The Impact of Asean Economic Community (AEC) on Demand of Female Labour in Vietnam HOA NGUYEN QUYNH, TOAN PHAM NGOC Received: 3 October 2018 Accepted: 15 November 2018 Published: 15 December 2018 Corresponding author: Hoa Nguyen Quynh, Faculty of Planning and Development, National Economics University, Hanoi, Vietnam Email: [email protected]Toan Pham Ngoc, Institute of Labour Science and Social Affairs, Ministry of Labor, Invalids and Social Affairs, Hanoi, Vietnam. ABSTRACT Using panel data from the GSO’s enterprise surveys for the period 2011 - 2015 and fixed effects regressions, this study examines the impact of AEC on demand for female labors in enterprises in Vietnam. It shows that there are statistically significant effects of AEC through the increase of intra industry trade on the fem ale labour’s dem and in all sectors and in the manufacture sector. In case of all enterprise, a sector oriented to intra-industry trade (IIT value increases gradually to 1) also makes the proportion of female workers increase in both short-term and long-term, but the impact in the longer term is stronger. The correlation coefficient between IIT and share of female labour in the short-term and long-term ones are 0.037 and 0.4 respectively. The short-run and long-run correlation coefficients are 0.4 and 0.44 in the manufacture sector. Keywords: Asean Economic Community (AEC), female labour demand, intra – industry trade (IIT). http://dx.doi.org/10.222.99/arpap/2018.45
13
Embed
2018.45 The Impact of Asean Economic Community (AEC) on ...
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Using panel data from the GSO’s enterprise surveys for the period 2011 - 2015 and fixed effects regressions, this study examines the impact of AEC on demand for female labors in enterprises in Vietnam. It shows that there are statistically significant effects of AEC through the increase of intra industry trade on the fem ale labour’s dem and in all sectors and in the manufacture sector. In case of all enterprise, a sector oriented to intra-industry trade (IIT value increases gradually to 1) also makes the proportion of female workers increase in both short-term and long-term, but the impact in the longer term is stronger. The correlation coefficient between IIT and share of female labour in the short-term and long-term ones are 0.037 and 0.4 respectively. The short-run and long-run correlation coefficients are 0.4 and 0.44 in the manufacture sector.
Keywords: Asean Economic Community (AEC), female
labour demand, intra – industry trade (IIT).
http://dx.doi.org/10.222.99/arpap/2018.45
Vol. 3 No. 4 December 2018 13 INTRODUCTION
Today, opening economy and international economic integration is is an
inevitable trend. International economic integration offers many opportunities
for nations, including oppotunities which affect the number of jobs and the
issue of gender equality in this field. Strengthening the international market
integration generally has a relationship with the increase in labor demand
(Giovanni S. Bruno, Rosario Crinò and Anna M. Falzoni, 2012; Bill Gibson,
2013). Theoretical models of international trade such as Heckscher-Ohlin-
Samuelson - The HOS model (1933 and 1941) indicate that a country that
tends to export goods which use relative surplus production factors in their
own country and import goods using relatively scarce factors. As a result, the
demand for unskilled labor has increased and the demand for technically
skilled labor have declined in a developing countries which surplus of unskilled
labor but lack of capital and skilled labor. Some empirical studies have similar
conclusions. Harrison and Revenga (1998), using the results of a (non-
random) survey in Costa Rica, Peru and Uruguay have concluded that
developing countries tends to increase jobs after trade reforms, while
countries in transition have shown the opposite trend. Paul Baker et al. (2014)
provides evidence that trade liberalization tends to increase jobs in developing
countries and reduce jobs in developed countries; demand for labor comes
from the demand for labor-intensive goods. Lham Haouas et al. (2005) has
studied the effects of short-term and long-term effects of free trade on
employment and wages. Employment patterns and wages are estimated with
data from 1971-1996 for exports and imports by sectors in Tunisia.
The results shows a statistically significant difference in the effects on
wages and employment in the short and long term with changes in exports.
From a gender perspective, based on the HOS model, women are likely to
gain trade advantage if countries start exporting goods or services that
employ a large number of female workers. Moreover, Becker (1971)
suggested that women are expected to benefit from export, as trade will lead
to more competition and thereby promote companies reduce the cost of
discrimination by employing more women. The World Bank's World
Development Report 2012 (World Bank, 2012) has pointed out that
globalization associated with economic integration has created new jobs and
market connections for women workers. Besides with studies showing the
positive impact of economic integration on gender equality in employment,
the WomanWatch (2011) has pointed out some less optimist conclusions on
the relationship between gender equality and trade policies in the context of
globalization. The study analyzes the impact of gender differences on career
opportunities at all three levels of sectors, government and households. From
14
a sectoral perspective, with considering the impacts of free trade on the labor
market and on small and medium enterprises, the study shows that free trade
increases the formal employment in low technical level and underpaid sectors
where mainly female work. but the increase in paid employment for women
is unsustainable by the trend of shifting production to those products that
require high technical level. The most recent study on the impact of
international integration on gender equality in the employment and income
sectors is the study by The ASEAN Secretariat (2015) on the gender impact
of the ASEAN Economic Community (AEC). Based on trade and labor market
data which has been disaggregated by sex, the study concluded that the
formation of the economic community of ASEAN will create more jobs for
women in the region, but the impact of AEC on the change of gender gap in
employment and income is not significant.
With the above studies, it can be seen that international integration, mainly
through international trade channels, tends to have positive impact on the
demand for labor, especially the demand for female labor, however the impact
is different for short and long term. Since joining the WTO, Vietnam's economy
has been increasingly integrated into the world economy. The year of 2015
marked a turning point in the Vietnam integration into the world economy
with participation in the Economic Community ASEAN (AEC), Vietnam-
EU's Agreement on Trade and a series of free trade agreements with many
major trade partners. Integration in global and regional markets will impact
directly and indirectly to the domestic labor market including impacts on labor
demand. Within that context, many organizations and researchers have made
preliminary assessments of the impact of economic integration on the labor
market. Research by the Institute of Labour Science and Social Affairs (2009),
"Assessing the predicted impacts on labor, employment, living condition and
income of workers when Vietnam is an official member of the WTO" shows
that the WTO will increase employment opportunities, especially for those
without technical expertise, through increasing exports, FDI and restructuring
of employment between sectors due to the development of the service sector,
industries based on new technologies, the export sectors. Integration has a
strong impact on the demand for skilled labor in the agricultural sector and
for large-scale, labor-intensive enterprises. The International Labor
Organization (ILO) and Asean Development Bank (ADB) (2014) predict that
by joining the ASEAN Economic Community (AEC), the number of jobs in
Vietnam will increase to 10.5% by 2025, the opportunity to increase the
number of jobs is mainly in cheap labor sectors which Vietnam has competitive
advantage such as textiles, footwear and human resources from industries
such as information technology, electronics and telecommunication.
Vol. 3 No. 4 December 2018 15
From a gender perspective, the study by Naila Kabeer and Tran Thi Van
Anh (2006), addresses the impact of globalization on gender and poverty in
Viet Nam. Using the survey data to compare the characteristics, conditions
and choices of women working for the global and domestic markets, the study
concludes that, as well as the other countries in the world, export-oriented
garment industry in Vietnam is an important source of employment for
women. This conclusion is similar to the study "Towards Gender Equality in
Viet Nam: To generate inclusive growth for women" by the UN Women and
the Institute of Family and Gender Studies (the Academy of Social Sciences of
Vietnam) in 2015, whereby international integration creates more
employment opportunities for female workers in the export sectors. Phan Thi
Nhiem et al. (2008) focus on the impact of WTO on ethnic minority women in
rural areas, whereby research shows that when joining the WTO, employment
opportunities for ethnic women in rural areas tend to be widespread but the
impact is negligible.
This study aims to examine the impact of AEC integration on the demand
for female workers in Vietnam at the enterprise level in both short term and
long term. This study is expected to make several empirical contributions.
Firstly, the mentioned studies have pointed out that the formation of the
economic community of ASEAN will create more jobs for women in the region,
but there are no studies on the impact of AEC on the specific situation of
female workers in Vietnam in both short term and long term. Secondly, most
studies on impact of international integration on gender issues in labor market
have focused on employment in general. Hitherto, demand side and supply
side have not been analyzed separately.
The paper is structured into five sections. After this introduction, Section 2
describes the methodology and data set used in this study. Section 3 presents
resutls including descriptive analysis of female labours in enterprises in
Vietnam and empirical results. Sections 4 concludes and finally, section 5 is
references.
METHODOLOGY
Resaech Design
The study uses GSO's annual enterprise survey data for the period 2012 –
2016 (information on enterprises operating is 2011 – 2015). The Enterprise
Survey is a firm-level survey which has been conducted since 2001 by GSO
and its sub-institutions for Viet Nam. The observations in those surveys are
corporations which have been established and governed by the Enterprise
Law. The surveys provide the enterprise’s general information on labor,
wages, income of employees, assets and source of capital, investment capital,
16
turnover, products of production and business, profits, inventory, production
costs by strains type of supplies, services, by origin (domestically produced or
imported). There is also information about export and import activities
(export, import, import and export value…).
Our approach is to measure the impact of joining in AEC on the
female labor’s demand by main secondary sectors in the economy.
Table 1 presents the number of enterprises by sector. By 2015, the number
of registered enterprises (formal enterprises) is about 455 thousand
enterprises, with an average increase rate of 7.7% per year in the period 2011
- 2015. From all sectors, electronics and textiles were the two industries with
relatively high growth rates of 17.2% and 6.6%, respectively. The rapid
growth of the textiles industry presents economic opportunities for women,
especially women who are looking for more steady income and formal sector
employment and women workers who are displaced from the rural areas. This
situation in Vietnam is quite similar with a number of the ASEAN Member
States. Within the AEC, this sector is expected to continue its expansion (The
ASEAN Secretariat, 2015).
Table 1. Number of enterprises by sector in Vietnam in the period 2011 –
2015
Unit: Number of enterprises
Sectors 2011 2012 2013 2014 2015
Agriculture 8,698 8,821 8,860 9,350 9,107
Fishing 1,546 1,544 1,512 1,689 1,716
Mining industry 2,955 3,002 2,910 2,996 2,801
Manufacture industry 55,836 59,212 60,878 67,221 70,219
Of which, Textiles 6,940 7,331 7,690 8,506 8,889
Electronic
Electricity, gas, steam and air
conditioning supply
627
1,131
736
1,376
820
1,390
1,088
1,752
1,142
1,857
Construction 44,578 48,973 51,801 56,441 61,669
Whole sale and retail trade
Accommodation and food
service activities
129,830
12,912
135,197
13,182
146,932
13,547
158,271
15,105
174,518
16,512
Transportation and storage 25,844 27,362 28,725 32,113 37,102
Other services 54,708 59,824 63,450 70,702 79,797
Total 338,038 358,493 380,005 415,640 455,298
Source: Authors’ calculation based on GSO’s enterprise surveys
Vol. 3 No. 4 December 2018 17 Estimation method
Basu et al. (2005) based on Hamermesh (1993) used the following model
to evaluate short- and long-term effects on labor demand from independent
Source: Authors’ estimation from GSO’s enterprise surveys Standard errors in parentheses: *** p<0.01, ** p<0.05, * p<0.1
Vol. 3 No. 4 December 2018 23 CONCLUSION
Vietnam has joint in ASEAN for 20 years and the formation of the economic
community of ASEAN (AEC) is predicted to create more jobs for women in the
region.However, there have been no studies on the impact of AEC on the
specific situation of female workers in Vietnam in both short term and long
term. This paper examines the impact of AEC on demand for female labors in
enterprises in Vietnam using panel data from the GSO’s enterprise surveys
for the period 2011 - 2015 and fixed-effects regressions. We find that the
impact of AEC (through the increasing in intra industry trade) on female
labour’s demand is statistically significant positive in both short term and long
term. The effect of intra industry trade on female labour’s demand is stronger
in the long term. We also find the similar impact trend in the case of
manufacture sector in Vietnam.
REFERENCES
Basu, S., S. Estrin, and J. Svejnar (2005). Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe. Industrial and Labor Relations Review.58(3), pp. 353–369.
Becker, G. (1971). The Economics of Discrimination. 1st ed. (Chicago: University of Chicago Press).
Bill Gibson (2013). Assessing the impact of trade on employment: Methods of analysis. ILO-EU.
Bruno, G. S., Crinò, R., & Falzoni, A. M. (2012). Foreign direct investment, trade, and skilled labour demand in Eastern Europe. Labour, 26(4), 492-513.
General department of Vietnam Customs, (2017). Custom Trade Statistics. https://www.customs.gov.vn/Lists/EnglishStatistics.
Grubel, H.G. and P.J. Lloyd (1975). Intra-Industry Trade, the Theory and Measurement of International Trade in Differentiated Products. London: MacMillan.
Hamermesh, D. (1993). Labor Demand. Princeton University Press, Princeton, NJ, 1993.
Haouas, I., Heshmati, A. and Yagoubi, M. (2005). The Impacts of Trade Liberalization on
Employment and Wages in the Tunisian Industries. Journal of International Development, 17(4), 527-51.
Harrison, Ann, and Ana L. Revenga (1998). Labor Markets, Foreign
Investment and Trade Policy Reform. Trade Policy Reform: Lessons and Implications, ed. J.Nash and W. Takasc, Washington DC: World Bank.
Institute of Labour Science and Social Affairs (2009). Assessing the predicted impacts on labor, employment, living condition and income of workers when Vietnam is an official member of the WTO
Martin A. Andresen. (2003). Empirical intra-industry trade: what we know and what we need to know. Retrieved July 16, 2016 from http://www.sfu.ca/~andresen/papers/Empirical_IIT_Lit_Review.pdf
24
Naila Kabeer and Tran Thi Van Anh (2006). Globalization, Gender and Employment in a Transition Economy: The Case of Viet Nam. UNDP Policy Dialogue Paper
Nhiem, Phan Thi et.al (2008). Impacts of Vietnam's WTO accession on rural ethnic minority women in some mountainous northern provinces. Ministerial level project. National Economics University, Hanoi
Paul Baker, David Vanzetti and Pham Thi Lan Huong (2014). Sustainable impact assessment EU -Vietnam FTA. Final report of Mutrap Activity code: EU2
Thanet Wattanakul, (2015). Analysis the Level of Intra-Industry Trade for ASEAN’s Economy. http://www.apeaweb.org/confer/tw15/papers/Wattanakul_Thanet.pdf
The Academy of Social Sciences of Vietnam (2015). Towards Gender Equality in Viet Nam: To generate inclusive growth for women.
The ASEAN Secretariat (2015), Project Gender Impact of the ASEAN Economic Community
The International Labor Organization (ILO) and Asean Development Bank (ADB). (2014). ASEAN Community 2015: Managing integration for better jobs and shared prosperity. Jointly report.
Tran Nhuan Kien and Tran Thi Phuong Thao, (2016). Determinants of Intra-Industry Trade for Vietnam’s Manufacturing Industry. Journal of Economics and Development, Vol.18, No.1, April 2016, pp. 5-18. Hanoi. Vietnam
Woman Watch (2011). Gender equality and Trade policy. Resource Paper. The Inter‐Agency Network on
Women and Gender Equality (IANGWE)
World Bank (2011). Globalization's Impact on Gender Equality: What's happened and what's need. in World
Development Report 2012: Gender Equality and Development, World Bank, Washington DC, ch. 6.