Date: Wed, 10 Dec 97 22:33:17 CST|
From: rich@pencil (Rich Winkel)
Subject: ICFTU: Living Dangerously In Asia
/** labr.global: 266.0 **/
** Topic: Living Dangerously In Asia **
** Written 12:05 PM Dec 9, 1997 by labornews in cdp:labr.global **
INTERNATIONAL CONFEDERATION OF FREE TRADE UNIONS (ICFTU)
ICFTU OnLine? 315/971208/LD
1998 - The year of living dangerously
By Luc DeMaret, in ICFTU OnLine
8 December 1997
Last year Asia was still venerated as a model of economic growth. It
will begin 1998 with an unprecedented economic crisis, the outcome of
which will depend on how industrial relations are managed. Social
explosion or dialogue?
Brussels - December 8 1997 (ICFTU OnLine): With ecstatic reports from all
the experts and the enthusiastic approval of the international financial
institutions, it was only yesterday that Asia seemed to be leading the
world in economic growth. Faced with this shower of praise, the
warnings of the trade unions, humanitarian organisations and "greens"
made little impact.
True, inequalities had grown in most of the countries of south-east
True, stability didn't always go hand in hand with human or trade union
rights. True, environmental protection was not a priority. But why
spoil the party?
Since the beginning of the sixties, the region's economy had been
booming. The "tigers" (South Korea, Hong Kong, Singapore and Taiwan)
were followed by the "baby tigers" (Thailand, Malaysia and Indonesia").
According to a recent survey by the French daily Le Monde (1) "Asia's
efficient economies have reached 25 per cent of world Gross National
Product. By the year 2000 they will have reached 30 per cent." In 1960
they only represented 4 per cent of world GNP. The human development
index published each year by the UNDP shows a record increase for the
countries of the region from 1960 until 1992. And very recently the
World Bank (2) again welcomed "the unprecedented fall in poverty" in
this part of the world, even though it drew attention to an increase in
Hidden behind the impressive macro-economic statistics however were the
early signs of an economic and social crisis which, without a change of
policy, is set to flare up in 1998.
So, last July's stock market crash which brought down the Thai baht,
and with it the Filipino, Malaysian and Indonesian currencies, was
predictable. Trade unions, notably the International Confederation of
Free Trade Unions (ICFTU) and its Asian regional organisation, APRO,
have long denounced the "casino economy" of the region and the lack of
attention to the social dimension of economic development.
"The capitalist maxim of increasing revenues by cutting costs to
maximise profits, combined with a reduction in public expenditure, has
simply made the rich richer and the poor poorer" (3) said Takashi
Izumi, APRO General Secretary, just over a year ago. In fact, Asia's
economic boom was nothing miraculous, notes the French monthly Le Monde
diplomatique: "National and foreign capitalists operating in these
countries have constantly increased their share of the market by
stimulating exports thanks both to a cheap (exploited) and abundant
labour force, the systematic intervention of the State, widespread
public subsidies, a disregard for democratic institutions, political
corruption that reached the highest echelons of the State and the
liquidation of all trade union resistance" (4).
Heavily indebted, most Asian tigers and baby tigers had linked their
currency to the US dollar in order to attract investors. Hit by rising
inflation, parity between local currencies and the green bills became
nearly meaningless and the steady rise of the dollar penalised the
exports of most countries. Suddenly, the negative elements that had so
far fed economic growth - heavy debt, speculation, structural imbalance
and social distortion - all made themselves felt and provoked the most
serious crisis the region has known.
The social impact of the crisis was soon apparent. On September 25, the
Thailand confederation of industry and commerce, the employers'
federation, announced that at least 120,000 workers would lose their
jobs by the end of the year, and that job cuts would continue into 1998.
The car industry plans to cut 30,000 jobs next year. APRO estimates
that the crisis could cost the jobs of more than one million Thais out
of a total working-age population (excluding agriculture) of 25 million
For those who can keep their jobs, the future is scarcely any brighter,
explains Duncan Campbell, one of the International Labour Organisation
(ILO) representatives in Bangkok. "Wages have been lowered and the
devaluation of the baht has resulted in a considerable loss in
In Indonesia, times have also changed. Following the wave of forest
fires which have covered the country in dense smoke since October, and
which speak volumes about the importance attached to environmental
conservation, the economic and social sky is also covered by heavy grey
clouds. Like the baht, the Indonesian rupiah has also reached its
lowest level and many heavily indebted enterprises are now insolvent.
At the beginning of November, the Indonesian entrepreneurs' association
confirmed that half the 4.3 million day labourers in the construction
industry had lost their jobs and that another 500,000 would no doubt go
the same way. The head of one of the country's biggest enterprises
indicated that the industry may get rid of ten per cent of its
workforce, leaving hundreds of thousands out of work. Even with the
help of the International Monetary Fund, called to the rescue, most
economists predict that there will be no recovery before the end of
The decision of the Gulf States to send illegal migrant workers home
will only add to the problem. Since October 15 nearly 30,000 Indonesians
have been repatriated from Saudi Arabia. Many more are expected to
follow, with an estimated 700 "recruitment" agencies operating in
Djakarta, sending tens of thousands of illegal migrants to the Gulf.
It is the money sent home by its migrant workers that has enabled the
Philippines, and its currency, the peso, to keep its head above water
following the monetary storm. Last year the 650,000 Filipinos working
outside their country repatriated a cool 7.5 billion dollars. But the
increase in money transfers in November will fall again next year say
experts, creating an even greater deficit in the trade balance.
According to the TUCP, the national trade union centre, the economic
outlook for 1998 is far from encouraging and unemployment, which affects
more than 8 per cent of the working-age population of nearly 30 million
people, could rise further following the economic slowdown, recorded for
the first time in 1997 after three consecutive years of strong growth.
The repeated denunciations of Malaysian Prime Minister Mahatir Mohamad,
accusing foreign speculators of causing the stock market crash, have not
helped stop the steady fall in the value of the ringgit, Malaysia's
currency. The resulting loss of purchasing power for the country's
workers is worrying the national trade union centre, the MTUC. It
recently denounced the low wage policy applied by Kuala Lumpur.
Millions of Malaysians earn less than 450 ringgits per month and the
exploitation of more than 2.5 million migrant workers has accentuated
the downward pressure on wages. Malaysia is by no means out of the
doldrums yet, and a prolonged recession may have catastrophic
consequences. Between 1997 and next year it has to build as many
commercial premises in the country as it has over the last fifty years.
Building loans currently represent one quarter of the country's GNP?
South Korea (see Trade Union World No.3/97) has not been spared the
turbulence of the stock market and even Hong Kong is set to see a
slowdown in its economy next month.
The big strikes in Korea at the beginning of 1997 showed that the labour
world will not remain indifferent to the policies its government is
following to overcome the crisis. Meeting in Manila at the beginning of
November for a session of the UN's Economic and Social Committee for
Asia and the Pacific (ESCAP), representatives of the region's government
pointed to the harmful social impact of the "economic volatility" of the
principal countries affected by the monetary crisis which could, they
warned, "extend to other countries" in the region. Adrianus Mooy, the
executive secretary of ESCAP, urged governments not to undermine social
development in any corrective measures they choose to take to find a way
out of their difficulties.
1998 will be a test of many of these countries' approach to social
dialogue. That test will be all the more significant, stresses APRO,
given that most of the countries concerned are in the process of
reforming their labour codes, further reducing the margin of manoeuvre
for the already hard-pressed trade unions: a ban on independent trade
unions in Indonesia, closely supervised freedom in Korea, Thailand and
Malaysia and restrictions in the Philippines.
"Some of the governments?will find themselves caught between the
reformers' demands for cost cutting, higher taxes and other austerity
measures on the one hand, and the demands of the workers and the very
poor on the other" explained Michael Richardson in the Herald Tribune
(5). In such a situation, a social explosion cannot be discounted.
Unless, as Duncan Campbell, an ILO expert, hopes, the crisis has a
salutary effect. He notes "a growing recognition of the need to develop
healthy industrial relations in the region".
The trade unions, at any rate, are prepared to play their role. APRO
has announced a special forum of trade union leaders from East and South
East Asia on "The Labour Agenda - Tackling and Beyond the Economic
Turmoil", to be held in February. By then we may have a better idea of
the direction of government policy.
(1) "Horizons", Le Monde, February 27, 1996
(2) "Everyone's miracle? Revisiting Poverty and Inequality in East
Asia", World Bank, August 1997
(3) Free Labour World, June 26, 1996
(4)"Typhon financier sur les tigres d'Asie" article by Frëdëric F.
Clairmont in Le Monde diplomatique, October 1997.
(5) "Financial Crisis Leaves Asian Leaders Shaky", Herald Tribune,
November 6, 1997.
Contact: ICFTU-Press at: ++32-2 224.02.12 (Brussels)
Copyright Le Monde diplomatique. This
article may not be reproduced without permission from Le Monde diplomatique.
To contact Le Monde diplomatique or subscribe to its English edition in
print or online: