Throughout the year, DCR TrendLine has highlighted a different ASEAN country each month, looking at its employment and economic trends and labor market. This month, we conclude our global series on Southeast Asia by providing insight on key talent trends in the region as a whole.
If ASEAN were a single country, it would be the seventh-largest economy in the world, with a combined GDP of $2.4 trillion in 2013. As the countries in the Association of Southeast Asian Nations (ASEAN) region prepares for integration and China’s growth slows, it is poised to position itself as the fourth largest global economy by 2050, according to McKinsey & Company. Labor-force expansion and productivity improvements are driving GDP growth.
With the third youngest number of professionals in the world, just behind China and India, Southeast Asia’s workforce is in the running to overtake the aging populations of Japan and South Korea. According to a Bloomberg report, the literacy rate in the Philippines, Malaysia, and Indonesia is above 92 percent, and the labor force from these three countries is expected to grow by double-digits through 2020.
Almost 60 percent of total GDP growth in the region since 1990 has come from productivity gains, with sectors such as manufacturing, retail, telecommunications, and transport growing more efficient.
The ASEAN is diverse. For example, Indonesia represents almost 40 percent of the region’s economic output and is a member of the G20, while Myanmar is emerging from decades of isolation and is a new market working to build its institutions. GDP per capita in Singapore is more than 30 times higher than in Laos, and in fact, even surpasses mature economies such as Canada and the United States. The standard deviation in average income among ASEAN countries is more than seven times that of EU member states. This diversity also exists in culture, language, and religion. For example, Indonesia is 90 percent Muslim, while the Philippines is more than 80 percent Roman Catholic, and Thailand is over 95 percent Buddhist.
While the ASEAN is becoming more integrated, companies operating in the region need to be aware of local preferences and sensitivities, and not rely on a one-size-fits-all strategy across this wide and varying market.
Leadership Gap in ASEAN
With more than 600 million people who speak multiple languages and dialects and represent a variety of cultures, the ASEAN region is complex when it comes to doing business and managing workforces. Leaders must handle various societal, cultural, and religious differences among each country’s distinct ethnic groups.
When the ASEAN Economic Community is formed at the end of 2015, it will establish free movement of talent across the region, further intensifying competition among businesses to attract the best talent and leaders. Some companies are looking to fill leadership gaps with expatriate executives, but experts say that leaders must be drawn from local talent. Gallup and the Human Capital Leadership Institute believe that companies need to customize leadership development that capitalizes on the region’s opportunities and potential, and this will require understanding the unique challenges in the ASEAN region. To develop the next generation of ASEAN leaders, companies operating in Southeast Asia must actively look for promising emerging leaders and have a plan in place to prepare them.
According to a LinkedIn study, companies in Southeast Asia say that the gap between hiring volume and hiring budgets is wide, causing them to scale up by investing wisely.
Percentage of Companies Predicting Hiring Volume and Budget Increases in 2014
Approximately 61 percent professionals in the region consider themselves to be passive candidates, but only 12 percent are super passive and not open to any opportunities at all. Currently, social professional networks are the top source of quality hires for Southeast Asian staffing firms, while traditional sources such as online job boards are declining.