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Crisis Promises More Pain for Workers

By Prangtip Daorueng, IPS
26 December 1998

BANGKOK, Dec 26 (IPS) - Workers across East Asia, many of them used to decades of job security, face increasingly uncertain times as the region's economic slowdown threatens to throw more labourers out of work in the coming months.

From South Korea to Indonesia, the employment picture is expected to turn hazy in the coming year as huge financial firms go under, businesses are unable to expand, public spending is cut and growth figures are slashed.

Sung Bhoyun of the Korean Workers' Centre says many Koreans are not used to facing the possibility of having no work. "This is the first experience for our generation," Sung said.

"We used to have very good living conditions - better situation than our parents. They kept telling us that we are the spoiled generation," Sung said at the 24th World Confederation of Labour (WCL) Congress here earlier this month.

While official estimates say the percentage of unemployed workers in Korea next year should be seven to eight, but Kim Dong Ho, also of the Korean Workers' Centre, says unions see the figure exceeding that.

Major conglomerates or chaebols are implementing salary freezes and layoffs that in some cases involve 30 percent of employees. Other firms are cutting pay as much as 30 percent, believing they are a better than outright unemployment in a country where being jobless is often viewed as shameful.

South Korea's activist labour unions are already restive, and have been demanding that the government revise stiff conditions required by the International Monetary Fund (IMF), which led a 57 billion U.S. dollar bailout of the financially troubled economy in November.

In exchange for the funds, the Fund has required the South Korean government to keep growth below five percent, slash the current account deficit to one percent of GDP from almost three percent, keep a balanced budget and raise taxes.

"We are expecting that many people will lose their jobs. It was really sudden and we hadn't prepared for this situation. Since the IMF is there, it is not going to give us money without any condition. So we are expecting a lot of requirements," said Sung.

Thai workers are also hurting from the financial meltdown that struck the country this year, resulting in the collapse of scores of financial houses and closure of factories. Thai economists say one to four million people, mostly in urban areas, are expected to become unemployed over the next year.

Thailand's closure of 56 financial firms this month threw 11,000 workers out of work, and analysts say up to 200,000 finance employees could be jobless after the restructuring of the sector is completed.

Hundreds of thousands of Indonesians are also expected to lose their jobs in the next few months, even as prices of basic items like food are rising.

"The recent economic downturn, in particular in South-east Asia, has raised grave concerns over high unemployment," the International Labour Organisation (ILO) said in a statement during its Asian regional meeting here in mid-December.

In the case of Thailand, labour and social welfare officials say the government is supporting the return of unemployed workers to their hometowns or villages to ease urban joblessness.

While Asia's problems are directly tied to labour uncertainty and restlessness expected in the next few years, some labour leaders say the crisis has also highlighted the risks that come with the opening of economies and the need for ways of protecting workers' interest.

Indeed, globalisation as well the role of the IMF in bailing out troubled Asian economies came under strong criticism at the World Confederation of Labour Congress.

"Globalisation is a kind of unavoidable situation. I think it is bound to happen. It is happening in one direction from top to bottom, from western countries to developing countries. There will be some sacrifice. We have to pay some price, especially the union movement," said Korea's Kim Dong Ho.

But IMF managing director Michel Camdessus, who was invited to the congress, said the Fund was not creating economic problems for Asian countries but that many of them had been adopting wrong policies ill-suited to a global economy. "We are not discouraged as the results show we are on the right way," he said.

"People are treating the IMF as a scapegoat for their problems. But the fact is we now have global economy and each year it is becoming more so. This is not a new process, but has been developing over these past 50 years," Camdessus said. And despite Asia's problems, over the years "the results we see are better growth rates everywhere and higher standard of living," added.

The crisis in Asia now is a problem of mismanagement rather than of globalisation itself, Camdessus said. According to him, despite rapid growth many countries did not spread wealth to the poorer sectors, resulting in bigger gaps between the rich and poor. The IMF believes that corruption, state monopolies, business oligarchies and vested interests are obstacles to globalisation.

But critics argue that what may make economic sense does not always benefit workers. While economies are advised to open up and be globally competitive to attract investments that create jobs, labour standards have not always been set up or respected.

At its regional meeting, the ILO said international standards have become even more relevant "in today's climate of globalisation, trade liberalisation and economic uncertainty". In a paper at the conference, it said: "Workers are particularly vulnerable in times of labour contraction and industrial restructuring."

Experts at the World Confederation of Labour Congress pointed out that there were no substantial social welfare programmes to help jobless workers. In fact, many said workers in Asia largely have to bear the costs of globalisation of their economies alone, and that the presence of the IMF is not the answer.

Even without the economic crisis, many Asian countries were seeing a fall in the number of full-time jobs and a rise in temporary, casual or subcontracted work that often falls outside legal regulation. In the competition for foreign investment, some countries have poor working conditions and pay.

Former WCL president Willy Peirens says many economies' free trade zones with unequal tax levies, low salaries and poor workers' standards, the growing informal sector and increasing number of migrant workers, are prime indicators of the problems within the globalisation process.

Asia's economic slowdown is bound to make things harder because globalisation, in the eyes of trade unions, has meant " weaker negotiating capacity and constant degradation of working conditions", at a time when there should be even more dialogue.

"It is our understanding that within the IMF some reforms have already taken place and we want to see that continue. For instance, the WCL wants to see structured consultations between the unions and the IMF. Also national unions have to be consulted in the process of elaborating programmes of structural adjustment," Peirens said.