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ILO Director-General warns of potentially grave social consequences of asian financial crisis


Press release | 09 December 1997


BANGKOK (ILO News) ­ Warning of the potentially grave social consequences of the financial turmoil in Asia, the Director-General of the International Labour Office (ILO) today called on states to develop effective unemployment benefit systems, facilitate worker redeployment and expand opportunities for education and skills acquisition.

In a keynote address opening a three-day ILO Asian Regional Meeting here, Michel Hansenne noted that a prolonged period of exceptionally high rates of economic growth had resulted in a reduction in poverty, strong employment growth and increasing real wages.

But, he emphasized, the sudden onset of the current economic crisis "if not quelled speedily, is likely to see strong negative impact on the real economy and hence on employment and the welfare of workers."

"Starting as the South East and East Asian economies do from a prolonged period of high growth, even a deceleration of growth would generate social tensions," he warned.

"The social consequences of a sharp increase in unemployment could, furthermore, be catastrophic because of the weakness of the existing system of social protection in most of Asia," Mr. Hansenne said. "There is typically no system of unemployment benefits or mechanism for facilitating retraining and redeployment. Consequently, retrenched workers will have to fend for themselves and rely on family and other traditional social support systems."

The Conference is to consider a range of issues of concern to the ILO--employment, poverty and human resource development, industrial relations and protections of workers, women and child labourers--in the broad perspective of globalization of economies and liberalization of trade. The participants are to forge new strategies for the ILO region on future activities covering a wide range of social issues. Participants include ministers of labour, and employer and worker representatives from 43 States (Endnote1) .

"The need for formal systems of social protection was not recognized during the period of high and steady growth and virtual full employment," Mr. Hansenne said. "Perhaps the current crisis and the danger of a rise in unemployment will serve as a catalyst for change, demonstrating the need for formal mechanisms to cope with the economic hazards associated with the global economy."

Mr. Hansenne called for the development of effective unemployment benefit systems and measures to facilitate worker redeployment, and for the adoption of policies aimed at reducing social inequalities including expanding opportunities for education and skill acquisition.

"It will also be important to strengthen the observance of core labour standards," Mr. Hansenne said, referring to the right of workers to organize and bargain collectively, abolition of forced and of child labour, and equal remuneration for men and women for work of equal value.

"Apart from the moral imperative of eliminating forced and child labour, there is also the fact that full respect for the freedom of association and the right to bargain collectively is an important bulwark against an excessive rise in inequality and a deterioration in labour standards in the wake of globalization," he said. "The best antidote against this is a strong labour movement that is fully empowered to defend workers interests through collective bargaining."

"Globalization will not be politically viable if it leads to a deterioration in social justice," the Director General said, adding that rising inequality, deteriorating labour welfare, and the absence of adequate social protection could breed "discontent and provoke a strong backlash against globalization."

"But over and above these prudential consideration there is also an important issue of democratic values," he added. "Workers are important stakeholders in the process of globalization and are also the group that is most likely to suffer from its negative effects. As such they have a right to be heard and to influence how the process of globalization is being managed both nationally and internationally. No effort should thus be spared in promoting greater social dialogue and industrial democracy."

The current economic crisis illustrated the importance for the ILO to "review and adapt its standard-setting activity in the context of a globalized economy," Mr. Hansenne said, acknowledging the contributions of governments of the Asian, Pacific and Arab regions to a global campaign launched in 1995 by the ILO to ratify core labour standards.

"The question arises, however, by what means one can apply those rights as long as the universal ratification of the corresponding Conventions has not been achieved in its entirety," he said. Among the options being explored by the ILO, he said, was the adoption of a "solemn Declaration" by its member States expressing the significance of a certain number of fundamental values and principles underlying social progress. Discussion of such a declaration has been included on the agenda of next year's International Labour Conference.

Endnote 1:

Afghanistan, Australia, Bahrain, Bangladesh, Cambodia, China, Fiji, France, India, Indonesia, Islamic Republic of Iran, Iraq, Japan, Jordan, Republic of Korea, Kuwait, Lao People's Democratic Republic, Lebanon, Malaysia, Mongolia, Republic of Myanmar, Nepal, New Zealand, Oman, Pakistan, Papua New Guinea, Philippines, Portugal, Qatar, Russian Federation, Saudi Arabia, Singapore, Solomon Islands, Sri Lanka, Syrian Arab Republic, Thailand, Turkmenistan, United Arab Emirates, United Kingdom, United States, Viet Nam, Yemen, and Hong Kong, China.