Strengthening Active Labor Market Policies to Drive an Inclusive Recovery in Asia

The coronavirus disease (COVID-19) pandemic has contributed to unprecedented job losses, disproportionately affecting vulnerable groups, such as youth, women, migrants, and informal workers. Pandemic responses in many developing Asian economies have included massive cash transfer programs to stabilize household incomes and stimulate demand for goods and services. However, these programs are temporary crisis measures, while COVID-19-induced unemployment may be lengthy and possibly permanent. Moreover, income support can help low-skilled workers maintain a basic living standard, but it cannot provide them with the skills needed to move to better quality work.

Active labor market policies focused on upskilling, reskilling, and on-the-job training can enhance the income-generating potential of the unemployed or underemployed and accelerate inclusive recovery after the pandemic, yet these programs have been vastly underutilized and underfunded in Asia. The pandemic has also highlighted the difficulties the poor face in joining skill-building programs due to work and family obligations.

This report examines the impact of the COVID-19 crisis on the employment of vulnerable groups in developing Asia, particularly those in the informal economy. It highlights the barriers that limit access to decent work and undermine socioeconomic well-being. Part I describes the keys to strengthening active labor market policies to better equip the most vulnerable for long-term labor force participation vital to boosting sustainable economic growth beyond the pandemic. Part II discusses youth employment and the role of technical and vocational education and training programs in upskilling and preparing youth for better jobs.