New UN publication warns of severe hardship for millions of workers in Asia

Five years after the 1997 financial crisis, many workers in Southeast Asia are just one paycheque away from extreme poverty, according to a new publication by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

“Protecting Marginalized Groups During Economic Downturn: Lessons From the Asian Experience,” warns that another financial crisis – or sudden economic downturn – could result in more severe hardship for millions of people across the region, especially for those in the so-called “informal sector,” many of whom are self-employed.

With the Southeast Asia still recovering from the economic shock that accompanied the sudden devaluation of regional currencies, the people worst affected continue to be individuals toward the bottom of the socio-economic ladder, ESCAP said.

Many countries in the region still have few or no social safety nets, like unemployment benefits, and this disadvantaged group would suffer most during the onset of a fresh and rapid recession, depression, or currency devaluation. The main fear is job loss due to downsizing or restructuring.

The study, conducted in Indonesia, the Republic of Korea and Thailand, also finds that most of the programmes introduced following the last financial crisis did not benefit persons who lost jobs in the urban formal sector, which is especially vulnerable to fluctuations in the economy and competitive pressure. Women are affected disproportionately.

Aggravating the situation is the pattern of shifting production centres, according to changes in competitive and comparative advantages across the region, further perpetuating the boom-and-bust cycle. The revolution in information and communication technologies and a freer flow of goods, services and technologies further exacerbate the situation.

The publication advises governments to act now to avoid the socio-economic turmoil that a fresh downturn or crisis could cause by initiating longer-term public works programmes and creating national unemployment insurance schemes as well as microcredit facilities for the unemployed.

It also recommends information and counselling centres for small- and medium-sized enterprises, and further encouragement of the long-standing Asian tradition of developing networks of families, friends and communities.