The True Cost of the Recession

“Factories are closing everywhere – and now the women are being approached by sex traffickers asking if they want to go and work in the west.” Jitra Kotchadet, union leader, Thailand

“I lost my job, I’ve been evicted from my house and my belongings confiscated by the landlord. Now I rent a small room with my husband and two children. We’ve had to cut our spending on food.” Kim Sunheap, Cambodia

These quotes lead a story in The Observer which points out that the ongoing economic crisis affects the vulnerable most. In particular, women, especially poor women, are disproportionately affected. Author Ruth Sunderland summarises an Oxfam report on the effects of the crisis:

Millions will lose their jobs without any safety net – Oxfam cites cases of women being forced to sign resignation letters so their employers can avoid paying redundancy; families will go hungry; there will be lower levels of schooling for girls; and, most horrific of all, the World Bank predicts the crunch will cause a surge in infant mortality, with up to 2.8 million more babies dying between now and 2015 if the crisis persists. The Bank points out that falls in GDP lead to much greater increases in female infant mortality than male. No explanation is offered for this discrepancy; the likely causes scarcely bear thinking about.”

Meanwhile, a new study by the Asian Development Bank points out that recessions in Asian countries generally are more severe and have longer-lasting effects than for OECD nations (that is, the world’s 30 largest economies). Asian economies (and Thailand in particular) are strongly linked to the global economy but in ways which make them particularly vulnerable to recessions – OECD countries have outsourced a great deal of manufacturing and service activities to Asian countries and, when there are bad times, the demand for those goods and services decreases sharply.

The recession is likely to be severe in Thailand throughout 2009 and probably for another year after that. It is unfortunate that the PAD disaster has simultaneously done so much damage to the tourism industry: hotels in Koh Samui are slashing prices by up to 70% to try to lure some traffic – tourism figures are projected to be down 20-30% on last year (and that seems an optimistic projection).

The Ghost of Mae Nak

Nang Nak was married to Tid Mak who was, as is often the case, called upon to do his corvée duty for the king of the day to fight in a war. Alas, while Tid Mak was away, his wife died in childbirth, as did her son. However, the two remained bound to the earth as ghosts and welcomed Tid Mak back home, in due course. The man himself was bewitched and could not tell that his family were walking corpses but his neighbours helpfully pointed this out to him on a regular basis (that part at least sounds realistic).

Eventually, the penny dropped when Tid Mak watched Nang Nak reach through the floor to collect a lime or some such thing. Then, her ghost was exorcised and stuffed in a jar and then thrown into the river for good measure. The people then relented and built a chapel or shrine to her at the local wat, which was no doubt a great relief. Subsequently, it has been customary for people to visit the shrine and make some offering to Mae Nak and request assistance in finding winning lottery numbers, a new job or some other benefit – why would Mae (mother) Nak, even if she had access to this information, hand it out willy-nilly to people prepared to pay her a few baht? This is a woman who was left to die on her own in childbirth and then exorcised when she wanted to continue living a peaceful life with her family. Were I her, I would be rather more of the Grudge type ghost (not sure how much in the way of royalties she has received from the more than 20 films made about her life). Still, beliefs differ, evidently.

Well, now that thousands are losing their jobs, many more people are visiting the shrine of Mae Nak in the hope of finding a new job – mostly without success, of course. If religion or superstition provides some measure of consolation or help, then I am reluctant to criticize people for taking advantage of it. However, it would be better if a proper social welfare system were instituted and the law changed to allow freedom of association and freedom of speech so that people could organize themselves and stand up for their rights. That is not likely just now or, it seems, at all.

ILO’s Response to Job Losses

With more than 17,000 jobs having been lost in February so far, making 26,000 this year with another 132,000 factory jobs already scheduled to be lost, it is clear that Thailand is facing a severe economic crisis. Total job losses will increase as suppliers and other stakeholders suffer when these factories contract or close down. As I have written before, Thailand is particularly vulnerable to economic crisis because of its openness to the world and its reliance on exports and tourism.

The International Labour Organization (ILO) has outlined the principal problems: “Of concern for countries were sectors dependent on exports and remittances and the knock on effect of decline to other economic sectors and to the most vulnerable and poorest. Potential loss of jobs and threats to decent work affecting many millions in the region was the central preoccupation of forum participants. Capacity to address this through stimulus packages was particularly worrying in countries with limited fiscal space or reserves to call upon.”

Some urgent policy areas were also identified:

§        Protecting and supporting decent jobs;

§        Collective bargaining and social dialogue particularly in negotiating flexible hours, wages, temporary lay-offs and severance packages;

§        Rolling out quickly infrastructure and labour-intensive public works projects, to keep men and women in work, particularly those retrenched;

§        Enterprise support measures including access to credit to focus particularly on small and medium sized enterprises (SMEs) and entrepreneurs.

§        Targeting support to specific sectors such as the rural and agricultural economy, and for vulnerable groups of workers – international and internal migrants, informal sector workers, women and young people;

§        Social security and social protection systems to be expanded to support vulnerable groups and increase disposable income levels;

§        International and regional support to include funding for developing countries and easing of conditionality in funding from international financial institutions:

The government has, to date, organized some job preservation schemes and suggested that support for SMEs and entrepreneurs will be forthcoming at some stage. A lot of money is simply being wasted for what appear to be political reasons. Few governments around the world inspire much confidence in their ability to deal with the crisis at the moment, so at least the quisling is not alone in that regard.

ILO on Job Losses and Poverty

The International Labour Organization (ILO) has issued a new report which is rather more pessimistic about jobs in 2009. In 2008, the global unemployment rate rose from 5.7% to 6.0% – that’s about 190 million people, 76 million of them young people. Depending on how the current economic crisis develops, another 50 million jobs could be lost worldwide and 200 million people returned to poverty (that will be 1.4 billion working poor).

To combat rising unemployment and rising poverty, the ILO recommends governments should:

i) wider coverage of unemployment benefits and insurance schemes, re-skilling redundant workers and protecting pensions from devastating declines in financial markets;

ii) public investment in infrastructure and housing, community infrastructure and green jobs, including through emergency public works;

iii) support to small and medium enterprises;

iv) social dialogue at enterprise, sectoral and national levels.*

The report deals in the regional rather than national level but some of the comments about ‘Southeast Asia and the Pacific’ are clearly directly relevant to Thailand:

In recent years South-East Asia and the Pacific has profited through trade and other economic linkages from the economic boom in China and India, and the slowdown in these countries will have a negative impact in the region. Reliance in many countries in South-East Asia on manufacturing exports to industrialized economies, foreign direct investment, tourism revenues and remittances, makes this region highly vulnerable to a prolonged recession in the developed world. Economic growth in the region declined to 5.1 per cent in 2008, and is currently projected to decline to 4.2 per cent in 2009.

The employment-to-population rate decreased slightly between 1998 and 2008, by 0.4 percentage points; the decrease was larger for youth than for adults. The unemployment rate in 2008 increased to 5.7 per cent, from 5.5 per cent in 2007.

As a proportion of the employed, extreme working poverty more than halved during 1997-2007. In 2007, 16.4 per cent of the employed were counted among the extreme working poor, but 46.6 per cent were among the working poor. In other words 30.2 per cent of the employed survived on between USD 1.25 and USD 2 a day.

* The Abhisit government has promised to do some of these things, to a limited extent – it remains to be seen how much this actually materializes (and yes I did have another dream about being arrested in the middle of the night so nothing controversial today or for the next few days from me).