ILO is a specialized agency of the United Nations

274th Session
Geneva, March 1999


The ILO's response to the financial crisis in
East and South-East Asia

The Social Impact of the Asian Financial Crisis:
An ILO Governing Body Symposium
Geneva, 19-20 March 1999

Conclusions of the Reporter

1. The social cost of the Asian financial crisis has been extremely high, with a substantial rise in open unemployment and underemployment and a significant decline in real earnings, concentrated mostly in sectors of the economy linked to international trade and financial flows.

2. The negative social impact has not been uniform across social groups. Workers and the emerging middle class in urban areas are the worst affected, since the rural economy was relatively insulated from the effects of the crisis. Among the victims of the crisis, vulnerable groups such as women, children, and migrant workers have suffered most.

3. The severity of the social impact was aggravated by the relative neglect of the development of institutions for social protection during the decades of the Asian economic miracle. Except in the Republic of Korea, there was no system of unemployment insurance, social assistance, or active labour market policies to relieve the distress of the large number of workers who lost their jobs or were pushed into poverty as a result of declining real incomes. Similarly, the relative underdevelopment of labour institutions ruled out any significant reliance on tripartite arrangements to moderate the extent of job losses.

4. While there are now encouraging signs that currency and financial markets have begun to stabilize and that the preconditions for recovery are in place, complacency must be avoided. Serious obstacles have still to be overcome in the task of financial and corporate restructuring. At the same time the reform of social policy and the building of new social institutions is a complex and difficult process.

5. In spite of these continuing difficulties, there is a clear determination to persevere with ongoing reforms. The crisis has forged recognition that the deficiencies of the pre-crisis economic and social systems need to be remedied. A common new vision for reform is emerging that consists of the following key elements:

6. In considering the lessons of the crisis the following key points emerged:

7. The ILO and other agencies with a social mandate on the one hand, and the IFIs on the other, should work more closely together in order to be better prepared to deal with future crises. In particular, closer collaboration between the ILO and the IFIs could be achieved through measures such as giving the ILO representation in the IMF Interim Committee and the World Bank/IMF Development Committee as well as the working out of agreed priorities for joint action, including -- but not limited to -- active cooperation at both the policy-making and operational level to promote implementation of the ILO Declaration on Fundamental Principles and Rights at Work by the IFIs, and the assignment of high priority to the design and implementation of efficient social insurance systems by the ILO.

8. In reviewing ILO action in response to the crisis, the symposium highlighted the following issues:

9. The ILO should act as a catalyst and facilitator to put in place well-designed programmes of training, retraining and job placement, and for the promotion of self-employment targeted at the specific needs of retrenched workers.

Geneva, 21 March 1999.

Updated by VC. Approved by RH. Last update: 26 January 2000.