New ADB Facility to Help South East Asia Revive Tourism and Boost Sustainable, Inclusive Investments

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Southeast Asia’s youth and women bore the brunt of job losses during the coronavirus disease (COVID-19) pandemic, according to an Asian Development Bank (ADB) report released today.

The report, A Crisis Like No Other—COVID-19 and Labor Markets in Southeast Asia, finds that people ages 15 to 24, who represent less than 15% of the workforce in Indonesia, the Philippines, Thailand, and Viet Nam, accounted for as much as 45% of job losses at the height of the pandemic in 2020. In Thailand, women accounted for 60% of all job losses, including 90% in manufacturing, in the second quarter of 2020.

The pandemic also exacerbated growing inequalities between skilled and unskilled workers, hurting low-skilled workers as well as middle-skilled workers, whose jobs face automation or being moved elsewhere. Informal workers, self-employed workers, temporary workers, and migrant workers were among the most vulnerable groups.

“Despite unprecedented government responses, COVID-19 has exposed significant social protection gaps associated with high and persistent informality across the region,” said ADB Director General for Southeast Asia Ramesh Subramaniam.

“It also has provided an opportunity for countries to address these gaps and expand coverage to new beneficiaries and excluded groups. As recovery takes hold, the focus of fiscal policy can shift more strongly from relief to stimulus, and from stimulus to structural investments that will promote sustained and inclusive growth.”

The report examines how COVID-19 has affected labor markets in Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam since the beginning of the pandemic. It aims to help policy makers identify priorities, constraints, and opportunities for developing and implementing effective labor market strategies during the economic recovery and beyond.

The region was hard hit during the second quarter of 2020, when government containment measures were at their most severe. During that period, one out of five workers in the Philippines lost jobs or left the workforce altogether. About 90% of Vietnamese who lost their jobs stopped looking for new employment, as did 60% Indonesians and 40% in Malaysians.

“The pandemic and the risk of slower economic growth and increased inequalities have underscored the need for fiscal policy to go beyond its counter cyclical role through increased

investments in social protection and its infrastructure,” said ADB Director of Human and Social Development for Southeast Asia Ayako Inagaki. “Countries should boost investments in human capital and mobilize domestic resources to build inclusive, sustainable social protection programs and increase social insurance contributions.”

Unlike in previous crises, supply chain disruptions, a decline in domestic and international demand, mobility and travel restrictions, and limited possibilities of working remotely led to massive job cuts in agriculture, wholesale, and retail—sectors that would normally absorb displaced workers during a crisis. Manufacturing accounted for a large share of net job losses in many countries in Southeast Asia. Micro, small, and medium-sized enterprises were disproportionately affected by job cuts because they have less liquidity or access to government support.

Young workers were more likely to lose jobs mainly because they dominated hard-hit sectors such as hotels and restaurants, as well as wholesale and retail trade. Women, in all the countries examined by the report and across all age groups, were more likely to leave the labor force, mainly to take care of their family during the pandemic. Women rejoining the workforce by early 2021 were mostly self-employed or in the informal sector, which may hurt their career development in the long run.

Informal workers, who are overrepresented among the region’s poor and near-poor workers, were particularly vulnerable to the crisis because they have limited job security and social protection. The region’s 10 million migrant workers also were hit by the restrictions on travel and mobility, because they often don’t have job security or access to health and welfare systems in their host countries.