Fairer Economies

Cohesive societies, competitive economies: how to tackle remaining poverty in Asia and the Pacific

Young people and women need a fairer playing field in the workforce to further reduce poverty

Young people and women need a fairer playing field in the workforce to further reduce poverty Image: UNDP India/Shashank Jayaprasad

Kanni Wignaraja
Assistant Secretary-General, UN; Regional Director for Asia and the Pacific, United Nations Development Programme (UNDP)
Philip Schellekens
Chief Economist for Asia and the Pacific, UNDP; Non-resident fellow, Center for Global Development
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Fairer Economies

  • 1.5 billion people have been lifted out of extreme poverty in Asia and the Pacific in two generations, but millions remain trapped.
  • Following the International Day for the Eradication of Poverty this week, we ask: how we can tackle the last miles of poverty at a time when new headwinds could limit or even reverse our progress?
  • Investing in people-centred, cohesive, societies while building more competitive economies, stands the greatest chance of success.

Asia and the Pacific are often singled out as star performers in terms of poverty reduction. No statistic better illustrates this than the region’s monumental achievement of pulling 1.5 billion people out of extreme poverty within just two generations.

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But a stark reality lies beneath this accomplishment: millions remain trapped in poverty of various kinds.

Here’s what we know: 185 million people in the region live in extreme poverty, scraping by on under $2.15 a day; and 6 million live in ultra-poverty, earning or spending less than half that amount. These numbers aren’t even up to date – they’re from 2019 – and, given the pandemic and the shocks that followed, they likely represent a minimum rather than a maximum.

The poverty picture becomes bleaker when we widen the lens. A billion people are "societally poor” with consumption of goods and services below half that of the median consumer. Half a billion are “multidimensionally poor”, facing multiple, simultaneous deprivations in education, health and living standards. All of this is mere numbers until we put faces and stories to the millions.

The share of people in developing Asia who live in extreme and moderate poverty is estimated to be higher now than 2022 predictions
The share of people in developing Asia who live in extreme and moderate poverty is estimated to be higher now than 2022 predictions Image: Statista

A turbulent landscape for poverty reduction

The International Day for the Eradication of Poverty offers the occasion to ask ourselves how we can tackle the last miles of poverty at a time when we are facing new headwinds that could limit or even reverse our progress.

This is one of the critical topics of our upcoming 2024 Regional Human Development Report for Asia and the Pacific. This report (to be launched in November) takes stock of the region’s state of human development. It also proposes new directions for policy as the region faces a large unfinished development agenda, while taking into consideration a potentially turbulent future.

More turbulence? A triple whammy of risk clusters lies before us: existential threats arising from climate devastation, wars and pandemics; new challenges to established drivers of growth and job creation; and risks to reform momentum due to increasing polarization, democratic backsliding and the erosion of trust.

These converging risks dramatically up the ante to do things differently. With half a billion people remaining deprived in multiple dimensions, the urgent need for new approaches is self-evident.

Doing things differently

One vital priority is to nurture more cohesive societies. This requires taking human development much more seriously and placing people very decisively at the heart of any future development strategy – people of current generations and of future generations – with the goal of nurturing and investment in bringing people together around shared goals, a sense of identity and a purpose.

This entails paying more attention to enlarging people’s choices by identifying and tackling structural exclusions and discriminations, upholding human dignity and developing human capability. All of this should be done with the intent to reduce our current heightened insecurity, while meeting our obligations to future generations.

To support the continued reduction in poverty in all its forms, the region needs to sustain sufficient levels of growth, which, despite present negative side effects, has largely powered the region’s spectacular success in poverty reduction. Looking ahead, what is called for is the right kind of growth.

Growth of the right kind generates many more jobs and creates a safer future for more people. For this to happen, we all have our work cut out. The remaining poor in Asia and the Pacific are predominantly the working poor operating in informal activities. The formal sector currently does not generate enough decent jobs to keep up with the needs of the workforce. Half of East Asia’s workforce is informal; in South-East Asia it is close to 75% and in South Asia almost 90%.

Much of South and Southeast Asia also have a relatively high share of informal workers
Much of South and South-East Asia also have a relatively high share of informal workers Image: Statista

The lack of a fair playing field for youth and women is a significant obstacle to this kind of growth. In South Asia, for example, 80% of young workers are informally unemployed and in many countries throughout the region, we see rising youth unemployment. Meanwhile, approximately 800 million women remain out of the workforce.

Generating job-rich growth, expanding the formal sector or even improving the livelihoods of those working informally are becoming more challenging in the current environment of geopolitical fissures and rapidly spreading labour-saving technologies.

There is no secret sauce for this situation: countries will need to step up their efforts to build more competitive economies and take advantage of the growth dividends from export-led growth in a more difficult global environment. Internally, they will need to support productivity growth and incentivize entrepreneurship as multipliers for sustained job creation.

This is just a quick preview of the directions proposed in our 2024 Regional Human Development Report, Making Our Future – New Directions for Human Development in Asia and the Pacific. The message on this International Poverty Day is clear: to reach the remaining poor in a context of potentially greater turbulence, we need approaches that are fit for the times. A combined focus on investing in people-centred, cohesive, societies while building more competitive economies, stands the greatest chance of success.

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