LONDON (ILO News) ­ Pointing to the huge social costs of the unfolding crisis in Asia, the Director-General of the International Labour Office, Mr. Michel Hansenne, has called on the governments of the leading industrial nations of the world to place the promotion of democracy and social justice at the heart of their international economic strategies.

Speaking at the Jobs Summit meeting of the G-8 in London tonight, Mr. Hansenne predicted that "several million workers will be adversely affected" and regretted that, through lack of foresight, "the countries concerned find themselves ill-prepared to deal with the social crisis. As a result, the suffering of those affected is all that much greater".

In Thailand, for example, the ILO believes that the unemployment rate will rise to about 4.5 % in 1998, throwing 700,000 persons out of work in addition to the one million workers who have lost their jobs since the onset of the crisis in July 1997. The situation in Indonesia is likely to be worse. The negative growth forecast for 1998 may cost as many as 3 million jobs. Half as many have already been lost.

But unemployment figures tell only one part of the story. The bulk of job losses will be concentrated in the modern sector, pushing skilled workers to inferior jobs in agriculture or in the informal sector. Those who manage to hold on to their jobs will meanwhile see their real wages drop significantly as a result of the inflation induced by large currency devaluations.

The suffering thus inflicted on workers and their families "greatly increases the risk of social and political instability" in the region, said Mr. Hansenne. Underlying this risk "is the fact that for several decades social progress has lagged behind the spectacular economic success achieved by emerging Asian countries. Not enough was done to develop social safety nets, to advance basic workers rights, or to promote social partnership."

Social security in the countries concerned is generally limited to provisions for retirement, health care and compensation for industrial accidents for workers in the organized sector, according to the ILO. There typically is no unemployment insurance of any kind. Social assistance for the poor is similarly meagre and of limited coverage.

"It was previously thought sufficient to get developing countries to see the wisdom of moving (...) towards greater openness to the world economy, greater reliance on markets and the private sector, and the adoption of macroeconomic policies that avoided large fiscal deficits and high inflation", said Mr. Hansenne. But, "the Asian experience has shown that, while necessary, this recipe is far from sufficient".

To simply liberalize and privatize is not enough. "The effective monitoring and regulation of markets (...) is also vitally important". Similarly, "the importance of honest, transparent and democratic management of the economy has been amply underscored."

"And it bears repeating that it is shortsighted and perilous to neglect the development of strong social institutions and policy."

While the immediate priority must be to contain and alleviate the social consequences of the crisis, "it is also important to agree on the agenda for forward-looking action", said Mr. Hansenne. For the ILO, recent developments in Asia underline above all the importance of "adherence to the fundamental social framework provided by international labour standards."

The ILO has devoted considerable efforts in recent years towards promoting universal observance of core labour standards. These cover the right to freedom from forced labour and discrimination, the right to organize and to bargain collectively and the elimination of child labour. None is more relevant in the present context than the principle of freedom of association.

"A free trade union movement is a key pillar for building democracy" and achieving "the greater policy transparency that is required to avoid a recurrence of the costly errors in the recent Asian experience", said Mr. Hansenne, adding that "an empowered labour movement is also important for exerting constant democratic pressure in favour of a more socially equitable pattern of globalization."

"This is now better recognized", he acknowledged. The fact that the Managing Director of the IMF, Mr. Michel Camdessus, had included consultations with trade unions during his latest trip through the region "has done much both to reassure workers and to give them a voice in the process of financial restructuring".

In some cases, "a modest start has been made in promoting social consensus", said Mr. Hansenne. "Whatever the final outcome of the current debate in the Republic of Korea, for example, support for the tripartite (government, employers and trade unions) agreement there is much wider than any imposed solution could have commanded."

This, said Mr. Hansenne "is a practical, real-world demonstration of the direct link between social justice and promotion of economic progress. It encourages me to propose to the IMF and the World Bank that we should work together more closely, both in developing responses to crisis situations as well as long-term strategies for economic and social development."

"The emerging world system should not tolerate, and indeed cannot withstand, many more social catastrophes of the scale that we are witnessing in Asia", warned Mr. Hansenne in concluding his speech to the G-8 representatives. "I therefore call upon you to expand the concept of global economic partnership to include promotion of democracy and social justice. The ILO will be a willing participant in this effort."