October 1, 2014 / 11:04 PM / 5 years ago

Rising rural wages in Asia will reduce extreme poverty: report

LONDON (Thomson Reuters Foundation) - The rise in rural wages now taking place across Asia could lift hundreds of millions of people out of extreme poverty in the next decade, a new report showed on Thursday.

Falling birth rates and a growing demand for factory workers mean that rural wages will keep rising sharply across the continent, according to the Overseas Development Institute’s (ODI) report Rural Wages in Asia.

The ODI is Britain’s leading independent think tank on international development and humanitarian issues.

The study found that up to three quarters of the world’s poorest people, particularly those who earn less than the extreme poverty level of $1.25 a day, live in rural areas.

ODI research fellow Steve Wiggins said that rural wages were crucial as they “mark the lowest returns to labor on offer”.

“Once people get paid over $5 a day, they leave the real misery of extreme poverty behind,” Wiggins told the Thomson Reuters Foundation.

“Another decade of rural wage rises could see the end of extreme poverty en masse in Asia, improving the lives of hundreds of millions of people.”

Average earnings for male farm workers in China more than doubled between 1998 and 2007, rising to $7 a day from $3.02, the report showed.

In Bangladesh, average rural wages rose to $2.21 a day in 2010 from $1.52 in 2005, a 45 percent increase, while India saw a rise of 35 percent between 2005 and 2012, to $2.91 a day from $2.15.

Female rural workers in China, India, Pakistan and Bangladesh earn up to a third less than their male counterparts, but the wage gap appears to be narrowing, the report said.

It also found that the rise in rural wages has in turn led to further rises in factory wages, leading to the relocation of factories from Asia to poorer regions where labor costs are lower, particularly Africa.

“Increasing rural wages in Asia could give Africa a huge growth boost,” Wiggins said.

“This can already be seen outside Addis Ababa in Ethiopia with the arrival of the first pioneer wave of relocated Chinese plants.

“This could be a game-changer for African countries, and they need to ensure they have a trained workforce and basic infrastructure in place, otherwise they might miss this boat.”

The report analyzed information from the 13 most populous countries in East, South and Southeast Asia.

Reporting By Kieran Guilbert; editing by Tim Pearce

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