Housing a quarter of the world’s population, South Asia (comprising Afghanistan, Bhutan, Bangladesh, India, Maldives, Nepal, Pakistan & Sri Lanka) is the most densely populated region of the world.
Huge young labour force availability, low cost of business operations & resource rich geography of South Asia provide visible growth potential to the region. However, distracted with political disturbances, mal-governance & terrorism, the region has failed to realise these benefits.
Map1: Heatmap showing GDP Growth Rates for FY 2020-21 for SAARC Nations
(Pakistan & Bangladesh in yellow showing positive growth)
Covid-19 spelt further devastation to the region. Regional economic growth fell from 3.1% in 2019 to -8.6% in 2020, far from the 5.1% growth predicted in 2019. Already existing vulnerabilities in the labour market were amplified by the pandemic induced lockdown and fiscal constraints.
Crisis time demands greater mutuality and hand-holding. In this context, this article explores the prospect of ‘Cooperative Regionalism’ in South Asia as a crisis management tool towards economic revival and growth.
Using unemployment load analysis as a critical variable, this article explores to capture and map depth of Covid-19 driven South Asian employment crisis. While regional institutions open up space for cooperative crisis management, this article also discusses options for cooperative regionalism in South Asian as economic recovery options.
During the pandemic, cumulative global unemployment rates (UR) witnessed a rise in 2020 which beneficially fell in 2021. South Asian UR asymmetry during pandemic however, offers a puzzling perspective.
UR load in South Asia is a curious puzzle (Fig.1). Unemployment rate registered a steep rise in Afghanistan and India. Other South Asian countries witnessed less abrupt but still high UR evidence when pegged with their pre-Covid historic trends. Maldives saw its UR decrease owing to its Vaccine Tourism Policy. Unfortunately, however, the policy backfired when the Covid-19 caseload increased.
Most developed economies are structurally capital-intensive due to low “birth-rates and aging” population causing labour shortages and phenomena of labour import.
South Asia on the other hand is structurally labour intensive and low in technology. The region’s young population availability (18-22%) is an asset but brings its own share of complications too.
REGIONAL JOB MARKET ANOMALIES
South Asian economies until the late 20th Century were primarily agrarian. There was stagnation in the secondary sector the last decade, with the tertiary sector becoming predominant resulting in premature shift from primary to tertiary sector without developing a sturdy industrial base.
This gave insufficient time to the region’s population & institutions to adapt to a more tech-heavy, urbanized & knowledge-based economy. The fluid transition was hampered since a buffer for the excess labour (underemployed in the primary sector but insufficiently trained to seek employment in the tertiary sector) never existed in the form of the industrial sector.
As a result, vulnerabilities of youth in the labour market were existent even before Covid-19. Trends show that South Asia’s UR has consistently increased since the Global Recession. Thus, along with the job market anomaly, sudden arrival of pandemic disproportionately impacted the youth in the region. Pay cuts were witnessed while jobs or recruitments dried up.
The problem of labour force preparation of youth starts with access to quality secondary education. Completion rates for secondary school are low, creating a pool of youth who require skilling. Even the economically active & educated end up working in the informal sector due to lack of training & industry-specific skills.
CASE FOR SOUTH ASIA’S COOPERATIVE REGIONALISM
Covid-19 & lockdowns will have long-lasting labour market impacts on the youth. Lack of internet & smartphones already forced poor students to drop out of schools; a phenomenon of “Missing Students”.
With disruption to education & training, employment, income losses, and greater difficulties in finding jobs, they seem to be pushed to a “lockdown generation” – a generation of young people with college degrees, unable to find suitable employment. This further drives South Asia to higher radicalization cases in South Asia.
The pandemic’s severe impact on youth employability and employment calls for an urgent and targeted policy response in South Asia. Unfortunately, due to Pakistan’s support to terror groups & India’s policy of isolating Pakistan internationally, SAARC has been in a state of limbo since 2016. With Taliban recapturing several areas of Afghanistan & China increasing its influence in Bhutan, Nepal, Sri Lanka & Maldives, South Asia has never been more disjointed.
The SAARC came together to make an Emergency Covid-19 fund in 2020 is a welcome development and opens up hope for better regional cooperation for crisis management. It should further enable dialogue & work towards creation of green jobs, opening the tourism sector, knowledge sharing & investment in infrastructure and connectivity to foster intra-regional trade & labour movement.
Asian countries also have high private savings rates. Governments can channel these savings from the people, combined with global crowdfunding & use them for economies’ revival. The region can thus avoid debts & any foreign influence on their soil. NGOs like Doctors Without Borders & other voluntary organizations can also be given free movement to provide targeted aid in South Asia. Trust deficit has been South Asia’s biggest challenge and Covid pandemic opened a small door for reinvigorating regionalism. Leadership in the region must cease this opportunity to explore greater cooperative regionalism instruments through the health corridor.
(This article was written by Anushka Dwivedi and Rakshikha P under guidance of Dr. R P Pradhan, CPPR Distinguished Fellow)
Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.