Employment Trends in Myanmar, Laos, Cambodia, and Brunei
This month’s article in the Global series on the employment and economic trends of the ASEAN countries focuses on four of the smaller countries in the region: Myanmar, Laos, Cambodia, and Brunei.
In 2014, the total population of Myanmar, formerly known as Burma, was recorded at 53.7 million people. The country has a relatively low unemployment rate of 4.02 percent. According to the Asian Development Bank, growth in Myanmar’s gross domestic product (GDP) is estimated at 7.7 percent, with strong expansion in construction, manufacturing, and services. The International Monetary Fund (IMF) projects an 8.5 percent growth for Myanmar’s economy. Myanmar’s own government’s target for growth in 2015-2016 is 9.3 percent.
Employment to Population Ratio
The country is currently going through an economic, social, and political revival. Following political reforms and advances in human rights, businesses and technology, many western nations have gradually lifted economic and diplomatic sanctions levied on the country years ago. The country now is in the midst of a strong economic revival, and has the highest growth rate in Asia.
Myanmar has a wealth of natural resources, a young and inexpensive workforce, and a strategic geographic location between India and China, and is thus capturing the interest of foreign investors. Within a year of the start of reforms, foreign investment in Myanmar’s energy, transportation, tourism, retail, and telecommunications industry has grown by over 40 percent.
Agriculture plays a large part in Myanmar’s economy, accounting for 25 percent of exports, 40 percent of imports, and approximately 70 percent of employment. Of the major economic industries in Myanmar, the government predicts a 46.9 percent growth over the 2015-2016 fiscal year in telecommunication.
Recently, minimum wage has been a topic for debate in Myanmar. The current daily minimum wage is 3,000 kyats ($2.59), and the government is proposing an increase by about 50 cents. Garment factory owners say they cannot afford to pay this increase in minimum wage, and trade associations are arguing that a higher minimum wage would discourage international investments. Some international retailers who manufacture in Myanmar have said that the increase in minimum wages is reasonable.
The total population in Laos in 2014 is 6.9 million people. The country’s GDP expanded 7.4 percent in 2014 from the previous year. Though the GDP growth is relatively high, it is in low-employment sectors such as hydropower. The majority of the country’s population lives in remote mountainous villages, and due to a lack of infrastructure, including poor access to transport and income from trade, many have lived their lives isolated from services and opportunities to escape structural poverty. Almost 70 percent of Laos’ workers continue to be engaged in agrarian livelihoods.
Employment by Sector
Source LAO PDR
The major source of economic growth was the services sector, mainly distribution and tourism, which has grown at a rate of 9.3 percent. The industrial sector came second with a growth rate of 8.7 percent, while agriculture grew by 2.9 percent.
The Laotian government aims to alleviate poverty through employment generated by industrialization. Currently, there are 90,000 Laotians entering the job market each year, so industrialization and modernization efforts are crucial.
Laos’ strategic geographical position has made it a key destination for Chinese foreign direct investment in recent times. In 2014, China was Laos’ top investor with over 5 billion USD invested in the country. China is also Laos’ largest export market. The Laotian government welcomes Chinese investment as they expect the economy to benefit from both the increased revenue and the human capital development that comes from the transfer of knowledge and skills from Chinese experts, especially in regard to the utilization and monetization of Laos’ natural resources.
While investors are attracted by the country’s low wages, businesses find it difficult to hire and retain qualified labor. There is a lack of skilled workers to serve manufacturing and other technology-driven jobs.
Cambodia has a population of 15.4 million, and a GDP of $39.7 billion, growing at a rate of 7 percent. According to the World Bank, the 2015 and 2016 projection for economic growth is about 6.9 percent, due to strong competition in garment exports, weak agriculture sector growth, and soft growth in tourism.
Political tension and labor unrest in the garment industry temporarily dampened investment in garment manufacturing and tourism from 2013 to 2014, but this has eased slowly over the past year. Exports of garments and footwear reached $6 billion in 2014, and shipments to the European Union increased by 22 percent. In 2015, Cambodian’s garment and footwear sector expanded with exports growing by 10.6 percent over the year to the first quarter of 2015, according to the International Labour Organisation (ILO). The number of factories operating and the number of workers employed in the industry have also grown. The sector employs approximately 600,000 workers, whose wages have grown significantly over the past two years.
In a recent study by a local coalition of youth groups, 49 percent of respondents aged between 15 and 35 said that not being able to find employment is their biggest fear. Cambodia has one of the youngest populations in Southeast Asia, with about half of the population under the age of 25. Also feared was low salaries and poor education.
The labor market has approximately 200,000 job-seeking youth entering it every year. Employers complain that workers lack basic skills and that the government needs to provide more vocational training. According to some analysts’ estimates, to keep the current GDP growth rate, Cambodia will need an additional 35,000 engineers and 46,000 technicians by 2018.
Brunei has a famously small population of 423,200, and a 2014 GDP of $17.26 billion. In Brunei, crude oil and natural gas production accounts for 60 percent of the GDP and more than 90 percent of exports. This exceeds that of Saudi Arabia, Kuwait, or the United Arab Emirates. According to the BP World Energy Outlook, Brunei has enough oil left for just 22 years. By comparison, Saudi Arabia has 64 years, while Kuwait has 89. This realization has prompted a renewed effort in Brunei to build parts of its economy independent from oil. GDP Composition by Sector
Source: Michigan State University
Per capita income is high at US $41,833, and the government provides for all medical services and subsidizes food and housing. The country has experienced hesitation in foreign direct investment, partly due to its introduction of the first phase of Sharia law in 2014. However, Brunei has its merits. Geographically, it is in the middle of an increasingly important region. It has an educated population conversant in English and Mandarin. Brunei has not experienced the environmental disasters that have impacted other parts of Asia, and is politically stable.