East Asia and the Pacific region have experienced a significant economic transformation over the last two decades, generating 131 million net new jobs. This growth, primarily driven by a shift from traditional farming to services and manufacturing, has substantially reduced poverty. The move from agriculture to more productive manufacturing and services has been a critical factor in poverty reduction, as seen in countries like Vietnam, Cambodia, the Philippines, and Thailand.
Nevertheless, challenges loom on the horizon. The region's labor markets face disruptions from automation and changing global trade patterns. Technology is advancing service sectors and offering higher-value opportunities, while demographic changes, such as aging populations and large youth cohorts, are affecting labor supply dynamics. Over the next decade, approximately 320 million people are expected to enter the working age, raising demands for job creation.
Youth unemployment is a pressing issue. Despite low overall unemployment, youth face significant employment challenges in countries like China, Indonesia, Malaysia, and Mongolia. For instance, about 13.4% of young Malaysians are not engaged in work or education, and youth unemployment in Mongolia is around 11%.
The region must not only increase the number of jobs but also improve their quality. Approximately half of all jobs are informal and low-productivity. After rapid industrialization, employment has primarily shifted from agriculture to low-productivity services, with fewer transitions to high-productivity sectors.
Countries with aging populations, like China and Vietnam, need to adapt labor markets to their shrinking workforce. A declining workforce could potentially slow economic growth, increase dependency ratios, and strain public finances. Policies are needed to extend working lives and make jobs more accessible to older workers.
The World Bank Group is working with governments and other stakeholders to shape policies that foster job creation and economic development in the region. Macroeconomic instability, inefficient markets, and cumbersome regulations often hinder private sector growth. The World Bank is supporting structural reforms to create a favorable environment for private sectors through initiatives like the Country Growth and Jobs Reports in Indonesia and the Philippines.
In Indonesia, the focus is on improving job quality and reducing market inefficiencies. The Philippines requires reforms to sustain growth and enhance job creation. Recent Development Policy Operations have supported reforms across the region to encourage private investment and improve public services.
Future-oriented development policy operations in the Philippines and Indonesia are aimed at resolving investment, skills development, and labor market participation challenges. The initiative stresses a competitive business environment, enhanced logistics, and modernized training systems to foster sustainable growth.