JOBS IN MYANMAR: PROMOTING MORE AND BETTER JOBS CONSULTATIONS AROUND JOBS REPORT STRUCTURE

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1 JOBS IN MYANMAR: PROMOTING MORE AND BETTER JOBS CONSULTATIONS AROUND JOBS REPORT STRUCTURE Wendy Cunningham, Rafael Munoz Moreno, Reena Badiani-Magnusson (co-ttls) Team: Indira Janaki Ekanayake; Sergiy Zorya; Habib Rab, Sjamsu Rahardja, Claire Hollweg, Mohammed Amin, Sufian Jusoh, Izabela Leão Yangon and NPT February, 2017

2 Motivation for a Myanmar Jobs Report Why should we care about jobs? MORE jobs to absorb a growing working age population and propel GDP growth BETTER jobs to reduce poverty and improve living and working standards Why a focus on jobs, is not economic growth sufficient? Economic Growth is necessary, but not sufficient, to create jobs: Not all economic growth leads to jobs (e.g.: mining sector) Active policies may enhance the job content of economic growth For more and better jobs Comprehensive approach, looking at different job segments and markets in the context of Myanmar s economic growth. JOBS are a key policy variable and not a side-effect 2

3 A heterogeneous jobs picture in Myanmar today most jobs are in farms, small businesses, or related (paid or unpaid) employees 6.8 million people are dedicated to (unpaid) homecare, mostly women Working* 24,116, % Unemployed** 126,268 Inactive 10,527,570 Family Farming Employee*** Non-Farm HH Business 3,613,612 of these are unpaid workers, equal to 17% of the working population Government 874,501 4% 7,922,177 33% # of Employee >10 3,383,155 14% 2,396,644 10% 112, % 9,850,811 41% 5,197,352 6,343,306 26% # of Employee <10 5,250,250 52, % * Based on those aged 15 and above, employed in the last year ** Unemployed without work in the last 7 days and actively engaged in job seeking *** 1.2 million employees worked at some point last year but did not work in the last 7 days. For these employees, company size information is not available. Source: MPLCS 2015, data collected Jan-Apr 2015

4 Objective and Overview of the Myanmar Jobs Report Objective: Identify policies for more and better jobs for all Myanmar in 5-15 years, accompanied by monitoring indicators Overview: 1. Conduct analysis of the current jobs picture, focusing on 1. The primary segments of the jobs market 2. The workforce 2. Identify a series of short and medium term goals for a more, better and inclusive jobs future 3. Identify policies and programs to support this vision Output: Policy notes summarizing the findings and policies 4

5 Some emerging messages

6 Working* Jobs in Rural Areas numerous, low-productivity (wages), and a jobs portfolio Government 874,501 4% Family Farming 7,922,177 33% # of Employee >10 3,383,155 14% 2,396,644 10% 24,116, % Employee*** 9,850,811 41% 112, % Non-Farm HH Business 6,343,306 26% # of Employee <10 5,250,250 5,197,352 52, % Rural jobs are more than agriculture 73% of jobs are in rural areas 46% of rural households have a jobs portfolio, that mixes nonagricultural and agricultural activities (see figure) A high share of households include wage laborers (38%); more similar to the structure of South Asian than East Asian rural labor markets Agricultural productivity, and thus earnings, are very low relative to other countries Agriculture jobs are not just Production! The agro-value chain of interdependent enterprises and value addition can allow for creation of many jobs. farmers Jobs across the agro-value chain Everyone else Share of rural households that derive income from each source 14% 40% 46% Source: MPLCS 2015, data collected Jan-Apr

7 Number of workers per HH enterprise (workers include all family and non-family and paid and non- Working* Jobs in the (non-farm) Household Enterprise Sector numerous, low productivity/ wages, and rapidly expanding sector Government 874,501 4% Family Farming 7,922,177 33% # of Employee >10 3,383,155 14% 2,396,644 10% 24,116, % Employee*** 9,850,811 41% 112, % Non-Farm HH Business 6,343,306 26% # of Employee <10 5,250,250 5,197,352 52, % More than 40% of households have one or more household enterprises Household firms create significant employment -- most employees are family members % of households in Myanmar that have one or more HH enterprise % % 1.0 Houshold not involved in any HH enterprise in the last 12 months Houshold involved in at least one HH enterprise in the last 12 months Urban areas Rural areas 7 Source: MPLCS 2015, data collected Jan-Apr 2015

8 Working* Jobs in the Formal Sector limited, but growing, source new of jobs and better jobs, though low productivity Government 874,501 4% Family Farming 7,922,177 33% # of Employee >10 3,383,155 14% 2,396,644 10% 24,116, % Employee*** 9,850,811 41% 112, % Non-Farm HH Business 6,343,306 26% # of Employee <10 5,250,250 5,197,352 52, % 2.3 million workers in more formal firms, about 9.6% of the labor force; a share similar to Vietnam (11.3%) Most job growth in this sector during was a result of new firms, supplemented by job growth in existing firms (figure 1) Creation of new large firms (>100 employees) and micro-firms (figure 2) the manufacturing sector and other services, particularly through new firms (figure 3) These gains were primarily offset by job loss due to firm failures, particularly among large and manufacturing firms. Job quality is higher in large exporting firms in terms of wages, work conditions, workplace safety, and medical care. Annual job creation and destruction Annual job creation and destruction by firm size Annual job creation and destruction by sector Source: Myanmar Enterprise Survey 2017 (preliminary results) 8

9 Working* 24,116, % Family Farming Employee*** Non-Farm HH Business 7,922,177 33% 9,850,811 41% 6,343,306 26% Myanmar s labor force abundant with limited skills, and geographically dispersed Government 874,501 4% # of Employee >10 3,383,155 14% 2,396,644 10% 112, % # of Employee <10 5,250,250 5,197,352 52, % Myanmar has an abundant and growing working age population, in an aging region but ¼ of employers say that skills shortages are a significant problem (see figure) Workers are likely not in the right jobs given their skills and interests - most jobs are found through informal networking (68%) 4 in 10 hiring employers find workforce is inadequately educated Jobs are not necessarily located where the workers are, leading to significant migration for work (see figure) 98% of those who migrate internationally do so for jobs Motivation for (own) internal migration 0% 2% 5% 6% 6% 5% 2% 73% Source: MPLCS (2015), MLESS & CSO (2015) 9

10 10 Policy areas emerging from the analysis Taking the sectoral development plan (agriculture, private sector development, education, etc) as given, identify how to adapt those policies and programs to have a greater impact on job creation and job quality upgrading Rural Non-agriculture jobs in rural zones, especially those linked to agro value-chains Diversification of rural household enterprises Urban HH Enterprises Programs, investments, and policies for improving urban household enterprises Formal Firms Growing domestic FDIlinked SMEs + large Incorporating a jobs angle into the Export Processing Zones strategy Developing local managerial capacity in SMEs Labor Transform and formalize the TVET sector as per needs of jobs-friendly sectors An explicit migration policy for good jobs in remote locations (national and international) Other Short-term programs and medium-term investments for job growth in post-conflict zones Trade-off between macro-variables and jobs (inflation, rer, etc)

11 Proposal: identify jobs goals to track progress in the creation of more and better jobs Example: We did this with the Government of Vietnam for their 20- year development strategy: 1. GDP per capita of at least $18,000 (in 2011 PPP) 2. >50% of the population living in urban areas 3. Industry + services responsible for >90% of GDP and 70% of jobs 4. -sector share in GDP >80% 5. >0.70 score on the UN s Human Development Index and could do this with GoM for Myanmar s jobs strategy, identifying goals for 2035: Job Outcomes 1. # jobs created by domestic sector jobs increases to #% of jobs, from 4.7% of jobs in 2014 Intermediate outputs for future more and better jobs 1. Industry and service sector account for #% of jobs, from 46% in x % of rural employment in industry and services, from 28% in Rice yields increase to #/hectare (by 2035) 4. Narrowing the Doing Business Distance to Frontier to x%, from 44.6% in x% of employer s identifying skills as a major obstacle to firm success in 2035, from 25% in Export diversification indicator declines from 0.21 in 2013, to x.

12 Timetable 2017 February March April May June Consultations First draft of analytical notes First draft of policy note Complete drafts for consultation Consultation on draft notes

13 Q&A and Discussion ---- private sector Overall Strategy 1) Does the PPT identify the main jobs challenges facing Myanmar? What is missing? 2) Do the policy areas capture key jobs issue that the government should be looking at? Are there other policy issues that this study should explore? 3) Would it be most helpful if the policy section presents short-term programs or medium-term policies and investments? Are there any country examples that would be useful to highlight in this study? Technical Questions 1) Are the main constraints for job creation at insufficient resource levels (i.e. limited infrastructure) or inadequate policy making (i.e. business environment)? 2) What are top 3 trends in opportunities and threats that are shaping the ability of private sector in creating jobs in the near future? 3) Are we dealing with insufficient demand to create jobs or inadequate labour supply to meet the opportunities created? 4) To what extend Export Processing Zones will be the main driver of job creation in Myanmar? 5) Do domestic firms see opportunities from greater FDI in Myanmar? What are the key channels (joint venture, tech know how, supplying to FDi firms, tap in skilled workers who worked for FDI firms). Or do they see FDI as threat\competitor? 6) Large firms and small firms seemed to contribute the most on job churning in Myanmar. The story of small firms fits in to the narrative of new opportunities for businesses to come in. But how about medium size firms? Are they stuck? 7) Does managerial capacity in the private sector seem to be a constrain for economic growth and job creation?