 1993: 282).
The Chinese implementation of the "open door" policy adopted by the government since the reform has brought about the highest growth and productivity in the export-oriented southern provinces that attracted heavy investment flows from Hong Kong and Taiwan, China. During the first ten year of economic reforms China's GNP recorded an average increase of 9.6 percent annually. [National Report of the People's Republic of China on Environment and Development. Beijing: China Environmental Science Press. 1992. p. 5.]
Asia's "open door" strategy and export-led growth, obviously indicate that development in this region is highly linked to the rest of the world, which led the rapid economic growth. There are five features of this, examined by Shibusawa. They include strong government intervention both in political stabilization and economic policy-making; the cooperative relationship of public/private sectors; foreign direct investment; open market which is due to the special character of the American politico-military umbrella in this region; and deferred gratification, which was not only to contribute to the relatively high level of employment but also to attract foreign investment due to low production costs because of low level of workers' wages (1992: 52-60).
Zhang article, page 1 of 2