GENEVA (ILO News) - The plight of Asian workers and enterprises and the ILO's response to the region's economic woes, which have caused massive business failures and upwards of 24 million lost jobs in East Asia alone, will be examined by the Organization's Governing Body in a special two-day Symposium, which gets underway on Friday, 19 March at ILO headquarters in Geneva.

A report prepared for the Symposium points out that the bulk of the job losses came in the modern, industrial and service sectors of East Asian economies - where wages, productivity and working conditions tend to be higher than average - forcing increasing numbers of workers into informal or agricultural sectors, which are already crowded and which offer generally poorer earning opportunities. ¹

Unemployment rates have nearly doubled in Hong Kong, China and the Philippines, increasing, respectively, from 2.8 to 5% and 7.4 to 13% from 1996 to 1998 (see Table). Other countries have seen open unemployment increase by three and four-fold in others, including Indonesia, which went from 4 to 12% during the same period, the Republic of Korea (2.6 to 7.6% ), Malaysia (2.5 to 6.7% ) and Thailand (1 to 4.4%). Under current trends, the upward spiral of unemployment growth appears to be slowing, but unemployment is still increasing from record high levels in most of the region's labour markets, with often disastrous consequences for workers and their families.

The Symposium also is expected to address calls for a strengthened ILO capacity for economic analysis and for a "rapid response" strategy for minimizing the social fallout from future crises. The Director-General of the ILO, Mr. Juan Somavia, has made the establishment of such a capacity one of his main operational priorities:

"The precipitous declines in living standards caused by financial instability need to be addressed with the same vigour, the same effort at containment, as declines in asset values. The ILO has a distinct role to play in addressing these concerns. In an interdependent but unsettled world economic order, the Organization needs to develop its capacity to address unforeseen events and respond to critical situations affecting the world of work," said Mr. Somavia.

Mr. Somavia said that in light of the developments, "Asia needs a new social contract, founded on renewed economic growth and on the strengthening of democratic institutions and tripartism."

The report also argues for increased participation and coordination of efforts with those of other international agencies: "The ILO needs to pursue closer dialogue with the Bretton Woods institutions (i.e. the World Bank, International Monetary Fund and World Trade Organization) not only in areas of crisis mitigation, but also in insisting on the recognition of its concerns in the design of growth policies so that they benefit employment, wages and income."

While the ILO analysis acknowledges that a return to economic growth is a necessary prerequisite to overcoming the social consequences of the crisis, the likelihood of a return to 7-8% growth rates of previous decades was slim to nonexistent. "Because growth in the foreseeable future will probably not be sufficient to reverse the current trend toward higher unemployment and poverty, a fundamental rethinking on the social dimension of international development is as important as the purely economic and financial issues that currently occupy centre stage in East Asia," said Eddy Lee, an ILO economist and author of a recent study of the Asia crisis.

The financial crisis, which struck the East Asia region in mid-1997, has provoked deep recessions and sharp increases in poverty in what had been the world's most dynamic economic growth zone for several decades. "Precipitous currency valuations of up to 80% and falls in equity and asset prices caused a sharp drop in output, consumption and average income," says a report prepared for the Governing Body members.

The enormity of the shock led to declines in Gross Domestic Product by the end of 1998 of 15% in Indonesia, the region's hardest hit economy, 6.5% in Thailand, 5% in the Republic of Korea and 3-4% in Malaysia and Hong Kong, China. Growth forecasts in Japan, Singapore, the Philippines and Viet Nam have been revised sharply downwards and the effects of the downturn have been felt across the globe.

Because the high levels of retrenchment in the job market are largely uncovered by any form of unemployment insurance, increasing numbers of workers are left to fend for themselves, falling into underemployment and self-employment in informal sector activities. As poverty rates increase, vulnerable groups, particularly women and migrant workers, are at high risk of slipping into poverty, the report warns.

"In the absence of adequate systems of social protection in the region, economic and social hardships arising from the crisis have been borne directly by workers and their families themselves," the report says. Under current conditions, the ILO warns that "the risk factor for child labour is increasing as families are pressured by the crisis to reduce expenditure."

The ILO's response to the crisis has focussed on advocating employment-generating economic policies, strengthening tripartism and stepping up its activities in the field, notably on behalf of vulnerable groups and in support of public works programmes and enhanced social security protection.

Specifically, these activities take the form of:

• Building institutional capacity in social fields where it is lacking, notably by strengthening trade unions and employer organizations;
• Seeking to influence the macroeconomic debate, notably in the policy debate between international financial markets and domestic jobs and earnings;
• Undertaking feasibility studies relating to the implementation or expansion of unemployment benefit schemes;
• Seeking to extend the coverage of social security schemes;
• Boosting resources in the battle against child labour and on behalf of vulnerable groups, notably women, migrants and informal-sector workers.

The report argues that "the ILO's technical expertise needs to be fully geared towards supporting the social partners in the design and implementation of policies to enhance job creation through enterprise development, to promote the quality of jobs, to seriously address the informal sector by enhancing its productivity and working conditions and to upgrade skills and employability."

1 The ILO's response to the financial crisis in East and South-East Asia. Evolution of the Asian financial crisis and determination of policy needs and response. Governing Body, 274 ^th Session (GB.274/4/2). International Labour Office, Geneva, March 1999.

The East Asian crisis: Changes in unemployment rates and levels, 1996-98

	Unemployment rates, per cent			New unemployed, millions
	1996	1998	Most recent estimates	1998	Most recent estimates
China * Hong Kong Indonesia Republic of Korea Malaysia Philippines Thailand _________ Total	3.0 2.8 4.1 2.6 2.5 7.4 1.1	5.0 to 6.0 4.8 9.0 to 12.0 7.6 6.7 13.1 4.4	15 to 20 8	3.5 0.1 4.8 to 7.6 1.2 0.4 1.7 1.7 __________ 13.4 to 16.2	12 to 15 2.8 ___________ 20.6 to 24.7

* Urban unemployment rate.
Source: ILO estimates based on national sources.