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Úà€KKK%"àòòÔ.RƒTBH:\WPWIN\WP6WE\DEPTS\04012-1B.E98RÔH:\WPWIN\WP6WE\DEPTS\04012-1B.E98Ô/  Ô/v.3óóTABLE ATABLE F Ý ƒI5$ÝÔUKUS.,ÔÒ°ÒÒ°ÒÓ  ÓÔ€_X$XXXÔÔ€_%ã@%X_X$ÔÓ$vvïƒz°œX$ÓÒvÒà ï àòòÚ  Ú1Ú  ÚóóòòÝ  ÝThis€is€part€of€the€Inpres€Desa€Tertinggal€(IDT)€Programme€or€presidential€instruction€programme€forÐ ô Ðvillages€that€are€left€behind.€IDT€is€in€fact€a€kind€of€social€fund€consisting€of€credit€for€self„employment€andÏallocations€for€labour„intensive€infrastructure.Table_A 7Ý ƒI5$ÝÔUKUS.,ÔÒ°ÒÒ°ÒÓ  ÓÔ€_X$XXXÔÔ€_%ã@%X_X$ÔÓ$vvïƒz°œX$ÓÒvÒà ï àòòÚ  Ú1Ú  ÚóóòòÝ  ÝSee€W.R.€Bohning:€òòEmploying€foreign€workersóó€(Geneva,€ILO,€1991).Ý ƒ‡!ÝÔUKUS.,ÔÑTRW\Ï6Á&A4 (Portrait)3Ø'Ð6Â&A4ÿ3Ø'TÑÒ°ÒÒ°ÒÑô°ÑÑ•°ÑÓ  ÓÔ€_X$XXXÔÔ€_%ã@%X_X$ÔÑ  ÑÓ$vvïƒz°œX$ÓÝ  ÝÓC€ ¤òõ ´"" ¤òõCÓñ+ñØØñ+ññ+ñØØñ+ñÖ€ÿÿÖñ-ñÖ€ ÿÿÖñ-ññ-ñÖ€ÿÿÖñ-ññ0ñÖ€ ÿÿÖñ0ññ0ñÖ€ÿÿÖñ0ñÝ ƒy¤ÎÿÝÒvÒÒÒÓ0vvïÒi ‚zvvïƒz0ÓÑ  ÑÑ€ ÈÈ` ÑÑ/ÈÑÑ/ÈÑÙvÒÙÑ ØXÑÓ 33ÓÔ€_&cA&%_%ã@ÔÔ€ô&cA&&_&cAÔÓÓÓ  ÓÝ  ÝÝ‚Zü;ÿÝÓ  ÓÔ  ÔÑ  ÑÒvÒÒÒÔ€&õ &&ô&cAÔÔ€„ç1„&&õ ÔÓfæÓÓ 33ÓÔ  Ôò òÓ  ÓÑ  ÑÒÒÒÒÓfæfæÓÓ ÓÝ  Ý3.à0 v àPolicies€to€contain€the€social€costsÝ‚Zü;ÿtƒÝó óÔ %ÔÔìì£ÔÐìv%"v%" ÐÓ  ÓÑ  ÑÒvÒÒÒÔ€ô„Ð;„„„ç1ÔÔ€ô&cA&„ô„Ð;ÔÓfæÓÓ 33ÓÝ  ÝÓ6vvï¬ã ] vvïÒi ‚z6ÓÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.1.à ¬ àIntroductionÝ‚žJ”ÿÖœÖÝÔ Ôó óÔŽ`½Ò/ÔÐ `½ ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àThis€chapter€will€review€the€policies€and€programmes€that€have€been€adopted€to€contain€theÐ Z· Ðsocial€costs€of€the€economic€crisis€in€the€three€most€severely€affected€countries.€The€focus€willÏbe€both€on€the€adequacy€of€policies€and€programmes€that€are€already€in€place€and/or€additionalÏmeasures€that€are€feasible€and€could€be€usefully€introduced€in€the€near€term.Ìà ï àThe€chapter€begins€with€a€brief€discussion€of€the€stabilization€and€reform€measures€that€haveÏbeen€adopted€under€the€agreements€that€all€three€severely€affected€countries€have€concluded€withÏthe€IMF.€This€is€followed€by€a€description€of€efforts€that€have€been€undertaken€to€moderate€theÏextent€of€crisis„induced€lay„offs€in€these€countries.€This€issue€is€of€special€significance€in€theÏAsian€crisis€since,€as€discussed€in€Chapter€1,€there€is€a€real€danger€that€the€overshooting€inÏmarket€reactions€since€the€onset€of€the€crisis€will€cause€many€otherwise€fundamentally€soundÏenterprises€to€go€under.€The€underlying€reasoning€is€that€alternatives€to€lay„off€and€liquidation,Ïsuch€as€reduced€working€time,€work„sharing,€and€negotiated€wage€cuts,€can€buy€valuableÏbreathing€space€for€viable€enterprises€to€ride€out€the€ð"ð€hopefully€temporary€ð"ð€shock€of€excessiveÏcurrency€depreciation,€falls€in€asset€prices€and€disruptions€in€financial€intermediation.Ìà ï àThis€is€followed€by€a€discussion€of€measures€to€assist€displaced€workers.€Except€in€theÏRepublic€of€Korea,€there€has€been€no€capacity€or€experience€in€implementing€active€labourÏmarket€measures€of€the€type€common€in€industrialized€countries.€The€main€instrument€availableÏin€these€countries€is€some€form€of€direct€employment€creation€scheme.€These€include€labour„¼intensive€public€works€schemes€and€credit€schemes€to€promote€self„employment€and€enterpriseÏdevelopment.€Such€schemes€have€been€used€in€the€past€as€part€of€poverty€alleviationÏprogrammes,€mainly€in€rural€areas.€The€critical€issue€in€the€present€crisis€is€whether€they€can€beÏscaled€up€sufficiently€and€soon€enough€to€cope€with€the€vastly€greater€numbers€that€are€likely€toÏbe€in€need€of€such€relief.€This€is€a€formidable€challenge,€since€there€are€both€financial€andÏinstitutional€capacity€constraints€to€doing€so.Ìà ï àGiven€the€serious€constraints€to€a€rapid€expansion€of€direct€employment€creation€measures,Ïattention€has€to€be€given€to€income€replacement€measures€to€relieve€the€most€acute€social€distress.ÏThe€next€section€of€this€chapter€therefore€discusses€issues€such€as€the€role€of€social€assistance€andÏmeasures€to€improve€the€access€of€the€poor€to€food€and€health€care.Ìà ï àThe€chapter€then€discusses€the€varying€extents€to€which€social€dialogue€and€tripartiteÏcooperation€have€so€far€played€a€role€in€containing€the€social€costs€of€the€economic€crisis€and€inÏdefusing€the€danger€of€social€unrest.€Lastly,€it€looks€at€the€effects€of€the€crisis€on€the€situation€ofÏmigrant€workers€and€suggests€policy€responses.ÌÌÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.2.à ¬ àEconomic€policiesÝ‚žJ”ÿ.ÖœÖÝÔ ºÔó óÔŽ&a!v%Ó ÔÐ &a!# ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àThe€economic€policy€response€to€the€crisis€so€far€has€been€the€subject€of€controversy.€OneÐ þ&["$ Ðissue€is€the€appropriateness€of€the€response€prior€to€the€conclusion€of€agreements€with€the€IMFÏby€the€Republic€of€Korea,€Indonesia€and€Thailand.€It€is€argued€that,€especially€in€the€case€ofÏThailand,€there€was€an€attitude€of€denial€to€the€impending€crisis€and€that€danger€signals€such€asÏa€large€current€account€deficit€and€an€asset€price€bubble€were€ignored.€Similarly,€when€the€crisisÏspread€to€Malaysia€the€initial€focus€was€on€attacking€foreign€scapegoats€instead€of€dealing€withÏthe€crisis.€As€discussed€in€Chapter€1,€this€was€part€of€the€deficiencies€in€domestic€policy€whichÏcontributed€to€the€onset€of€the€crisis.€But€it€also€has€to€be€recognized€in€mitigation€that€there€wereÏnew€elements€in€the€nature€of€the€crisis€that€virtually€no€one€foresaw.Ìà ï àThe€heart€of€the€controversy,€however,€is€over€the€policies€that€have€been€adopted€in€theÏworst„affected€countries€after€the€conclusion€of€agreements€with€the€IMF.€A€common€criticismÏof€these€programmes€concerns€the€need€for€the€fiscal€tightening€that€has€been€included€in€them.Ð ‡0ä+/ ÐCritics€have€argued€that,€given€the€huge€deflationary€shock€caused€by€the€massive€outflow€ofÏcapital,€fiscal€tightening€was€a€perverse€response.€It€was€also€unnecessary€in€view€of€the€lowÏlevels€of€government€debt€in€these€countries€and€the€fact€that€the€balance€of€payments€deficits€hadÏnot€been€caused€by€loose€fiscal€policy€in€the€first€place.€Some€critics€have€argued€that€what€isÏrequired€is€stable€or€even€expansionary€fiscal€and€monetary€policy.€The€underlying€view€is€thatÏthis€would€bring€about€an€early€restoration€of€high€growth€that€would€soon€ease€the€debt„servicingÏburden€and€minimize€adverse€effects€on€the€domestic€economy.€Others€have€also€recommendedÏavoiding€fiscal€tightening€on€the€grounds€that€it€is€necessary€to€allow€room€for€an€essentialÏtightening€of€monetary€policy€in€order€to€stabilize€currencies.€Against€this€the€IMF€hasÏmaintained€that€the€recommended€fiscal€tightening€has€been€slight€(1.5€percent€of€GDP€in€the€caseÏof€Thailand)€and€is€necessary€to€pay€for€the€cost€of€restructuring€the€financial€sector.€It€has€alsoÏstressed€that€it€has€adopted€a€flexible€attitude€to€these€fiscal€targets€and€that€they€have€indeed€beenÏloosened€when€the€economic€downturn€proved€to€be€more€severe€than€anticipated.Ìà ï àA€similar€debate€has€emerged€over€the€extent€to€which€monetary€policy€should€be€tightenedÏand€interest€rates€raised.€The€IMF€position€is€that€a€significant€rise€in€interest€rates€is€necessaryÏin€order€to€restore€confidence€in€currencies€which€have€suffered€massive€depreciations.€WhileÏacknowledging€that€this€will€impact€negatively€on€the€large€number€of€domestic€firms€with€highÏdebt,€the€IMF€argues€that€this€is€a€lesser€evil€than€a€failure€to€stabilize€currencies.€The€reasoningÏbehind€this€is€that€with€large€numbers€of€firms€carrying€high€levels€of€foreign€short„term€debt€inÏthese€countries,€an€easing€of€their€debt€burden€through€a€recovery€of€the€exchange€rate€will€doÏmore€to€minimize€insolvency€than€the€maintenance€of€low€interest€rates.€Moreover,€the€rise€inÏinterest€rates€need€only€be€temporary€since€it€can€be€reversed€once€confidence€is€restored€in€theÏcurrency€market.Ìà ï àCritics,€however,€point€out€that€this€prescription€does€not€appear€to€have€worked;€theÏsubstantial€rise€in€interest€rates€in€Thailand€and€Indonesia€has€not€so€far€had€the€desired€effect€ofÏrestoring€confidence€in€their€currencies,€especially€in€the€latter€country.€The€explanation€offeredÏfor€this€is€that€high€interest€rates€are€not€sufficient€to€compensate€for€the€perceived€rise€in€creditÏrisks€on€the€part€of€lenders€to€these€countries.€They€may,€instead,€exacerbate€fears€that€theÏexchange€rate€will€weaken€even€further€if€it€is€perceived€that€they€are€not€sustainable.Ìà ï àThe€last€major€area€of€controversy€is€over€the€structural€reforms€that€have€been€prominentlyÏembedded€in€the€agreements€with€the€IMF.€These€involve€the€immediate€problem€of€restructuringÏor€closure€of€insolvent€banks€and€other€financial€institutions,€as€well€as€institutional€reforms€suchÏas€strengthening€regulation€of€the€financial€sector,€instituting€effective€bankruptcy€laws,Ïincreasing€the€transparency€of€corporate€governance,€and€liberalizing€laws€limiting€foreignÏownership€in€the€corporate€and€financial€sectors€of€the€economy.€These€structural€reforms€areÏseen€by€the€IMF€to€be€critical€requirements€for€the€restoration€of€international€market€confidenceÏin€these€economies€and€hence€for€their€recovery.Ìà ï àThere€have€been€two€main€strands€of€criticism€to€this€approach.€The€first€has€questioned€theÏwisdom€of€making€these€structural€reforms€an€integral€part€of€what€should€have€been€essentiallyÏstabilization€packages.€Some€have€argued€that€the€focus€should€have€been€squarely€on€ð ðlife„savingÏcore€economic€issuesðð€rather€than€diluting€it€by€introducing€inherently€difficult€and€time„¼consuming€issues€of€institutional€reform.€While€not€questioning€the€need€for€such€reforms,€theyÏstress€that€the€timing€is€inappropriate.€This€is€joined€by€a€related€political€economy€argument€thatÏby€front„loading€difficult€reforms€within€the€policy€package€the€IMF€may€have€pushed€the€processÏbeyond€an€optimal€level€of€conditionality.€Given€the€political€fragility€in€some€of€these€countriesÏsuch€a€tough€reform€line€may€ultimately€prove€counter„productive€since€it€is€beyond€the€capacityÏof€governments€to€implement.Ìà ï àThe€second€strand€of€criticism€of€these€structural€reform€measures€springs€in€large€part€fromÏnationalist€and€populist€sentiment.€A€major€grievance€concerns€the€liberalization€of€laws€relatingÏto€foreign€ownership€in€the€financial€and€corporate€sectors.€This€is€seen€as€an€exploitation€of€theÏcurrent€weaknesses€of€these€countries€by€major€powers,€a€perception€that€is€heightened€by€theÏfact€that€equity€prices€have€collapsed€dramatically€in€the€wake€of€the€crisis.€The€latter€implies€thatÐ è0E,3 Ðforeign€purchases€of€national€assets€are€being€made€at€distress€prices€and€hence€unfair.€TheÏupshot€would€be€a€loss€of€national€ownership€and€control€over€key€sectors€of€the€economy€thatÏwould€reduce€future€policy€autonomy.Ìà ï àA€key€consideration€in€evaluating€this€second€strand€of€criticism€is€a€judgement€over€theÏextent€to€which€current€asset€prices€reflect€the€fundamental€worth€of€companies€in€distress.€WhileÏthere€was€certainly€overvaluation€until€the€crisis,€there€are€also€grounds€for€thinking€that€the€over„¼reaction€in€currency€and€equity€markets€referred€to€earlier€makes€this€a€bad€time€to€sell.€At€theÏsame€time,€however,€it€has€to€be€recognized€that€this€may€be€the€only€alternative€to€going€under.ÏThe€choice€may€simply€be€between€accepting€more€foreign€ownership€and€losing€the€enterpriseÏaltogether€to€the€national€economy.€Besides,€an€increased€inflow€of€foreign€direct€investment€willÏcontribute€to€overcoming€the€crisis€by€injecting€badly€needed€capital€as€well€as€the€technologyÏand€managerial€skills€necessary€to€strengthen€the€corporate€and€financial€sectors.€But€in€order€toÏrealize€the€latter€benefits€it€will€be€important€to€promote€sales€to€foreign€buyers€that€are€reallyÏmore€efficient€than€alternative€local€investors.Ìà ï àThere€is€no€simple€way€of€resolving€this€debate.€A€fundamental€problem€is€that€of€theÏcounterfactual.€The€potential€effects€of€alternative€policies€advocated€by€critics€cannot€be€verifiedÏuntil€they€are€actually€applied€in€the€current€crisis€situation.€They€may€have€as€strong€analyticalÏarguments€in€their€favour€as€the€policies€that€are€being€currently€being€pursued€but,€as€pointedÏout€earlier,€the€current€Asian€crisis€has€several€new€and€poorly€understood€elements.€The€issueÏcannot€therefore€be€confidently€resolved€on€òòa€priori€óógrounds.Ð '„ Ðà ï àBut€this€is€not€to€say€that€arguments€for€alternative€policies€should€be€ignored.€TheyÏconstitute,€as€it€were,€ð ðshadow€policiesðð€that€could€be€seriously€considered€should€parts€ofÏcurrent€policies€fail€to€yield€their€anticipated€results.€In€situations€where€professional€opinion€isÏseriously€divided€and€where€there€is€a€high€degree€of€uncertainty,€as€is€the€case€in€the€currentÏsituation,€a€greater€than€usual€degree€of€flexibility€in€policy€implementation€would€be€in€order.ÏClose€monitoring€of€the€unfolding€effects€of€current€policies€and€a€willingness€to€change€courseÏwhen€warranted€would€clearly€be€desirable.€And,€in€that€monitoring,€the€impact€of€policies€onÏthe€level€of€unemployment€and€social€costs€should€be€a€prominent€consideration.€In€particular,Ïat€least€temporarily€increased€social€spending€may€be€unavoidable€if€countries€are€to€undertakeÏcredible€efforts€to€alleviate€the€gravest€social€consequences€of€the€crisis.ÌÌÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.3.à ¬ àSaving€viable€enterprises:€AdjustmentÐ â? Ðà ï àà ¬ àat€the€enterprise€levelÝ‚žJ”ÿt8€in€ÝÔ 9Ôó óÔŽj!ÇÜ 9ÔÐ j!Ç  ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àThere€have€been€a€number€of€initiatives€to€minimize€the€extent€of€lay„offs€as€a€result€of€theÐ d"Á! Ðcrisis€as€well€as€to€save€viable€enterprises€facing€temporary€liquidity€crises€through€cooperativeÏaction€between€workers€and€employers.€In€the€Republic€of€Korea,€agreement€was€reached€underÏthe€Tripartite€Accord€that€ð ðemployers€will€do€their€best€to€put€an€end€to€illegal€lay„offs€and€unfairÏlabour€practices€to€stabilize€employment.€Trade€unions€will€make€positive€efforts€to€improve€aÏfirmððs€competitiveness€and€enhance€productivity€and€quality€in€order€to€stabilize€employment.ÏLabour€and€management€will€make€efforts€to€settle€harmoniously€labour€disputes€at€the€companyÏlevel,€to€put€an€end€to€unfair€labour€practices,€and€to€promote€labour„management€cooperationÏby€jointly€establishing€a€òòCentre€for€Labour„Management€Cooperation€Supportóó.ððÐ 4)‘$) Ðà ï àDespite€this€encouraging€language,€however,€there€remains€strong€suspicion€among€the€rankÏand€file€that€employers€could€take€unfair€advantage.€The€sentiment€is€strongest€among€employeesÏin€bankrupt€companies.€In€fact,€local€unions€in€insolvent€companies€led€opposition€against€theÏleadership€of€the€Korean€Confederation€of€Trade€Unions€(KCTU)€that€had€agreed€to€lay„offÏprovisions€in€the€Accord.€There€are,€in€addition,€many€reports€of€unfair€labour€practices€sinceÏthe€beginning€of€the€crisis.Ìà ï àNevertheless,€on€the€positive€side,€there€has€been€an€increase€in€the€number€ofÏestablishments€and€unions€which€have€jointly€declared€the€objective€of€labour„managementÐ \0¹+1 Ðcooperation.€A€Ministry€of€Labour€survey€recorded€194€such€declarations€as€of€the€end€ofÏFebruary€1998,€compared€with€only€four€a€year€earlier.Ìà ï àA€survey€conducted€by€the€Federation€of€Korean€Trade€Unions€(FKTU)€gives€evidence€ofÏefforts€undertaken€to€find€alternatives€to€lay„offs.€Of€the€400€enterprise€union€leaders€surveyed,Ï58.8€per€cent€responded€that€ð ðwhile€the€inevitability€of€lay„offs€cannot€but€be€acknowledged,Ïtrade€unions€are€making€efforts€to€avoid€lay„offs€through€Labour„Management€Councilsðð.€TableÏ3.1€records€measures€taken.ÌÌÝ‚ŽÊÿÝÔ€?&õ &&ô&cAÔÔ€?ôÕl ô&?&õ ÔÓÓÓfæÓÓ  Óò òÝ  ÝÔ& | ÔTable€3.1.€€FKTU€survey€of€alternatives€to€lay„off€Ý‚ÿæBthe€ÝÔ/# €ô QÔó óÔ€ôô‡ô ô?ôÕlÔÔ€ô&cA&ôôô‡ÔÓÓÓfæÓÐ # € ÐÓ  ÓÝ  ÝÝ‚AÔÌÿÝÔ€ô¡qÂ&ô&cAÔÔ€?Â9ËÂÂô¡qÔÓÓÓfæÓÓ 33ÓÝ  ÝÔ*wƒ ddd Xdd Xdd Xv%"v%"wÔÔ,Ådd ÔÔ,¼ dd ÔÔ,i dd#ÔÔ,Ådd#ÔÔ+  ÔÐ 1€  o  ‚G‚ƒƒ„„‹‹1ÐÐ >€ -Y ¶   „„‹‹>ÐAlternative€to€lay„offÐ >€ -Y ¶   „„‹‹>ÐPercentage€of€cases€in€which€usedÐ >€ -Y ¶ 3  „„‹‹>ÐÐ <2%Y ¶ 3 G   ‚G‚ƒƒ‹‹<ÐÐ %Xµ  ‹‹%ÐNew€recruitment€freezeÐ G=Xµ  fffff&J@52.3‰fffff&J@‰‹‹GÐ52.3Ð G=8Xµ  fffff&J@52.3 fffff&J@ ‹‹GÐÐ 3)Xµ  G  ‚G‚ƒƒ‹‹3ÐÐ %kÈ  ‹‹%ÐEarly€retirementÐ G=kÈ  ffffff1@17.4‰ffffff1@‰‹‹GÐ17.4Ð G=8kÈ  ffffff1@17.4 ffffff1@ ‹‹GÐÐ 3)kÈ  G  ‚G‚ƒƒ‹‹3ÐÐ %~Û  ‹‹%ÐWorking€hours€reductionÐ G=~Û  ,@14.0‰,@‰‹‹GÐ14.0Ð G=8~Û  ,@14.0 ,@ ‹‹GÐÐ 3)~Û  G  ‚G‚ƒƒ‹‹3ÐÐ %‘î  ‹‹%ÐRotating€unpaid€leaveÐ F<‘î  333333 @3.4‰333333 @‰‹‹FÐ3.4Ð F<7‘î  333333 @3.4 333333 @ ‹‹FÐÐ 3)‘î  G  ‚G‚ƒƒ‹‹3ÐÐ %¤ ‹‹%ÐTransfer€to€affiliated€firmÐ F<¤ ÍÌÌÌÌÌ@2.6‰ÍÌÌÌÌÌ@‰‹‹FÐ2.6Ð F<7¤  ÍÌÌÌÌÌ@2.6 ÍÌÌÌÌÌ@ ‹‹FÐÐ 3)¤! G  ‚G‚ƒƒ‹‹3ÐÐ %·" ‹‹%ÐSecondment€to€subcontracting€firmÐ F<·# ÍÌÌÌÌÌ@2.6‰ÍÌÌÌÌÌ@‰‹‹FÐ2.6Ð F<7·$ ÍÌÌÌÌÌ@2.6 ÍÌÌÌÌÌ@ ‹‹FÐÐ :€ )·% G  ‚G‚ƒƒ‹‹:ÐÐ ,€ Ê'&  ‹‹,ÐTemporary€lay„off€Ð M€ <Ê''  ÍÌÌÌÌÌô?1.3‰ÍÌÌÌÌÌô?‰‹‹MÐ1.3Ð M€ <7Ê'( ÍÌÌÌÌÌô?1.3 ÍÌÌÌÌÌô?  ‹‹MÐÐ," Ê') G    ,ÐÝ‚AÔÌÿgDabouÝÔ€?&õ &Â?Â9ËÔÔ€ô&cA&&?&õ ÔÓÓÓfæÓÓ 33ÓÝ  ÝÔ'| ô nCÔÌà ï àThe€survey€also€showed€that€45.2€per€cent€of€the€unions€were€willing€to€accept€a€wageÏfreeze,€and€another€3.4€per€cent€a€wage€reduction,€if€employers€would€guarantee€employmentÏsecurity.Ìà ï àIt€can€be€said€that€enterprise€unions€have€been€unable,€in€any€broad€way,€to€negotiateÏalternatives€to€lay„offs€or€to€mitigate€their€social€costs€owing€to€factors€such€as€unstable€unionÏleadership,€union€avoidance€strategies€by€employers,€and€the€narrowly€focused€bargainingÏstrategy€of€the€enterprise€union€itself.€There€are€nonetheless€indications€that€most€trade€unionÏmembers€would€be€willing€to€accept€redeployment€within€the€enterprise€or€a€wage€reduction€ifÏthe€òòchaebolóó€owners€made€sincere€efforts€to€reform€their€businesses€and€avoid€lay„offs.€Even€someÐ –ó2 Ðmilitant€unions€have€initiated€campaigns€to€revive€their€companies€through€the€purchase€ofÏcompany€shares.€These€may€be€in€the€minority,€however:€many€unions€appear€to€have€beenÏbypassed€by€employers€in€the€process€of€restructuring.Ìà ï àIn€Thailand,€the€position€paper€of€the€labour€federations€participating€in€the€NovemberÏNational€Tripartite€Forum€articulates€the€trade€unionsðð€demand€that€employers€not€take€advantageÏof€the€present€circumstances.€As€in€the€Republc€of€Korea,€the€Thai€social€partners€agreed€in€theÏForum€that:€ð ðmass€lay„offs€were€inevitable,€but€every€effort€should€be€made€to€keep€these€to€aÏminimum,€in€the€first€place,€through€negotiation,€and€through€any€other€means€such€as€adjustmentÏof€hours€of€work€or€wages€or€other€production€costs.€In€any€event,€mass€lay„offs€should€be€theÏlast€resort.€The€law€should€be€strictly€enforced€to€ensure€that€workers€who€are€laid€off,€or€whoÏare€laid€off€as€a€result€of€the€insolvency€of€enterprises,€receive€all€the€legal€benefits€to€which€theyÏare€entitled.ððÌà ï àHowever,€compared€to€the€case€of€the€Republic€of€Korea,€one€marked€difference€is€theÏunderdeveloped€formal€framework€for€dialogue€at€enterprise€level.€Thai€labour€legislationÏprovides€for€two€main€channels€through€which€labour„management€dialogue€on€adjustment€couldÏoccur.€One€is€through€collective€bargaining€at€workplaces€in€which€a€trade€union€has€beenÏrecognized.€The€meagre€level€of€workplace€organization€in€Thailand€means€that€collectiveÏbargaining,€were€it€to€bear€fruit€at€all€in€finding€solutions€to€lay„offs,€would€apply€to€a€narrowÏminority€of€the€Thai€workforce.Ìà ï àThe€other€formal€channel€is€labour„management€dialogue€through€Employee€CommitteesÏ(ECs)€in€enterprises€employing€more€than€50€persons.€To€date,€however,€ECs€remainÏunderdeveloped,€existing€in€only€500€enterprises.Ð Õ02,H Ðà ï àThe€simple€conclusion€to€draw€is€that€the€institutional€apparatus€through€which€dialogue€onÏthe€consequences€of€enterprise„level€adjustment€could€occur€is€just€not€in€place€in€Thailand.€OfÏcourse,€the€absence€of€the€sort€of€formal€mechanisms€for€dialogue€provided€for€by€labour€lawÏdoes€not€necessarily€mean€the€absence€of€dialogue€ð"ð€or,€further€still,€the€absence€of€good,Ïcooperative€labour„management€relations.€Recent€research€in€Thailand€and€elsewhere€hasÏdocumented€the€existence€of€well„developed,€cooperative€labour„management€relations€in€someÏnon„union€enterprises.€But€evidence€also€suggests€that€such€examples€are€(i)€likely€to€be€in€theÏminority,€and€(ii)€slower€to€diffuse€in€the€absence€of€a€well„developed€trade€union€movement.ñ,ñ׃×ñ,ññ,ñ׃×ñ,ñÝ ƒJˆÎÝÔø!ø!ÔòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð ™ ö Ðà ï àThere€is€no€comprehensive€empirical€record€of€the€extent€to€which€firms€have€had€recourseÏto€any€alternatives€to€lay„offs€or€have€engaged€in€formal€or€informal€dialogue€with€theirÏworkforces€over€adjustments.€Thailandððs€leading€employer€confederations€state€that€the€searchÏfor€alternatives€to€lay„offs€is€common€practice€among€their€member€firms.€The€Ministry€ofÏLabour€and€Social€Welfare€(MOLSW)€has€also€taken€a€proactive€stance€in€(i)€urging€firms€toÏdelay€lay„offs€by€finding€alternatives;€(ii)€requesting€that€firms€first€notify€the€Ministry€òòprioróó€toÐ à=  Ðthe€intent€to€lay€off,€so€that€alternatives€could€be€considered€first€or,€failing€these,€adequateÏoutplacement€services€(retraining,€job€search)€could€be€arranged€under€MOLSWððs€auspices;€andÏ(iii)€seeking€to€intervene€itself€prior€to€recourse€to€lay„offs.Ìà ï àWith€the€onset€of€the€crisis,€MOLSW€created€15€teams€of€Ministry€officials€which€haveÏattempted€to€assist€enterprises€in€Bangkok€and€in€the€neighbouring€industrialized€provinces€inÏfinding€alternatives€to€lay„offs.€Since€then,€the€teams€have€visited€nearly€1,000€firms€to€date.ÏMOLSW€has€prepared€a€booklet€outlining€ways€in€which€labour€and€production€costs€could€beÏadjusted€to€avoid€lay„offs.€Finally,€MOLSW€has€hosted€three€tripartite€seminars€in€an€effort€toÏdiffuse€knowledge€on€ways€in€which€employment€can€be€preserved.€The€Ministry€initiative€willÏcontinue€as€part€of€the€Governmentððs€seven„measure€programme€to€address€the€crisis.€While€theÏMinistryððs€initiatives€are€clearly€positive,€there€is€no€information€available€on€their€impact.Ìà ï àThe€extent€to€which€alternatives€to€lay„offs€have€been€broadly€used€in€Indonesia€is€unknown;Ïwhether€such€alternatives€have€been€the€subject€of€prior€dialogue€or€consultation€with€theÏworkforce€and€its€representatives€is€equally€uncertain.€What€is€known,€however,€is€that€with€theÏrise€in€lay„offs,€the€Federation€of€All„Indonesia€Trade€Unions€(FSPSI)€(the€official€trade€unionÏfederation)€set€up€a€team€to€consult€with€and€assist€companies€contemplating€mass€dismissals.€TheÏteam€also€provides€legal€assistance€to€workers€who€are€facing€dismissal.€The€teamððs€mainÏobjective€is€to€promote€the€search€for€alternatives€to€lay„offs€through€the€reduction€of€workingÏtime,€the€elimination€of€overtime,€alternating€work€shifts,€cutting€production€costs€and€alternatingÏhome€rest€periods.€The€Indonesian€Employersðð€Association€(APINDO)€is€also€providing€a€rangeÏof€similar€advisory€services€to€its€members.€In€addition,€it€is€trying€to€monitor€the€incidence€ofÏlay„offs€through€its€network€of€27€provincial€offices.Ìà ï àAn€additional€factor€impeding€the€development€of€social€dialogue€at€the€enterprise€level€inÏIndonesia€is€the€fact€that€the€unions€themselves€have€been€weakened€by€the€loss€of€membershipÏresulting€from€lay„offs.€The€Indonesian€Prosperity€Trade€Union€(SBSI),€for€example,€has€seenÏa€reduction€in€its€already€limited€resources€and€is€unable€to€monitor€the€rate€of€lay„offs€involvingÏits€own€members.Ìà ï àWhile€there€are€positive€examples,€it€is€unlikely€that€the€search€for€alternatives€to€lay„offsÏis€a€widespread€practice€at€present.€For€many€enterprises,€there€are€economic€reasons€for€thisÏarising€from€the€gravity€of€the€crisis€itself.€Another€reason,€however,€is€that€the€ways€and€meansÏof€building€labour„management€trust€and€strong€workplace€cooperation€are€not€deeplyÏinstitutionalized.ÌÐ Ó,0(. ÐÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.4.à ¬ àPolicies€and€programmes€to€assistÐ £ Ðà ï àà ¬ àdisplaced€workersÝ‚žJ”ÿ¡jvincÝÔ -kÔó óÔŽ+ˆúÔÐ +ˆ ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  ÝÝ‚é{ÿÝÔ€ôŠÌöŠ&ô&cAÔÔ€@ŠàSŠŠôŠÌöÔÓ  ÓÓfæÓÓ 33ÓÔ  ÔÝ  ÝRepublic€of€KoreaÝ‚é{ÿƒlÝÔÝÔ mÔÔ^ƒà%‚ÔÐ ƒà ÐÔ€@&õ &Š@ŠàSÔÔ€ô&cA&&@&õ ÔÓ  ÓÓfæÓÓ 33ÓÝ  Ýà ï àIn€the€Republic€of€Korea,€the€Government€originally€allocated€about€5€trillion€won€to€theÐ lÉ Ðlabour€market€budget€for€1998.€At€the€end€of€March,€Parliament€increased€the€allocation€toÏ8trillion€won.€It€is€questionable,€however,€whether€the€additional€resource€allocation€will€actuallyÏbe€available€this€year.€Almost€50€per€cent€of€the€original€budget€is€geared€towards€unemploymentÏbenefits€and€other€income€support€programmes€for€the€unemployed.€Job€creation€measuresÏaccount€for€about€20€per€cent€of€the€budget.€The€remaining€30€per€cent€is€divided€betweenÏtraining€programmes,€subsidies€for€enterprises€to€maintain€the€level€of€employment€and€supportÏfor€the€development€of€employment€services,€the€latter€being€the€smallest€programmeÏ(representing€only€about€3.5€per€cent€of€the€total€budget).Ìà ï àA€summary€of€the€main€policies€and€programmes€that€have€been€introduced€by€theÏGovernment€of€the€Republic€of€Korea€to€assist€unemployed€workers€is€presented€in€table€3.2.ÏThese€measures€vary€according€to€whether€the€unemployed€are€job€losers€or€first„time€jobseekersÏand€whether€the€job€losers€are€covered€by€the€Employment€Insurance€System.Ìà ï àThe€Republic€of€Korea€has€a€well„developed€network€of€employment€services,€whichÏconsisted€of€1,875€agencies€in€1996€(52€national,€285€public€and€1,538€private).€BurgeoningÏunemployment€since€November€1997€has€posed€major€challenges€to€the€employment€services.ÏFirstly,€the€existing€staff€are€less€and€less€able€to€handle€the€ever„growing€number€of€clients.ÏSecondly,€the€public€employment€service,€which€deals€with€both€placement€services€and€theÏadministration€of€unemployment€benefits,€is€under€increasing€pressure€to€extend€its€services,Ïespecially€for€guidance€and€counselling.Ìà ï àThe€1998€labour€market€policy€package€includes€measures€to€(i)€strengthen€publicÏemployment€services;€(ii)€develop€a€nation„wide€computerized€employment€information€system;Ï(iii)€support€trade€unions€to€set€up€their€own€placement€services;€and€(iv)€develop€manpowerÏbanks.€The€Government€will€set€up€about€20€additional€public€employment€offices€and€increaseÏthe€staff,€especially€vocational€guidance€counsellors.€By€the€end€of€1998€the€number€ofÏmanpower€banks€is€expected€to€have€increased€from€four€to€20.Ìà ï àIn€the€context€of€growing€unemployment€and€expected€large„scale€lay„offs,€the€employmentÏservices€appear€to€be€the€weakest€component€of€the€current€labour€market€policy€programme.ÏThey€receive€a€relatively€small€portion€of€the€labour€market€budget€allocation.€Yet€the€role€ofÏemployment€services€is€critical€in€facilitating€and€accelerating€employment€and€labour€marketÏadjustments.Ìà ï àAnother€major€programme€that€has€been€adopted€is€job€creation€for€the€unemployed.€ThisÏincludes€four€new€schemes:ÌÝ‚cÿÝÝ  ÝÝ‚cùxÝð"ðà0 ï àÝ  Ýa€programme€offering€start„up€loans€for€unemployed€professionals€and€managers€to€set€upÐ ˆ%å $ Ðtheir€own€ventures€or€small€firms€to€create€new€jobs.€In€terms€of€allocated€resources,€thisÏis€the€largest€programme;݃cùxy݌Рï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚c^zÝð"ðà0 ï àÝ  Ýa€programme€targeting€job€creation€in€existing€small€and€medium„sized€enterprises.€ThisÐ A(ž#' Ðprogramme€provides€loans€for€job€creation€and€for€improving€working€conditions€with€theÏaim€of€attracting€nationals€to€replace€the€foreign€workers€who€currently€hold€many€of€theÏð ðdirty,€difficult€and€dangerousðð€jobs€in€these€enterprises;€Ýƒc^zyz݌Рï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚cB|Ýð"ðà0 ï àÝ  Ýa€programme€to€offer€start„up€loans€for€the€unemployed€covered€by€the€EmploymentÐ Ô+1'+ ÐInsurance€System€(EIS),€so€that€they€can€become€self„employed;€and݃cB|]|݌Рï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚cm}Ýð"ðà0 ï àÝ  Ýa€programme€to€create€temporary€job€opportunities€in€public€works€for€those€long„termÐ ³-)- Ðunemployed€who€are€outside€the€scope€of€the€unemployment€benefits€system.€ThisÏprogramme€is€expected€to€create€50,000€temporary€jobs€in€the€public€sector.݃cm}ˆ}݌Рï%"ï%" ÐŒÝ  ÝÐ l0É+0 ÐÔ& " ÔÝ‚ŽÊÿÝÔ€?&õ &&ô&cAÔÔ€?ôÕl ô&?&õ ÔÓÓÓfæÓÓ  Óò òÝ  ÝTable€3.2.€€Summary€of€the€1998€policy€and€programme€measures€for€the€unemployedÝ‚ÿSWðÝÔ/Ò/£Ôó óÔ€ôô‡ô ô?ôÕlÔÔ€ô&cA&ôôô‡ÔÓÓÓfæÓÐ Ò/ ÐÓ  ÓÝ  ÝÝ‚AÔÌÿÝÔ€ô¡qÂ&ô&cAÔÔ€?Â9ËÂÂô¡qÔÓÓÓfæÓÓ 33ÓÝ  ÝÔ*ˆƒ ddÅdd ¼ dd i dd#Ådd# v%"v%"ˆÔÔ,m ÔÔ,ì ÔÔ,´ ÔÔ,½ ÔÔ,å ÔÔ+  ÔÐ 1€ Á ‚G‚ƒƒ„„‹‹1ÐÐ >€ -e  „„‹‹>ÐÐ >€ -e  „„‹‹>ÐCovered€by€the€Employment€InsuranceÐ e ÐSystemÐ >€ -—ô  „„‹‹>ÐÐ >€ -e  „„‹‹>ÐNot€covered€by€the€Employment€InsuranceÐ e ÐSystemÐ <2%—ô G   ‚G‚ƒƒ‹‹<ÐJob€losersÐ %–ó  ‹‹%ÐÐ %–ó  ‹‹%ÐòòTotal€forecast€for€1998:óóÐ –ó  Ѐ€€694,000€personsÌòòTotal€allocated€resources€for€1998:óóÐ Ø5  Ѐ€€2.1528€trillion€wonÌòòUnemployment€benefits:óóÐ  w Ѐ€€Coverage:€439,000€personsÌ€€€Resources:€1.2028€trillion€wonÌòòRetraining:óóÐ ý Z Ѐ€€Coverage:€80,000€personsÌ€€€Resources:€135€billion€wonÌòòLoans€for€livelihood,€health,€education,Ð à =  Ðhousing€costs:óóÐ Þ  Ѐ€€Coverage:€150,000€householdsÌ€€€Resources:€800€billion€wonÌòòPublic€works:€óóÐ dÁ  Ѐ€€Coverage:€25,000€personsÌ€€€Resources:€15€billion€wonÌÐ %G¤  ‹‹%ÐÐ %–ó ‹‹%ÐòòTotal€forecast€for€1998:óóÐ –ó Ѐ€€197,000€personsÌòòTotal€allocated€resources€for€1998:óóÐ Ø5  Ѐ€€1.1219€trillion€wonÌòòEmployment€promotion€training:óóÐ  w" Ѐ€€Coverage:€10,000€personsÌ€€€Resources:€5.7€billion€wonÌòòTraining€for€farmers:óóÐ ý Z% Ѐ€€Coverage:€2,000€personsÌ€€€Resources:€1.2€billion€wonÌòòTraining€and€start„up€loans:óóÐ à = ( Ѐ€€Coverage:€10,000€personsÌ€€€Resources:€300€billion€wonÌòòLoans€for€livelihood,€health,€education,Ð Ã + Ðhousing€costs:óóÐ dÁ , Ѐ€€Coverage:€150,000€householdsÌ€€€Resources:€800€billion€wonÌòòPublic€works:óóÐ G¤ / Ѐ€€Coverage:€25,000€personsÌ€€€Resources:€15€billion€wonÐ 3)‰æ1 G  ‚G‚ƒƒ‹‹3ÐFirst„timeÏjobseekersÐ %=š3 ‹‹%ÐÐ %œù4 ‹‹%ÐÐ %œù5 ‹‹%ÐÐ %œù6 ‹‹%ÐòòTotal€forecast€for€1998:óóÐ œù7 Ѐ€€115,000€personsÌòòTotal€allocated€resources€for€1998:óóÐ Þ;9 Ѐ€€773.8€billion€wonÌòòEmployment€promotion€training:óóÐ  }; Ѐ€€Coverage:€40,000€personsÌ€€€Resources:€22.8€billion€wonÌòòTraining€institutions:€óóÐ `> Ѐ€€Coverage:€4,000€personsÌ€€€Resources:€6.7€billion€wonÌòòTraining€for€low„educated€youth€forÐ æCA Ðlabour€shortage€occupations€andÏindustries:óóÐ (…C Ѐ€€Coverage:€21,000€personsÌ€€€Resources:€44.3€trillion€wonÌòòJob€creation€through€new€ventures,Ð  hF Ðself„employment,€etc.:óóÐ ¬ G Ѐ€€Coverage:€50,000€personsÌ€€€Resources:€700€billion€wonÐ G€ 6îKI G  ‚G‚ƒƒ„„……‹‹GÐNote:€The€following€measures€have€not€been€included:€Job€security€measures,€support€for€enterprises€to€sustainÐ !^J Ðemployment,€employment€promotion€for€potential€manpower,€skill€enhancement€training€for€employees,€andÏsupport€for€strengthening€employment€services€and€labour€market€administration.€The€total€allocation€for€suchÏmeasures€in€1998€is€953.6€billion€won.ÌÔ/l#É=#šÔSource:à0 ¬ àMinistry€of€Labourððs€Report€to€the€National€Assembly,€Feb.€1998.ÐB86l#ÉN¬%"¬%" G    BÐÔ'" £ÔÝ‚AÔÌÿ¬€l0É+ÝÔ€?&õ &Â?Â9ËÔÔ€ô&cA&&?&õ ÔÓÓÓfæÓÓ 33ÓÝ  ÝÌà ï àAlthough€the€fourth€programme€is€supposed€to€be€a€temporary€measure,€its€value€should€notÏbe€overlooked.€Experience€in€many€other€countries€has€shown€that€well„organized€public€worksÏcan€provide€the€unemployed€with€worthwhile€jobs€while€helping€the€community€throughÏsponsorship€of€projects€that€respond€to€local€needs.€A€public€works€programme€can€be€more€cost„Ïeffective€than€other€employment€creation€measures.€Table€3.2€showed€that€the€public€worksÏprogramme€will€cover€a€much€higher€number€of€unemployed€at€considerably€lower€cost€than€theÏother€proposed€employment€creation€programmes.€It€might€be€worth€giving€consideration€to€aÏmore€balanced€budget€allocation€for€the€different€types€of€employment€creation€programmes.€Ìà ï àTraining€and€redeployment€policies€have€also€been€introduced.€The€Republic€of€Korea€hasÏa€well„developed€vocational€training€system,€consisting€of€about€500€public,€private€(non„profit)Ïand€company„based€vocational€training€institutions.€The€system€trained€over€300,000€persons€inÏ1997.€The€challenge€for€the€country,€then,€is€not€the€lack€of€appropriate€training€facilities€butÏâ ârather€the€need€to€redirect€training€programmes€to€the€new€circumstances€and€to€ensure€that€theÐ Œ/é*[ Ðtraining€is€effective€in€helping€job€losers€to€move€away€from€declining€sectors€to€those€withÏemerging€opportunities.Ìâ âà ï àIn€considering€priorities€for€training€policies,€some€of€the€main€issues€to€be€addressed€are:Ïhow€much€training€will€be€needed,€in€what€areas,€and€how€can€large„scale€training€programmesÏbe€implemented€effectively?€In€its€1998€employment€policy€package,€the€Government€hasÏprovided€for€the€expansion€of€vocational€training€opportunities€so€that€more€than€200,000Ïunemployed€can€receive€training/retraining€during€the€year.€Some€of€the€new€training€schemesÏhave€been€designed€to€address€the€needs€of€specific€groups€ð"ð€they€focus€on€business€education;Ïvocational€conversion;€training€for€low„skilled,€low„educated€workers;€re„employmentÏorientation;€adaptation€training€for€newly€recruited,€long„term€unemployed;€and€employmentÏpromotion€training.€For€those€who€are€not€yet€unemployed€but€are€expected€to€lose€their€jobs,Ïsubsidies€are€also€available€for€vocational€conversion€training€and€training€for€starting€upÏbusinesses€ð"ð€such€programmes€are€especially€helpful€in€providing€the€necessary€skills€andÏknowledge€to€equip€workers€for€entering€new€employment€before€they€actually€lose€their€currentÏjobs.Ìà ï àTo€facilitate€the€access€of€the€unemployed€to€temporary€job€opportunities,€Parliament€passedÏthe€Act€on€Dispatched€Workers€in€February€1998.€Under€the€Act,€employment€agencies€mayÏrecruit€workers€and€dispatch€them€to€enterprises€that€require€temporary€workers€with€specialÏknowledge€or€experience,€workers€to€fill€temporary€vacancies€associated€with€illness€or€maternityÏleave€of€the€regular€workforce,€or€workers€to€meet€irregular€production€needs.€The€ActÏguarantees€protection€to€such€workers€who€are€dispatched€by€employment€agencies€for€temporaryÏjobs.€At€the€same€time,€the€Act€provides€for€the€right€of€company€unions€or€other€workersððÏrepresentatives€to€be€consulted€on€the€use€of€such€temporary€dispatched€workers€in€theirÏenterprises.ÌÌÝ‚é{ÿÝÔ€ôŠÌöŠ&ô&cAÔÔ€@ŠàSŠŠôŠÌöÔÓ  ÓÓfæÓÓ 33ÓÔ  ÔÝ  ÝIndonesiaÝ‚é{ÿÂÝÔ @žÔÔ^÷T™öÔÐ ÷T ÐÔ€@&õ &Š@ŠàSÔÔ€ô&cA&&@&õ ÔÓ  ÓÓfæÓÓ 33ÓÝ  Ýà ï àIndonesia€has€for€some€time€had€a€number€of€programmes€of€direct€intervention€aimed€atÐ à= Ðpoverty€alleviation.€The€experience€acquired€in€implementing€such€programmes,€including€theÏinstitutional€framework,€can€be€fruitfully€utilized€to€undertake€emergency€measures€forÏemployment€creation€for€the€poor€during€the€current€crisis.Ìà ï àA€substantial€part€of€government€expenditure€is€usually€allocated€for€infrastructure;€and€theÏuse€of€labour„intensive€methods€can€maximize€the€employment€potential€of€such€investment.€InÏ1994„95,€under€the€village€infrastructure€project׃×Ý ƒJˆÎÝÔªªÔòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€in€Java,€more€than€5€million€workdays€ofÐ '!„  Ðemployment€were€created.€There€is€also€potential€for€employing€labour„intensive€methods€inÏcreating€and€upgrading€urban€infrastructure,€as€demonstrated€by€the€Kampung€ImprovementÏProgramme€(KIP),€which€is€applied€to€densely€populated,€poor€urban€neighbourhoods.€Both€theÏvillage€infrastructure€programme€and€the€KIP€have€potential€for€substantial€expansion.€Indeed,Ïthe€Government€has€already€initiated€a€crash€programme€of€Rp.33€billion€for€urban€and€semi„¼urban€areas€for€the€first€three€months€in€1998.€This€programme€is€intended€to€createÏapproximately€4€million€workdays€of€employment,€equivalent€to€80€days€of€employment€forÏ54,000€persons.€For€1998„99,€allocations€of€Rp.600€billion€and€Rp.500€billion€have€been€madeÏfor€labour„intensive€infrastructure€(in€rural€and€urban€areas)€and€labour„intensive€forestry.€ThisÏallocation€should€be€able€to€generate€about€103€million€workdays€of€employment,€or€an€averageÏof€80€days€of€employment€for€approximately€1.3€million€workers.Ìà ï àApart€from€labour„intensive€public€works,€targeted€credit€for€self„employment€could€alsoÏbe€stepped€up.€Indonesia€has€achieved€considerable€success€over€the€past€decade€with€severalÐ d,Á'- Ðunsubsidized€rural€credit€programmes.€Bank€Rakyat€Indonesia€(BRI),€for€example,€has€anÏoutstanding€loan€of€some€Rp.4.5€trillion€to€2.5€million€borrowers.€In€addition€to€maintaining€theÏUnit€Banking€System,€BRI€supervises€about€5,300€village€credit€units€(BKDs)€which€provide€veryÏsmall€loans€to€about€800,000€low„income€people€in€their€villages.€The€bank€has€a€credit:€depositÏratio€of€1:2,€and€operates€on€a€self„sustained€basis.€More€than€60€per€cent€of€its€loans€go€to€ruralÏareas.€Micro„credits€for€self„employment€have€the€added€advantage€that€women€can€benefit€fromÏthem€more€easily€than€from€employment€in€infrastructure€construction.€Clearly,€the€BRI€micro„¼credit€programme€has€scope€for€further€expansion,€as€the€current€growth€(10€per€cent)€in€loansÏis€lower€than€in€earlier€years.Ìà ï àMicro„€and€small€enterprises,€especially€those€not€requiring€imported€inputs,€have€not€yetÏbeen€hit€by€the€current€financial€and€economic€crisis.€Indeed,€there€is€a€stronger€case€forÏpromoting€their€growth€at€this€critical€juncture.€And€micro„credit€can€play€an€important€role€inÏthis€regard.€Programmes€like€that€of€BRI€should€therefore€receive€special€encouragement€forÏexpansion.ÌÌÝ‚é{ÿÝÔ€ôŠÌöŠ&ô&cAÔÔ€@ŠàSŠŠôŠÌöÔÓ  ÓÓfæÓÓ 33ÓÔ  ÔÝ  ÝThailandÝ‚é{ÿ†«ÝÔ ¬ÔÔ^H¥ êG ÔÐ H¥  ÐÔ€@&õ &Š@ŠàSÔÔ€ô&cA&&@&õ ÔÓ  ÓÓfæÓÓ 33ÓÝ  Ýà ï àThe€effects€of€the€crisis€were€to€some€extent€mitigated€in€1997€by€rising€governmentÐ 1Ž Ðexpenditure.€In€real€terms€this€was€some€18„19€per€cent€higher€in€1997€than€in€1996.ÏUnfortunately€a€fall€in€real€terms€of€some€12€per€cent€is€expected€in€1998€(to€some€US$21,400Ïmillion€at€constant€1996€dollars).€Promised€additional€loan€disbursements€by€the€World€Bank€orÏthe€Asian€Development€Bank€(ADB)€of€a€few€hundred€million€US€dollars€in€1998€will€do€littleÏto€compensate€for€this€fall,€which€inevitably€affects€employment,€especially€in€construction.€CutsÏin€government€expenditure€in€1998€amount€to€20€and€16€per€cent,€respectively,€for€the€MinistryÏof€the€Interior€and€the€Ministry€of€Agriculture€and€Agricultural€Cooperatives,€both€of€which€haveÏextensive€community€development€programmes.€Health€and€education€will€each€be€cut€byÏapproximately€6€per€cent.€In€the€face€of€this€there€can€be€little€funding€for€the€national€action€planÏto€alleviate€unemployment€problems€(December€1997).€This€proposes€support€for€self„¼employment,€greater€use€of€labour„intensive€technology,€the€repatriation€of€an€estimated€200,000Ïillegal€immigrants€and€encouragement€for€Thais€to€work€abroad,€with€an€annual€target€ofÏ100,000.Ìà ï àGiven€the€Governmentððs€financial€constraints,€it€is€all€the€more€important€that€outsideÏassistance€be€well€targeted.€To€mitigate€the€social€impact€of€the€crisis,€the€Government€hasÏobtained€concessional€loans€from€the€Asian€Development€Bank€and€the€World€Bank€for€a€SocialÏSector€Programme€and€a€Social€Investment€Project,€respectively.€On€March€12,€the€ADBÏapproved€a€loan€of€US$500€million€to€the€Thai€Government€to€provide€balance€of€paymentÏassistance€in€return€for€the€Governmentððs€commitment€to€certain€policy€measures€in€three€socialÏpolicy€fields€ð"ð€labour€market€and€social€welfare,€education€and€health.€In€view€of€the€IMFððsÏrelaxation€of€budgetary€requirements€for€Thailand,€it€is€thought€that€perhaps€half€of€theÏUS$500million€loan€will€directly€support€the€Social€Sector€Programme.€The€Programme€will€beÏimplemented€over€four€years.€An€initial€tranche€of€US$300€million€has€already€been€released.ÏThe€second€tranche€of€US$200€million€will€be€released€in€ten€to€12€months.Ìà ï àIn€the€area€of€labour€market€and€social€welfare€measures,€the€policy€priorities€supported€byÏthe€ADB€loan€are€the€establishment€of€several€Centres€for€Assistance€to€Laid„Off€WorkersÏ(CALOWs),€which€would€act€as€ð ðone„stopðð€service€centres€providing€training€referral,Ïcounselling€and€placement€services;€the€extension€of€social€security€coverage€to€laid„off€workersÏ(coverage€would€be€extended€for€six€months€after€lay„off€for€medical€care€and€maternity,Ïdisability€and€death€benefits);€to€limit€the€minimum€wage€increase€in€1998€in€order€to€improveÏthe€competitiveness€of€the€labour€force,€and€to€engage€in€a€review€of€labour€policy€in€general€andÏminimum€wage€policy€in€particular;€to€give€greater€protection€to€the€poor€in€rural€areas€byÏinstructing€line€ministries€to€disaggregate€to€the€provincial€level€according€to€the€incidence€ofÏpoverty€in€the€provinces;€and,€finally,€to€simplify€the€procedures€by€which€private€enterprises€canÐ {0Ø+2 Ðreceive€tax€deductions€for€investing€in€the€vocational€training€of€their€workforce.€Among€theseÏpolicy€priorities,€the€one€relating€to€the€limitation€of€the€increase€in€the€minimum€wage€in€1998Ïis€a€cause€for€concern€from€an€ILO€standpoint.€Given€recent€sharp€increases€in€food€prices,Ïespecially€of€rice,€it€is€important€to€preserve€the€real€value€of€the€minimum€wage€as€a€means€ofÏprotecting€low„paid€workers.Ìà ï àAs€to€the€World€Bankððs€Social€Investment€Project€loan,€it€is€anticipated€that€in€June€theÏWorld€Bank€will€approve€a€loan€of€US$430€million€to€the€Government€of€Thailand.€AboutÏUS$250€million€of€this€loan€would€be€used€to€supplement€ongoing€government€programmes€inÏthe€areas€of€health€care,€education€and€environmental€support.€The€supplement€is€intended€toÏmake€up€for€government€cutbacks€resulting€from€the€current€fiscal€constraints.€Funding€forÏongoing€government€programmes€also€includes€those€that€address€unemployment,€the€promotionÏof€rural€industries€and€labour„intensive€public€works,€as€well€as€expanded€vocational€training.ÏThe€remainder€of€the€loan€ð"ð€about€US$180€million€ð"ð€would€be€used€to€set€up€a€SocialÏInvestment€Fund€and€to€generate€new€urban€development€programmes.€The€Social€InvestmentÏFund€would€be€channelled€through€the€branch€network€of€the€Government€Savings€Bank€and€beÏused€to€provide€funds€and€technical€assistance€for€community„oriented€projects€to€supplementÏcommunity€needs.€These€projects€(and€fund€dispersal)€would€be€undertaken€by€community„basedÏorganizations.€Employment€creation€is€one€objective€of€the€Social€Investment€Fund.€EmploymentÏcreation€for€the€entire€US$430€million€loan€could€benefit€approximately€100,000€persons,Ïaccording€to€the€World€Bank.Ìà ï àApart€from€these,€there€have€been€other,€minor€initiatives€with€very€little€impact.€So€far,Ïfor€example,€the€Governmentððs€baht€10,000€loan€scheme€has€been€extended€to€displaced€workers.ÏIn€the€current€fiscal€year€provision€has€been€made€for€650€loans€and€so€far€350€have€beenÏdisbursed€(the€publicity€given€to€the€scheme€far€outweighs€its€scale).€In€addition,€a€baht€2,000Ïgrant€scheme€for€groups€of€up€to€ten€persons€involved€in€group„based€income€generation,€withÏan€annual€budget€of€baht€60.2€million,€has€had€a€0.75€per€cent€take„up€rate.Ìà ï àThe€Department€of€Public€Welfare€(DPW)€has€responsibility€for€looking€afterÏunderprivileged€target€groups,€including€people€with€disabilities,€women,€the€elderly,€childrenÏand€beggars.€DPW€reports€that€it€has€seen€a€sharp€increase€in€the€numbers€of€socially€excluded,Ïwhich€gives€some€indication€of€the€social€dimensions€of€the€crisis.€DPW€manages€the€baht€2,000Ïgrant€scheme,€as€well€as€the€baht€10,000€loan€scheme,€under€which€one€day€of€enterprise€trainingÏis€provided€for€borrowers.ÌÌÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.5.à ¬ àSocial€protectionÝ‚žJ”ÿpÄ,000ÝÔ üÄÔó óÔŽ""”!ñÔÐ ""! ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àMeasures€to€provide€the€unemployed€with€some€kind€of€income€support€are€vital,€not€onlyÐ #y" Ðfor€those€directly€concerned,€but€also€to€preserve€the€fabric€of€society€and€to€maintain€the€labourÏforce€in€readiness€for€the€economic€upturn.€Active€measures,€including€emergency€employmentÏcreation€schemes€and€labour€redeployment€schemes,€have€already€been€discussed.€These€are€oftenÏdeemed€superior€to€so„called€ð ðpassiveðð€measures€which€seek€merely€to€provide€the€unemployedÏwith€a€replacement€income.€However,€it€should€be€borne€in€mind€that€the€availability€of€aÏtemporary€replacement€income€does€also€make€a€positive€contribution€to€securing€the€productiveÏemployment€of€labour:€it€relieves€the€pressure€on€the€unemployed€worker€to€accept€the€first€jobÏthat€comes€along€and€allows€time€to€find€one€which€will€make€good€use€of€his€or€her€skills€andÏexperience.€Moreover,€active€measures€are€subject€to€a€number€of€constraints.€The€budgetsÏavailable€to€finance€them€are€limited,€and€the€costs€of€active€measures€per€unemployed€workerÏare€typically€higher€than€the€cost€of€benefit€alone,€as€they€also€include€the€costs€of€equipment,Ïmaterials€and€project€administration.€Employment€creation€measures€are€also€constrained€by€theÏneed€to€avoid€unfair€competition€with€regular€private€sector€activity€and€non„subsidizedÏemployment.€Indeed,€as€we€have€seen€in€the€previous€section,€these€employment€creationÏâ âschemes€can€provide€income€support€for€only€a€fraction€of€those€who€have€lost€or€will€be€losingÐ â/?+1 Ðtheir€jobs€during€the€present€crisis.€There€is€thus€a€great€need€for€other€forms€of€temporaryÏincome€support.Ìâ âà ï àHowever,€only€one€unemployment€benefit€scheme€exists€in€the€countries€most€directlyÏaffected€by€the€crisis.€This€is€the€scheme€which€was€implemented€in€the€Republic€of€Korea€onÏ1€July€1995€under€the€terms€of€the€Employment€Insurance€Act€adopted€in€1993.€While€itsÏexistence€does€not€owe€anything€to€the€present€crisis,€the€crisis€has€had€a€major€impact€on€it,€byÏstimulating€the€social€partners€to€agree€on€an€exceptionally€rapid€expansion€and€improvement€ofÏthe€scheme€early€in€1998.€This€was€part€of€a€quid€pro€quo€conceded€by€the€Government€and€theÏemployers€in€order€to€obtain€the€agreement€of€the€workersðð€organizations€to€legislative€changesÏdesigned€to€facilitate€lay„offs€in€specified€circumstances.Ìà ï àThe€scheme€is€financed€by€a€contribution€equal€to€0.6€per€cent€of€total€payroll,€sharedÏequally€between€employers€and€workers.€The€Act€fixed€at€1.5€per€cent€the€maximum€totalÏcontribution€which€could€be€levied€for€all€the€components€of€the€Employment€Insurance€SystemÏ(which€also€includes€a€large€number€of€active€labour€market€policy€measures).€Parliament€hasÏvery€recently€revised€that€maximum€upwards€to€3€per€cent€of€payroll,€with€effect€from€1€MarchÏ1998,€though€the€actual€contribution€rates€at€that€time€remained€as€before:€0.9€per€cent€for€smallÏfirms,€1.1€per€cent€for€medium„sized€firms€and€1.3€per€cent€for€large€firms.€(It€is€the€trainingÏcomponent€of€the€system€which€accounts€for€the€differences€in€contribution€rates.)€As€the€schemeÏis€able€to€draw€on€its€reserves,€it€will€be€able€to€finance€increased€benefit€expenditure€for€aÏcertain€time€before€having€to€increase€the€contribution€rate.Ìà ï àThe€unemployment€benefit€is€50€per€cent€of€the€workerððs€earnings€during€the€month€beforeÏbecoming€unemployed.€The€maximum€benefit€is€W35,000€per€day,€which€means€that€inÏcalculating€benefit€no€account€is€taken€of€earnings€in€excess€of€W70,000€per€day.€The€latterÏamount€is€well€above€national€average€non„agricultural€earnings,€which€in€1997€wereÏW1,463,000€per€month€or€Ô& Ú ÔW48,767€Ô'Ú”ƒÔÔper€day€(assuming€30€days€in€a€month).€With€effect€fromÏ1€March€1998,€the€minimum€benefit€was€raised€from€50€to€70€per€cent€of€the€minimum€wage.ÏAs€the€minimum€wage€for€the€period€September€1997€to€August€1998€was€set€at€W11,880€perÏday,€the€minimum€unemployment€benefit€increased€from€W5,940€to€W8,316.€As€the€minimumÏwage€is€about€25€per€cent€of€non„agricultural€average€earnings,€the€minimum€unemploymentÏbenefit€is€just€under€18€per€cent€of€average€earnings.Ìà ï àThe€unemployment€benefit€scheme€thus€allows€for€some€vertical€redistribution€of€income:Ïon€the€one€hand,€by€having€a€maximum€benefit€but€no€maximum€contribution€and,€on€the€otherÏhand,€by€having€a€minimum€benefit€which€provides€workers€at€or€near€the€minimum€wage€withÏa€higher€rate€of€income€replacement€than€others€(though€most€workers€earning€as€little€as€that€areÏsaid€to€work€in€small€enterprises€not€covered€by€the€scheme).Ìà ï àThe€duration€of€unemployment€benefit€depends€both€on€the€length€of€the€period€insured€andÏon€the€personððs€age€upon€becoming€unemployed,€as€shown€in€table€3.3.ÌÌÔ& … ÔÝ‚ŽÊÿÝÔ€?&õ &&ô&cAÔÔ€?ôÕl ô&?&õ ÔÓÓÓfæÓÓ  Óò òÝ  ÝTable€3.3.€€Duration€of€unemployment€benefit€entitlement€(months),€Republic€of€KoreaÝ‚ÿîØcoulÝÔ/[&¸!,&‰!Ôó óÔ€ôô‡ô ô?ôÕlÔÔ€ô&cA&ôôô‡ÔÓÓÓfæÓÐ [&¸!& ÐÓ  ÓÝ  ÝÝ‚AÔÌÿÝÔ€ô¡qÂ&ô&cAÔÔ€?Â9ËÂÂô¡qÔÓÓÓfæÓÓ 33ÓÝ  ÝÔ*™ƒ*ddm ì ´ ½ å  v%"v%"™ÔÔ,p d ÔÔ,#ÔÔ,#ÔÔ,#ÔÔ,#ÔÔ+  ÔÐ 6€ % J'§"' €p€‚G‚ƒƒ„„‹‹6ÐPeriod€insuredÐ >€ -‘'î"(  „„‹‹>Ð1„3€years*Ð >€ -‘'î")3  „„‹‹>Ð3„5€yearsÐ >€ -‘'î"*3  „„‹‹>Ð5„10€yearsÐ >€ -‘'î"+3  „„‹‹>Ð10€years€+Ð F<*‘'î",3 G p   €P€‚G‚ƒƒ‹‹FÐUnder€age€30Ð D:(í#-  @2‰@‰‹‹DÐ2Ð cY5(í#.  @2 @  @3‰@‰‹‹cÐ3Ð cY5(í#/  @3 @  @4‰@‰‹‹cÐ4Ð cY5(í#0  @4 @  @5‰@‰‹‹cÐ5Ð \R@(í#1  @5 G P @ €P€‚G‚ƒƒ‹‹\ÐAged€30€to€50Ð D:£)%2  @3‰@‰‹‹DÐ3Ð cY5£)%3  @3 @  @4‰@‰‹‹cÐ4Ð cY5£)%4  @4 @  @5‰@‰‹‹cÐ5Ð cY5£)%5  @5 @  @6‰@‰‹‹cÐ6Ð \R@£)%6  @6 G P @ €H€‚G‚ƒƒ‹‹\ÐOver€age€50€and€the€disabledÐ D:¶*&7  @4‰@‰‹‹DÐ4Ð cY5¶*&8  @4 @  @5‰@‰‹‹cÐ5Ð cY5¶*&9  @5 @  @6‰@‰‹‹cÐ6Ð cY5¶*&:  @6 @  @7‰@‰‹‹cÐ7Ð k€ Z@¶*&;  @7 G H @ ‚G‚ƒƒ„„……‹‹kÐ*The€minimum€period€of€insurance€required€in€order€to€be€eligible€for€benefit€is€reduced€from€one€year€to€sixÐ É+&'< Ðmonths€between€March€1998€and€June€1999.€Ð8.,X,µ'= G    8ÐÔ'…,&âØÔÝ‚AÔÌÿ„Ú™'öÝÔ€?&õ &Â?Â9ËÔÔ€ô&cA&&?&õ ÔÓÓÓfæÓÓ 33ÓÝ  ÝÌà ï àAs€an€incentive€to€find€a€new€job,€an€early€re„employment€allowance€is€payable€toÏunemployed€workers€who€find€another€job€within€less€than€half€the€period€for€which€they€areÏentitled€to€unemployment€benefit.€The€lump„sum€allowance€is€equal€to€one„third€of€the€remainingÏunemployment€benefit€entitlement.Ð £0,A Ðà ï àThe€coverage€of€the€unemployment€benefit€scheme€was€initially€limited€to€employees€inÏfirms€with€30€or€more€workers,€but€a€planned€extension€of€coverage€to€firms€with€ten€or€moreÏworkers€was€implemented€on€1€January€1998.€In€response€to€the€crisis,€the€scheme€was€furtherÏextended€to€firms€with€five€or€more€workers€from€1€March€1998.€(The€active€labour€marketÏmeasures€under€the€Employment€Insurance€System€initially€applied€to€firms€with€70€or€moreÏworkers€and€were€extended€on€1€January€1998€to€firms€with€50€or€more€workers.€With€effectÏfrom€1€July€1998,€these€measures€too€will€apply€to€all€firms€with€five€or€more€workers.)€TheÏpercentage€of€employees€covered€by€the€(un)employment€insurance€scheme€in€1997€was€estimatedÏat€just€33€per€cent.Ìà ï àCertain€categories€of€workers€are€excluded€from€the€Employment€Insurance€System:Ïemployees€of€firms€with€fewer€than€five€workers€(these€workers€number€6€million€and€representÏabout€45€per€cent€of€all€employees),€public€officials,€teachers€at€private€schools€(these€two€groupsÏenjoying€exceptional€security€of€employment),€new€workers€over€age€60,€workers€over€age€65,Ïpart„time€workers,€and€daily€paid€workers€employed€for€less€than€30.8€hours€per€week.€The€lastÏtwo€categories€will€be€covered€with€effect€from€1€July€1999.€While€foreign€employees€with€theÏright€of€residence€are€compulsorily€covered,€those€who€have€only€a€work€permit€can€chooseÏwhether€or€not€to€be€covered.Ìà ï àWomen€are€at€a€disadvantage€as€regards€entitlement€to€unemployment€benefit,€not€only€asÏpart„time€workers€are€excluded,€but€also€because€the€scheme€relates€the€duration€ofÏunemployment€benefit€entitlement€very€closely€to€the€length€of€insured€employment.€OnlyÏworkers€with€ten€years€or€more€of€insured€employment€qualify€for€the€maximum€benefit€durationÏof€seven€months.€Owing€mainly€to€their€family€obligations,€women€tend€to€have€shorter€periodsÏof€insured€employment.€Not€only€are€women€less€well€protected,€but€there€are€indications€thatÏthey€have€been€particularly€affected€by€the€initial€wave€of€lay„offs€within€particular€sectors€andÏcompanies.€The€attitude€that€it€is€more€important€to€safeguard€the€jobs€of€ð ðheads€of€householdsððÏis€said€to€be€widespread€and€to€cause€discrimination€against€women.€The€jobs€of€temporaryÏworkers,€among€whom€women€are€rather€well€represented,€have€also€proved€to€be€particularlyÏat€risk.Ìà ï àA€positive€feature€of€the€Employment€Insurance€Act€from€the€point€of€view€of€women€is€thatÏa€subsidy€is€available€to€employers€in€respect€of€any€woman€who€opts€to€take€one€yearððs€extendedÏmaternity€leave.€This€subsidy,€which€is€W135,000€per€month€for€small€and€medium„sizedÏenterprises€and€W90,000€for€large€enterprises,€is€intended€to€help€pay€for€the€womanððs€continuedÏsocial€insurance€coverage.€Of€course,€many€other€industrialized€countries€have€gone€further,€byÏproviding€some€kind€of€cash€benefit€during€extended€periods€of€maternity€leave.€In€fact,€paidÏmaternity€leave€in€the€Republic€of€Korea€is€limited€to€just€30€days€before€and€30€days€after€birth.ÏIt€is€the€financial€responsibility€of€the€individual€employer€rather€than€of€the€social€securityÏsystem.€This€imposes€an€unfair€burden€on€companies€employing€women€of€child„bearing€age€andÏis€likely€to€lead€to€discrimination€in€hiring€practices.Ìà ï àIn€January€1998€unemployment€benefit€was€being€paid€to€just€over€18,000€persons.€At€thatÏtime€registered€unemployment€was€about€900,000.€The€large€disparity€between€these€two€figuresÏresults€from€various€factors,€including:ÌÝ‚cÿÝÝ  ÝÝ‚cOôÝð"ðà0 ï àÝ  Ýthe€non„coverage€of€most€employees€until€the€end€of€1997;݃cOôjôÝŒÐd(Á#)ï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚cõÝð"ðà0 ï àÝ  Ýthe€substantial€periods€of€insurance€required€in€order€to€become€eligible;݃cõ/õÝŒÐi)Æ$*ï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚cêõÝð"ðà0 ï àÝ  Ýthe€relatively€short€duration€of€benefit€entitlement€(between€two€and€four€months€at€theÐ n*Ë%+ Ðpresent€time,€as€nobody€has€yet€been€insured€for€more€than€three€years);݃cêõö݌Рï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚c#÷Ýð"ðà0 ï àÝ  Ýthe€tendency€for€employers€initially€to€lay€off€their€temporary€employees€(those€withÐ M,ª'- Ðcontracts€of€less€than€three€months€are€not€covered€by€unemployment€insurance);€and݃c#÷>÷݌Рï%"ï%" ÐŒÝ  ÝÝ‚cÿÝÝ  ÝÝ‚cdøÝð"ðà0 ï àÝ  Ýthe€fact€that€very€many€of€the€workers€becoming€unemployed€have€left€their€jobs€voluntarilyÐ ,.‰)/ Ðand€are€thus€disqualified€from€receiving€unemployment€benefit€(employers€prefer€toÏavoidthe€stigma€of€lay„offs,€so€they€have€encouraged€workers€to€take€early€retirement€orÏresign;€employees€are€also€made€aware€that€if€the€company€is€in€financial€difficulties,€itÐ º0,2 Ðmaylater€become€unable€to€provide€severance€pay€ð"ð€which€is€of€far€more€value€than€anyÏunemployment€insurance€entitlement).݃cdøøÝŒÐ ï%"ï%" ÐŒÝ  Ýà ï àThe€number€of€unemployment€benefit€recipients€as€a€proportion€of€the€number€of€registeredÏunemployed€is€likely€to€rise€as€a€result€of€the€improvements€recently€made€to€the€scheme.ÏHowever,€this€trend€could€be€reversed€if€there€is€a€steep€increase€in€the€number€of€the€long„termÏunemployed€(who€will€have€exhausted€their€entitlements).Ìà ï àEven€countries€with€highly€comprehensive€and€universal€social€security€programmes€requireÏa€system€of€social€assistance€to€serve€as€a€general€safety€net,€notably€for€unemployed€workersÏwho€have€exhausted€their€unemployment€benefit€entitlements€and€first„time€jobseekers.€Yet€theÏRepublic€of€Koreaððs€social€assistance€scheme€is€still€quite€rudimentary€and,€in€particular,€doesÏnot€provide€cash€benefits€to€persons€deemed€able€to€work€ð"ð€this€in€a€country€where€the€majorityÏof€employees€have€not€yet€had€the€opportunity€to€build€up€òòanyóó€unemployment€benefitÐ W´  Ðentitlements.€Most€of€the€other€countries€or€areas€affected€by€the€crisis,€with€the€notableÏexception€of€Hong€Kong,€China,€also€do€not€grant€social€assistance€cash€benefits€to€theÏunemployed.€The€traditional€emphasis€on€self„reliance€is€ill„suited€to€a€crisis€in€which€so€manyÏworkers€are€being€deprived€of€the€means€to€earn€a€living.€In€some€countries,€public€worksÏschemes€function€as€a€substitute€for€social€assistance€in€areas€of€high€unemployment,€as€forÏexample€in€Indonesia,€where€the€Government€provides€work€on€a€daily€basis€at€75€per€cent€ofÏthe€minimum€wage.€One€advantage€of€such€schemes€is€that€they€are€self„targeting,€and€so€do€notÏrequire€any€system€of€means„testing,€which€is€usually€complex€and€costly€to€administer.Ìà ï àOne€other€instance€of€contributory€benefits€for€unemployed€workers€is€to€be€found€inÏIndonesia,€where€workers€covered€by€JAMSOSTEK,€the€countryððs€national€provident€fund,€areÏentitled€to€withdraw€the€balance€from€their€account,€if€they€have€been€members€of€the€schemeÏfor€at€least€five€years€and€unemployed€for€six€months.€It€is€projected€that€there€will€be€1.4€millionÏwithdrawal€requests€from€unemployed€members€in€1998,€representing€a€total€of€Rp.291€billion.ÏThis€exceptional€wave€of€withdrawals€is€expected€to€mean€that€15€per€cent€of€the€membershipÏwill€withdraw€their€balances€in€1998,€a€fivefold€increase€compared€with€1997.Ìà ï àAlmost€all€the€countries€affected€by€the€crisis€have€some€sort€of€severance€pay€legislation.ÏThis€lump„sum€benefit€is€financed€and€administered€by€employers.€It€is€highly€relevant€to€workersÏwho€become€unemployed,€although€unemployment€is€not€a€condition€for€receiving€it.€TheÏgenerosity€of€severance€pay€varies€quite€substantially€from€one€country€to€another.€The€existingÏseverance€pay€legislation€in€Thailand,€contained€in€Chapter€V€of€the€Labour€Law,€provides€forÏonly€modest€benefits€amounting€to€six€monthsðð€wages€for€workers€who€have€been€in€a€job€forÏthree€years€or€more€(with€three€monthsðð€pay€for€those€with€one€to€three€yearsðð€employment,€andÏone€monthððs€pay€for€those€with€between€120€days€and€one€year€in€the€job).€Under€a€specialÏprovision,€higher€payments€(which€can€bring€total€severance€pay€up€to€a€maximum€of€12€monthsððÏpay)€are€due€to€workers€with€six€yearsðð€employment€or€more€who€are€made€redundant€as€a€resultÏof€the€introduction€of€new€machinery€or€technology.Ìà ï àThailandððs€new€Labour€Protection€Act,€adopted€in€January€1998€and€due€to€come€into€forceÏsix€months€after€its€publication€in€the€Royal€Gazette,€provides€for€higher€severance€pay€forÏworkers€with€longer€periods€of€employment€in€the€enterprise€concerned.€Those€who€have€beenÏin€the€job€six€to€ten€years€will€be€entitled€to€eight€monthsðð€pay€and€those€with€ten€years€or€moreÏwill€get€ten€monthsðð€pay.€Although€the€intention€of€the€legislation€is€no€doubt€to€provide€betterÏprotection€to€workers,€it€seems€likely€that€in€the€short€term€it€will€have€the€perverse€effect€ofÏencouraging€employers€to€terminate€workersðð€employment€before€these€more€costly€provisionsÏcome€into€force.€Trade€unions€have€therefore€asked€the€Ministry€of€Labour€to€issue€an€interimÏregulation€enforcing€the€higher€payments€without€delay.Ìà ï àThere€is€evidence€to€suggest€that€in€some€cases€the€relatively€modest€severance€paymentsÏdue€under€the€Thai€legislation€are€not€in€fact€paid€by€employers.€This€kind€of€problem€is€widelyÏrecognized€in€the€Republic€of€Korea,€where€all€employers€with€five€or€more€employees€areÏrequired€by€law€to€provide€severance€pay€of€at€least€one€monthððs€wages€for€each€year€ofÐ ;0˜+2 Ðemployment€(more€favourable€provisions€are€often€contained€in€collective€agreements,Ïparticularly€for€employees€with€long€service).€As€a€result€of€bankruptcy,€some€employers€are€nowÏunable€to€fulfil€this€obligation.€A€certain€degree€of€protection€in€such€circumstances€will€beÏprovided€under€the€terms€of€the€Wage€Bond€Guarantee€Act,€which€is€scheduled€to€come€intoÏforce€on€1€July€1998€and€which€was€one€of€the€measures€contained€in€the€TripartiteÏCommissionððs€agreement€of€6€February€1998.€A€Wage€Bond€Guarantee€Fund€will€guarantee€notÏonly€workersðð€last€three€monthsðð€wages,€but€also€their€statutory€severance€pay€entitlements€forÏthe€last€three€years.€The€Fund€is€to€be€financed€by€employer€contributions€to€be€set€by€theÏMinistry€of€Labour€at€not€more€than€0.2€per€cent€of€payroll.€The€enterprises€covered€by€the€FundÏare€those€which€come€under€the€Industrial€Accident€Compensation€Insurance€Act,€i.e.€firms€withÏfive€or€more€workers.Ìà ï àThailand,€in€its€new€Labour€Protection€Act,€has€provided€for€the€establishment€of€anÏEmployeesðð€Welfare€Fund.€This€was€intended€partly€to€provide€a€guarantee€for€severance€pay,Ïrather€like€the€measure€in€the€Republic€of€Korea€described€above,€but€also€to€serve€as€aÏcompulsory€provident€fund€for€employees€in€enterprises€with€ten€or€more€employees€which€doÏnot€have€provident€funds€of€their€own.€The€provident€fund,€which€would€be€administered€by€theÏMinistry€of€Labour,€would€allow€workers€to€withdraw€their€balances€upon€separation€fromÏemployment€or€upon€death.€Unlike€the€measure€adopted€in€the€Republic€of€Korea,€the€ThaiÏEmployeesðð€Welfare€Fund€would€require€a€sizeable€contribution€of€up€to€10€per€cent€of€earnings,Ïshared€equally€between€employers€and€workers.€The€severance€pay€guarantee€is€a€valuableÏresponse€to€the€crisis€and€will€in€itself€cost€very€little.€The€provident€fund€has€little€or€noÏrelevance€to€the€crisis€as€it€will€take€years€for€workers€to€accumulate€a€significant€balance€in€theirÏaccount€(this€being€a€simple€savings€account,€without€any€element€of€insurance€against€the€riskÏof€unemployment,€for€example).€As€for€its€financing,€it€may€be€observed€that€the€provident€fundÏwould€deprive€enterprises€of€large€sums€of€money,€a€prospect€which€would€be€particularlyÏunwelcome€to€many€of€them€during€the€current€crisis.€To€that€extent€obliging€employers€toÏcontribute€to€a€fund€is€very€different€from€obliging€them€to€provide€severance€pay,€which€allowsÏthe€funds€to€be€invested€within€the€business.€No€date€has€been€fixed€for€implementing€theÏEmployeesðð€Welfare€Fund.Ìà ï àThe€provision€of€a€replacement€income€is€not€the€only€type€of€social€benefit€required€byÏunemployed€workers.€Another€vital€need€is€for€insurance€for€health„care€costs.€If€workers€andÏtheir€families€need€such€insurance€in€normal€times,€they€require€it€even€more€whenÏunemployment€deprives€them€of€all€or€part€of€their€income.€In€the€social€security€system€of€mostÏindustrialized€countries,€workers€receiving€unemployment€benefit€are€automatically€covered€byÏthe€social€health€insurance€scheme.€In€most€of€the€countries€affected€by€the€financial€crisis,€suchÏan€arrangement€is€obviously€not€feasible,€as€there€is€no€unemployment€benefit€scheme.€However,Ïpersons€leaving€insured€employment€have€benefited€from€continued€free€coverage€underÏThailandððs€social€security€system,€which€at€present€is€primarily€a€health€insurance€scheme€(thoughÏit€also€provides€cash€sickness€and€maternity€benefits,€invalidity€benefits,€funeral€grants€andÏsurvivorsðð€allowances).€In€response€to€the€current€crisis,€it€has€been€decided€to€extend€the€periodÏof€continued€coverage€from€six€months€to€one€year.€This€extension€is€to€remain€in€place€for€threeÏyears.€The€targeting€of€this€measure€is€far€from€perfect,€there€being€no€reliable€system€to€verifyÏthat€those€who€benefit€are€in€fact€unemployed.€It€is€quite€possible€that€some€of€them€are€working,Ïeither€in€other€jobs€not€covered€by€the€social€security€legislation€or€for€employers€who€are€simplyÏnot€complying€with€that€legislation.€There€are€worries€that€the€availability€of€this€free€coverageÏmay€increase€the€degree€of€non„compliance,€which€is€already€recognized€as€a€significant€problem.ÏOnce€the€unemployment€insurance€scheme€provided€for€by€the€1990€Social€Security€Act€isÏintroduced,€a€more€satisfactory€solution€will€be€achievable.Ìà ï àIn€the€Republic€of€Korea,€workers€who€are€laid€off€have€the€right€to€continue€their€healthÏinsurance€coverage€for€a€period€of€six€months,€but€to€do€so,€they€must€pay€both€the€worker€andÏthe€employer€share€of€the€contribution.€One€of€the€points€agreed€to€in€the€Tripartite€CommissionÏon€6€February€1998€was€that€the€law€would€be€changed€so€that€laid„off€workers€would€be€entitledÐ ’0ï+3 Ðto€continued€health€insurance€coverage€for€12€months€and€would€be€liable€to€pay€only€the€workerÏcontribution,€the€employer€contribution€being€covered€for€this€period€by€the€health€insuranceÏsociety€in€which€the€worker€had€been€enrolled.€At€the€end€of€the€period€of€continued€coverage,Ïworkers€who€remain€unemployed€are€supposed€to€contribute€to€one€of€the€district€health€insuranceÏsocieties€which€cover€the€urban€self„employed€and€the€farmers.€The€Government€providesÏsubsidies€to€these€societies,€covering€30€per€cent€of€the€cost€of€health€insurance,€but€theÏcontribution€payable€by€the€insured€is€nevertheless€a€significant€financial€burden€for€theÏindividual,€especially€if€he€or€she€is€unemployed.Ìà ï àThe€limited€level€of€social€protection€in€many€of€the€countries,€and€in€particular€in€IndonesiaÏand€Thailand,€is€a€reflection€of€choices€on€social€and€economic€policy.€Thus,€throughout€theÏperiod€of€sustained€economic€growth€which€pre„dated€the€crisis€there€was€a€tendency€to€rely€onÏthe€belief€that€the€alleviation€of€poverty€would€follow€as€a€direct€consequence€of€economicÏgrowth.€This,€together€with€a€reliance€on€traditional€support€systems€through€the€family,€hasÏtended€to€result€in€only€limited€priority€being€given€to€the€development€of€social€protectionÏsystems€based€on€redistribution€and€solidarity.€In€addition,€such€schemes€as€do€exist,€except€inÏthe€Republic€of€Korea€and€at€least€in€principle€in€the€Philippines,€are€aimed€at€the€formal€sectorÏand€cover€a€limited€range€of€contingencies.€The€safety€net€remains€the€family€or€individualÏsavings,€with€the€State€occupying€a€relatively€minor€role€in€this€respect.Ìà ï àWhere€social€security€schemes€exist€they€may€be€viewed€as€inadequate€or€poorly€managed.ÏIn€Indonesia,€the€principal€social€security€scheme€(JAMSOSTEK)€is€limited€in€coverage€to€onlyÏabout€12€percent€of€the€labour€force€and€is€perceived€by€many€of€its€contributors€andÏbeneficiaries€as€ineffective.€Various€weaknesses€have€been€highlighted€in€the€press.€The€FSPSIÏhas€drawn€attention€to€the€low€level€of€benefit€and€coverage,€the€lack€of€transparency€inÏthesystem€and€the€inappropriate€use€of€social€security€funds.€It€has€called€for€JAMSOSTEK€tobeÏrestructured.€The€major€component€of€JAMSOSTEK€is€a€compulsory€savings€scheme€ð"ðÏaprovident€fund€ð"ð€but€investment€of€the€aggregate€contributions€of€members€and€their€employersÏhas€not€always€produced€a€positive€real€rate€of€return,€so€that€benefit€paid€on€retirement€in€theÏform€of€a€lump€sum€often€provides€a€poor€basis€for€social€protection€during€the€years€ofÏretirement.Ìà ï àBelow€the€contributory€social€security€scheme€in€Indonesia,€which€does€not€includeÏunemployment€insurance,€there€is€effectively€no€mechanism€or€provision€for€income€support€forÏthose€unable€to€sustain€themselves.€Poverty€alleviation€programmes€are€understandably€focusedÏon€job€creation€or€income„generating€activities,€but€there€seems€to€be€little€recognition€of€the€factÏthat€not€all€the€poor€can€benefit€from€such€programmes.€Indonesia€has€made€progress€in€povertyÏalleviation,€but€without€a€real€safety€net,€the€effect€of€the€crisis€on€employment€and€familyÏincomes€will€hit€hard.ÌÌÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.6.à ¬ àSocial€dialogueÝ‚žJ”ÿæ+~ ÝÔ r,Ôó óÔŽŠ%ç ü$Y ÔÐ Š%ç % ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àOf€the€three€countries,€it€is€clearly€in€the€Republic€of€Korea€that€the€evolution€of€strongÐ „&á!& Ðinstitutions€in€civil€society€has€made€the€greatest€strides€in€recent€years.€It€is€here,€too,€that€theÏcrisis€has€afforded€an€opportunity€for€the€further€consolidation€of€appropriate€institutions€of€socialÏdialogue€at€the€macro€level.€The€Tripartite€Commission,€which€was€launched€on€15€JanuaryÏ1998,€and€the€Tripartite€Social€Accord,€signed€on€6€February,€have€become€essential€ingredientsÏin€the€development€of€social€and€economic€policies€to€contain€the€social€costs€of€the€financialÏcrisis.€Most€of€the€labour€market€policy€measures€taken€recently€by€the€Government,€legislationÏon€the€socio„economic€agenda,€and€various€social€plans€suggested€by€the€social€partners€haveÏoriginated€from€the€Accord.Ìà ï àKey€factors€in€this€development€have€been:€the€shared€sense€of€emergency€among€the€socialÏpartners€generated€by€the€worst€economic€crisis€since€the€1960s;€the€urgent€need€to€show€theÏsocial€partnersðð€firm€resolve€to€reform€economic€structures€and€the€labour€market,€so€as€to€regainÏforeign€investorsðð€confidence€in€the€market;€the€consolidation€of€political€and€civil€democracyÐ ç0D,2 Ðevidenced€by€the€victory€of€the€opposition€leader,€Kim€Dae„Jung,€in€last€Decemberððs€presidentialÏelection;€and€the€considerable€social€and€political€power€of€the€trade€union€movement,€asÏmanifested€in€the€general€strikes€of€early€1997.Ìà ï àBoth€the€status€of€the€Tripartite€Commission€and€the€influence€of€the€Accord€itself€areÏdistinctive.€In€particular,€it€is€the€decision„making€authority€of€the€Commission€that€isÏnoteworthy.€In€the€past,€most€tripartite€bodies€were€purely€consultative,€without€decision„makingÏpowers.€However,€the€Tripartite€Commission€has€such€powers€and,€indeed,€many€agreementsÏreached€by€the€Commission€were€translated€into€law€during€the€February€session€of€the€NationalÏAssembly.€The€remainder€of€the€agreements€are€expected€to€become€law€in€the€near€future.€InÏthe€past,€most€tripartite€bodies€consisted€of€representatives€of€trade€unions,€employers€and€ð ðpublicÏinterestsðð,€without€the€direct€presence€of€the€Government.€This€time,€the€Government€isÏrepresented€by€the€participation€of€the€Minister€of€Labour€and€the€Minister€of€Finance€andÏEconomy.€As€the€Accord€notes,€the€Tripartite€Commission€is€likely€to€become€ð ða€lawfullyÏpermanent€agency€which€coordinates€all€economic€units€in€order€to€overcome€the€currentÏeconomic€crisis€and€to€achieve€social€cohesionðð.Ìà ï àThe€Tripartite€Social€Accord€covers€a€wide€range€of€socio„economic€matters,€including:€theÏpromotion€of€freedom€of€association;€management€transparency€and€business€restructuring;Ïlabour€market€policy;€the€extension€and€reform€of€the€social€security€system;€wage€stabilizationÏand€the€improvement€of€labour„management€cooperation;€and€the€enhancement€of€labour€marketÏflexibility.€Among€these€issues,€the€agreements€on€corporate€transparency,€business€restructuringÏand€labour€market€flexibility€are€largely€based€on€IMF„prescribed€policy€aims,€as€well€as€theÏpolicy€orientation€of€the€new€Government€and€trade€unions.€The€hottest€issue€concerned€theÏenhancement€of€labour€market€flexibility€ð"ð€particularly€with€regard€to€legislation€on€the€lay„offÏsystem€and€procedures.Ìà ï àThe€trade€unions€ultimately€made€concessions€on€the€lay„off€provisions€in€return€forÏagreement€to€improve€freedom€of€association,€including€a€repeal€of€the€ban€on€political€activitiesÏof€trade€unions,€the€establishment€of€works€councils€for€government€employees,€the€right€ofÏteachers€to€form€trade€unions€and€to€bargain€collectively,€the€strengthening€of€labour€marketÏpolicy€measures,€and€considerable€increases€in€budget€outlays€to€help€the€unemployed.€EmployersÏgained€greater€freedom€to€lay€off€employees,€and€new€legislation€on€the€partial€introduction€ofÏtemporary€work€agencies.€Ìà ï àThailand€has€several€tripartite€committees€at€national€level€covering€a€variety€of€economicÏand€social€policy€spheres,€and€having€differing€degrees€of€statutory€authority,€from€the€purelyÏadvisory€to€actual€decision„making€responsibility€and€authority.€However,€compared€to€the€recentÏevolution€in€the€Republic€of€Korea€tripartism€in€Thailand€must€be€described€as€substantiallyÏweaker,€based€as€it€is€on€weak€and€internally€fragmented€organizations€of€workers€andÏemployers.Ìà ï àThe€level€of€trade€union€organization€is€extremely€low.€Nationwide,€there€are€aboutÏ245,000union€members€in€approximately€1,000€unions,€representing€perhaps€3.5€per€cent€of€theÏ7€million€or€so€workers€in€the€industrial€workforce€(which€itself€is€only€about€one„fifth€of€theÏcountryððs€workforce€of€34€million).€It€follows,€therefore,€that€(i)€the€role€that€collectiveÏbargaining€could€play€in€negotiating€the€downturn€is€rather€minimal,€and€(ii)€an€assessment€ofÏð ðtripartismðð€must€acknowledge€the€rather€limited€foundation€on€which€it€rests.Ìà ï àTripartite€instruments€and€procedures€have€nevertheless€played€some€role€in€policy€guidanceÏon€the€economic€and€social€consequences€of€the€crisis.€Four€initiatives€are€of€particular€relevance.ÏFirst,€the€National€Labour€Development€Advisory€Council€(NLDAC),€an€advisory€body€thatÏoften€influences€government€decisions,€established€a€Subcommittee€on€the€Social€Effects€of€theÏEconomic€Crisis€in€October€1997.€The€mandate€of€the€Subcommittee€was€to€collect€availableÏinformation€on€the€social€effects€to€develop€policy€guidelines€for€the€NLDAC€which,€in€turn,Ïcould€be€recommended€to€the€Government.€The€report€of€the€Subcommittee€submitted€inÏDecember€documented€unemployment€figures€and€argued€that€they€would€have€major€negativeÐ 90–+2 Ðeffects€on€the€family,€the€education€system,€personal€health,€the€crime€rate,€and€political€stabilityÏitself.€It€also€recommended€that€the€Government€work€with€community„based€organizations€to,Ïinter€alia,€promote€the€management€and€distribution€of€agricultural€goods€produced€by€laid€offÏworkers€who€return€to€their€rural€homes;€expand€the€public€welfare€system,€in€particular€byÏamending€the€Social€Insurance€Act€to€cover€the€cost€of€school€fees€and€to€extend€free€medicalÏtreatment€to€the€unemployed;€and€to€apply€to€job€losers€active€labour€market€measures€such€asÏthe€expansion€of€credit€options€for€self„employment,€of€training€opportunities,€and€the€promotionÏof€job€fairs€and€other€labour€exchanges.Ìà ï àThe€second€way€in€which€tripartism€has€played€a€role€is€through€the€labour€court€system.ÏThailandððs€system€of€dispute€settlement€is€tripartite,€comprising€judges€and€an€equal€number€ofÏassociate€judges€whose€candidacies€are€proposed€respectively€by€workersðð€and€employersððÏorganizations.€This€labour€court€system€has€had€an€important€role€to€play€in€safeguarding€labourÏprotection€amidst€worsening€economic€conditions.€By€September€1997,€the€systemððs€nine„monthÏcase€load€numbered€12,073,€already€exceeding€all€annual€totals€in€its€17„year€history.€Over€80Ïper€cent€of€cases€in€1997,€moreover,€concerned€severance€pay€entitlements€(in€1985,€this€issueÏaccounted€for€52€per€cent€of€disputes€heard).Ìà ï àA€third€example€of€the€relevance€of€tripartism€in€addressing€the€current€crisis€was€theÏNational€Tripartite€Forum€in€November€1997.€Aside€from€Thailandððs€existing€tripartiteÏinstitutions,€a€tripartite€òòprocessóó€to€promote€dialogue€on€the€social€consequences€of€the€crisis€wasÐ Mª Ðinitiated€by€the€ILO€at€the€request€of€the€Government€and€with€the€full€support€of€all€of€the€majorÏworkersðð€and€employersðð€organizations.€A€two„day€National€Tripartite€Forum€was€held€at€the€endÏof€November€1997.Ìà ï àTwo€features€of€the€meeting€are€of€particular€significance.€First,€theòò€process€óóitself€wasÐ â? Ðrelatively€novel€for€Thailand€in€terms€of€the€breadth€of€the€social€actors€actually€involved€in€theÏdialogue.€To€prepare€for€the€meeting,€for€example,€all€of€Thailandððs€labour€federations€met€overÏa€two„day€period€to€draft€a€common€stance€on€the€analysis€of€the€crisis€and€policy€solutions.€OnÏthe€employer€side,€too,€the€two€major€federations€were€closely€associated€with€the€preparationÏof€the€meeting€and€with€consultations€over€the€background€document€for€the€meeting.Ìà ï àSecond,€there€was€a€substantive€outcome€of€the€Forum€in€the€form€of€a€ten„point€statementÏof€recommendations€on€which€tripartite€consensus€had€been€reached.€One€recommendation€urgedÏð ðthat€the€Government€should€arrange€for€a€Tripartite€Working€Group€to€meet€on€a€regular€basisÏto€discuss€current€social€and€labour€issues€and€identify€ways€and€means€of€addressing€these.€ThisÏWorking€Group€could€also€assist€the€ILO€in€planning€and€organizing€activities€that€are€relevantÏto€the€issues€and€objectives€described€in€the€documentðð.Ìà ï àThe€fourth€initiative€was€the€creation€in€December€1997€of€the€National€Committee€on€theÏAlleviation€of€Unemployment,€apparently€in€response€to€one€of€the€recommendations€of€theÏNational€Tripartite€Forum.€This€committee,€for€which€the€Labour€Ministry€is€the€secretariat,€isÏchaired€by€Prime€Minister€Chuan€Leekpai€and€comprises€representatives€of€seven€ministries€asÏwell€as€one€worker€and€one€employer€representative.€Each€of€the€ministries€is€responsible€for€theÏcoordination€of€a€particular€policy€area.€The€areas€include:€the€repatriation€of€illegal€migrantÏworkers;€promoting€the€outward€migration€of€Thai€workers;€support€for€the€Kingððs€agriculturalÏdevelopment€projects;€labour„intensive€public€works€programmes€in€rural€areas;€promotion€ofÏfrugality€through€development€of€cottage€industries€and€local€goods€production€and€distribution;Ïefforts€to€maintain€employment€in€industry€through€marketing€and€export€assistance€and€theÏretraining€of€displaced€workers;€and€targeting€assistance€to€graduates€in€finding€work.Ìà ï àIn€Indonesia€tripartite€bodies€exist€at€national,€provincial€and€district€levels.€However,€theÏvarious€tripartite€bodies€have€not€been€activated€and€utilized,€nor€have€they€shown€by€their€trackÏrecord€any€ability€to€effectively€confront€the€many€pressing€labour€and€social€issues€arising€fromÏthe€current€financial€crisis.Ìà ï àThere€are€therefore€some€reservations€as€to€the€real€meaning€of€tripartism,€irrespective€ofÏthe€existence€of€tripartite€mechanisms,€in€the€Indonesian€case.€At€the€root€of€what€may€beÐ h0Å+2 Ðdescribed€as€a€weak€basis€for€tripartism€are€the€continued€constraints€on€freedom€of€association.ÏIn€fact,€the€credibility€of€the€officially€sanctioned€and€legally€recognized€national€trade€unionÏcentre€is€very€much€eroded€now€and€workers€with€grievances,€including€members€of€the€officialÏunions,€are€increasingly€looking€elsewhere€for€representation.€Since€recent€initiatives€to€developÏindependent€and€democratic€trade€unions€in€Indonesia€have€been€contained€by€governmentÏrepression,€workersðð€organizations€forced€to€operate€beyond€the€ambit€of€the€law€and€oftenÏclandestinely€are€generally€unable€effectively€to€openly€criticize€government€policies€andÏprogrammes.Ìà ï àIndonesiaððs€official€trade€union€federation,€FSPSI,€faces€challenges€with€respect€to€thoseÏwho€should€be€its€natural€constituents€ð"ð€Indonesian€workers€ð"ð€but€it€also€admits€its€limitationsÏand€lack€of€effectiveness€in€relation€to€the€authorities.€It€has€complained€of€the€general€tendencyÏto€ignore€trade€unions€in€policy„making.€That€workers€and€their€organizations€are€unable€toÏparticipate€as€genuine€representative€partners€alongside€the€State€and€capital€during€the€presentÏcrisis€is€symptomatic€of€a€major€shortcoming€in€the€industrial€relations€culture€in€Indonesia.Ìà ï àUnder€the€circumstances,€it€can€easily€be€understood€that€trade€unions€outside€the€FSPSI,Ïthe€most€significant€of€which€is€the€still€proscribed€Indonesia€Prosperity€Trade€Union€(SBSI),Ïhave€felt€inadequate€in€responding€to€the€problems€created€by€the€financial€crisis.€SBSI€has€in€factÏsuffered€a€substantial€loss€of€its€membership€as€a€result€of€lay„offs.€It€is€finding€it€difficult,€owingÏto€limited€resources,€even€to€monitor€the€rate€of€lay„offs€involving€its€own€members.€It€alsoÏclaims€that€its€activities€were€hampered€by€the€tight€security€measures€undertaken€by€theÏGovernment€as€it€prepared€for€the€presidential€elections€in€March.Ìà ï àThere€are€encouraging€developments,€however.€The€FSPSI€leadership€is€now€activelyÏseeking€the€assistance€of€the€ILO€in€pushing€for€political€reforms€and€facilitating€theÏdemocratization€process,€particularly€in€relation€to€trade€union€rights€in€Indonesia.€It€has€issuedÏa€strong€statement€for€the€elimination€of€all€existing€laws€restricting€freedom€of€association.€MoreÏgenerally,€there€is€growing€acknowledgement€from€opposition€political€parties,€independent€tradeÏunion€leaders,€non„governmental€organizations€(NGOs),€many€leaders€of€official€unions,Ïuniversity€academics€and€students,€some€government€officials€and€employers€that€socio„economicÏreforms€and€the€construction€of€legitimate€labour€market€institutions€will€be€important€forÏresolving€the€crisis.Ìà ï àAnother€favourable€sign,€in€spite€of€the€factors€impeding€a€truly€strong€and€independentÏtripartite€social€dialogue€from€developing€in€Indonesia,€ñ%ñit€ñ%ñis€the€recent€effort€to€marshall€a€tripartiteÏanalysis€and€response€to€the€crisis.€In€an€unprecedented€move,€the€Government€through€theÏDepartment€of€Manpower€(DEPNAKER),€the€employers€through€the€Indonesian€Chamber€ofÏCommerce€and€Industry€(KADIN)€and€the€Indonesian€Employersðð€Association€(APINDO),€andÏthe€workers€through€FSPSI€came€together€in€January€1998€to€discuss€and€agree€on€the€currentÏmanpower€situation€in€Indonesia€resulting€from€the€crisis.Ìà ï àAmong€ñ&ñthe€ñ&ññ'ñits€ñ'ñrecommendations€was€a€definition€of€the€priority€tasks€of€tripartite€institutionsÏand€bodies€to€include:Ì(i)à0 ï àmaximizing€efforts€to€create€harmonious€employment€conditions€to€strengthen€undertakingsÐ Û&8"' Ðand€enterprises;Ð ï%"ï%" Ð(ii)à0 ï àminimizing€lay„offs€by€considering€alternatives€such€as€reducing€overtime€work,€rearrangingÐ º($) Ðworking€hours,€cutting€costs€which€are€not€directly€required€by€the€production€process,€andÏrelocating€workers€to€other€companies€within€the€group;Ð ï%"ï%" Ð(iii)à0 ï àpromoting€negotiations€between€workers€and€employers€on€the€management€of€lay-offsÐ s+Ð&, Ðwhere€they€are€unavoidable.Ð ï%"ï%" Ðà ï àHowever,€the€meeting€did€not€elaborate€on€how€the€recommendations€would€be€pursued€andÏimplemented.Ìâ âÐ 1/Ž*0 ÐÝ‚žJ”ÿÝÔ  Ôâ âÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.7.à ¬ àPolicies€towards€migrant€workersÝ‚žJ”ÿg.€ItÝÔ ™gÔó óÔŽ1Ž£ÔÐ 1Ž ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àAn€important€area€for€immediate€action€is€that€governments€in€labour„receiving€countriesÐ +ˆ Ðshould€establish€clear€written€policies€and€procedures€to€guard€against€the€arbitrary€use€of€powerÏto€expel€migrants€collectively€or€òòen€masseóó,€especially€the€undocumented,€on€the€grounds€that€theyÐ ß< Ðtake€up€jobs€which€can€be€given€to€nationals.€Police€and€immigration€personnel€may€not€alwaysÏbe€aware€or€respectful€of€basic€rights€of€migrants€when€there€is€an€economic€crisis€and€politicalÏleaders€are€sending€the€wrong€signals.€These€basic€rights€and€other€aspects€of€the€migrantÏworkersñ(ñððñ(ñ€issue€are€highlighted€in€the€Migration€for€Employment€Convention€(Revised),€1949Ï(No.97),€and€the€Migrant€Workers€(Supplementary€Provisions)€Convention,€1975€(No.€143).Ìà ï àProtection€of€the€right€to€accrued€wages€is€also€an€important€issue.€The€bankruptcy€law€inÏsome€countries€may€not€allow€employers€to€give€their€workers€first€lien€on€company€assets€forÏthe€payment€of€back€wages.€In€Malaysia€it€has€been€reported€by€the€Malaysian€Trade€UnionÏCongress€that€workersðð€claims€are€simply€not€entertained.€The€workersðð€federation€would€likeÏsuch€claims€be€given€priority€in€keeping€with€the€principle€adopted€by€the€United€NationsÏCompensation€Commission€set€up€after€the€Gulf€war€when€migrantsðð€claims€were€given€priorityÏand€dealt€with€before€corporationsðð€claims€were€considered.€Migrant€workers€are€particularlyÏdisadvantaged€since€they€are€likely€to€leave€the€country€of€employment€long€before€bankruptcyÏcases€can€be€resolved€by€judicial€processes.€In€view€of€this€specific€disadvantage,€there€is€a€goodÏargument€for€setting€up€a€fund€from€employersðð€contributions,€to€provide€resources€for€suchÏcontingencies.€States€should€also€take€steps€to€reach€agreements€whereby€migrant€workers€canÏenjoy€their€acquired€rights€to€pensions€and€other€statutory€benefits.Ìà ï àThe€relevant€standards€are,€in€addition€to€Conventions€Nos.€97€and€143,€the€Protection€ofÏWages€Convention,€1949€(No.€95),€and€the€Protection€of€Workersðð€Claims€(EmployerððsÏInsolvency)€Convention,€1992€(No.€173).Ìà ï àAuthorities€tend€to€impose€many€restrictions€on€the€purchase€of€foreign€exchange€whenÏcurrencies€are€under€attack€from€speculators.€Migrant€workers€are€evidently€seriously€hurt€byÏsuch€measures€since€they€will€need€a€convertible€currency€to€support€their€families€back€home.ÏIt€is€a€violation€of€ILO€standards€to€restrict€their€ability€to€transfer€their€earnings€to€their€families.Ìà ï àLooking€beyond€immediate€measures,€experience€in€other€countries€suggests€very€stronglyÏthat€the€importation€of€foreign€workers€should€be€carried€out€under€government-to-governmentÏagreements,€where€facilities€for€testing€and€recruitment€can€be€provided€free€by€publicÏemployment€offices€and€where€enforcement€of€employment€contracts€can€be€overseen€by€theÏappropriate€national€authorities.€None€of€the€Asian€labourñ)ñ€ñ)ññ*ñ„ñ*ñreceiving€countries€have€been€openÏto€such€arrangements€so€far,€but€the€situation€may€change€if€the€present€crisis€demonstrates€theÏproblems€that€come€with€the€return€of€retrenched€workers.Ìà ï àInconsistent€or€stop„go€policies€will€undermine€their€effectiveness€and€fail€to€resolveÏproblems€of€clandestine€immigration€and€the€irregular€employment€of€undocumented€foreignÏworkers.€Aspiring€immigrants€are€likely€to€resort€to€clandestine€entry€if€they€expect€anotherÏregularization€campaign€in€the€near€future.€Employers€will€not€worry€about€violating€laws€inÏemploying€those€without€proper€work€permits€if€the€government€frequently€changes€its€mind€asÏto€the€occupations€or€sectors€in€which€foreigners€will€be€allowed€employment.Ìà ï àThe€problems€with€ineffective€immigration€controls€might€lie,€in€the€first€instance,€in€theÏabsence€of€clear€policy€goals€or€the€lack€of€transparency€in€the€processes€of€formulating€suchÏpolicies.€Policies€may€be€murky€when€there€is€no€consensus€among€the€body€politic€on€howÏimmigration€is€to€play€a€role€in€meeting€various€social,€political,€and€economic€goals.€Even€whereÏthe€policy€is€driven€by€economic€goals,€i.e.€faster€growth,€implementation€may€not€be€easy.€AnÏemployment„driven€labour€immigration€policy,€for€example,€depends€critically€on€how€one€canÏestablish€the€need€for€employing€a€foreign€worker.׃+×Ý ƒJˆÎÝÔjjÔòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€Experience€shows€that€a€ð ðquota€systemððÐ [.¸)/ Ðentails€certain€rigidities,€but€it€has€the€advantage€of€setting€a€clear€frame€for€administrators,Ïemployers,€and€the€public€at€large€and€seems€to€be€suited€to€the€situation€in€the€region.€Policy„¼makers€would€have€to€settle€the€question€of€what€forms€of€quotas€to€set€(national€or€by€region,Ïby€industry,€etc.)€and€administrators€would€have€to€develop€systems€for€assessing€labour€marketÏrequirements.ÌÌÝ‚žJ”ÿÝÔ  ÔÓ  ÓÔ€&õ &&ô&cAÔÔ€»x »&&õ ÔÓfæÓÓ 33Óò òÔ  ÔÝ  Ý3.8.à ¬ àConcluding€remarksÝ‚žJ”ÿ|.€ItÝÔ ‘|Ôó óÔŽ£  rÔÐ £  ÐÓ  ÓÔ€ô»XH » »»xÔÔ€ô&cA& »ô»XHÔÓfæÓÓ 33ÓÝ  Ýà ï àThe€preceding€discussion€has€shown€that€while€there€has€been€clear€concern€over€the€socialÐ  ú Ðimpact€of€the€economic€crisis€and€even€though€this€has€been€manifested€in€a€range€of€initiativesÏto€contain€the€social€costs,€the€overall€impression€must€be€that€the€response€so€far€has€beenÏinadequate.€In€particular,€efforts€to€cater€for€the€large€numbers€of€displaced€workers€cover€onlyÏa€small€fraction€of€those€in€need€of€such€relief.€In€addition,€except€in€the€Republic€of€Korea,€thereÏhas€been€virtually€nothing€in€the€way€of€temporary€income€support€in€the€form€of€eitherÏunemployment€benefits€or€social€assistance€to€make€up€for€the€shortfall€in€the€coverage€of€directÏemployment€creation€measures.Ìà ï àThere€are€two€fundamental€reasons€why€the€worst„affected€countries€are€in€their€current€stateÏof€social€distress.€The€first€is€the€sheer€magnitude€of€the€social€fallout€from€an€unexpected€andÏsevere€economic€crisis.€This€would,€in€and€of€itself,€have€put€serious€stress€even€on€countriesÏwith€better„developed€systems€of€social€protection.€The€second€was€the€unpreparedness€andÏunderdevelopment€of€the€social€protection€system€itself.Ìà ï àAgainst€this€background€it€is€important€to€note€that€social€safety€nets€cannot,€realistically,Ïbe€constructed€in€a€matter€of€months.€Similarly,€measures€such€as€attempts€to€save€viableÏenterprises€and€active€labour€market€policies€can€achieve€only€limited€results€when€they€goÏagainst€the€grain€of€macroeconomic€conditions.Ìà ï àThis€suggests€that€a€two„pronged€approach€is€required€to€overcome€the€current€socialÏdistress.€The€first€is€to€try€to€bring€about€an€economic€recovery€as€soon€as€possible€so€that€theÏnumbers€in€need€of€relief€can€be€reduced€through€a€steady€reabsorption€into€income„earningÏactivities.€This€requires€priority€attention€to€economic€policies€and€related€structural€reforms€forÏpromoting€recovery.€At€the€same€time,€however,€work€on€the€second€prong€of€strengtheningÏsystems€of€social€protection€must€also€begin.€Since€high€and€sustained€growth€can€clearly€noÏlonger€be€taken€for€granted,€a€significantly€higher€degree€of€social€protection€must€be€aimed€for.ÏJust€as€the€Great€Depression€forged€a€new€social€contract€in€many€industrialized€countries€in€theÏ1930s,€so€too€must€the€current€Asian€crisis€serve€as€an€impetus€to€creating€a€more€sociallyÏoriented€model€of€development.€The€next€chapter€seeks€to€point€the€way€forward€towards€this.Ì