Asia: Crisis causes massive unemployment

by Kerstin Marx


United Nations, May 20 -- The fallout from the financial crisis in Asia - which began in mid-1997 - has caused massive unemployment throughout the region, according to a new United Nations study.

The economic turmoil in South-east and East Asia "underscored the vulnerability of these once high growth and full employment economies, where unemployment rates have doubled and even tripled in the space of a few months," the report said.

The 24-page study, released to coincide with a review here of the 1995 UN Social Summit in Copenhagen, said that the international community committed itself to promote the goal of full employment as a basic priority of economic and social policies.

But four years after the Copenhagen summit, full employment was still a distant goal - and not only in Asia. A study , by the UN's International Labour Organisation (ILO) warned that the world unemployment situation "remains grim."

ILO statistics revealed that more than 150 million workers currently were unemployed out of a world labour force of about three billion people. Additionally, about 25 to 30 percent of these workers were underemployed.

The economic crisis in Asia was blamed for much of the setback to the world employment situation.

Between August 1997 and December 1998, rapid job losses saw unemployment rise in Indonesia from 4.3 million to 13.7 million people. In Thailand, the numbers exploded from 0.7 million in February 1997 to 1.9 million in December 1998.

Even in less severely effected economies, such as Hong Kong, China, Malaysia and Singapore, there were now twice as many people without work than before the crisis, according to the ILO report.

In Hong Kong, the number of unemployed increased from 77,000 people in October 1997 to 152,000 in December 1998, compared to an increase in Malaysia from 224,000 unemployed in December 1997 to 405,000 in December 1998.

ILO expects these rates to remain at a high level "at least until the end of this year".

Since the Copenhagen summit, many efforts have been made worldwide to increase the rate of job creation and reduce unemployment and underemployment. "However, the recent turbulence and consequent decline in growth in the global economy have in many cases overwhelmed the positive impact of these efforts," the report concedes.

Addressing the opening session of the special committee's meeting to review the outcome of the Copenhagen summit, ILO Director- General Juan Somavia said that the organisation's evaluation of the five years "no doubt shows advantages." "But globally speaking, both within the developing and developed societies, the insecurity of individuals, their families and the communities in which they live has not abated," he added.

The 20th century demonstrated an "extraordinary capacity to multiply growth, productivity and wealth", according to Somavia.

But it also had been "unable to find stable and effective solutions to reduce unemployment, poverty, and social exclusion."

At its current session, the Committee is preparing for a special session of the UN General Assembly, to be held in June 2000 in Geneva. At that meeting (Copenhagen Plus Five), further means to implement the commitments made in 1995 will be discussed.

"Copenhagen Plus Five will have to deal with major challenges," said Somavia, pointing to the economic contractions in Asia, Russia and some Latin American countries and their spillover effects on a global level.

At the Committee's session, the question of how to resolve those financial crisis without creating further reverses in social progress remained highly debated.

"Ten or 15 years ago policy-makers would have said that a nation's crisis was over when macro-economic conditions improved," said Nitin Desai, Under-Secretary-General for Economic and Social Affairs (DESA). But today,"with the persistence of high unemployment and poverty, no policy-maker is ready to take such a stance."

Before the crisis, the South-east and East Asian countries often had been cited as "models of the positive impact of globalisation in raising rates of economic growth and job creation."

Their macroeconomic policies of promoting labour-intensive exports, trade liberalization and attracting foreign direct investment have raised living standards and reduced poverty within the region, the UN report says.

However, these policies did not benefit the Asian countries on the long term, the paper concedes. "What the crisis has now revealed is that, while essential, this set of policies was not sufficient," it said.

"The rapid globalisation of the world economy has posed new challenges which have made the goal of maintaining full employment a more complex undertaking." (IPS)

The above article by the Inter Press Service appeared in the South-North Development Monitor (SUNS).