An ILO working paper shows how the middle class population has grown in some of the regions in the Asia-Pacific, which explains for the sustained high growth rates over the past two decades. In 1991, around 55% of the regions workers were living in extreme poverty ($1.25 a day), 25% living in moderate poverty ($1.25-$2/day) and nearly 14% in the near poor category ($2-$4/day)80% of the regions workforce was poor and only 5% of the workforce was living with their families on more than $4 per person per day and constituted the middle class and above category. In 2012, the share of middle class was 38% of the workforce and the poverty was slashed by 46 percentage points over two decades. However, an analysis of sub-regional data indicates that this rapid development in the Asia-Pacific as a whole has been driven largely by the extraordinary growth in middle class employment in the East Asia sub-region that includes China and Korea, growing from less than 5% in 1991 to more than 60% of total employment in 2012. Even the Southeast Asia and the Pacific region (ASEAN, Australia and New Zealand) experienced rapid growth in middle class employmentan increase from 12% to 33% of the total workforce over the same period. In contrast, the middle class in South Asia (India and other SAARC nations) still comprises only a very small segment of the sub-regions workforceless than 9% in 2012, though this is a notable increase from 2% in 1991. As of 2012, over 61% of South Asias workforce remains poor and a further 30% are near poor. The ILO study projects rapid growth in Asias middle class, which could grow to one-half of the total workforce in the region by 2017. This is based on a projected acceleration in middle class employment growth in East Asia (which is expected to see 180 million additional middle class workers between 2012 and 2017).
Overall regional projection for Asia-Pacific is, therefore, heavily dependent upon the growth and employment performance in China. Unfortunately, a vast majority of 87% workers in South Asia are projected to remain either poor or near poor in 2017. Without a faster growth in the middle class, the region, especially India, would falter in sustaining high economic growth. Which is why Indian policymakers need to take a hard look at rigid labour laws and skill development.