Chapter 12
Workforce
12.1
Throughout the report so far, the committee has identified serious gaps
in much needed skills across all sectors of the economies of Pacific island
countries. Improvements in educational achievements in Pacific island countries
would certainly allow them to use this valuable workforce resource to develop
their economies. The committee has noted, however, that some of the smaller
islands lack substantial renewable resources and have limited opportunities to expand
their economies. With a growing population already putting a strain on these
resources, education, although critical, may not be the complete answer to achieving
a more productive workforce and economy. Some Pacific island countries, including
Fiji, Samoa, Tonga, Kiribati and Tuvalu, use remittances to help support their
economies. In this chapter, the committee considers the nature of the workforce
in Pacific island countries with a particular focus on unemployment, job
opportunities and labour mobility.
Statistics
12.2
The available data on workforce participation in the Pacific region is
not accurate, nor is it comparable across the region due in part to the
different measurements used. The United Nations Economic and Social Commission
for Asia and the Pacific's (ESCAP) 2008 economic and social survey explained that
some Pacific island countries 'include all people engaged in subsistence
activities as economically active, while others only include those who indicate
that they are working for cash'.[1]
Statistics on unemployment suffer from the same problem as each country has
'its own criteria for determining who counts as unemployed'. ESCAP's survey
explained:
In Fiji, Papua New Guinea, Samoa and Solomon Islands, the
unemployed are people in the labour force who are currently not working but are
actively seeking work. In Tonga, the unemployed also include people not
actively looking for a job.
12.3
ESCAP suggested that because unemployment is hard to define in the rural
areas of Pacific island countries, the region 'needs some agreed definitions in
order to reflect the realities of rural life'.[2]
Because of the poor quality of the data, the statistics used in this chapter should
be regarded as indicative.
Employment in Pacific island countries
12.4
Labour force participation rates in the region vary from 83.5 per cent
in Vanuatu to 59.2 per cent in Fiji and Samoa.[3]
A high proportion of employment in the Pacific island countries is in the informal
or subsistence economy, where agriculture, fisheries and forestry generate approximately
80 per cent of employment.[4]
Informal economy
12.5
The extent to which Pacific Islanders are engaged in the subsistence
economy differs between countries. For example, according to ESCAP's 2008 survey,
about 90 per cent of the 2.3 million workers in PNG were employed in rural
areas.[5]
Fiji does not fit this pattern of employment, with more than half of its workers
employed in urban areas.[6]
A Lowy Institute policy paper provided an example of the division of labour
between the formal and informal sectors in various Pacific island countries. It
found that by 2015, only 5.8 per cent of PNG's working age population is
expected to be in formal sector employment; 10.4 per cent in Solomon Islands; and
12 per cent in Vanuatu.[7]
12.6
Clearly, traditional and informal sectors are by far the dominant components
in most Pacific island countries, with the formal sector forming only a minor part
of the economy.[8]
Formal economy
12.7
The public sector accounts for most employment in the formal economies
of Pacific island countries—on average 30–40 per cent, with the exception of
Kiribati where it makes up 70 per cent.[9]
Employment opportunities, therefore, are limited in the narrow and weak private
sector in many Pacific island countries.[10]
For example, manufacturing and construction provide only a small fraction of
the available work, with manufacturing having a large informal component. More
workers are employed in the services sector than in the manufacturing sector.[11]
Tourism and maritime industries are considerable sources of employment in the
private sector.
Unemployment and underemployment
12.8
Labour market data for Pacific island countries is particularly
unreliable.[12]
Even so, available indicators show that unemployment poses a significant
challenge.[13]
12.9
According to Mr John Millett, 1.25–1.5 million of PNG's population of
6–7 million is unemployed, and '7 out of 10 new entrants to the work force [are]
excluded from the monetised economy'. He pointed out that 'over the period 1980
to 2006 some 13 million person-years of labour resource—almost two-thirds of
the available increase—were not availed for development, despite land
abundance'.[14]
Unemployment rates, however, vary considerably across the region, from
Kiribati's and Vanuatu's 1.6 per cent to Solomon Islands' 32.1 per cent.[15]
12.10
Even though statistics are unreliable, evidence indicates that the rates
of underemployment are also high in most countries, where many work in the
subsistence and small-scale cash cropping sectors.[16]
Professor Helen Hughes and Mr Gaurav Sodhi, Centre for Independent Studies, suggested
that in stagnated economies, mainly the large countries in the Pacific,
underemployment and unemployment can be as high as 80 per cent of the male
population.[17]
They observed:
More than two million men—four out of five—are unemployed in
towns or underemployed in villages. More than 100,000 men join the labour force
annually. Most of these will never work and never earn an income. Every day,
men and boys can be seen languishing in villages and towns, and by the
roadside.[18]
12.11
In most Pacific island countries, women and youth have a higher
unemployment rate than men; and the unemployment is higher in rural areas than
in the urban environment.[19]
Youth
12.12
The labour force in most Pacific island countries is very young: on
average, 45 per cent of the population is in the 15–24 years age group.[20]
Unemployment of young males is a significant problem in the region with a high percentage
of them having 'little chance of gaining formal sector employment', largely because
they are new entrants to the labour market with little work experience.[21]
According to an ESCAP study, the rate of population growth creates difficulties
finding employment 'for the growing number of young and relatively
better-educated people with aspirations beyond village-based and
family-oriented agricultural and fishing activities'. It noted:
This is of particular concern in the more populous countries
of Melanesia which, unlike Micronesia and Polynesian countries and territories,
do not enjoy historical migration outlets to developed countries particularly
Australia, New Zealand and the United States.[22]
12.13
Professor Helen Ware, University of New England, noted that there are
'some one million unemployed and underemployed young men' in the region, of
which approximately 700,000 are in PNG alone.[23]
The PNG economy absorbs only 30 per cent of people coming of working age.[24]
Mr Yourn informed the committee that in Fiji, 'It is conservatively estimated
that there are 12,000 school leavers a year coming out of the education
system...and job creation at the moment is nil'.[25]
The Australia Fiji Business Council suggested that the number of young people
leaving the education system and joining the economy exceeds by many times the
number of new jobs being created in the economy.[26]
12.14
According to an ESCAP study, unemployment figures may 'understate the
magnitude' of youth unemployment as 'many youths drop out of the labour force
and give up actively seeking work when it becomes clear that few opportunities
exist'.[27]
They are 'the least employable group in the formal sector' and thus remain in
the subsistence economy or in the informal sector.[28]
12.15
Furthermore, high youth unemployment constitutes one of the highest risks
to stability in the region.[29]
The Australia Pacific Islands Business Council observed that the youth bulge was
'rapidly approaching adulthood, with little clear prospect of being able to
enter the mainstream economy'. In its view:
There is across the region a tsunami of youth unable to find
meaningful employment and providing a real social, economic and security
challenge.[30]
12.16
AusAID acknowledged that youth unemployment is 'a major challenge'.[31]
World Vision Australia called for support programs to address youth
unemployment and concerns in general.[32]
Women
12.17
In addition to youth, women, who constitute nearly half of the labour
force, are another disadvantaged group in the labour market. As with employment
figures in general, there is a shortage of data regarding women's participation
in the work force.
12.18
Studies indicate that gender has implications for employment prospects,
particularly where 'strong historical and cultural traditions have assigned
gendered roles and these have produced gender differentiated skills sets'.[33]
For example, the UN found that in developing regions, women are 'more likely
than men to be in vulnerable employment situations', the difference being ten percentage
points or more in a number of regions, including Oceania.[34]
It noted that more jobs need to be created for women, and institutions need to help
them combine work and family responsibilities.[35]
12.19
In the Pacific region, a significant majority of women are self-employed
especially in the informal sector and have a large role in caring for children
and livestock.[36]
They also face problems with 'low wages in agriculture and industry compared to
the male counterparts, and the "glass ceiling syndrome" across all
sectors of the economy'.[37]
They have difficulties accessing credit, and ageing women, who have not worked
in formal employment, rely on financial support from working children and often
provide unpaid childcare.[38]
12.20
The Pacific Economic Survey 2008 stated that the available data
indicated that 'further improvements are needed to achieve equity in terms of
employment outcomes'.[39]
Implications for the region
12.21
Unemployment affects economic and human development. It is also the
breeding ground for social instability and, if the unemployed turn to crime and
violence, a situation may escalate into a security concern, both domestically
and regionally. The Australia Pacific Islands Business Council argued that 'if
increasing numbers of young people find themselves economically deprived the problem
[of law and order] is likely to grow'.[40]
The Australian Federal Police (AFP) agreed:
...as a result of demographic factors such as the youth bulge
and urban drift; the breakdown of traditional justice mechanisms particularly
within urban areas large numbers of unemployed youth are now vulnerable to the
lure of criminal entities promising to alleviate their poverty and boredom...[41]
12.22
The committee discusses these concerns in its second volume on security
issues.
Opportunities for job creation
12.23
Governments can shape labour markets by removing barriers and creating
incentives for sustainable economic growth.[42]
Labour markets
12.24
The Pacific Islands Forum Secretariat suggested there was a need for
labour market reforms and policy development, including harmonisation of labour
market legislation and regulation, and a regional framework including skills
development.[43]
It commented that labour markets could be improved by increasing stakeholder
consultation and gender equality, among other things.[44]
12.25
Along similar lines, Dr Benedict Imbun, senior lecturer at the University
of Western Sydney, argued that in order to achieve economic development, governments
will need to 'acknowledge the significance of the labour force and formulate
policies to efficiently and effectively manage' it.[45]
In his view, they need to address the difficulty and costs of hiring and the
flexibility of working hours as labour market operations are said to be
unnecessarily restricted.[46]
12.26
A Pacific 2020 background paper suggested that addressing the issue
of gender-based unemployment and underemployment would remove barriers to
employment for a large group of people.[47]
Some of the means to do so include policy review; introduction of quotas,
especially in training; training of decision makers 'to better understand and
deal with gender based employment issues'; and development of family-friendly employment
policies, including in the private sector.[48]
12.27
The paper found that 'labour market regulation appears to have had only
minor effects on employment because it has not been binding'.[49]
It was also of the view that policies are likely to have little impact without
overall employment growth.[50]
Likewise, Dr Imbun suggested that 'simply reforming labour legislation is not
sufficient to ensure improved labour market outcomes'. He noted that other
factors such as 'birth, death and migration rates; education policies; the
domestic investment climate; the impact of globalisation; and attitudes towards
gender roles' affect 'the supply of and/or demand for labour in the region, and
thus affect labour market outcomes'.[51]
12.28
The lack of accurate and reliable data on the workforce and unemployment
in Pacific island countries complicates policy making. One commentator noted
that 'More often than not, politicians develop policies in ignorance of
available labour market data'.[52]
In their joint submission, Australian Services Union (ASU), Community and
Public Sector Union (CPSU) and Communications, Electrical and Plumbing Union
(CEPU) called for data and analysis to map women's contribution to economies.[53]
Economic activity
12.29
Education and training is another way of addressing unemployment
especially in light of the skills shortage in the region. This was considered
at length in the two previous chapters. But even improvements in the delivery
of education services will not of themselves solve the region's unemployment
problem and must be accompanied by economic activity that creates jobs. For
example, an ADB report noted that youth unemployment:
...reflects the economy failing to generate enough decent jobs
in relation to growth in the labor market. Attempts at training youth in crash,
sometimes massive, programs have failing records the world over.[54]
12.30
Thus, if employment opportunities are to grow in Pacific island
countries, economic activity in the region will have to pick up.
12.31
In its earlier chapters, the committee noted the potential for Pacific
island countries to boost economic activity through raising productivity,
value-adding, improving economic infrastructure, marketing, education and
training. It looked at both the formal and informal sectors with the emphasis
on the private sector. Indeed, this sector has the potential to grow and open up
job opportunities.
Private sector
12.32
The OECD pointed out the critical role of the private sector in creating
jobs and suggested that 'fostering entrepreneurship—including women's
entrepreneurship—and developing small and medium-sized enterprises are key
drivers of economic growth [and] job creation' and constitute 'a major source
of employment'.[55]
A number of witnesses agreed with this view. The Australia Fiji Business
Council submitted that the key to employment growth would 'be the development
of a vibrant and sustainable SME sector'.[56]
The ANZ stated that 'over the medium-to-long term, promoting the domestic
private sector and attracting foreign investment will be crucial...in generating
employment opportunities and income'.[57]
12.33
Dr Imbun argued, however, that there had been 'little emphasis on sectors
that drive' economic growth due to the dominance of the public sector.[58]
The OECD also noted that in developing countries and the donor community, 'employment
creation outside the public sector has not featured prominently in sector
policies'.[59]
12.34
The committee has noted two particular industries that offer enormous
potential for job creation: tourism and mining. They promise not only to absorb
workers for their specific industry but to encourage the growth of local supply
chains—businesses and cottage industries to provide, for example, fresh foods, building
materials, transport, health, education and ICT services. Tourism, in
particular, has become a major driver of economic growth in the region and offers
job opportunities, particularly for women and young people, including the
unskilled, as the industry has good training and education components.[60]
12.35
The operations of multinational companies harnessing petroleum, gas and
other natural resources offer employment in resource-rich countries such as PNG
and Solomon Islands. Esso Australia submitted that the company's gas project in
PNG would create employment opportunities to the extent of 15,000 during the
construction phase and 850 during the operation phase. Of these positions,
3,500 to 5,000 could be filled by Papua New Guineans, the rest, usually with
higher-level skills, need to be brought in from overseas.[61]
12.36
Despite the potential for the private sector to grow and create jobs,
this sector faces major impediments. The committee has already considered some
of these constraints such as the poor state of economic infrastructure and
skills shortage, and deals with others, including the business environment,
access to land and finance, later in this report.
12.37
While Papua New Guinea is said to have 'the economic size and
opportunities to generate its own employment', smaller island countries may
require continued access to external labour markets.[62] An ADB Paper found that
for the smaller island countries, with their limited resources to create formal
employment opportunities outside government, the export of labour services to
higher-income countries 'will be a significant activity' for many years.[63]
12.38
The committee now turns to labour mobility as a means of addressing
employment issues in Pacific island countries.
Labour mobility
12.39
It is generally accepted that overseas employment benefits both
individuals and countries in the region through remittances and developing 'a
wider skills base thereby assisting regional economic development'.[64]
Research shows that migrant workers have increased their productivity, which is
said to compensate for their absence.[65]
Work experience overseas is considered valuable:
Such industry mentoring, placements, internships and other short-term
on-the-job opportunities will provide longer-lasting professional relationships
and create regional networks of practitioners and mentors that can offer
on-going support. The opportunity to participate in an Australian workplace
will also build capacity in a range of other professional skills beyond climate
change adaptation.[66]
12.40
Thus, labour mobility is considered by many to be 'crucial' for the
economies of the smaller Pacific island countries in dealing with the
demographic pressures, high levels of unemployment and underemployment
particularly of young people.[67]
Labour mobility not only provides an opportunity for finding employment but
also for contributing to family finances through remittances. For example,
through maritime employment, many families receive regular remittances that in
some countries constitute more than a quarter of GNP.[68]
In 2003, 'an estimated 4000 Pacific island seafarers engaged in international
shipping remitted approximately US$19 million in foreign exchange to their
countries'.[69]
Indeed, labour mobility in the Pacific islands region has increased over the
last two decades.[70]
Migration
12.41
The Australia Pacific Islands Business Council argued that the private
sector 'will never' absorb all school leavers in some of these countries, which
is why labour migration and returned remittances 'will be of increasing
importance'.[71]
In this way, migration is seen as a 'means of relieving population pressure on
the already scarce resources' of some Pacific Island countries 'whilst
increasing both the earning potential of the migrant abroad' through higher salaries
and remittances. Therefore, as argued by a number of researchers:
Migration in the region should be viewed neither as merely a
response to ailing economies nor simply a development strategy, but more as an
intrinsic part of life that many islanders take almost for granted.[72]
12.42
Fiji's Acting High Commissioner submitted that migrant workers have also
become 'an invaluable development partner in improving living standards of
individuals, households and even for the community at large'.[73]
Emigration has also 'encouraged educational achievement and returned
remittances to the islands. These have often been used for further investment
in education'.[74]
12.43
Permanent migration, however, may have adverse consequences. The
emigration rates of tertiary qualified people are high, with Tonga, Samoa and
Fiji 'in the top ten tertiary emigration rates for middle income countries'.[75]
The flight of skilled workers has left a deficit in both the public and private
sectors and generated a demand for substitute labour.[76]
This, in turn, has created problems in relation to wages in the form of a dual
pay system: expatriates doing the same job as locals are paid salaries many
times higher.[77]
Big oil and gas projects have to recruit foreign workers, which might cost up
to four times as much as that of employing a local worker.[78]
Another study concluded that 'The outflow of skilled workers does tend to both
widen wage gaps and lower average levels of skill, reducing outputs and already
dwindling tax bases'.[79]
Further:
If the country has had to endure an extended period with few
or virtually no skilled workers, a ‘transitory brain drain’ a worsening of
living standards and of both the quality of education, and health care,
together with dramatic reductions in wages and output.[80]
12.44
Some countries are also concerned that 'scarce public expenditures' on
higher education may be lost through emigration.[81]
12.45
Although there is demand for labour in Australia and New Zealand, one
study found employment options favour skilled workers.[82]
Another represented current Australian and New Zealand migration policies
allowing permanent migration of skilled workers as the '"worst case"
scenario', which contributed to an exodus of the skilled workforce from Pacific
island countries.[83]
The OECD observed:
Greater coherence is needed between migration policies and
development policies...Attention should also be focused on the implications of
OECD country policies that actively recruit doctors, nurses, scientists and
other skilled professionals to migrate to the developed world without any
compensation for the investment in those skills made by the low income
countries.[84]
12.46
Fiji noted that the 'Brain drain for a small developing economy like
Fiji is unavoidable but...the best option open to us under the circumstances, is
to see how best we can re-engineer the situation to bear some positive spin for
our own economy'.[85]
One method proposed to recapture these public expenditures is 'through an
appropriately administered exit tax'.[86]
Conclusion
12.47
Unemployment, particularly youth unemployment, is a growing problem in
many Pacific island countries. While temporary and permanent migration of
workers is a way of relieving the unemployment situation, it also has a
downside particularly with regard to brain drain. As noted earlier, migration
and remittances are vital to the economic viability of some of the smaller
Pacific island countries. For others, however, the loss of skilled workers may
create problems.
12.48
In the following chapter, the committee considers the ways in which
Australia is providing assistance to Pacific island countries to help them tackle
the problem of unemployment in the region.
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