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SE Asia economic integration could worsen inequality: study

August 20, 2014

JAKARTA – A plan by Southeast Asian countries to establish a European Union-inspired single market next year could worsen inequality and is likely to benefit men more than women, a new study warned on Wednesday (Aug 20).

The Association of Southeast Asian Nations (ASEAN) has set 2015 as the target to create a single economic market across the 10-nation bloc that is home to some 600 million people. It is aimed at improving the flow of goods, services, investment and labour around the region, whose economic powers have long faced criticism for failing to work together more effectively.

The single market could add an extra 14 million new jobs and boost Southeast Asia’s annual growth 7.1 per cent by 2025, according to the joint study by the UN’s International Labour Organisation and the Asian Development Bank.

However, it also warned the gains may not be evenly distributed, and the plan could increase already large gaps between rich and poor across the region. “Unless decisively managed, this could increase inequality and worsen existing labour market deficits – such as vulnerable and informal employment, and working poverty,” the study said.

It called for Southeast Asian countries to develop policies that support “inclusive and fair development” and to improve social protection.

The study also found that the share of new jobs going to women across the region would be smaller than those going to men. Sukti Dasgupta, an International Labour Organisation economist and researcher on the study, said this was due to the sectors that were likely to be boosted by integration, such as construction and transport.

The study found that integration would benefit Cambodia, as well as other lower-income countries the most, while hitting Indonesia, Southeast Asia’s top economy, the hardest.

Growth in Southeast Asia’s economies has been impressive in the past 50 years and helped spawn millions of new middle class workers and attract foreign investment to the region. However, wealth gaps are huge within the ASEAN bloc, which includes rich countries like Singapore, middle-income nations such as Indonesia and Malaysia, and lower-income ones such as Cambodia and Myanmar.