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Labouring under the Crisis

By Boonthan Sakanond, IPS
31 January 1999

BANGKOK, Jan 30 (IPS) - The unprecedented job losses and social havoc caused by Asia's economic crisis is prompting international bodies and trade union groups to call for a radical rethink of labour policies throughout the region.

Excessive reliance on poorly paid and trained workers, restricted union activities and the absence of social safety nets, these bodies say, are key factors responsible for both the crisis as well as the inability of affected countries to deal with its social fallout.

"The crisis has revealed serious shortcomings in Asian labour market institutions and practices," says a new International Labour Organisation (ILO) report called 'Towards Full Employment: Prospects and Problems in Asia and the Pacific'.

These "need to be dealt with urgently if the affected countries are to avoid backsliding into problems of unemployment, underemployment and poverty that economic growth and industrialisation had done so much to reduce," the report adds.

The International Confederation of Free Trade Unions (ICFTU), meanwhile, says governments, employers and international institutions must formulate laws and set up the bodies to ensure proper social partnership between labour and capital.

Such moves, argues the trade union body, are crucial if the region is to recover from the crisis and prevent future ones.

For decades, fast-growing East Asian economies have practised 'flexible labour' policies that benefit employers but have meant easy dismissal and low wages for workers. The policies often excluded workers' rights to form unions.

Prior to the economic turmoil that began July 1997, most countries in the region had not been signatories to even basic ILO conventions, including those on the Right to Organise and Collective Bargaining (1949), Against Discrimination of Employment and Occupation (1958), Equal Remuneration (1951) and Minimum Age (1973).

But in recent months nations such as Indonesia, Malaysia, the Philippines, Singapore and Thailand have selectively ratified, under domestic and international pressure, some of these conventions.

Still, South Korea and Thailand, along with China and Vietnam, have yet to sign the Conventions on Freedom of Association and Protection of the Right to Organise.

The ILO acknowledges improvements in labour-management relations, but "the stark reality remains that in no country in the region is collective bargaining a vehicle for social dialogue for the majority of workers."

The ICFTU, for its part, says in a statement on the Asian crisis: "There is a key role for social dialogue and collective bargaining in efforts to overcome the effects of the financial crisis."

It says the recent riots in Indonesia demonstrate what may happen when such factors are missing. For the ICFTU, the unrest there can be traced back to the inability of the authoritarian Suharto government to develop institutions, particularly trade unions, to reconcile economic and social pressures and build a consensus.

Political analysts expect social tensions in the region to worsen in 1999 as enterprises attempt to regain profitability by slashing workforces.

The trend toward higher unemployment is hounding all Asia- Pacific countries, regardless of their level of industrial development.

In Japan, the largest economy in the region, the rate of open unemployment topped four percent in 1998. The advanced economies of Australia and New Zealand have not been spared unemployment rates of nearly eight percent last year.

Among South-east Asian countries, Indonesia lost nearly eight million jobs (the equivalent of one in every five modern-sector jobs) last year, forcing hundreds of thousands of migrant workers to return home -- to more unemployment. In Thailand, unemployment levels have reached more than five percent, which is more than double the pre-crisis figure.

In South Korea, unemployment surged to more than seven percent of the workforce by the end of 1998, compared to less than three percent in 1997.

Real wages are also falling by as much as 30 percent in Indonesia, eight percent in Thailand and five to 10 percent in South Korea.

The ILO says all these mean that the long-term goals of any post-crisis economic policy should include the establishment of sound labour market institutions and social safety nets. Says the ILO report: "The need to make employment growth the core objective of development strategies has never been greater."

The ILO is now pushing Asian governments to introduce unemployment insurance and benefit schemes and training systems for retrenched workers. Among the crisis-struck countries, only South Korea provides unemployment insurance.

"Severance pay, the most prevalent form of social protection for the region's laid-off workers, is largely inadequate," notes a senior ILO official here in Bangkok.

She says the system suffers from serious problems of enforcement since, in times of economic difficulty, employers often fail to make payments. And when they do pay, says the ILO official, the amounts they fork over are generally insufficient.

Whether governments will have a change in attitude toward labour depends largely on how and if workers can win the sympathy and support of the rest of their countrymen, forcing authorities to pay attention to them.

In Indonesia and South Korea, workers' groups have been able to assert their rights following the downward spiral of their economies.

Thus, despite job losses there, workers have been able to win important concessions at the level of greater government recognition of their role in the economy.

Contrast this to Thailand, Singapore, China, Vietnam and Malaysia, where no demonstrations against anti-labour policies have taken place as yet.

Analysts say workers in these countries who expect to be handed their rights on a silver platter are in for a very long wait.