The economic performance across much of Asia and the Pacific region will remain tempered through the end of 2012, which will likely to maintain pressure on labor relations.
In India, the recent approval of FDI in multi-brand retail could increase unemployment among lower-skilled workers due to consolidation and closure in retail stores. At the same time, the new investment is likely to drive demand for higher-skilled jobs.
In Indonesia, the potential for disputes between employers and labor unions is likely to intensify, as unions continue to push for wage hikes and better working conditions. Unions have had success challenging both multinational and local firms this year, sparking a string of rallies (including a national strike on 3 October involving thousands of workers) that have threatened to upend Indonesia’s attractiveness to foreign consumer goods manufacturers and retailers.
In China, the recent flaring up of a territorial dispute with Japan led to strikes and attacks against facilities. Those events could persuade some Japanese manufacturers to relocate production capabilities outside of the mainland entirely.
In Thailand, the cost of labor will continue to rise, especially at the lower end of the pay scale, given that the government is expected to raise the national minimum wage to 300 baht ($9.78) per day starting 1 January 2013. The Central Wage Committee, which determines wage rates for Thailand, authorized the policy’s implementation after determining that it would not adversely affect the economy.
While the mining boom provided a boon for employment in Australia, the downturn has already caused major layoffs in the sector, and the trend will likely persist as global conditions continue to show weakness. The investment trend in mining could diminish unions’ leverage and their ability to strike for higher wages, as they have done in the past year.
In New Zealand, although reconstruction efforts helped create construction jobs, sagging business confidence suggests that employment growth in other sectors such as manufacturing and services could be lackluster for some time. Prime Minister Key, seeking to boost growth and employment, is attempting to entice Hollywood television productions to film in New Zealand.
Political changes and other economic developments across the region are likely to have further impacts on the stability and robustness of the labor market for the remainder of 2012 and the first quarter of 2013.
You can download the full Global Market Brief and Labor Risk Index for Asia-Pacific here.