The Pacific Plan, Regional Developments and Job Creation

1
The Pacific Plan, Regional Developments and Job
Creation

• A Presentation at the Pacific Cooperation
  Foundation Conference on the Future of Pacific
  Labour
• Wellington, 29 30 June 2006
• Peter Forau
• Pacific Islands Forum Secretariat

2
Outline

• Pacific Plan
• Genesis
• Priorities
• Regionalism
• Whats Happening
• Regional Development
• - new architecture
• - toward integration
• - trade (PICTA, PACER)
• - economic partnerships (PACER, EPA, etc)
• - labour mobility
• - international engagements (WTO, EU/ACP, IFIs,
  APEC, PFDPs)
• Job Creation
• Features
• Labor Policies and Legislations
• Supply of and Demand for Labour (Labour Markets)
• Developing Pacific labour (Job Creation)
• - Regional Initiatives
• - International Initiatives

3
Pacific Plan

• Genesis
• EPG Review Report Auckland Declaration
• desire to deepen regional cooperation
• Leaders Vision
• Give effect to Leaders Vision
• Specific Leaders Decisions
• - promote economic growth, sustainable dev,
  good govern., security
• - strengthen regional cooperation
• - protect cultures
• - reform the Forum and CROP
• - promote members awareness of the costs
  benefits of regionalism
• - build strong partnerships

4
Pacific Plan

• Key Priorities (for implementation next 3 years)
• 25 key priorities under economic growth,
  sustainable dev., good governance, security
• Economic Growth
• - expansion of markets for trade in goods under
  SPARTECA, PICTA, PACER
• - integration of trade in services,
  include.,temp.movement of labour into PICTA EPA
• -effective implementation of RTFP
• -implement FPRT
• - examine and dev. comprehensive framework for
  trade and econ. Partnership with Aust. NZ.
• - bulk purchasing of petroleum
• - support private sector dev.

5
Pacific Plan

• Regionalism
• Basis for Pacific Plan
• Context countries working together for their
  joint and individual benefit.
• 3 types of regionalism
• Type 1 regional cooperation services provided
  nationally but coordinated regionally (dialogue
  process),
• Type 2 Regional Provisions of Public
  Goods/Services - e.g., education, shipping, air
  safety etc.
• Type 3 Regional Integration removing physical
  (borders) and technical barriers (customs,
  quarantine etc) between countries
• Which type of Regionalism is preferable? All as
  they are part of a process. Now Pacific
  Cooperation around Type 1 2. Emerging desire
  to work toward Type 3 regionalism.
• Is there a case for the Pacific to work towards
  Regional Integration? YES
• Why?
• - to improve income convergence
• - to improve market access

6
Pacific Plan

• Status
• PPAC Appointed
• Regional Architecture Study underway
• CROP Work Programming around initiatives of
  Pacific Plan inprogress
• Work on extension of PICTA to cover services
  progressing
• Work on PACER related arrangements soon to start
  
• Work on labor schemes under consideration no
  formal mandate yet

7
Regional Development

• - new architecture
• - toward integration
• - trade (PICTA, PACER)
• - economic partnerships (PACER, EPA, etc)
• - labour mobility
• - international engagements (WTO, EU/ACP, IFIs,
  APEC, PFDPs)

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Features of Labor Markets in FICs

• Segmented formal and informal
• Heavily regulated minimum wage conditions etc
• Unresponsive to modern commercial requirements
  productivity and efficiency gains
• Generally unionized
• Small and undeveloped (very few players and
  limited skills base)
• Controlled by employers (except for highly
  specialized skills)
• Non-competitive and imperfect
• fragile

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Labor Policies and Legislations

• Generally labor policies and legislation focus on
  protecting workers right ref. minimum wages,
  employment relationships, dispute settlement,
  health and safety, workers compensation etc.
• Aged and unresponsive.
• Do not encourage productivity and wealth
  creation.
• Role of Policy develop human resources for
  economic production (dynamic efficiency),
  allocate human resources to different sector
  needs (static efficiency), and promote social
  justice (improve workers welfare). In FICs none
  of these is well developed.
• Role of Legislation protect employee/employer
  rights and relationships.

10
Supply of and Demand for Labor

• Supply Side Issues
• lack of skills
• Culture
• Unmotivated
• Prone to migration (esp.for highly skilled)
• Low wages
• Poor working conditions
• Demand Side Issues
• Very few jobs
• High cost of labor (absenteeism)
• Stringent regulations
• Poor worker loyalty (skilled workers)

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Supply of and Demand for Labour (labor mkt) cont..

• Other issues
• Youth unemployment is a serious problem
• Huge skills mismatch leads to expatriate
  recruitment or additional investment in human
  resource development (could be a disincentive)
• Poverty is a problem (mainly in the informal
  sector) leads to lack of investment by families
  of education of proper education of children
• Rural opportunities are very limited
• Poor women education
• emigration

12
Creating Jobs

• Can the Pacific Plan Help? YES
• Pacific Plan Provides initiatives for improving
  environment for job creation as well as directly
  creating job opportunities.
• Regional Initiatives
• USP/FSM
• PRIDE
• Australian Technical College
• ADB Skills Assessment Project
• PICTA
• PACER
• Pacific Plan (FEMM Mandate)
• EPA Mode 4 type services
• International Initiatives
• - WTO rules allows mode 4 type services trade

13
Future Directions

• Reform labor laws
• Grow economies through more investments for job
  creation
• Expand rural banking to include rural financing
  to offer credit for self-employment activities
• Increase investment in national
  technical/vocational colleges
• Negotiate bilateral overseas labor schemes
• Formulate innovative human resources development
  plans
• Increase investment in education
• Align wages to productivity
• Move earnestly toward regional integration

14
Final Remarks

• Labor markets in FICs are too small and unable to
  absorb available supply of economically active
  population.
• This lack of capacity is a serious problem, can
  affect security and viability of FICs.
• Investment in jobs has to increase or overseas
  labor schemes must be negotiated.
• Regional integration can help
• The Pacific Plan is the beginning