ESCAP Report 2009

The Economic and Social Survey of Asia and the Pacific (ESCAP) Report 2009 has recently been unveiled. The report states that as the global financial crisis is still unfolding, its impact on people’s income levels and their welfare is difficult to estimate. Preliminary estimates indicate in 2009 that unemployment in Asia-Pacific could increase by 7 to 23 million workers.

Greatest Employment Impact
According to the report, in 2008, the greatest employment impact was felt in the export manufacturing sector, including garments, electronics and autos, which constitutes a large part of many East and South-East Asian economies. The crisis is also expected to hit such sectors as construction, tourism, finance, services and real estate.

The report reveals that the countries experiencing the greatest impact will be those with slowing economies and rapid labour force growth, such as Cambodia, Pakistan and the Philippines. Wage growth is slowing across the region –- the average wage growth in real terms in 2009 is unlikely to exceed 18 per cent –- and an outright wage reduction in countries with low economic growth seems inevitable, the ESCAP report states.

Cost of Financial Crisis
The ESCAP report points out that mere unemployment figures tend to mask the full extent of the problem. Hundreds of millions more will bear a disproportionate cost of the crisis, it states. As the 1997 crisis showed, when people are affected by sudden shocks, the ones most at risk are the poor, women who are labourers in the manufacturing sector, the youngest and oldest populations and socially excluded groups, the report highlights.

Not only do these groups have fewer resources with which to cushion the impact of shocks, such as real assets and savings, but they also have less influence on economic and political decision making, it states.

However, the negative impacts, according to the report, last much longer than the crisis itself: although economic growth resumed relatively quickly after the 1997 crisis, in some countries it took up to 10 years to recover lost ground in the struggle against poverty. Communities or groups that have been excluded from productive resources, decent work and social security are likely to be highly vulnerable to the negative impact of the global financial crisis and to volatility in food and fuel prices.

Such groups include indigenous communities; ethnic minorities; persons with disabilities; populations displaced due to conflict, large development projects, environmental degradation or disasters; stateless people; and migrants.

In particular, many refugees and internally displaced populations depend on food assistance for their survival and generally do not have access to land for farming, employment or income generation.

Child Labour Situation
The ESCAP report points out that the financial crisis could exacerbate the child labour situation. In the Asia-Pacific region, for children may have to go to work to supplement household income. As of 2004, by the International Labour Organisation (ILO) estimates, 122 million children were economically active in the region. Children are also at risk of being withdrawn from school or not enrolled.

The report states that where families have to pay school fees for their children, economic hardship often leaves them with no option but to keep their children out of school. When families have to cut back on the quantity and quality of food, poorer nutrition in children can have permanent effects on intellectual capacity and cause chronic poor health, which, along with lower educational completion rates, could undermine human capital development and set back economic and social development for decades.

The report highlights that it is expected that men and women will be affected somewhat differently by the current financial crisis. In the Asia-Pacific region, especially with the growth of exports, many women have entered the labour market, but many of them work in export processing zones, where they may not have labour rights, or in industries which sometimes offer very low wages, poor working conditions and no job security.

Lack of Social Protection
According to the report, many women also work in the informal sector, which is precarious and offers no social protection. Although in many cases women have taken up paid work because male household members lost their jobs, women and girls may be seen as a burden on the family because their work may not be valued as highly as that of male household members.

In difficult times, the report states, families often rely on women to care for the sick, older persons and those who cannot fend for themselves, making it difficult for women to earn an income outside the home. Culturally, women and girls are often expected to contribute financially to the family regardless of how that money is earned, it reveals.

When there are few opportunities for wage work, girls and women may end up being trafficked through the promise of a job or being lured or forced into prostitution and other forms of extreme exploitation. Men may migrate out of rural areas, leaving women as household heads and often among the most poor.