United Nations: Advocates 'social safety net' in Third World

by Thalif Deen

New York, June 14 -- The United Nations wants Third World governments - particularly those snared by the economic crisis in Asia - to create "social funds" to provide emergency relief to the needy and the poor.

The world body says that countries affected by economic crises should provide social safety nets to those whose lives are devastated by rising unemployment, growing poverty and a rapid deterioration in health and educational services.

"Governments have to play a critical role in ensuring social protection,"says a UN study released Tuesday. "With that end in view, budgetary allocations for the social sector have to be preserved and augmented."

The 12-page report, which goes before the annual sessions of the Economic and Social Council (ECOSOC) in Geneva next month, urges developing nations to "seriously" consider the introduction of an effective system of unemployment insurance.

"Mounting unemployment and erosion of real incomes have brought about a sharp increase in poverty," the report says.

The countries most affected in the Asia-Pacific region include South Korea, Thailand, Indonesia, Malaysia and the Philippines.

In Indonesia, unemployment rose from 4.7% in 1991 to 21% in 1998, in Malaysia from 2.7% to 6.4%, in South Korea from 2.6% to 7.7% and in Thailand from 1.9% to 4.4%.

A similar crisis in Brazil and other Latin American countries found its way into Russia last year.

The study points out that several governments of the affected countries have already implemented programmes and policies to arrest the rapidly deteriorating social conditions.

The government of South Korea has set up a comprehensive unemployment benefits package, including an expanded unemployment insurance system, a subsidised loan programme for the unemployed and for small scale businesses and public works programmes, the report noted.

Thailand has launched a social investment project to provide the poor with comprehensive assistance in the form of creation of unemployment and provision of training as well as capital.

Indonesia has initiated a major social safety-net programme while Malaysia has introduced several measures to arrest the decline in social welfare arising from the economic crisis. The study says that "mounting unemployment and erosion of real incomes have brought about a sharp increase in poverty" in the region.

By the middle of 1998, the proportion of poor people in Indonesia had reached 40% of the total population of 208 million people - up 11% on 1997.

In Malaysia, which has a population of about 23 million, poverty increased from 6.8% in 1997 to an estimated 8.0% in 1998.

In Thailand, with its population of about 63 million people, the incidence of poverty increased from 11.4% to 15.3%. "The sharp decline in incomes has had a negative impact on the consumption of health and educational services," the report notes.

The public sector's ability to cope with the increased demand for its services has been constrained by the limited budgetary resources available under bailout packages.

"For many in the impoverished groups, the education of children is no longer affordable, leading to drop-outs at all educational levels," the report said. A number of countries in the region also are experiencing severe social problems.

Meanwhile, the International Monetary Fund (IMF) has provided bailout packages to several Asian nations. South Korea has received about 58 billion dollars from the IMF, Indonesia about $43 billion, Thailand about $17.2 billion and the Philippines about $1.0 billion.

According to the report, economic growth rates in the region are expected to rise through the year 2001.

South Korea's growth rate which declined from 5.5% in 1997 to minus 6.0% in 1998 rose to 2.0% in 1999. In the year 2000, the growth rate is expected to reach 3.9%, rising to 5.0% in 2001.

Thailand's growth rate, which fell from minus 0.4% in 1997 to minus 7.8% in 1998, rose to 0.9% in 1999.

The two Asian economies that virtually emerged unscathed are China and Taiwan.

China had an average annual growth rate of more than 7.0% in 1997 and is expected to sustain it through 2001. taiwan too had returned only positive growth rates.

The Taiwanese economy grew by 6.8% in 1997 and 4.7 in 1998, and is expected to grow by 5.5% in 1999, 6.0% in 2000 and 6.2% in 2001. (IPS)

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