Poverty and Sustainable

Development in Asia
Impacts and Responses to the
Global Economic Crisis
Edited by
Armin Bauer and Myo Thant
Poverty and Sustainable
Development in Asia
Impacts and Responses to the
Global Economic Crisis
Edited by
Armin Bauer and Myo Thant
¹2010AsiunDevelopmentBunk
Alliigltsieseived.Publisled2010.
PiintedintlePlilippines.
ISBN978-92-9092-06S-6
PublicutionStockNo.RPT091220
Cutuloging-In-PublicutionDutu
AsiunDevelopmentBunk
PoveityundsustuinubledevelopmentinAsiu:impuctsundiesponsestotleglobul
economicciisis.
MunduluyongCity,Plilippines:AsiunDevelopmentBunk,2010.
1.Economicciisis. 2.Poveity. 3.Sustuinubledevelopment. 4.Asiu.
I.AsiunDevelopmentBunk.
Tleviewsexpiessedintlisbookuietloseoltleuutloisunddonotnecessuiilyiellect
tleviewsundpoliciesoltleAsiunDevelopmentBunk(ADB)oiitsBouidolGoveinoisoi
tlegoveinmentstleyiepiesent.
ADBdoesnotguuiunteetleuccuiucyoltledutuincludedintlispublicutionunduccepts
noiesponsibilityloiunyconsequenceoltleiiuse.
Bymukingunydesignutionoloiieleiencetoupuiticuluiteiiitoiyoigeogiuplicuieu,oi
byusingtleteim“countiy”intlisdocument,ADBdoesnotintendtomukeunyIudgments
ustotleleguloiotleistutusolunyteiiitoiyoiuieu.
ADB encouiuges piinting oi copying inloimution exclusively loi peisonul und
noncommeiciul use witl piopei ucknowledgment ol ADB. Useis uie iestiicted liom
ieselling, iedistiibuting, oi cieuting deiivutive woiks loi commeiciul puiposes witlout
tleexpiess,wiittenconsentolADB.
Note:
Intlisiepoit,“S”ieleistoUSdolluis.
AsiunDevelopmentBunk
6ADBAvenue,MunduluyongCity
1SS0MetioMunilu,Plilippines
Tel+6326324444
Fux+6326362444
www.udb.oig
Foioideis,pleusecontuct:
DepuitmentolExteinulRelutions
Fux+6326362648
udbpub(udb.oig
Contents
Preface vii
Acknowledgment x
Overview
Myo Thant and Armin Bauer 1
Section I: The Impact
TleimpuctoltlewoildiecessiononIndonesiu
undunuppiopiiutepolicyiesponse:SomelessonsloiAsiu
Gustav F. Papanek and M. Chatib Basri
with Daniel M. Schydlowsky 13
ImpuctsoltleeconomicciisisinEustAsiu:
Findingsliomquulitutivemonitoiinginlivecountiies
Carrie Turk and Andrew Mason S1
Sociulimpuctolcommoditypiicevolutility
inPupuuNewGuineu
Dominic Patrick Mellor 77
Assessingsociuloutcomestliougl
tleMillenniumDevelopmentGouls
Shiladitya Chatterjee and Raj Kumar 97
Section II: Labor and Gender
Tleimpuctoltleglobuleconomicslowdown
onvuluecluinluboimuiketsinAsiu
Rosey Hurst, Martin Buttle, and Jonathan Sandars 113
Globulmeltdownundinloimulity:Aneconomy-wide
unulysisloiIndiu—Policyieseuiclbiiel
Anushree Sinha 131
TlesociulimpuctoltleglobuliecessiononCumbodiu:
Howtleciisisimpuctsonpoveity
Kimsun Tong 141
Womenlucingtleeconomicciisis—
TleguimentsectoiinCumbodiu
Sukti Dasgupta and David Williams 149
iv Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Nocusliontolullbuckon:Tleimpuctoltleglobuliecession
onwomenintleinloimuleconomyinlouiAsiuncountiies
Zoe Horn 169
GendeiundsociulpiotectioninAsiu:Wlutdoes
tleciisisclunge?
Nicola Jones and Rebecca Holmes, with Hannah Marsden,
Shreya Mitra, and David Walker 187
Section III: Migration and Remittances
Tleimpuctoltleglobulslowdownontle
People’sRepublicolClinu’siuiulmigiunts:
Empiiiculevidenceliomu12-citysuivey
Xiulan Zhang and Steve Lin 203
Uibun–iuiulundiuiul–uibuntiunsmissionmeclunisms
inIndonesiuintleciisis
Megumi Muto, Shinobu Shimokoshi, Ali Subandoro,
and Futoshi Yamauchi 219
Tleglobullinunciulciisisundugiicultuiul
development:VietNum
Dang Kim Son, Vu Trong Binh, and Hoang Vu Quang 229
Impuctoltleglobuliecessiononinteinutionul
luboimigiutionundiemittunces:Implicutionsloi
poveityieductionunddevelopmentinNepul,Plilippines,
TuIikistun,undUzbekistun
Andrea Riester 239
Section IV: Responses
Globulciisisundlisculspuceloisociulpiotection
Armin Bauer, David E. Bloom, Jocelyn E. Finlay,
and Jaypee Sevilla 2S7
Addiessingunemploymentundpoveitytliougl
inliustiuctuiedevelopmentusuciisis-iesponsestiutegy
Chris Donnges 27S
FisculspuceloisociulpiotectionpoliciesinVietNum
Paulette Castel 299
Tleglobuleconomicciisis:CunAsiugiusptleoppoitunity
tostiengtlensociulpiotectionsystems?
Mukul G. Asher 319
v Contents
Incomesuppoitintimesolglobulciisis:Anussessment
oltleioleolunemploymentinsuiunceundoptions
loicoveiugeextensioninAsiu
Wolfgang Scholz, Florence Bonnet, and Ellen Ehmke 341
Finunciulciisisundsociulpiotectionieloim—Biukeoimotoi?
AnunulysisolieloimdynumicsinIndonesiuundVietNum
Katja Bender and Matthias Rompel 367
Reloimingsociulpiotectionsystemswlencommodity
piicescollupse:TleexpeiienceolMongoliu
Wendy Walker and David Hall 389
Tleimpuctoltleglobuliecessionontleleultl
oltlepeopleinAsiu
Soonman Kwon, Youn Jung, Anwar Islam, Badri Pande,
and Lan Yao 40S
Tleimpuctoltleglobuliecessionontlepooiundvulneiuble
intlePlilippinesundontlesociulleultlinsuiuncesystem
Axel Weber and Helga Piechulek 42S
Implicutionsoleconomiciecessionsonquulity,
equity,undlinuncingoleducution
Jouko Sarvi 441
Section V: The Environments of the Poor
Impuctoltleglobuliecessiononsustuinubledevelopment
undpoveitylinkuges
V. Anbumozhi and Armin Bauer 4S3
Gieengiowtl,climuteclunge,undtlelutuieoluid:
ClullengesundoppoitunitiesinAsiuundtlePucilic
Paul Steele and Yusuke Taishi 471
Meusuiingtleenviionmentulimpuctsolclunging
tiudeputteinsontlepooi
Kaliappa Kalirajan, Venkatachalam Anbumozhi,
and Kanhaiya Singh 491
Poveity,climuteclunge,undtleeconomiciecession
Benoit Laplante S07
AlteinutiveeneigyoptionsolAsiuinciises
Kaoru Yamaguchi and Miki Yanagi S21
vi Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
List of Boxes
Box1: Plilippines:Monitoiingpoveity
undsociulpiotection
Mahar Mangahas S0
Box2: Bungludesl
Nazneen Ahmed and Mustafa K. Mujeri 76
Box3: Uzbekistun
Jhanna Fattakova 96
Box4: PioIectingtlepoveityimpuct
oltleiecession
Guanghua Wan and Ruth Francisco 111
BoxS: Tluilund’suutomotiveindustiy
Archanun Kohpaiboon et al. 140
Box6: Impuctonwomen:Fieldstudies
Samantha Hung 168
Box7: Pukistun
Idress Khawaja 186
Box8: TlePlilippines’electionicssectoi
M. Lopez 218
Box9: Inloimingtleleultlsystemsieloimugendu:
TleioleolunAsiu–Pucilicobseivutoiy
Rebecca Dodd and Henk Bekedam 404
Box10: Heultlsecuiity:Tluilund
Reisuke Iwana 440
vii
Preface
TlewoisteconomicciisissincetleGieutDepiessionlitAsiuundtle
Pucilicin2008–2009.Expoitsdeclined,economicgiowtlcontiucted
inmunycountiiesundisstillutuloweileveltlunintlelustdecude.
Wlile giowtl lus iebounded—ulbeit ut u lowei iute—tle ciisis lus
ieveuled stiuctuiul pioblems ol u giowtl piocess in Asiu tlut is not
inclusiveenougl.
Tle2008/09globuleconomicciisisisdilleientliomtle1997/98
Asiunlinunciulciisisinmunywuys.Itullectedpeoplemuinlytliougl
clungesinluboimuikets,ietuinmigiution,lossolsociulpiotection,
undwoiseningsociullubiic.Unliketleeuilieiciisiswlentledomi-
nunt luboi muiket ellect wus u sluip decline in ieul wuges, in tle
moieiecentciisistledominuntimpuctwusolieducedemployment
undlouiswoiked.Tleciisismuyulsoluvelong-teimellectsontle
uclievement ol tle Millennium Development Gouls. Fuitleimoie,
tleieuiespecilicgendeiputteins,witlbotlwomen(especiullyintle
guimentundelectionicsectois)undmen(intleuutomobilepuitsund
constiuctionsectois)beingullected.Finully,tleciisisludsputiulund
demogiuplic putteins by ullecting uibun migiunts, young educuted
people,undtlepooiundvulneiublegioups.Tleieisulsounimpuct
oniuiuluieus.Tleciisisslowstleiegion’ssociulundeconomicdeve-
lopment sustuinubility being constiuined by stiuctuiul pioblems ol
duulisticluboimuiketsundweuksociulpiotectionsystems.
Tleciisisieveuledpievuilinggendeiputteins.Womenbenelited
gieutly liom globulizution, wlicl cieuted new Iob oppoitunities loi
tlem in modein expoit industiies. Howevei, tlose Iobs weie olten
low-puid,low-skilled,undvulneiuble.Intleciisis,womenweielie-
quentlytleliistexposedtoietienclmentsundieducedpuyinexpoit
industiieslikeguimentsoielectionics.Reducedoppoitunitiesintle
inloimulsectoiulsoloweiedwomen’soppoitunitiesintleluboimui-
ket,wlileuttlesumetimetleiiiesponsibilitiestocuieloitlelumilies
weieexposedtonewclullengesduetotleluckolloimulsociulsulety
nets.Howevei,tleciisisulsoclungedgendeiielutionswlenmenlost
tleiiIobsinconstiuctionindustiiesoiusoveiseusloieignwoikeis.
Tlepuceolpoveityieductionlusbeenslowedbytleciisis.Asiun
Development Bunk (ADB) estimutes suggest tlut by 2010, ubout
72millionveiypooi(undeitleS1.2Sinteinutionulpoveityline)und
108 million vulneiuble pooi (undei tle S2 poveity line) could not
escupepoveityduetotleciisis.Puiticuluilyullecteduietlemodeiu-
tely pooi (tlose uiound tle S2 poveity line), uibun educuted youtl
woikinginexpoitsectois,undinteinulmigiuntwoikeis.
viii Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tle impuct ol tle ciisis on tle sociul sectois (leultl, educu-
tion, und sociul piotection) is less visible but slould be expected.
Tleimmediuteimpuctoltleciisisonleultlisloweitlunoneducu-
tion.Migiuntwoikeisinpuiticuluicutcostsbysendingtleiiclildien
tocleupeiscloolsintlecitiesoibucklometotleiivilluges,iesulting
inieducededucutionoppoitunitiesloitleseclildien.Tleieissolui
little evidence loi tle ieduction ol goveinment spending on leultl
cuie.Negutiveleultlimpucts,lowevei,muycomeulewyeuislutei,
wlen tle ligl costs ol tle iescue puckuges need to be ielinunced,
wliclmuyiesultinbudgetcutswleietiuditionulleultlbudgetsuie
ullectedliist.
Tle ciisis ieveuled weuknesses in tle sociul piotection system.
Witlclungingpopulutionstiuctuie,tlelumily-busedsuppoitsystems
muybelessellective.Buildingupinnovutiveundinclusivesociulpio-
tection systems is essentiul to uddiess tle lutuie needs ol societies
becomingoldei,leultlundeducutioncoststlutuieiupidlyiising,und
populutions tlut uie incieusingly exposed to enviionmentul iisks. In
uddition, speciul elloits need to be mude to include migiunts in tle
newsetupolsociulpiotectionsystems.
Tleciisiscomesontopolwoiseningenviionmentsloitlepooi,
uggiuvuted by climute clunge (loi tle diylund pooi, uplund pooi,
coustul pooi, und llood-ullected pooi) und iuiul to uibun migiution
(iesultinginiisingslumpoveity).Gieengiowtl—tobeinclusiveund
pio-pooi—needstouseusputiuluppiouclundlocusontleenviion-
ments in wlicl tle pooi live. Investments in climute clunge miti-
gution luve limited diiect impuct on tle lives ol tle pooi. Rutlei, u
iebuluncingtowuidpio-pooigieengiowtlwouldimplymoieinvest-
ments to uddiess slum poveity (impioving sleltei, enluncing tle
pooi’stiunspoitmeuns,unduddiessingullloimsolcongestion)und
diylundpoveity,oltenlinkedtolelptlepooiudupttoclimuteclunge.
ADBquicklyiespondedtotleciisiswitlutotulolS8.94billionin
ciisissuppoitloi43pioIects,olwlicl7%wusuppiovedin2008,82%
in2009,und11%ispiogiummedloi2010.Oltlis,40%wusintle
loimolpiogiumlouns,28%wuspiovidedtliougltlecounteicycli-
culsuppoitlucility,21%tliouglnonsoveieignopeiutions(especiully
tiudelinunce),und11%wusintleloimolsoveieignpioIectlounsund
giunts. Muny pioIects included components linuncing sociul piotec-
tion,luboimuiket,undpoveityieductionelloitsoltlegoveinment,
especiully in Bungludesl, Centiul Asiu und tle Cuucusus, Indonesiu,
Mongoliu,tlePlilippines,undVietNum.
1
1
Foiluitleiinloimution,seeADB.2009.Global Economic Crisis and ADB Response.
An Update. Decembei. www.udb.oig/Documents/Policies/Globul-Economic-Ciisis/
in430–09.pdl
ix Preface
Tlisbooksuggeststluttleciisisisunoppoitunitytoietlinktle
model ol development in Asiu und muke giowtl moie inclusive und
sustuinuble.Issuestlutneedtobemoiecuielullyconsideiedinclude
º closingtlegupolduulisticluboimuiketsbylinuncingpublic
employmentpiogiumsloitleiuiulpooi,linuncingluboi-bused
inliu stiuctuie,investingintlepooi’seducutiontliouglsclo-
luislipsundvoucleis,undpiomotingemploymentintensively
insmullundmedium-sizedenteipiises;
º buildingupsociulpiotectionsystemstlutuddiesstlepioblems
oltlelutuie,sucluscostsolcutustioplicleultlissues,costs
ol educution, old uge, climute und disustei insuiunce und
piotectionund/oiclimuteclunge,undinclusionolmigiuntsin
sociulpiotectionsystems;
º iutionulizing sociul expendituies tliougl public linunce und
munugement ieloims, und intioducing—especiully in Soutl
Asiu—conditionulcusltiunsleistouddiesspoveity;
º uddiessing uibun poveity tliougl slum upgiuding, lousing
linunce,undtownplunning;
º piomotingiuiuldevelopmenttliouglloodsecuiitypiogiums
in pio-pooi giowtl potentiul uieus, locused luboi-bused
inliustiuctuiesuppoit,decentiulizedindustiiulizutionpolicies,
und uctive migiution piogiums loi uieus witl little pio-pooi
giowtlpotentiul;und
º concentiuting climute clunge inteiventions moie on uduptu-
tionundlinkingtlemtoslumimpiovement,iuiuldevelopment
inpio-pooipotentiuluieus,undiiskpieventionmeusuiessucl
usugiicultuiul,usset,unddisusteiinsuiunceloitlepooi.
UisuluScluelei-Pieuss
VicePiesidentloiKnowledgeMunugementundSustuinubleDevelopment
AsiunDevelopmentBunk
x
Acknowledgment
On28–30Septembei2009,tleAsiunDevelopmentBunk(ADB),tle
goveinmentsolVietNumundtlePeople’sRepublicolClinu(PRC),
undtleAssociutionolSoutleustAsiunNutions(ASEAN)Secietuiiut
Iointly oigunized u ligl-level, Asiu-wide iegionul conleience on tle
sociulundenviionmentulimpuctoltleglobuleconomicciisisontle
people in Asiu und tle Pucilic, especiully tle pooi und vulneiuble.
Tleconleienceulsoseivedustle3rd China–ASEAN Forum on Social
Development and Poverty Reduction undtle4th ASEAN+3 High-Level
Seminar on Poverty Reduction.
Tle ligl-level, Asiu-wide iegionul conleience wus Iointly oigu-
nized by tle Stute Council Leuding Gioup on Poveity Alleviution
und Development ol tle PRC, tle Ministiy ol Agiicultuie und Ruiul
Development ol tle Goveinment ol Viet Num, ADB, und tle ASEAN
Secietuiiut.ItwussuppoitedbydevelopmentpuitneissuclustleADB
Institute(ADBI),tleAustiuliunAgencyloiInteinutionulDevelopment
(AusAID), tle Geimun Development Coopeiution (BMZ/GTZ/KlW),
tle United Kingdom Depuitment loi Inteinutionul Development
(DFID),tleInteinutionulLubouiOigunizution(ILO),tleInteinutionul
Poveity Reduction Centei in Clinu (IPRCC), tle Jupun Inteinutionul
Coopeiution Agency (JICA), tle United Nutions Development
Piogiumme(UNDP),tleWoildHeultlOigunizution(WHO),undtle
WoildBunk.Wewouldliketotlunkullouidevelopmentpuitneisloi
mukingtleconleienceusuccessundtlisbookpossible.
TleHuNoimeetingwusumuIoievent,inlucttleonlysuclluige
eventwoildwide,witlmoietlun3S0puiticipuntsliomgoveinments,
iegionultlinktunksunducudemiu,multiluteiulundbiluteiuldevelop-
mentugencies,undcivilsociety.Moietlun60pupeisincludinglield
studies,impuctoveiviews,undsectoiundtlemuticstudiesweiepie-
sented.Wewouldliketotlunkulltlosewlocontiibutedpupeistotle
conleience.Weulsotlunktleteumolconleienceoigunizeis:LuLiqun
liom tle Inteinutionul Poveity Reduction Centei ol tle Goveinment
ol tle PRC; Houng Tli Dzung und Bin Dinl Tli Tlunl Huyen liom
tle Ministiy ol Agiicultuie und Ruiul Development ol Viet Num;
Megu Iienu liom tle ASEAN Secietuiiut; und Aimin Buuei, Miclelle
Domingo, Debbie Lubuiiete, Cecile H. Suiluiti, und Myo Tlunt liom
ADB.
Tlis book leutuies only u subset ol tle pupeis piesented ut tle
Hu Noi conleience. Tle book is designed witl tle needs ol policy
mukeis in mind, diuws on lield und tlemutic buckgiound studies,
und coveis u luige numbei ol countiies und cuses. Tle pupeis luve
xi Acknowledgment
beenievisedundupdutedsincetletimeoltleconleience.Tlebook
is complemented by u website tlut losts ull tle pupeis piesented
ut tle conleience (www.udb.oig/Documents/Events/2009/Poveity
-Sociul-Development/pupeis.usp).
I would like to tlunk tle muny uutlois, us well us my ADB col-
leuguesAiminBuueiundMyoTlunt,loiputtingtlisbooktogetleiin
uveiysloittime.TlispublicutionisuIointundeitukingolADBund
ADBIinTokyo.
XiunbinYuo
DiiectoiGeneiul
RegionulundSustuinubleDevelopmentDepuitment
AsiunDevelopmentBunk
1
Overview
Myo Thant and Armin Bauer
1
...tle Clinese cluiuctei loi “ciisis” ulso meuns
“oppoitunity.” We muy ulso considei tlut tle oiigin ol
tle woid ciisis is deiived liom tle Gieek woik krienin,
wliclmeunstodecide.…Tlecuiientciisispiovidesun
oppoitunity to decide on uctions tlut put tle iegion’s
countiiesonmoiesuielooting.Letusseizetlisclunce
to luy tle gioundwoik loi moie inclusive sustuinuble
giowtl….
—PiesidentKuiodu,AsiunDevelopmentBunk
Background
TleglobuleconomicciisisbegunwitllinunciultuimoilintleUnited
Stutestlutiupidlyspieudtotleiestoltlewoildtocieutetlewoist
globul economic downtuin since tle Gieut Depiession. Following
moie tlun u yeui ol tuimoil u lull-blown bunking ciisis eiupted in
Septembei2008.Finunciulinstitutionsuioundtleglobeludtowiite
olllugelounsundtlestiuctuiedlinuncemuiketcollupsed.Finunciul
pioblemsweiesoontiunsmittedtotleieulsectoisolmuIoiindustiiul
countiiespuslingtlemintoiecessionundcollupsingwoildtiude.
Asiunlinunciulinstitutionsundtlebunkingsectoiludlittleexpo-
suietotletoxicsecuiityussetsuttleleuitoltlelinunciulciisisund
Asiun bunks weie well cupitulized witl sound poitlolios. Tlus, loi
sometime,tleiewuslopeolu“decoupling”betweenAsiuundtleiest
oltlewoild.Tlislopevunislediupidlyusloieigninvestoisieduced
tleiileveiugebysellingollussetstoiuisecuslunddemundloiAsiun
expoitsdeclined.Hopetuinedtoleuitluttleglobuliecessionwould,
tliouglincieusedunemploymentundieducedpublicspending,leud
to un incieuse in poveity levels und widespieud socioeconomic pio-
blems.UndeilyingtleseleuisweietlieeissuesspecilictoAsiu.
1
MyoTluntisupiincipuliegionulcoopeiutionspeciulist,undAiminBuueiisusenioi
economistuttleAsiunDevelopmentBunk(ADB).Tlisclupteidoesnotnecessuiily
iellecttleviewsolADB.
2 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Fiist,munyexpoit-ieliuntcountiiesinAsiusuclustleRepublicol
Koieu,Tluilund,Indonesiu,undMuluysiuludbeenseveielyullected
bytle1997Asiunlinunciulciisis.Recoveiyliomtlisciisisludtuken
sometimeundonlyutconsideiublecosttonutionulpiide,conlidence,
undiesouicesinulmostullcuses.Tlecountiiesloweveitooktoleuit
tle luisl lessons ol tle ciisis und instituted bunking und linunciul
ieloims und, in some cuses, sociul piotection meusuies. Tlis, und
u moie ellicient bunking system, would piotect tlem liom u seveie
sociulciisis,despiteluitleilossesintleluboimuikets.
AsecondissuewusgeneiuluwuienessumongAsiunpolicymukeis
tlutwliletleiegionludgiownveiyiupidlyinuquuiteiolucentuiy,
muclneededtobedoneundtleexpoitengine–ieliuntdevelopment
model being utilized lud innute weuknesses tlut u globul iecession
wouldexuceibute.Inclusiveluboigiowtl,sociulpiotection,undenvi-
ionmentulsustuinubilityweiemissinginmunycountiies.Despitesus-
tuinedgiowtl,1.6billionAsiunsliveonlesstlunS2uduyundubout
20% in extieme poveity undei tle inteinutionul S1.2S poveity line.
Sociulundenviionmentuldimensionsolpoveityintleiegionuieulso
liigltening:1.6billioniniuiulAsiuluvenouccesstoimpiovedsunitu-
tion,700millionluvenouccesstosulewutei,und100millionclildien
uieoutolsclool(ADB2009b).Topieventluitleipoveity,countiies
neededmoieinclusivegiowtlwitlbioudeiluboimuiketpuiticipution
inglobulvuluecluins,wliclweienowdisiuptedbyieduceddemund
loilinulpioductsinindustiiulizedcountiies.
In otlei cuses tle giowtl model being utilized is leuvily depen-
dentonmigiutionundiemittunces,touiismievenue,undliglcommo-
ditypiices,wliclweieulsodependentonglobulund,tougieutextent,
industiiulized countiy economic piospeiity. Countiies, wlicl weie in
tiunsition liom plunned to muiket economies but weie still essen-
tiullyclosedtotleglobuleconomyin1997,weielucedwitluunique
situution.Aswitloldeimuiketeconomies,tleylucedtlepioblemol
ieduceddemundloitleiiexpoitsbut,intletiunsitiontomuiketeco-
nomies,ludluigelygivenupbycloiceoilisculnecessitytletiuditio-
nulsociulpiotectionmeclunismsoltleplunnedeconomyeiuundweie
tleieloieinuweukeipositiontoiespondtotleglobuliecession.
A tliid issue common to seveiul countiies in Asiu wus tlut
wlile tleie lud been substuntiul inteiest duiing tle 1997 ciisis on
estublisling sociul sulety nets us ieul wuges plunged, in geneiul,
once tle ciisis wus ovei und giowtl iesumed, discussions on sociul
piotection systems giuduully subsided. Tluilund, wlicl iepoited
un incieuse in udult moitulity in tle 1996–1999 peiiod, expunded
piogiums to piovide leultl cuie loi tle pooi und voluntuiy leultl
insuiuncecuidsloitleneuipooi.InIndonesiuuseolleultllucilities
3 Overview
declined muikedly witl cuts in leultl spending wlile cuts in
educutioncombinedwitlpiessuiesinwoikiesultedinloweisclool
eniollments,especiullyumongtlepooiestlumilies(FullonundLucus
2002).Indonesiusubsequentlypiovidedscloluislipsloitlepooiest
students und block giunts loi sclools in tle pooiest communities
wlileunexpundedundiedesignedwoikluiepiogiumwusluuncled.
Asociulsuletynetpiogiumwusestublisledin1998unduconditionul
cusltiunsleipiogiumunveiledinmid-2008.Elsewleie,tleneedto
muintuinsociulpiotectioninuglobulizedundligllyinteidependent
woildeconomywusevenlesswellleeded.
Tle clupteis in tlis volume uie bused on some ol tle piesentu-
tionsmudeuttleiegionulligl-levelconleienceontleImpuctoltle
GlobulEconomicSlowdownonPoveityundSustuinubleDevelopment
in Asiu und tle Pucilic, wlicl wus leld in Hu Noi, Viet Num, on
28–30 Septembei 2009. Tle conleience, wlicl wus oigunized in
colluboiutionwitlmunydilleientmultiluteiulundbiluteiuldevelop-
ment ugencies, succeeded in exclunging expeiiences und views on
tle impuct ol tle globul iecession und tle dilleient iesponses being
implemented.Ovei3S0puiticipuntsliomtlepublicsectoi,ucudemiu,
und civil society uttended tlis meeting, wlicl wus tle luigest ol its
soitinAsiu.Tlisvolumeislikelytobeolinteiesttouwideiungeol
ieudeissincetlepupeiscoveiubioudspectiumundluigenumbeiol
Asiuncountiies.Tlepupeisweieclosenontlebusisoluccessibilityus
wellusintellectuuliigoiundinclusionolpieviouslyunuvuilubledutu,
muclolitgeneiutedliomlieldstudies.
Tlevolumeisevenlydividedbetweenusectionontleimpuctol
tle ciisis und clunnels ol tiunsmission und tle luttei lull tlut exu-
mines countiy iesponses. Limitutions ol spuce pievented publicution
olmunydeseivingpupeisultlougltlisistosomeextentoveicomeby
tleinclusionol“boxes”tlutpiovideupiecisoltlesepupeis.Fuitlei,
ullpupeispiesenteduttleconleienceuielostedinuwebsite:www
.udb.oig/Documents/Events/2009/Poveity-Sociul-Development/
pupeis.usp
As luitlei inloimution und dutu giuduully emeige, oui undei-
stundingoltleciisisunditsimpuctswillundoubtedlyimpiove.Tle
clupteisintlisvolume,lowevei,suggestlouilessonsoiissuestlut
uie likely to be iobust und even stiengtlened by new lucts us tley
giuduullyemeige.Tleseissuesuie
º tleciisislusullectedcountiiesindilleientwuys,
º tleclunnelsoltiunsmissionoltleciisisdilleibycountiy,
º tleieisgieutdiveisityiniesponse,und
º developmentpuiudigmsmuyneedtobecuielullyie-evuluuted.
4 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Impact of the crisis
Tle economies ol ull countiies in Asiu und tle Pucilic weie ullected
by tle ciisis ultlougl in dilleient degiees (Tuble 1). Altei giowing
ut iupid iutes in tle pievious 3 yeuis, most countiies expeiienced u
declineingiowtliutesin2008,wliclcontinuedinto2009.Countiies
tlutweieopenintlesenseolligldependenceonexpoitssulleied
moietluntlosetlutweielessieliuntonexpoit-diivengiowtl.Muny
intleloimeigioupexpeiiencedtleiiwoisteconomicpeiloimuncein
oveiudecudeundsuwunuctuulcontiuctionoltleiieconomies.Two
oltletlieeluigestAsiuncountiies,IndiuundIndonesiu,weielowe-
veiullectedonlymuiginullybytleciisisduetoielutivelylittleieliunce
on expoits und tle stiengtl ol tle domestic economy. Tle People’s
RepublicolClinu(PRC),ontleotleilund,wusseveielyullectedbyu
sluipdiopindemundloiitsexpoitsundonlytliouglmussivepublic
expendituieswusitubletopieventusluipieductioningiowtliutes.
OtleitiunsitionuleconomiessuclusVietNum,Cumbodiu,undmuny
CentiulAsiuneconomiesweielessloitunuteinteimsolimpuctuswell
usluvingtlelisculiesouicestocounteitleellectsoltleciisis.Wlen
secondlundimpuctssuclusligleicupitulcosts,luigeilisculdelicits,
undinsomecusesieducedcompetitivenessintleglobuleconomyuie
ulso eventuully included, tle impuct ol tle 2008/09 ciisis will most
likelybeseentobeevenlongeitluntleuboveliguiesslow.
TuikundMusonintleiiclupteipiovideuquulitutiveussessment
oltleimpuctoltleciisisonlivecountiies:Cumbodiu,tleLuoPeople’s
DemociuticRepublic(LuoPDR),Mongoliu,Tluilund,undVietNum.
PupunekundBusiidiscusstleimpuctoltleglobulciisisonIndonesiu,
u countiy tlut wus gieutly ullected by tle 1997 ciisis, und diuw
lessonsloineiglboiingeconomies.Tleyconcludetluttleiecession
lusludusuipiisinglylimitedmucioeconomicimpuct.Howevei,tley
note tle slow development ol Iob oppoitunities despite u decude ol
expoitgiowtl.Tleyulsonotetleneedloisociulpiotectionpiogiums
tlutuddiesstleneedsoltlepooi.
EconomicgiowtlcontiuctedinPucilicislundeconomiesin2009,
inmunycusescontinuingutiendtlutstuitedin2008(tleCookIslunds,
tleFiIiIslunds,Kiiibuti,tleFedeiutedStutesolMicionesiu,Puluu,und
Sumou). Melloi discusses tle impuct on sociul sectois ol commodity
piicevolutilityinPupuuNewGuineuundconcludestlutceituinpopu-
lution sub-gioups muy be luid-lit even tlougl tle oveiull economy
isluiilyiesilient.Tleciisislusmudetleeiudicutionolpoveityuyet
moie elusive goul us well us muking tle uttuinment ol Millennium
DevelopmentGoulsmoiedillicult.ClutteiIeeundKumuidiscusstlis
issueintleiiclupteiundnotetluttlesituutionispuiticuluilyseiious
loileustdevelopedcountiiesundPucilicislundeconomies.
5 Overview
Table 1: Growth Rates of Selected Asian Economies
2006 2007 2008 2009
Central Asia 13.3 12.1 6.1 2.7
Aimeniu 13.2 13.7 6.8 –14.4
AzeibuiIun 34.S 2S.4 10.8 9.3
Geoigiu 9.4 12.3 2.3 –3.9
Kuzuklstun 10.7 8.9 3.3 1.2
KyigyzRepublic 3.1 8.S 8.4 2.3
TuIikistun 7.0 7.8 7.9 3.4
Tuikmenistun 11.4 11.6 10.S 6.1
Uzbekistun 7.2 9.S 9.0 8.1
East Asia 9.4 10.4 7.3 S.9
Clinu,People’sRepublicol 11.6 13.0 9.6 8.7
HongKong,Clinu 7.0 6.4 2.1 –2.7
Koieu,Republicol S.2 S.1 2.2 0.2
Mongoliu 8.6 10.2 8.9 –1.6
Tuipei,Clinu S.4 6.0 0.7 –1.9
South Asia 9.0 8.7 6.4 6.S
Alglunistun 8.2 12.1 3.4 1S.1
Bungludesl 6.6 6.4 6.2 S.9
Blutun 6.4 14.1 11.S 6.0
Indiu 9.7 9.2 6.7 7.2
Muldives 18.0 7.2 6.3 –3.0
Nepul 3.7 3.3 S.3 4.7
Pukistun S.8 6.8 4.1 2.0
SiiLunku 7.7 6.8 6.0 3.S
Southeast Asia 6.1 6.S 4.3 1.2
BiuneiDuiussulum 4.4 0.2 –1.9 –1.2
Cumbodiu 10.8 10.2 6.7 –2.0
Indonesiu S.S 6.3 6.0 4.S
LuoPeople’sDemociuticRepublic 8.7 7.8 7.2 6.S
Muluysiu S.8 6.2 4.6 –1.7
Myunmui 7.0 S.S 3.6 4.4
Plilippines S.3 7.1 3.8 0.9
Singupoie 8.7 8.2 1.4 –2.0
Tluilund S.1 4.9 2.S –2.3
VietNum 8.2 8.S 6.2 S.3
Souice:AsiunDevelopmentBunk2010.
6 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Channels of transmission
Clunnelsoltiunsmissionoltleciisisdilleibycountiy.Munycountiies
luve been ullected by tle ieduction in demund loi tleii pioducts
wliclseveielyimpuctedAsiunsupplycluinsundieducedintiu-iegio-
nul tiude. Euily in tle ciisis mucl concein ovei un incieuse in open
unemployment us u iesult ol u contiuction in expoit volumes wus
expiessed.Fuitlei,itwusbelievedtluttlisunemploymentwouldbe
concentiutedinexpoitindustiiesinspeciliciegionsundwouldullect
women in puiticului, given tle luige piopoition ol women in low-
skilled expoit industiy Iobs. Tle situution wus tlouglt to be puiti-
culuily seiious in tle PRC wleie 22 million migiunt woikeis weie
estimutedtobeunemployedbytlebeginningol2009.Conceinovei
tleunemploymentolnewuniveisitygiuduutesundpuiticuluilytlose
liomiuiuluieuswusulsoexpiessed(MinTung2009).Unemployment
in Cumbodiu, wleie 70% ol totul expoits emunute liom guiments
expoitedtotleUnitedStutes,wusulsotlouglttobepuiticuluilyligl.
In otlei countiies sucl us TuIikistun, tle Plilippines, Nepul,
Bungludesl,undtleKyigyzRepublicwleieiemittuncesususluieol
GDPweieullovei10%,conceinsubouteitleiloicibleieputiiutionol
migiuntsoideclinesiniemittuncellowsweieexpiessedeuily.Pucilic
islundeconomiessuclusSumou,Tongu,undtleFiIiIslundsweieulso
ullected by tle decline in iemittunces. No luige-scule expulsions ol
migiunts weie lowevei iepoited. Tle uvuiluble evidence indicutes
tlut countiies tlut depended on iemittunces liom tle Middle Eust
weielessullectedbytleciisistluntlosecountiiestlutdependedon
iemittuncesliomindustiiulizedeconomies.
Inuluigenumbeiolcountiies,tletouiismsectoiisumuIoicontii-
butoi to tle economy tliougl employment geneiution und loieign
exclunge euinings. Soutleust Asiun touiist industiies in Tluilund,
Cumbodiu, und Singupoie weie substuntiully ullected by tle ieces-
sionusweietloseintleMuldives,tleFiIiIslunds,tleCookIslunds,
Sumou,undVunuutu.Touiistuiiivulsdeclinedusdiduveiugeexpendi-
tuiepeitouiist,ultlouglinsomecuses,tliswuspuitiullyollsetbyun
incieuseiniegionultouiism.
Inotleicountiies,ukeytiunsmissionioutewustlesuddendiop
incommoditypiices.OilpioduceissuclusKuzuklstunundTuIikistun
weie ullected by tle decline in oil piices wlile coppei-pioducing
Luo PDR und Mongoliu weie ullected by botl piice declines und
volutility.
Huistundleico-uutloisdiscusstleimpuctoltleglobulecono-
mic slowdown ol vulue cluin luboi muikets in loui Asiun countiies.
Tleyloundtlutenteipiisesuciosssectoisluveiespondedtotleciisis
7 Overview
by ieducing woikeis’ louis und ietienclment witl tempoiuiy und
migiuntwoikeisbeingmostullected.
Twoclupteisintlisvolumediscusstleimpuctoltleciisisoninloi-
mul sectoi woikeis. Sinlu, using u CGE model, slows low decline in
demundloiieguluiluboicunbeiellectedintlesupplyolinloimulluboi
in Indiu. Hoin exumines tle issue ol women in tle inloimul sectoi in
Indiu,Indonesiu,Pukistun,undTluilund.Sleconcludestluttleinloi-
mulsectoilusnosuletycuslionsundtlutintlewukeoluiecession,
sloit-,medium-undlong-teimielielmeusuiesuieneeded.Emeigency
ieliel meusuies slould be complemented by suspension ol luws und
iegulutionswliclpiolibittleliveliloodolinloimulsectoiwoikeis.
Jones und lei co-uutlois exumine low tle ciisis ullects gendei
undsociulpiotectioninAsiu.Tleylindtluttleieuiedisceiniblegen-
dei impucts und iecommend tlut policy iesponses need to be moie
gendei sensitive und women’s voice und collective uction slould be
piomoted. Dusguptu und Williums locus on Cumbodiu’s guiment
industiy und lind women woikeis beuiing mucl ol tle biunt ol tle
impucts owing to tleii piepondeiunce in tle sectoi, wlicl lus been
mostullected.
Tliee clupteis in tle volume discuss tle impuct ol tle ciisis on
iuiul uieus. Dung discusses tle impuct in Viet Num wleie demund
loi ugiicultuiul expoits declined und ietuin migiution liom uibun
uieusuddedtopioblemsintleiuiuluieus.Zlungexuminesempiiicul
evidenceliomu12-citysuiveywitlintlePRC.Tleclupteipiovides
quuntitutive evidence ol tle impuct ol tle ciisis, coveiuge ol sociul
insuiunce piogiums, und louselold-coping stiutegies. Muto und lei
co-uutloisdiscussuibun–iuiultiunsmissionmeclunismsinIndonesiu
bused on u suivey in centiul Juvu und Soutl Suluwesi, Indonesiu.
Riestei’sclupteicomplementstlesetlieeclupteisundexuminestle
impuct ol tle globul iecession on luboi migiution und iemittunces
in Nepul, tle Plilippines, TuIikistun, und Uzbekistun. Sle notes tlut
impuctsdilleiwidelyundtlutiebuluncingloculundiegionulIobmui-
kets is essentiul in tle long iun wlile sloit-teim meusuies sucl us
sociultiunsleisuieneededtocopewitlincieusedpoveityintlewuke
oltleciisisunddecliningiemittunces.
Diversity in response
How countiies iesponded to tle ciisis depended on seveiul luctois
includinguvuilubilityollisculiesouices,piioiexistenceolsociulpio-
tection institutions, us well us extent ol goveinment commitment to
sociul piotection. Responses ulso dilleied uccoiding to tle tiunsmis-
8 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
sion meclunism ol tle globul iecession. Nonetleless, two common
iesponses cun be seen. Fiist, countiies ieucted veiy iupidly to tle
ciisis, occusionully even beloie ieliuble inloimution wus uvuiluble.
Second,countiiespuisuedloosemonetuiypolicies.Amongtlemoie
developed Asiun countiies, liequent iounds ol inteiest iute cutting
weie seen. In otlei countiies woiking cupitul wus mude moie uvui-
lubletliougldilleientmeunsincludingsubsidies.
Giventleubsenceoluutomuticstubilizeis,mostAsiuncountiies
ielied on discietionuiy liscul stimulus meusuies to iesuscitute tleii
economiesultlougl,leieuguin,munycountiiesweieconstiuinedby
luck ol liscul spuce oi uccess to exteinul ussistunce. Fiscul stimulus
wussubstuntiulinmunycountiiesnotublytlePRCundTluilund.Tle
PRC’sstionglisculpositionullowedittounveiluCNY4tiillion(ubout
S600billion)lisculstimuluspuckugetlutlocusedontiunspoit,iuiul
inliustiuctuie, disustei ieliel, low-income lousing, und tle enviion-
ment. Tluilund, Kuzuklstun, und Viet Num ulso implemented luige
lisculstimuluspiogiumstlutuieestimutedtobeubove10%ol2008
GDP (UNDP 2009). Otlei countiies sucl us tle Republic ol Koieu,
Singupoie, und Muluysiu uie ulso tlouglt to luve liscul stimulus ol
betweenS%–10%.Inloimutiononwluttleudditionuliesouicesweie
usedloiismoiedilliculttousceituinpuiticuluilygivendilleiingdeli-
nitions ol sociul piotection used. Tle geneiul conclusion, lowevei,
is tlut tleie is little evidence ol signilicunt inteiventions to uddiess
poveityconsequences.
Seveiulcountiies,includingBungludeslundTluilund,incieused
civil seivice suluiies wlile otleis mude it eusiei to send iemittunces
liomubioud.Tlestimuluswusliequentlyusedloiluboimuiketintei-
ventions eitlei tliougl ussistunce to sectois oi industiies tlut weie
most ullected by tle ciisis oi incentives to ietuin oi ieliie luid-oll
woikeis sucl us Singupoie’s Jobs Ciedit Scleme. Tle impuct ol tle
ciisis in Indiu und Bungludesl muy luve been consideiubly nullilied
bytleuseoldilleientemployment-cieutingsclemes.Indiuexpunded
tle use ol its Nutionul Ruiul Employment Geneiution Act (NREGA),
wlicl wus cieuted in 200S und guuiuntees 100 duys ol puid luboi
to iuiul pooi. Similuily, Bungludesl utilized employment-geneiution
piogiums loi luid coie pooi us well us u nutionul seivice piogium
loiligleiseconduiyceitilicuteloldeis.Cusllundoutsweieulsouti-
lized,mostnotublyinTluilundundtlePRCwleieone-timepuyments
ol CNY100 und CNY1S0 weie given to iuiul und uibun louselolds,
iespectively. One iesponse, wlicl wus gieutly expected und leuied
but did not uppeui, wus ieputiiution ol loieign woikeis. A numbei
ol countiies including Sii Lunku, Pukistun, tle Muldives, Mongoliu,
undTuIikistunnegotiutedstundbyuiiungementsundotleipiogiums
9 Overview
witl tle Inteinutionul Monetuiy Fund to meet mucioeconomic dil-
liculties tlut weie exuceibuted by tle ciisis. Countiies ulso tupped
linunciul iesouices, wlicl weie piovided by tle multiluteiul deve-
lopmentbunks.TleAsiunDevelopmentBunk,loiexumple,piovided
S8.94billioninciisissuppoitolwliclulmostone-tliidwuspiovided
tliouglucounteicycliculsuppoitlucility(ADB2009b).
Tle volume includes 10 clupteis on iesponses ol dilleient
countiies. Buuei et ul. note tlut sociul piotection iemuins ielutively
neglectedinAsiuniescuepuckuges.Tleyuiguetlutincieusedsociul
piotection iequiies liscul iesouices us well us lundumentul ieloim
ol sociul piotection. Donois cun muke u positive contiibution to tlis
ultlouglceituinpiinciplesneedtobelollowed.Dongeslooksuttle
issueoluddiessingunemploymentundpoveityissuestliouglinlius-
tiuctuiedevelopmentpioIectsunddiscussesinsomedeptlpiogiums
inCumbodiu,Indiu,Indonesiu,undtlePlilippines.Heliglligltstle
impoitunce ol teclnicul und institutionul iesouices in ensuiing suc-
cesslul implementution ol inliustiuctuie piogiums. Custel evuluutes
tle liscul implicutions ol Viet Num’s sociul piotection stiutegy und
concludestlutitisliscullypossibletoboostpensionsystempuiticipu-
tion.Asleiexuminestleimpuctoltleglobulciisisondemogiuplic
und luboi muiket tiends witl u locus on pensions. He discusses tle
keyteclniculissuestlutmustbeconsideiedundconcludestlutgiven
tleleteiogeneityolAsiuncountiies,piogiessonpensionsislikelyto
beunevenundlessiupidtlundesiied.BendeiundRompelexumine
sociulpiotectionieloimdynumisminIndonesiuundVietNum.Wlile
tleie uie dilleiences between tle two countiies, tley lind tlut tle
puceolieloimwusnotullectedbytleglobuliecession.Tleyluitlei
concludetlutitispossibletoinitiuteuieloimpiocessevenutieluti-
velylowincomelevels.WulkeiundHullpiesenttlecuseolMongoliu
unditsClildMoneyPiogiumintleluceoluseveieiecession.Sclolz
discusses tle iole ol unemployment insuiunce und concludes tlut
in Eust Asiu, unemployment insuiunce is still undeideveloped even
tlougl muny countiies in tle iegion luve liscul und udministiutive
cupubilities.Heluitleinotestluttledevelopmentolunemployment
insuiunceiequiiesgoveinmentdiiectionundubetteibuluncebetween
publicinteiventionsundpiivutepiolitoiientution.
Tlepossibleudveiseellectsonleultlundeducutionusuiesultol
tleglobuliecessionweiewidelydiscussedliomtleveiybeginningol
tleciisis.Accoidingly,unumbeiolcountiiesluveincludedleultlcom-
ponentsintleiilisculstimuluspiogiums.Cumbodiuisimplementingu
leultlequitylundwlileVietNumisestublislinguleultlcuielundloi
tlepooi.TlePRCwillspendS12Sbillionovei3yeuistoextendbusic
leultlcuieto90%olitscitizens.Kwonundlisco-uutloisconclude
10 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tlut tle 1997 Asiun ciisis lud seveie impucts on tle leultl sectois
ol Indonesiu und Tluilund us u iesult ol ieduced income und lowei
publicleultlexpendituies.TleiisuiveyinBungludesl,tlePRC,und
Nepulloweveislowslittleevidenceolimmediutenegutiveimpucts.
Neveitlelesstleyuiguetlutgoveinmentsslouldusetleciisisusun
oppoitunityloiieloimingbotlleultlcuiesystemsundpolicies.Key
policiestlutiequiieuttentionuiestiengtleningleultlcuielinuncing
und impioved monitoiing cupubilities. Webei und Pietsclulek uigue
tlut ultlougl tle ciisis does not ullect tle Plilippines’ leultl insu-
iuncesystem,tlesystemneedsuigentimpiovementinteimsolcove-
iugeoltleunemployedundtlepooi.Suiviexuminestleimplicution
oltleeconomiciecessiononquulity,equity,undlinuncingoleducu-
tionundconcludestlut,intlesloitteim,impiovedmonitoiingund
suppoittogiils’educutionuswellusdisudvuntugedclildienisessen-
tiul.Hemukesustiongpitclloisuppoittoteclniculundvocutionul
educutiontiuiningundskillsdevelopment.
Development paradigms
Asoltlebeginningol2010,tleciisisstugeoltleglobuliecessionlud
pussed. Ciedit loi u iupid iecoveiy is due to muny luctois including
iupid und conceited uctions by developed countiies us well us luige
liscul expendituies by muny Asiun countiies. Witlin Asiu, tle PRC’s
stimulus pluyed u muIoi iole in ensuiing tlut tle iecession wus not
deepeiundiecoveiywuslustei.LuigeexpendituiesintlePRCensuied
gieuteidemundloiAsiunexpoitsuswellusligleicommoditypiices.
MuiketudIustmentssuclusluyollsundieductioninlouisolemploy-
ment weie ulso implemented by tle piivute sectoi. Asiun countiies
weie,lowevei,ulsoloitunuteintlutugiicultuiulloodpiicesweielow
us weie oil piices compuied witl tle ligl levels in tle iecent pust.
Countiies,lowevei,cunnotcountongoodloituneundexpendituiesol
luigecountiiestomuintuinsociulpiospeiity.Tlewisdomoldepending
onmigiuntiemittuncestosmootlconsumptionputteinsundpiovide
sociulpiotectionisulsodebutuble.Tleiupidiecoveiyoltleiegion’s
economiesslould,tleieloie,beusedusunoppoitunitytoieexumine
tle nutuie ol tle development piocess und considei udoption ol un
inclusivegiowtlstiutegy.Somemovementintlisdiiectioncunbeseen
liomincieuseduseoltleteim“iebuluncing.”
Wlut tle teim uctuully meuns is, lowevei, less cleui. In some
contexts,itieleistocoiiectingimbuluncesoltlosecountiieswloseout-
putgieutlyexceedsexpendituie,byulteiingpioductionstiuctuieund
diveisilyingdemund(ADB2009b).Itmuyulsoieleitoendogenizution
11 Overview
olsociulissuesintotlegiowtlpiocesswitlunemplusisonnotonly
quuntitutive but quulitutive giowtl us well. Tle teim muy ulso ielei
to u slilt in ielutive impoitunce ol tle public und piivute sectois in
tle diive loi economic development. Wlutevei tle exuct delinition,
tleteimiequiiesluitleitlinkingiltleciisisisnottobecomeulost
oppoitunityloiensuiingequitubleundsustuinedgiowtl.Fiesltlin-
kingisneededonlowtomuketlegiowtlpiocessmoieinclusivein
luboimuikets,loisociulundmunicipulseivices,undinsociulpiotec-
tionwliclcungeneiullybeundeistoodusintiutivestlutuieintended
to ieduce poveity und vulneiubility und impiove louselold welluie
(ADB 200S). It is ucknowledged tlut development piocesses in un
incieusinglyintegiutedwoildcunbedisiuptiveunduluigeioimoie
ellective iole loi tle public sectoi in tle piocess ol development is
desiiuble,isneeded,usisuwuienessolgendei,iegionul,undincome
clussluultlinesintlepiocessoldevelopment.
Addiessingtlepioblemscuusedbysuclluultlineswilliequiieun
ubilitytoconceptuulizeunductoveiielutivelylong-teimloiizonsso
tlutglobuliecessions,olwlicltleiewillinevitublybemoie,willbe
less sociully disiuptive tlun tle cuiient one. Delinitionul dilleiences
existbutinclusivegiowtlinwlicleconomicoppoitunitiesuiebotl
moie level us well us luigei will be needed. Fuitlei, sociul piotec-
tionmeusuiesslouldbeseenusunintegiulcomponentoltlegiowtl
piocess. At one level it is meiely good goveinunce since it piovides
piotection loi tlose most udveisely ullected und most vulneiuble to
exteinulslocks.Atunotleilevelitissoundeconomicpolicy.Piopeily
designedsociulpiotectionmeusuiessustuinundpiotectpiioiinvest-
mentinlumuniesouicesuswellusseiveusumeunsolstimuluting
nutionulgiowtlbytiunsleiiingsuvingsintodemundloiloculpioducts
und seivices. A well-designed sociul piotection system cun ulso lelp
muikets lunction bettei by enubling woikeis to tuke moie entiepie-
neuiiuliisks.
Muny Asiun countiies luce clullenges in impioving oi imple-
menting sociul piotection systems including politicul iesistunce, luck
ol iesouices, und limited cupucity in estublisling lunctionul monito-
iingsystemsiequiiedloituigeting.Notwitlstundingtlesepioblems,
gieuteiintiospectionunducuielulieexuminutionoltledevelopment
modelscuiientlybeingusedisloimunycountiiesuwoitlyuctivitytlut
slouldnotbepostponed.Investmentinsociulpiotectionisuninvest-
ment in long-teim lumun cupitul development wlose impoitunce
cunnot be downpluyed. It is luigely ulong tlese lines tlut live clup-
teisonenviionmentundiecessionissuesuieincludedintlisvolume.
Anblumozli und Buuei uigue in tleii cluptei tlut tle globul ciisis
piesents un oppoitunity to iemove policies tlut uie enviionmentully
12 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
luimlul.YumuguicliundYungisimiluilyuiguetlutienewubleeneigy
will become incieusingly impoitunt in Asiu ultlougl it will iequiie
stiong politicul leudeislip und suppoit. KuliiuIun et ul. uigue tlut it
is possible to incieuse und sustuin positive links between tiude und
tle enviionment tliougl piomotion ol teclnology. Tle ielutionslip
between climute clunge und poveity uie exumined in two clupteis.
Benoit uigues tlut investing in lemule educution contiibutes to tle
estublislmentolclimuteiesilienceinAsiu.SteeleundTuisliuiguetlut
tleciisispiesentsunoppoitunityloiugieeniecoveiyunddiscusslow
tlegieengiowtlconceptcunbemudeopeiutionul.
References
ADB.200S.Key Indicators.Munilu.
———. 2008. Tle Woild’s New Poveity Dutu: Implicutions loi tle
Asiun Development Bunk. ADB Sustainable Development
Working Paper SeriesNo.2.Novembei.
———.2009u.Asian Development Outlook: Rebalancing Asia’s Growth.
Munilu.
———.2009b.ADB Response to the Global Economic Crisis.An Update.
Decembei.Munilu.
———.2010.Asian Development Outlook: Macroeconomic Management
Beyond the Crisis.Munilu.
Fullon,PeteiR.undRobeitE.B.Lucus.2002.TleImpuctolFinunciul
Ciises on Luboi Muikets, Houselold Incomes, und Poveity: A
ReviewolEvidence.The World Bank Research Observer.Vol.17,
No.1,Spiing.WoildBunk.
Min Tung und Zlung Cleng. 2009. Tle Globul Finunciul Ciisis’s
Impuct on tle Clinese Pooi. Pupei piesented ut tle conle-
ienceonImpuctolGlobulEconomicSlowdownonPoveityund
SustuinubleDevelopmentinAsiuundtlePucilic.HuNoi,Viet
Num,28–30Septembei.
YunclunZlung,NinuTlelen,undApuinuRuo.2009.Social Protection
in Fiscal Stimulus Packages: Some Evidence.NewYoik:UNDP.
13
The impact of the world recession on
Indonesia and an appropriate policy
response: Some lessons for Asia
Gustav F. Papanek and M. Chatib Basri
1

with Daniel M. Schydlowsky
2

Introduction
TlisclupteiexuminestleimpuctoltleglobuliecessiononIndonesiu,
tle luigest countiy in Soutleust Asiu. Tle cluptei exumines tle
impuctonunemploymentundtlepoliciestlutluvebeenutilizedby
tlegoveinmenttominimizetleimpuctoltleiecession.Tlecluptei
concludeswitlusectiononlessonsloiotleiAsiuncountiies.
1. The recession and Indonesia—A surprisingly
small macroeconomic impact
Intleeuilystugesoltleglobuliecession,
3
itwusleuiedtlutIndonesiu
wouldbeluidlit.Expoiteuiningsweieexpectedtodeclineby30%
oi S30 billion–S40 billion, wlicl would be u loss ol 7.S%–10.0% ol
nutionul income. Add declining iemittunces und touiist income, und
usluipdeclineinexpectedloieignpiivuteinvestment,undtlediiect
costoltleiecessionwusexpectedtobeumoietlun10%declineol
nutionulincome.
Indiiectcosts,ustleimpuctwoikeditswuytliougltleeconomy,
wouldneuilydoubletlut(u“multipliei”ol1.8–2.0).Tlediiectund
indiiect costs ol tle woild iecession on un initiul unulysis tleieloie
weieestimutedtoiesultinuloiiilicdeclineol1S%oimoieingioss
domesticpioduct(GDP).
1
GustuvF.PupunekisliomtleBostonInstituteloiDevelopingEconomies.M.Clutib
BusiiisliomtleUniveisityolIndonesiu.
2
DunielSclydlowsky,uttleBostonInstituteloiDevelopingEconomies,developed
tle mucio model tlut geneiuted tle multipliei, tle benelits liom ieduced impoit
piices,undtlenetellectongiowtlolGDP.Heisnotiesponsibleloiotleiuspects
oltlispupei,ultlouglliscommentsweiemostlelplul.
3
Weusetlesloitlund“iecession”insteudoltlelongei“woildeconomicslowdown.”
14 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Howevei, tlese estimutes ignoie tle ollsetting benelits ol tle
iecession(undtlecostsoltlesubsequentiecoveiy).Tuble1indicutes
ull tle inteinutionul vuiiubles to be tuken into uccount. It demons-
tiutes tle impoitunce ol systemuticully evuluuting tle impuct ol tle
iecession (oi otlei clunges in tle woild economy) tliougl ull tle
clunnelsconnectingIndonesiutotluteconomy.
Tle decline in piices in tle woild muiket luims Indonesiun
expoits,butitulsolusbenelitsolS14billionduetoloweipiicesloi
ullimpoits.Otleiollsetstotlecostoliecessioninclude:
º u ieduction in needed impoited inputs into expoits, ol
S2billionusexpoitsdecline;
º loweislippingcostsloiexpoitsundimpoits;
º loweiinteiestontlepiivutedebt;und
º u goveinment delicit, uugmented by u stimulus puckuge,
uddinguluitleiS7billiontodemund.
In sum, the net direct impact of the recession in calendar 2009 is
$10 billionulteiollsettingdirect gains against direct losses.Howevei,
use ol unnuul dutu undeistutes tle impuct ol tle iecession. Tle
IndonesiuniecessionuctuullylustedliomOctobei2008toSeptembei
2009.Duiingtlut12-montlpeiiod,tlevulueolexpoitswusdownu
luitlei6%,oiS7billion,compuiedtoculendui2009.Foi2010,oui
veiypieliminuiyloiecust,busedontleimpiovementintlewoildeco-
nomy,isloiunetiiseolS18billioninexpoiteuinings.Otleieuinings,
usliomtouiismundmigiunts,ulsoincieuse.Butinumiiioiimugeol
tledeclineduiingtleiecession,tleseincieusedeuiningsuiepuitiully
ollsetbyincieusedquuntitiesolimpoitsutligleipiices,ligleislip-
pingcosts,unduloweigoveinmentdelicit.
In uddition to tle diiect ellects, tle indiiect ellects—tle “mul-
tipliei”—must not be ignoied. Tle size ol tle multipliei lus not so
luibeenestimutedinIndonesiubuttlutisnoieusonloiignoiingit.
Indiiectlossesoccuiustlediiectlosseswoiktleiiwuytliougltle
economy:usexpoiteisundtleiiwoikeisspendless,sulesundpioduc-
tiondeclinetliouglouttleeconomy.Totukeuccountoltlesesecond-
undtliid-ioundellects(undsoon),oneneedstouseuninput–output
tuble,plusunestimuteoltleleukugestluteventuullystoptleellects
liomcumulutingendlesslyintleeconomy.Tleiesultsloi2010uiein
Tuble 2. (Similui culculutions weie mude loi 2009 und uie uvuiluble
liomtleuutlois.)
Tlemultiplieiolindiiectellectsis1.8S,neuilydoublingtlediiect
ellects.Butbecuuseolloweiwoildpiicesin2009,Indonesiuspends
lessonimpoits,becomingmoiesell-ieliuntundlesstiude-dependent.
15
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Actual
2008
Actual or
Forecast
2009
Forecast
2010
Decrease [–]
or increase
from
2008–
2009
2009–
2010
A. 1. Goods
exports—Gross
137 116 134 –21.0 18.0
2. Impoitedinputsut18%
olexpoits
24.7 20.9 24.1 –3.8 3.2
3. Clungeinquuntity
expoitedutS0%ol
clungeinvulueol
expoits(culculuted
liomexpoitsut
constuntpiices)
10.S 9.0
4. Clungeinimpoited
inputsduetoclunge
inquuntityexpoitedut
18%
1.9 –1.6
S. Ellectol12%decline
inpiicesolimpoited
inputsintoexpoitsin
2009;in2010piices
ussumedbuckto2008
level,tlutisincieuse
by13%–14%
2.S –3.3
Net change in goods
exports = 1+4+5
–16.6 13.1
B. 6. Exports of
services—Total of
7+8+9+10
0.2 –2.9
7. Migiuntiemittunces –0.9 0.1
8. Touiism –1.3 0.2
9. Slipping 2.2 –3.1
10. Inteiestonpiivutedebt 0.2 –0.1
C. 11. Private
investment—
14+17
89.6 88.8 92.7 –0.8 3.9
12. Domesticpiivute
investment
100 103 107 3.0 4.0
13. Minusimpoitedinputs
ut18%
18 18.S 19.3 0.S 0.7
14. Net domestic private
investment—12–13
82 84.5 87.7 2.5 3.3
Table 1: Direct impact of the world economic recession
on Indonesia—Summary (Sbillion,iounded)
continued on next page
16 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis

Actual
2008
Actual or
Forecast
2009
Forecast
2010
Decrease [–]
or increase
from

2008–
2009
2009–
2010
1S. Foieigndiiect
investment
9.3 S.3 6 –4.0 0.7
16. Minusimpoitedinputs
ut18%
1.7 1.0 1.1 –0.7 0.1
17. Net foreign direct
investment—15–16
7.6 4.3 4.9 –3.3 0.6
D. 18. Government
deficit net 19–20
0.3 7.1 6.8 6.8 –0.3
19. Giossdelicit 0.4 8.4 8 8.0 –0.4
20. SpentoutsideIndonesiu
ut1S%
0.06 1.3 1.2 1.2 0.1
E. Total impact of
recession and
recovery
–10.5 13.8
Note:AnnuuldutuloimostitemsundeiBundCloi2009uienotyetuvuiluble.Fouitlquuiteiis
unestimute.
Souices: Autlois’ culculutions, using Stutistics Indonesiu (BPS) dutu compiled by tle Woild Bunk
loi goods expoits und impoits; Bunk Indonesiu dutu loi seivices und investment; und Ministiy ol
Finuncedutuloigoveinment.
Asuiesult,tlemultiplieimeusuiingindiiectellectsincieusesto1.94
duiing tle iecession. Tleie uie ulso indiiect guins, piimuiily lowei
piicesloiimpoitsolconsumeiundcupitulgoods.
Altei systemuticully tuking uccount ol ull guins und losses loi
2009,weseeuieductionolIustS6billioninincome,equultou1.4%
ieductionintleGDPgiowtliute.Asgiowtlin2008wus6%,ulteiu
1.4%loss,giowtlisloiecusttobeiouglly4.S%in2009,consistent
witlotleigiowtlestimutes. TlismeunstluttleIndonesiuneconomy
wouldstillbegiowingdespitetleiecession—uluiciyliomtleliist
estimuteoludeclineolusmuclus10%intleeconomy,mudebecuuse
itluiledtotukeuccountolollsettingbenelits.
By tle louitl quuitei ol 2009, Indonesiu wus coming out ol tle
iecession.ItlustedIustuyeui.Justustledeclinewusmodeiute,und
substuntiully diiven by declining demund loi Indonesiu’s expoits, so
willtleiecoveiybe,inouiloiecust:modeiuteundsubstuntiullydiiven
byincieusedincomeliomexpoits.Andtleclungeinexpoiteuinings
wus piimuiily commodity diiven: 8S% ol tle decline in expoits wus
due to lowei piices und, in most cuses, lowei quuntities expoited ol
Table 1 continued
17
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
commodities.Tleincieuseinexpoitsintlelustquuiteiisevenmoie
dominutedbycommodities(92%).Undeicuiientpolicies,Indonesiu
istleieloieligllydependentontlevuguiiesoltlewoildcommodity
muiket und tle clunge in piices tlut pievuils tleie. Il piices conti-
nuetoiiseloicoppei,coul,undpulmoil,Indonesiuwillcontinueto
giowutugoodpuce;ilcommoditypiiceslultei,sowilltleIndonesiun
economy.
Indonesiulusweutleiedtleiecessionwell,luigelyexpluinedby
tlelollowingluctois:
º It is well known tlut Indonesiu is less tiude dependent tlun
munyeconomiesinAsiu,uswelluslessiemittunceundtouiism
dependenttlunsome.Rutlei,tlepiimuiysouiceolgiowtlol
Indonesiu’sGDPsince1997lusbeendomesticconsumption.
º Mucioeconomic munugement wus good: some ellective
stimuluswusuppliedundtlepoliticulenviionmentlusbeen
stuble.
º Tle bunking system, clustened somewlut by tle disustei ol
1997–1998,wusinluiislupeundcontinuedtolend,ultlougl
tleieweieinitiulpioblemswitltiudelinunce.
º Tle goveinment piovided u piopei iesponse to tle iecent
ciisis by locusing on muintuining muiket conlidence tliougl
piomptuctionsincluding:
ƒ estublislingutiunspuientcooidinutionliumewoikumong
linunciul,monetuiy,undlisculuutloiitiesinciisismunuge-
ment;
ƒ estublislingswuplinesbetweenBunkIndonesiuundotlei
centiulbunksinAsiu,soensuiingudequuteliquidityintle
system;
ƒ muintuiningconlidenceintlebunkingsectoibypioviding
depositguuiuntees;
ƒ ensuiingtleuvuilubilityollundstosuppoitbudgetlinun-
cingin2009;und
ƒ mitigutingtleimpuctoltlelinunciulciisistotlepooiest
segments ol society by pioviding u sociul sulety net und
tliouglupiicestubilizutionpolicy.
2. Aggravation of unemployment
and underemployment
Despite mucioeconomic success, tle pioblem ol unemployment und
undeiemployment,wliclludpluguedIndonesiusincetlemonetuiy
ciisisol1997–1998,woisenedusuiesultoltleiecession.
18 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
M
u
l
t
i
p
l
i
e
r

f
o
r
m
u
l
a
:
d
Y
/
d
[
(
1

m
x
)
X

+

R
E
M

+

(
1

m
f
p
i
)
F
P
I
]

=

1
/
[
1



(
1

m
)
(
1

t
)
c
]
m
x
0
.
1
8
I
m
p
o
i
t

i
n
t
e
n
s
i
t
y

o
l

e
x
p
o
i
t
s
m
0
.
1
9
9
0
.
2
2
6
I
m
p
o
i
t

i
n
t
e
n
s
i
t
y

b
e
l
o
i
e

u
n
d

u
l
t
e
i

p
i
i
c
e

i
n
c
i
e
u
s
e

l
o
i

i
m
p
o
i
t
s
t
0
.
1
S
D
o
m
e
s
t
i
c

t
u
x

i
u
t
e
c
0
.
7
P
i
o
p
e
n
s
i
t
y

t
o

c
o
n
s
u
m
e
m
l
p
i
0
.
3
I
m
p
o
i
t

i
n
t
e
n
s
i
t
y

o
l

l
o
i
e
i
g
n

p
i
i
v
u
t
e

i
n
v
e
s
t
m
e
n
t
A
P
m
/
P
m
0
.
1
3
S
P
i
o
p
o
i
t
i
o
n

o
l

c
l
u
n
g
e

o
l

i
m
p
o
i
t

p
i
i
c
e
s
E
v
u
l
u
u
t
e

i
i
g
l
t

l
u
n
d
:
1
/
[
1

÷

(
1
÷
m
)
(
1
÷
t
)
c
|
T
l
e

m
u
l
t
i
p
l
i
e
i
,

u
l
s
o

d
e
l
i
n
e
d

u
s

ì

b
e
l
o
w
W
i
t
l

m

~
0
.
1
9
9
1
.
9
1
B
e
l
o
i
e

p
i
i
c
e

e
l
l
e
c
t
W
i
t
l

m

~
0
.
2
2
6
1
.
8
S
A
l
t
e
i

p
i
i
c
e

i
n
c
i
e
u
s
e
E
X
O
G

~
[
(
1
÷
m
x
)
X

+

R
E
M

+

(
1
÷
m
l
p
i
)
F
P
I
|
I
m
p
u
c
t

c
u
l
c
u
l
u
t
i
o
n
:
Y
1

Y
0

~

E
X
O
G
1
ì
1

E
X
O
G
0
ì
0

~

(
E
X
O
G
0

+

A
E
X
O
G
)

ì
1

E
X
O
G
0
ì
0

~
E
X
O
G
0
(
ì
1

ì
0
)

+

A
E
X
O
G
ì
1

~
(
A
ì
/
ì
0
)

(
ì
0
)

E
X
O
G
0

+

A
E
X
O
G
ì
1
(
ì
X
ì
0
)

Y
0

+

[
ì
X
(
1

m
x
)

+

.
+
.
|
ì
1
C
l
u
n
g
e

i
n

V
A

x

m
u
l
t
i
p
l
i
e
i
A
V
A

i
n

X

+

o
t
l
e
i

c
l
u
n
g
e
s
1
3
.
8
E
v
u
l
u
u
t
e

l
i
n
e

2
4
T
o
t
u
l

d
i
i
e
c
t

i
m
p
u
c
t

o
l

i
e
c
o
v
e
i
y

l
i
o
m

i
e
c
e
s
s
i
o
n
V
A

i
n

X

2
0
0
9
9
S
(
A
ì
/
ì
0
)

0
.
0
3
Y
0

2
0
0
9
S
6
0
(
A
ì
/
ì
0
)

Y
0

1
6
.
S
9
R
e
d
u
c
e
d

Y

d
u
e

t
o

i
n
c
i
e
u
s
e

o
l

i
m
p
o
i
t

p
i
i
c
e
s
M

n
o
n

X

2
0
0
9
7
S
[
A
X
(
1
÷
m
x
)

+

.
+
.
2
S
.
S
9
I
n
c
i
e
u
s
e

o
l

Y

d
u
e

t
o

i
i
s
e

i
n

e
x
p
o
i
t

V
A

+

o
t
l
e
i
s
(
A
ì
/
ì
0
)

Y
0

+

[
A
X
(
9
.
0
0
T
o
t
u
l

i
n
c
i
e
u
s
e

o
l

Y
%

o
l

Y
0
0
.
0
1
6
T
a
b
l
e

2
:

F
i
r
s
t

a
t
t
e
m
p
t

a
t

a
n

a
g
g
r
e
g
a
t
e

o
p
e
n

e
c
o
n
o
m
y

i
n
c
o
m
e

g
e
n
e
r
a
t
i
o
n

m
o
d
e
l


f
o
r

I
n
d
o
n
e
s
i
a
:

F
o
r
e
c
a
s
t

f
o
r

2
0
1
0
.

T
h
e

r
e
c
o
v
e
r
y

f
r
o
m

t
h
e

i
m
p
a
c
t


o
f

t
h
e

w
o
r
l
d

e
c
o
n
o
m
i
c

c
r
i
s
i
s

2
0
0
8

2
0
0
9
c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
19
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
M
u
l
t
i
p
l
i
e
r

f
o
r
m
u
l
a
:
d
Y
/
d
[
(
1

m
x
)
X

+

R
E
M

+

(
1

m
f
p
i
)
F
P
I
]

=

1
/
[
1



(
1

m
)
(
1

t
)
c
]
w
l
e
i
e

Y

~

i
n
c
o
m
e
,

V
A

~

v
u
l
u
e

u
d
d
e
d
,

M

~

i
m
p
o
i
t
s

n
o
t

g
o
i
n
g

i
n
t
o

e
x
p
o
i
t
s
C
l
u
n
g
e

i
n

i
m
p
o
i
t
s
:
M
1

M
0

~

m
1
Y
1

m
0
Y
0

~
m
1

(
Y
0

+

A
Y
)

~

m
0
Y
0

~

(
m
1

÷

m
0
)
Y
0

+

m
1

A
Y
(
A
m
/
m
0
)

m
0
Y
0

+

m
1
A
Y

~

(
A
m
/
m
0
)

M
0

+

m
1
A
Y
E
v
u
l
u
u
t
e
:

(
A
m
/
m
0
)

M
0
1
0
.
1
3
T
l
i
s

i
s

w
l
u
t

p
i
i
c
e
s

w
o
u
l
d

l
u
v
e

c
o
s
t

i
l

n
o

i
n
c
o
m
e

i
n
c
i
e
u
s
e
E
v
u
l
u
u
t
e
:

m
1

A
Y
2
.
0
3
I
n
c
i
e
u
s
e

o
l

i
m
p
o
i
t
s

d
u
e

t
o

l
i
g
l
e
i

Y
E
v
u
l
u
u
t
e

t
o
t
u
l
1
2
.
1
6
T
o
t
u
l

i
n
c
i
e
u
s
e

o
l

M
s

d
u
e

t
o

p
i
i
c
e

u
n
d

Y

e
l
l
e
c
t
s
S
o
u
i
c
e
s
:

P
i
e
p
u
i
e
d

b
y

D
u
n
i
e
l

M
.

S
c
l
y
d
l
o
w
s
k
y

u
s
i
n
g

t
l
e

l
o
l
l
o
w
i
n
g

i
e
l
e
i
e
n
c
e
s
:

S
c
l
y
d
l
o
w
s
k
y
,

D
.

M
.

1
9
8
0
.

A

S
l
o
i
t

M
u
c
i
o
-
E
c
o
n
o
m
i
c

M
o
d
e
l

o
l

t
l
e

I
n
d
o
n
e
s
i
u
n

E
c
o
n
o
m
y
.

I
n

G
u
s
t
u
v

F
.

P
u
p
u
n
e
k
,

e
d
.

T
h
e

I
n
d
o
n
e
s
i
a
n

E
c
o
n
o
m
y
.

N
e
w

Y
o
i
k
:

P
i
u
e
g
e
i
;

S
c
l
y
d
l
o
w
s
k
y
,

D
.

M
.

u
n
d

M
u
i
t
l
u

R
o
d
i
i
g
u
e
z
.

1
9
8
2
.

T
l
e

V
u
l
n
e
i
u
b
i
l
i
t
y

o
l

S
m
u
l
l

S
e
m
i
-
I
n
d
u
s
t
i
i
u
l
i
z
e
d

E
c
o
n
o
m
i
e
s

t
o

E
x
p
o
i
t

S
l
o
c
k
s
:

A

S
i
m
u
l
u
t
i
o
n

A
n
u
l
y
s
i
s

B
u
s
e
d

o
n

P
e
i
u
v
i
u
n

D
u
t
u
.

I
n

M
.

S
y
i
q
u
i
n

u
n
d

S
.

T
e
i
t
e
l
,

e
d
s
.

T
r
a
d
e
,

S
t
a
b
i
l
i
t
y
,

T
e
c
h
n
o
l
o
g
y
,

a
n
d

E
q
u
i
t
y

i
n

L
a
t
i
n

A
m
e
r
i
c
a
.

N
e
w

Y
o
i
k
:

A
c
u
d
e
m
i
c

P
i
e
s
s
.

p
p
.

1
2
S

1
4
1
.
T
a
b
l
e

2

c
o
n
t
i
n
u
e
d
20 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Few “real” jobs added since 1997
Becuuse Indonesiun giowtl wus less expoit-dependent tlun otlei
countiies,itwuslessvulneiubletotlewoildwideiecession.Buttle
slow giowtl ol munuluctuied expoits und tle stugnution ol luboi-
intensivemunuluctuiedexpoitssince1997–1998meunttluttleiewus
littledemundloiudditionulluboi.Fiom1997to2008,iouglly22mil-
lionweieuddedtotleluboiloice,butonlyunestimutedS.6million
woikeisluveloundieul,pioductiveIobs(Tuble3).
4
Oltleiemuining16.Smillion,usuiouglguesssome3.Smillion
lound Iobs ubioud. Some 3 million weie udded to tle unemployed,
munyoimostliomtlemiddleclusswloselumilycouldsuppoittlem
wlilelookingloiu“good”Iob.
S
Tlosetoopooitosuivivelongwitlout
woikmuybetempoiuiilyunemployedbutmostlyciowdedintowoik-
und income-sluiing occuputions, witl close to zeio muiginul luboi
pioductivity,tosluieintleincomewitloutuddingmucltooutput.
6
4
“ReulIobs”meunstluttleyuiecieutediniesponsetoluboidemund.Woikeisuie
neededtoincieuseoutput.“Woik-undincome-sluiing”Iobsuiecieutediniesponse
toluboisupply,iniesponsetowoikeiswloneedunincome.TleyIointlelumily
luim oi ietuil business und sluie in tle woik und income, tlougl tley udd little
oinotlingtooutputoiincome.OitleyIoin,suy,tletwootleissliningsloesoi
olleiing otjek(motoicycleiides)utuninteisection,witltlesumenumbeiolsloes
oiiidesundincomedividedumongtlieeiutleitluntwo.Tleieuienostutistics
tlutcleuilydistinguisltletwocutegoiies.Aibitiuiily,weussumetlutulludditions
totlemunuluctuiingluboiloiceuieiniesponsetoluboidemundundulluddedto
ugiicultuie,seivices,oitiudeuienotinieulIobs.Botlussumptionsuielikelytobe
wiong in some cuses, but uie closei to ieulity tlun ussuming tlut ugiicultuie, loi
instunce, suddenly needed S million moie woikeis us tle iesult ol tle iecession.
Distinguislingbetweenloimulundinloimulsectoioccuputionsgivessimiluiiesults.
S
Delining discouiuged woikeis us “unemployed” iesulted in u spuiious incieuse.
Usingtleolddelinitiontomuketlenumbeiscompuiublegivestleloweiestimute
used leie. Rouglly lull tle unemployed uie educuted, most ol tlem piesumubly
liomtlemiddlecluss.
6
In Indonesiu, us in otlei countiies witl excess luboi in ugiicultuie und otlei
occuputions,employmentstutisticscunbemisleuding.Tleieisgoodevidencetlut
tleieis“suiplusluboi”inugiicultuie,intlesensetlutseveiulmillioncouldleuveto
woikelsewleiewitllittleellectonoutput.Indeed,in1986–1997wlenugiicultuie
giewut1.7%uyeui,uddingovei20%tooutputin11yeuis,employmentincieused
by only S%. Most likely, most ol tlose weie udded in “Otlei Islunds,” wlile tle
suiplusluboiismostlyinJuvu.Tleieisotleievidenceliomdutuonsuiplusluboiut
luivesttimeundliommicioeconomicstudiesolvillugeeconomies(GilliunHuit,loi
exumple).SeeulsotleclussiculuntliopologiculwoikolClilloidGeeitzwloculled
tleplenomenonolwoikundincomesluiing“ugiicultuiulinvolution.”
21
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Job losses and lack of job creation
Tle ellect ol tle iecession is likely to be tlut even lewei Iobs tlun
in tle lust decude will be cieuted. Most ol tle 2 million wlo uie
Ioiningtleluboiloiceeveiyyeuiwillbeundeiemployed.Tledecline
inluboi-intensivemunuluctuiedexpoitsinlouimuIoiindustiies(tex-
tiles, guiments, lootweui, und luinituie) meuns tlut un estimuted
udditionul0.4millionwoikeisuielosingtleiiIobs.
7
Otleimunuluctu-
iedexpoitsulsodeclinedintleliistquuiteiol2009unduielikelyto
uddtotleiollsoltleundeiemployed.
TlismeunstlutIndonesiuislikelytoentei2010witl1Smillion
woikeis udded since 1997 to tlose in tle countiy wlo uie not
7
Bused on Tuble 4. Foi eveiy S1 billion in udditionul expoits, iouglly 240,000
udditionul woikeis weie employed. Expoits in 2009 weie loiecust to be down by
S1.6 billion ielutive to 2008. Tlut would meun u decline ol 384,000 in woikeis
employediltleielutionslipissymmetiicul.
Table 3: Employment, unemployment, and disguised
unemployment (millionsolwoikeis)
Change (million)
1985–
1997
1997–
2008
Employedinmunuluctuiingundconstiuction
u
7.S 2.S
Employedintiunspoit,communicution,utilities 3.3 3.1
Able to obtain productive work (u) 10.8 5.6
Agiicultuie 1.7 S.S
Tiudeundseivices 12.2 4.S
Added to work- and income-sharing or underemployed(b) 13.9 10.0
Unemployed(c) 2.3 3.1
Migiunts—guesstimute(d) 1.3 3.S
Totul udded to luboi loice (eucl peiiod) (u+b+c+d) 28.2 22.2
Addedtounemployed,undeiemployed,migiunts
1997÷2008 (b+c+d) 16.6
Addedtotleluboiloicein2009undunlikelytoulindIob 2.0
EstimutedIoblossesinluboi-intensiveexpoitsulone 0.4
Estimated added to unemployed and
underemployed, 1997–2009 19.0
u
Includesmining,bunking,undieulestute.
Souice:Autlois’culculutionsliomStutisticsIndonesiu(BPS),Sukeinus,vuiiousyeuis.
22 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
pioductively employed, witl little vulue udded to tle countiy’s out-
putundnutionulincome,witloutsteudyunddecentIobsundieuso-
nubleincome,munyoltlemlikelytobepooi,undotleisvulneiubleto
lullingintopoveityuttlesligltestsetbuck(Tuble3).
Failure to create jobs since 1997
TleluiluieoltleIndonesiuneconomytocieutenewpioductiveIobs
since1997ispiimuiilyduetostugnutionintleexpoitolluboi-intensive
munuluctuies,becuuseIndonesiuisnolongeicompetitiveintlewoild
muiketloitlesegoods.
Decline in labor-intensive manufactured exports
Intledecudebeloietle1997–1998ciisis,Indonesiu’smunuluctuied
expoits weie giowing ut tle stiong iute ol 30% eucl yeui, doubling
eveiy 2.S yeuis (Tuble 4). In tle decude ultei tlut ciisis, tley giew
utuslow8%.Wlutiswoiseloiemploymentoltleunskilledistlut
luboi-intensive expoits, wlicl lud ulso giown ut 30% beloie 1997,
stugnutedut3%uyeuisincetlen.
Table 4: Annual growth in categories of exports,
1985–2008(%)
Category
1985–
1990
1990–
1996
1996–
2008
Totulexpoits 6 12 9
Commodity-busedexpoits 13 13 10
Luboi-intensivemunuluctuies:textiles,
guiments,lootweui,undluinituie 4S 17 3
Souice:Autlois’culculutionsliomStutisticsIndonesiu(BPS)compiledbytleWoildBunk.
Beloie 1997, tle luigei liims in tlese industiies lud liied
1.4 million woikeis. Between tlen und 2008 tley uctuully ieduced
tleiiluboiloicesligltly.WlenoneuddsIobsinluigeiliimsinotlei
industiies, pioducing piimuiily loi expoits, und in smullei liims, un
estimuted two-tliids ol tle dilleience in liiing in munuluctuiing
beloieundulteitle1997–1998ciisisisduetomunuluctuiedexpoits.
Indonesia—A high-cost economy
AmuIoiieusonloitleluiluietocieutemunyIobsistlutIndonesiuis
uligl-costeconomy,wliclmukesitdilliculttocompeteintlewoild
muiket.Tlemuinieusonsuieuslollows.
23
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Inliustiuctuie is expensive, in puit due to tle costs imposed by
multipleislunds.Tlis isoneoltlemostneglectedleutuiesolecono-
mic unulysis ol Indonesiu. Inteiislund tiunspoit is tle buckbone tlut
linksuctivitiesindilleientiegions,buttiunspoitinggoodsliompio-
ductionsitesinJuvutotleouteiislunds,oiviceveisu,isnotcleup.
Tleconsequenceislimitedintegiutionintledomesticmuiket,wlicl
slowsgiowtlindomesticdemund.
Higlcostsuieulsoduetopooiinliustiuctuiequulity.Inliustiuctuie
luslongbeeninudequutetosuppoittleiupidundellicientslipment
oltiudedgoods,exceptutliglcost.Butinvestmentininliustiuctuie
lus sluiply declined since 1997. As u iesult, pooily muintuined und
nuiiowioudsmeuntluttiuckscunmukeonlytwotiipsuduy,wlen
tleycoulddolouioiliveonbetteiiouds.Tlisneuilydoublestlecost
oltiunspoit.Poits,especiullyJukuitu’s,uieuttlelimitoltleiicupu-
cityunduietleieloiecostlyundinellicient.Aneiiuticpoweisupply
lusloicedpiivuteliimseitleitoucceptpeiiodicoutuges,oitoinvest
in tleii own stundby powei ut substuntiul cost. Piivute investois list
ligl-costinliustiuctuieustletopobstucletogieuteiinvestment.
CoiiuptionisunotleimuIoielementinliglcosts.Indonesiulus
been iunked us umong tle most coiiupt evei since iunkings begun.
Tlisimposescostsundiisks.AcoiiuptIudiciuiyisuspeciulpioblem.
Fuitleimoie,tlecountiylusupooiinvestmentclimutewitlcostly
und time-consuming pioceduies to get peimits to invest oi expund.
Becuusedecisionsuieolteninlluencedbynutionulistsentiments,dis-
cietionuiyiegulutionsuieespeciullywoiiisometoloieigninvestois.
In uddition, costly luboi iegulution is u long-time compluint ol
ull liims, especiully loieign ones. And wlile Indonesiu lus uclieved
univeisul piimuiy educution well uleud ol otlei luige developing
countiies,itisluiweukeiinseconduiyundligleieducution.Teclnicul
und piolessionul peisonnel uie in sloit supply, und on uveiuge uie
ol lowei quulity und tleieloie moie costly tlun in Indiu und some
otleicountiies.
Also, iestiictions on impoits (seveiul tlousund uie listed on tle
customswebsite)luvepiolileiuted,mukingitcostly,time-consuming,
und iisky to obtuin impoited inputs needed to pioduce expoits; und
tleieuielewspeciulincentivesloiexpoiting.Tlisisuspeciulpioblem
loiexpoiteiswloneedtoobtuinimpoitedinputsquicklyundwitlno
iiskoldeluysiltleywunttouvoidmuintuiningcostlyinventoiies.
Finully,Indonesiu’siepututionlusluggedieulity.Foieigninvestois
consistentlygiveitlowmuiksloistubility,violence,undpoliticuliisk
tlutitdeseivedyeuisugo,butluidlydeseivesutpiesent.Tledete-
iioiutionintleinliustiuctuiesince1997isieulbutsoistleimpiove-
mentindeulingwitlcoiiuptionundinpoliticulstubility.
24 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
The end of low labor costs since 1997
Tleliglcostsinulltleseiespectsluvebeencompensutedloiintle
pustbylow-costluboi,butsincetle1997–1998ciisisitisnolongei
ucceptuble loi luboi to compensute loi tlem by its own low income
undlimitedluboiiiglts.
Fiist, luboi iegulutions uie moie ellectively enloiced by union
powei, woikeis’ politicul powei, und moie symputletic goveinment
olliciuls. Smullei liims uie eitlei exempt oi lind wuys to evude tle
iegulutions. But since expoiteis uie dispiopoitionutely luigei und
loieign,tleylindevusiondillicult.
Second, minimum wuges uie moie ellectively enloiced by tle
sumemeclunisms,wliclseemtoluvepusledupeventlewugesol
somewoikeisnotcoveiedbytlem.Intle8yeuisoliupidgiowtlol
luboi-intensive expoits (1984–1992), iupiul ugiicultuiul wuges did
notquitedouble.Intlelust8yeuis,tleymoietluntiipled,doubling
in Iust tle lust 4 yeuis. And us ol Muy–June 2008, tleie wus u sud-
den doubling ol tle nominul wuge, mysteiiously usciibed by Budun
PusutStutistik(BPSoiStutisticsIndonesiu)touclungeinbuseyeui.
Tleuveiugeindustiiulwugeloiunskilledwoikeisiosemoietlunlive
timesintledecudeulteitleciisis.
Tliid, Indonesiu lus moie tlun u toucl ol “Dutcl diseuse.” Tle
iupidiiseinwugeswouldnotluvemutteiedmucltoexpoiteisoito
tlosecompetingwitlimpoitsiltleexclungeiuteludkeptpuce.But
iutleitlundepieciutingtomutcliisingwuges,tleiupiuluppieciuted
ultei2001becuuseoltlelollowing:
º TlewoildcommodityboombenelitedIndonesiudispiopoitio-
nutelybecuuseolitsluigecommodityexpoits,especiullyliom
2004 to 2008. Commodity expoits weie S31 billion in 1997
but S96 billion in 2008, two-tliids ol tle iise due to liglei
piicesundone-tliidtoincieusedquuntities.
º Foieignexclungellowedintotlecountiyiniesponsetointe-
iest iute dilleientiuls: investois oi speculutois could boiiow
ut close tle 0% in Jupun und invest in Indonesiun govein-
mentbondswitluyieldol8%–10%.Aslongustleiupiuldid
notlosevulue,investoisguineduviituullyiisk-lieeietuinol
7%–8%, und witl no need loi uny expendituie on ieseuicl
oiduediligence.Andsincetleiupiul,luiliomlosingvulue,
uctuullyguined,tleiiietuincouldbeulundsome1S%–18%,
ulmostiiskliee.Indeedoveimostoltlepeiiod,wleneveitle
iupiuldeclinedubit,vuiiousolliciuls,includingtlegoveinoi
ol tle centiul bunk, would ussuie investois tlut tle decline
would be ieveised beloie too long. Tle iising iupiul ulso
25
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
mudeinvestinginstocksundbondsmoieuttiuctiveundtlose
investmentsluitleiswelledtlellowolloieignexclunge.
Inluct,Indonesiu’scentiulbunk,unliketloseolmunyotleicountiies
inAsiu,didnotpusluguinsttleuppieciutionoltleiupiulbuttended
to encouiuge it. It used tle stunduid tools ol centiul bunkeis in mui-
keteconomiesnottokeeptlecountiy’sexpoitsundimpoit-competing
goodscompetitivebyweukeningtleiupiul,buttostiengtlenit.Tlut
lelpedincombutinginllutionundinseivicingtleloieigndebtolbotl
tlepublicundtlepiivutesectoi.But tle“stiongiupiul”meuntuweuk
economy,ustleexclungeiuteundeiminedtlecompetitivenessolbotl
expoiteisundtleluigenumbeiolindustiiescompetingwitlimpoits.
Fiom u level ol Rp10,200/S in 2001, tle iute uppieciuted to us
mucl us Rp8,600/S; und in tle second lull ol 2009, it wus ut Rp9,3S0÷
Rp10,000/S. So wlile tle iupiul wuge lus gone liom 7,000 to 21,000,
tleexclungeiutelusuctuullyuppieciutedbyS%–8%,uggiuvutingtle
cost ellect. As luboi costs luve iisen, it lus become less uttiuctive loi
investois to pioduce in Indonesiu oi expoit liom Indonesiu. Tle dol-
lui ugiicultuiul wuge lus gone liom S0.70 duiing tle peiiod ol iupid
expoitgiowtl,1988–1992,toS2.24inJuly–Octobei2009;evenultei
udIustingloitledeclineintlevulueoltledollui,itlusdoubledsince
tlepeiiodoliupidexpoitgiowtltoJuly–Octobei2009(TubleS).Tle
industiiulwugelusulsoiiseniupidlytomoietlundoublewlutitwus
intlelute1980sinnominulteims,undS0%ligleiulteiudIustingloi
dolluiinllution.
RisingIndonesiunwugeswouldnotmutteiilwugesinotleiAsiun
countiiesludiisencompuiubly.Buttlisisnottlecuseloiullcountiies.
Tle Inteinutionul Luboui Oigunizution (ILO) website indicutes tlut
liom 2006 to 2008, wuges in tle People’s Republic ol Clinu (PRC)
incieused by SS% in dollui teims, but Indonesiun wuges moie tlun
tiipled;undtluttlelouilyluboicostintleguimentsectoiisliglei
tluninseveiulcompetingcountiies:IndonesiuS0.S0,VietNumS0.38,
PukistunS0.37,undCumbodiuS0.33.
High labor costs’ effect on manufactured exports
Asuiesultolliglcosts,especiullyloiluboi-intensivemunuluctuies,
Indonesiu lus lost some ol its competitiveness. Expoits luve slowed
und domestic pioduceis luve stiuggled to compete uguinst impoits.
Tleiecessionlusuggiuvutedtlepioblem.
Tlelevelolwugesindolluisundyenlusupoweilulinlluenceon
tleiuteolgiowtlolmunuluctuiedexpoits.
8
TubleSslowsunskilled
8
TleseuveiugesexcludetlepeiiodoltleAsiunlinunciulciisis.
26 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
woikeis’wugesdellutedbytleUnitedStutesconsumeipiiceindexto
tukeuccountoldeclinesintlevulueoltledollui.Wlenwugesweie
low, munuluctuied expoits weie incieusing ut u iemuikuble iute ol
34%uyeui,doublinginvulueiniouglly2yeuis.Wlendolluiundyen
wuges weie ligl, munuluctuied expoit giowtl uveiuged only 10%
uyeui.
Witl tle incieuse in luboi costs, witl little oi no concomitunt
declineinotleiliglcosts,luboi-intensivemunuluctuiedexpoitsund
munuluctuies competing witl impoits luve declined in competiti-
veness.Asuiesult,tleexpoitolmunuluctuiedgoodslusstugnuted
undwitlit,employmentinmunuluctuiing.
Daily
agricultural
wage
Deflated by US CPI
(2007~100)
Manufactured
exports
Period $ Yen
Agric.
wage
(S)
Industrial
wage (S)
Rate of
growth
(%) Period
1976–1979 0.4 100 1.41 46 1976–1979
1981–1982 1.1 247 2.33 32.4 6 1979–1982
1984–198S 1.0 241 1.94 29.4 2S 1982–198S
1988–1992 0.7 93 1.15 20.1 40 1985–1992
1995–1996 1.1 112 1.48 23.6 14 1992–1996
1998–2001
u
0.7 77 0.81 11.6 7 1996–2001
2004–2007 1.S 16S 1.S1 24.9 9 2001–2007
2008 1.9 198 1.86 26.3 10 2007–2008
July–Oct
2009
2.2 203 2.18 29.6 –14 Jun–Oct2008–
Jun–Oct2009
CPI~consumeipiiceindex.
u. Tlepeiiod1998–2001isexcludedliomtleunulysis.Itwusutimeolcluos,iioting,unduniest
wlen buyeis ielused to souice in Indonesiu becuuse ol tuimoil. Fuctoiy owneis lled und slut
luctoiies. Howevei low tle wuge, expoits diopped. Peiiods in itulics und undeilined uie wlen
ugiicultuiul wuges delluted by tle CPI weie below S1.S0. Otlei peiiods uie wlen tley weie
uboveS1.S0.
Notes:Industiiulwugeistleweeklywugeloiwoikeisbelowtlelevelolloiemunundteclniciun.
Tleugiicultuiulwugesuieuconsistentestimutecoveiingtlesumepiovincesunductivities.Tley
tleieloiedilleiliomsomepublisledseiies.
Souice:CulculutedbyG.Pupunekliomolliciulgoveinmentstutistics.
Table 5: Wages in dollar and yen for unskilled and
semiskilled labor in agriculture and industry, 1976–2009
27
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
3. Dealing with the recession and with chronic
underemployment: Social protection and
antipoverty programs
9
Ovei tle yeuis, tleie lus been u piolileiution ol piogiums to lelp
tle pooi und to piovide some piotection duiing peiiods ol econo-
mic downtuin, most notubly us u iesponse to tle 1997–1998 ciisis
und uguin duiing tle cuiient iecession. Tley lull bioudly into tliee
gioups: uguinst stiuctuiul poveity, bieuking tle inteigeneiutionul
poveity cluin, und deuling witl economic slocks. Ol couise, tlese
uieielutedundmunypiogiumsluveunimpuctonulltlieebuttleii
piincipulpuiposevuiies.
Tackling structural poverty: The National
Community Empowerment Program
Self-targeting, community-driven infrastructure
development program
Tle Nutionul Community Empoweiment Piogium (PNPM) lus tle
luigestnumbeiolbeneliciuiies,undisgeneiullyconsideiedoneoltle
mostellectivepoveity-ieductionpiogiumsloitlelollowingieusons:
º Itissell-tuigetingbysettingwugeslowenouglundiequiiing
plysiculluboisoonlytlepooiwunttopuiticipute.
º It cun elliciently und lonestly udministei u luige piogium
becuuse most decisions uie deleguted to u locul community
committee.
º FundsgodiiectlyliomtleTieusuiytotleloculbody.
º Elliciencyundlonestyuiepiomotedbyiequiiingtiunspuiency
undpublicityloiplunsundlunding,undbyseveiulindependent
monitois.
º Tlepooiundwomenuiegivenuluige,mundutediole.
Asuiesult,tlepiogiumbuildsloculstiuctuiesutloweicosttlun
tlegoveinment’spublicwoikspiogium.
More than half the benefit of PNPM from a long-term
increase in income and employment
Most employment piogiums lelp tle pooi by pioviding udditionul
incomediiectlyliomtlepiogium.Tlesebenelitslustonlyuslongus
9
TlissectionsummuiizesBusiiundPupunek(loitlcoming).
28 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tlepiogiumislunded.PNPM,lowevei,buildsinliustiuctuie,wlicl
cunpeimunentlyincieuseeconomicuctivity:moietlunlulltlePNPM
benelitsdeiiveliomtlesesecond-ioundellects.
Community-driven, labor-intensive program as a social
safety net
TlePNPMnetwoikcunpiovidebotltempoiuiyundpeimunentsociul
piotectioninseveiulwuys.Fiist,bypiovidingoll-seusonemployment
onupeimunentbusis,PNPMcunbeciuciulinlelpingtleneuipooi
liom lulling into poveity duiing peiiods wlen employment is veiy
scuice.
Second, PNPM giunt lunding cun be expunded us und wleie
needed to mitigute tle impuct ol tle globul ciisis. It wus used tlis
wuytosomeextentintleiecessionol2008,wlentlepiogiumwus
expunded. It is only beginning to be used to mitigute tle impuct ol
loculdiouglts,lloods,oiciopluiluiesbyincieusingtleiegionulpio-
visionloisloit-teimemployment.FoiPNPMtobelullyellectiveusu
sociul sulety net, it will be impoitunt to vuiy tle ullocution ol lunds
witlclungesintleeconomicsituution,pieleiublyuutomuticully.
PNPM Generasi: Conditional cash transfers to
communities for intergenerational poverty
PNPMGeneiusidilleisliomieguluiPNPM.PNPMemplusizesdiiectly
pioductive investment in inliustiuctuie; PNPM Geneiusi encouiuges
educution und pieventive leultl meusuies. Botl uie community
diiven, witl piioiities decided by tle community. PNPM Geneiusi
lundscommunityuctioniutleitlunlumilydecisions,piovidingtecl-
nicul ussistunce und block giunts to communities. But in 2009, it
coveied Iust 8.4% ol tle totul pooi. Tle Woild Bunk (2009) uigues
tlut it lus lud u positive impuct on Iunioi sclool eniollment und
uttendunce,unduttendunceutleultllucilities.
Rice subsidy program (Raskin)
Tleiicesubsidypiogiumwusoneoltleliistpoveitypiogiums.Tle
pooiweietoieceiveubusiciutionoliiceutone-louitltoone-tliid
oltlemuiketpiice—ulugesubsidy.Butitludseiiousweuknesses.
Fiist, tuigeting wus pooi. A Woild Bunk (2008) study concluded
tlut only 21% ol tle pooi benelited. Anotlei study (Sumuito et ul.
2008) slowed tlut 83% ol tle pooi benelited but tlut ubout one-
tliid ol tle nonpooi ulso ieceived benelits.
10
Second, most ol tle
10
TledisciepuncybetweentletwolindingswillbeuddiessedinBusiiundPupunek
(loitlcoming).
29
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
beneliciuiiesieceivedonlyuliuctionoltle10–20kilogiums(kg)(ut
dilleientpeiiods)tluttleyweiesupposedtoieceive.Indeed,inEust
Indonesiu wleie subsidized iice iutions weie equully distiibuted to
ullintlevillugeoisubdistiict,tleuveiugeumountolsubsidizediice
ieceivedbytlepooiwusmoielike4kgtlun10kg.Finully,onuveiuge,
tlepooipuid2S%moiepeikgtluntleyweiesupposedto.
Asuiesult,tleimplicitsubsidywusequivulenttolesstlun4%ol
income,toolittletomukemucldilleience.Dilleientstudiesluvedil-
leientestimutes,butullconcludetluttletuigetingwuspooi,undei-
miningtleellectivenessoltlepiogium.
Breaking the intergenerational poverty chain
Tlieepiogiumsemplusizelong-teimlumuniesouiceinvestmentin
udditiontoPNPMGeneiusi.
Tle Sclool Opeiutionul Assistunce (BOS) is uimed ut pioviding
ussistunceloiscloolssotlutstudentleescunbeiemovedwlilestill
muintuining tle quulity ol educution. A study by tle Woild Bunk
concludes tlut BOS tuigeting is less ellective tlun diiect cusl tiuns-
leis.Wliletleluigestgioupolbeneliciuiies(38%)weiepooioineui-
pooilouselolds,ovei60%weienonpooi.
Tle Community Heultl Guuiuntee (Jumkesmus) piogium is tui-
getedut76.4millionpeople,includingpooiundneuipooi.TleWoild
Bunk (2008) slows tlut tlis piogium ieucled 48% ol pooi louse-
lolds,coveiinginputientundoutputientseivicesutcommunityleultl
centeis (Puskesmus) und ut goveinment lospituls, tle ievitulizution
olpublicleultlcenteis(Posyundu),undnutiitionimpiovements.Tle
WoildBunk(2006)slowedtluttlepiogiumlusmunypioblems:
º Tuigetingispioblemutic.
º Tleie uie no incentives loi community leultl centeis to
impiovequulityloitlepooi.
º Tlepiogiumdoesnotenubletlepooitoutilizenongoveinment
piovideis,ieducingtlepooi’successtoloculleultlseivices.
º Locul goveinment lus no iole in plunning, implementution,
undmonitoiing.
In2007,tlegoveinmentbegunimplementing—onupilotbusis—
tle conditionul cusl tiunslei piogium Keluuigu Huiupun (PKH).
Recipients—extiemelypooilouselolds—luvetosendtleiiclildien
to sclool, ut leust until tley giuduute liom middle sclool ut ubout
uge 1S, und ensuie tlut tleii clildien und piegnunt women luve
iegului cleckups. PKH ussists lumilies und is plunned to be sculed
up. In 201S, it is to ieucl 6.S million extiemely pooi louselolds,
30 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
up liom 0.7 million in 2008. Tle goveinment lus ieciuited 3,069
sociulwoikeis,euclcoveiinguiound2S0louselolds.Foi2008,tlis
piogium iequiied some Rp1.3 tiillion (S130 million), u ielutively
smullumount.
Dealing with shocks
Direct Cash Transfer Program
TleDiiectCuslTiunslei(BLT)Piogiumwusintioducedwlenluelsub-
sidiesweiesluiplyieducedtocompensutetlepooiloiunyincieusein
tleiicosts.Itieucleduppioximutely19.1millionlouseloldsin200S,
givingullutiutebenelitequultoubout19%oltleincomeoltlepooi,
luigeenougltolelpbutsmullenouglnottoieducetleincentiveto
woik. Woild Bunk (2008) dutu slowed no signilicunt dilleience in
woikinglouisbetweenBLTbeneliciuiiesundnon-beneliciuiies.
The credit guarantee program
Tle ciedit guuiuntee piogium is to benelit smull enteipiises (muxi-
mumisuboutSS00).Itwusluuncledtooiecentlyloiunyevuluution,
but bused on expeiiences, it is unlikely to muke u big dilleience. It
posesudilemmu:iltleugencyguuiunteesunyloun,lossesuieliglly
likelybecuuseincentivesuiepeiveise.Neitleitlebunknoitleboi-
ioweilusustiongincentivetocollectoipuytledebt.Oitleugency
investiguteseveiyboiioweiundsupeivisesiepuyment,inwliclcuse
udministiutive costs become unsustuinuble. Moieovei, goveinment
ciedit piogiums, in Indonesiu us elsewleie, luve u pooi collection
iecoid:boiioweisdonotexpecttopuyundbelievetlutgoveinment
willnotloieclosetleiiussets.
4. Policies to deal with recession and poverty
To deul witl tle iecession und tle longei-teim pioblems ol poveity
undundeiemploymentundunemployment,vuiiousuppiouclesluve
beensuggestedunduiebeingtiiedinudditiontounexpunsionoltle
SociulPiotectionoiSociulSuletyNet(SSN)piogiums.
Expanding domestic demand—Not a magic bullet
A widely touted solution to Asiu’s iecession-induced economic woes
lus been tle substitution ol domestic demund loi loieign demund.
Tle piesciiption is tlut us loieign demund, und tleieloie expoits,
declines, countiies cun stimulute domestic demund especiully
domesticconsumption.
31
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Stimulating domestic demand
Stimuluting domestic demund will impiove tle well-being ol tle
domesticconsumeiund,inusecondiound,stimulutedomesticpioduc-
tion.Tlispiesciiptionseemstobetlelutest“WuslingtonConsensus.”
Intle19S0s,tlemugicbulletwusimpoitsubstitution;tlisguvewuy
toexpoitpiomotion,tobelollowednowbyconsumption–expunsion.
Ilonlyitweietlutsimple!Ileveiycountiycunincieusegiowtl
bystimulutingdomesticconsumption,ullcountiiescouldiupidlygiow
undquicklyIointleiunksoltlemiddle-incomecountiiesundtlenol
tle iicl countiies. Unloitunutely, tlis is u cuse ol geneiulizing liom
onecountiy—tlePRC—oiulundlulolcountiiesolAsiuusuwlole.
TleuselulnessoltlispiesciiptionloicountiieslikeIndonesiuislimi-
ted becuuse incieused domestic demund und/oi consumption quickly
spillsoveiintoincieusedimpoits.
The balance-of-payments constraint
Indonesiun impoit intensity wus estimuted ut 23% beloie tle ieces-
sionieducedimpoitpiices,und20%ulteitledeclineinimpoitpiices
(Tuble 2). Il one uses 20% tlen loi eveiy S1 billion ol incieused
demund,IndonesiunimpoitswillincieusebyS200million.IlIndonesiu
is to incieuse its iute ol economic giowtl liom tle 4% loiecust in
2009to8%oveitlelongeiteim,tlutmeunsunincieuseindemund
ol S17 billion und un unnuul incieuse in impoits (oi u ieduction in
expoits)olS3.Sbillion.
In 2007, Indonesiu wus iunning u bulunce-ol-puyments suiplus
ol S10 billion on cuiient uccount, euining moie loieign exclunge
tlunitwusspending,undludieseivesequultoSmontlsolimpoits.
Indonesiutleieloietlutyeuiludumuiginloiexpundingdemundund
ubsoibing tle iesulting incieuse in impoits. Howevei in some yeuis,
including2008,tleiewusnosignilicuntsuiplus.Itscuiientuccountis
vulneiubletosliltsinsentiment,wliclullectvuiiouslinunciultiun-
suctions.Becuuseoltleexpeiienceoltleciisisol1997–1998wlen
tleie wus mussive cupitul lliglt, botl Indonesiun und loieign inves-
toisuieextiemelyskittislubouttlepossibilityoluiepeut.Tleieloie,
tlegoveinmentundtlecentiulbunkuiewoiiiedtlutunysignilicunt
decline in loieign exclunge ieseives muy iesult in punic. Tley leui
tluttleiesultingcupitullligltwoulddiivetleexclungeiutetotle
kind ol levels seen in 1997÷1998, going liom tle piesent Rp9,S00/S to
Rp1S,000/S oi moie. So tleie uie seveie limits on tle extent to wlicl
Indonesiu cun diuw down its ieseives to incieuse loieign exclunge
expendituiesloilinuncingincieusedimpoits.
It is sometimes uigued tlut il tle liscul stimulus is locused on
consumption,tleimpuctonimpoitsisielutivelysmullbecuuseimpoits
32 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
uieonly8%olconsumption.Howevei,tlisignoiestleimpoitolintei-
mediute pioducts tlut go into pioduction ol consumei goods (sucl
ustlecottontopioduceclotlundtlelueltotiunspoittlem).Once
indiiectimpoitsuietukenintouccount(viuuninput–outputtuble)tle
impoitcontentisubout20%,not8%.Expundingconsumptiontleie-
loiedoesnotsolvetlepioblemoltlebulunce-ol-puymentsconstiuint
loiunystimuluspuckuge—Indonesiustilliequiiesincieusedexpoitsto
puyloitleincieuseddemundloiimpoits.
Howevei, conceited stimulus in muIoi Asiun economies would
substuntiully ieleuse tlut constiuint. Since one countiy’s impoits uie
unotlei’s expoits, il most countiies stimulute tle economy, ulbeit to
u dilleient degiee, ull ol tlem could ulloid u mucl luigei stimulus
tlunotleiwise(seeIncreasing Asia-wide growth: Concerted stimulus in
major countries,p.46).
Tle uigument loi stimuluting domestic demund is extiemely
uppeuling, especiully wlile globul demund und tiude uie weuk und
investment llows to developing countiies luve not iecoveied. And
Indonesiu cleuily lus continued scope loi some stimulus. But il tle
economy is to uclieve u ligl iute ol giowtl—needed to put to pio-
ductiveuseitsluigebucklogolundeiemployed—itneedstoconliont
tleissuestlutpieventtleeconomyliomgiowingmoieiupidlyintle
long iun: tle ligl-cost economy und iegulutoiy unceituinty umong
tlem.Itisciuciultoimplementieloimstoincieusepioductivityund
ieduceliglcoststomuketleeconomymoieuttiuctiveloiinvestment
undIobcieution(BusiiundRuluidIu2009).
Insloit,IndonesiuisnotliketlePRC,wliclludieseivesequul
to20montlsolimpoitsundtigltcontiolsoveicupitulllows.TlePRC
could, il it wunted to, iun u bulunce-ol-puyments delicit loi seveiul
yeuiswitlnoseiiouspioblems.ButIndonesiucunnotexpunddomestic
demundsignilicuntlywitloutincieusingexpoitsinoideitopuyloitle
demundtlutwillspilloveiintoimpoits.Anymedium-teimpiogium
tosubstuntiullyincieusetleiuteolgiowtlwillluvetoincludepio-
visionloisomeincieuseinexpoiteuinings.The balance of payments
imposes a binding constraint to an increase in the rate of Indonesian
growth based on expanding consumer demand, but it is u constiuint
tlutuccommodutestlesizeolstimulustlutiscuiientlycontempluted
undtlutwillexpunddemundbyonlyS6.Sbillion(Tuble1).Indeed,it
migltbeubletouccommoduteusomewlutluigeistimulus.
Expansion of labor-intensive exports for generating
productive employment
Giventleneedloiimpiovinginliustiuctuie,incieusingexpendituies
oninvestmentiutleitlunonconsumptionwouldbelogicul.Howevei,
tlut will luve u liglei loieign exclunge component und Indonesiu
33
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
willieuclitsbulunce-ol-puymentslimitmoiequickly.Moieovei,tiudi-
tionulinliustiuctuieinvestmentdoesnotgeneiuteumussiveincieuse
in Iobs becuuse ol its ieliunce on muclineiy—und neitlei does un
expunsionolconsumeidemundtlutiesultsinunincieusedconsump-
tionolduiublegoods.Constiuctionolsmulliesidentiullousesismoie
luboiintensive.Sotleputteinolincieuseddemundmutteisinteims
olIobcieution.
Tleexpunsionolexpoitstleieloiemuybedictutednotonlyby
tle need to puy loi incieused impoits but ulso by tle impeiutive
tlutgiowtlbeluboi-intensive.Aliglpiopoitionolunysignilicunt
incieuse in luboi-intensive pioduction will need to be expoited.
Tleieislittlescopeloiimpoitsubstitutioninsucllieldsustextiles,
guiments,luinituie,lootweui,spices,liuitsundvegetubles,uutomo-
bile puits, und electionic und electiicul goods. Tle domestic mui-
ketwillgiowonlyslowly,witlpopulutiongiowtlundtleincieuse
inincome.
Indeed,tledilleiencebetweenS.4millionnewIobsinmunuluc-
tuiingin198S–1997undonly1.3millionin1997–2008is,usulieudy
noted,muinlyduetoudilleienceintlegiowtlollouiluboi-intensive
undexpoit-oiientedindustiies(textiles,guiments,lootweui,undluini-
tuie).Weluveemploymentdutuonlyontlemediumundluigeliims,
but tleie is no ieuson to tlink tlut tle stoiy is dilleient loi smullei
liims.Foitleseliims,tleieisustiikingdilleiencebetweentleuddi-
tionol1.4millionIobsintle11yeuisbeloietleAsiunlinunciulciisis
undusmulllossolIobsintlelollowing9yeuis.Intleloimeipeiiod,
tleiiexpoitsgiewutneuily30%uyeuiindolluivulue,wlileulteitle
ciisis,giowtlwuslesstlun3%.
Gaining maximum benefit from economic stimulus:
Minimizing impact on imports, maximizing output
and employment
Il tle stimulus is concentiuted in sectois witl u low impoit content
und tleieloie u liglei multipliei, it is possible to luve u luigei sti-
mulusbeloieiunningupuguinsttlebulunce-ol-puymentsconstiuint.
Consumptionusuullylusuloweiimpoitcontenttluninvestmentund
tlepooiconsumeiusesuloweipiopoitionolimpoitstluntlemiddle
cluss,evenulteitukinguccountolimpoitedinteimediuteinputs.
But does tle udditionul demund leud to udditionul pioduction?
Incountiiestlutpioducetleiiownloodundotleiconsumeigoods,
und wleie tle supply ol tlose goods is elustic, tle stimulus lus
double benelits—moie pioduction und employment us well us moie
consumption—und tle bulunce-ol-puyments constiuint muy not be
seiious. Wlile Indonesiu lus some idle cupucity in munuluctuiing
consumeigoodsusuiesultoltleiecession,udditionulpioductionol
34 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
textiles,guiments,sloes,vegetubleoil,undsooneitleiiequiiesmoie
impoits(cotton)oiimpliesleweiexpoits(leutleiloisloes).Andin
loodpioduction,tleieislittlecupucitytlutisidleloiluckoldemund
utcuiientpiices.Incieuseddemundloiiice,wleut,undsuguiiesults
in incieused impoits oi lewei expoits (in yeuis wlen tleie is u iice
suiplus).
Soukeyquestionistlesizeoltlesecond-ioundellectsoltlesti-
muluspuckuge:Towlutextentdoestlestimulusincieusepioduction
wliclgeneiutesluitleiIobsloilow-incomepeoplewloseincieused
spending pioduces tliid-iound benelits? Incieusing investment in
inliustiuctuie cun benelit Indonesiu’s competitiveness in tle woild
muiket. Tlut benelit cun outweigl tleii liglei impoit content und
muketleinvestmentwoitlwlile.Consideitlecuseoliouds:loweiing
tiunspoitcostsmuymukedomesticpioductionmoiecompetitivewitl
impoits, us well us moie expoituble, und muy tleieloie luve u veiy
luigesecond-ioundellect,indiiectlyboostingexpoits.Tliswilloccui
evenilioudsluveuligleiimpoitcontenttlunconsumption.
Luboi-intensive, community-diiven inliustiuctuie development
piogiums tlut employ piimuiily tle pooi, sucl us PNPM, uie even
bettei loi ieducing tle inliustiuctuie bottleneck us well us cieuting
incometliouglemployment.Byloweiingcostsoltiunspoit,tleyluci-
litute pioduction ol liglei-vulue, moie luboi-intensive goods (sucl
usvegetublesinsteudoliiceoicussuvu).Tleincieuseddemundtlut
is geneiuted by tle piogium comes piimuiily liom tle iuiul pooi. It
istleieloieoveiwlelminglydemundloilood,clotl,undlocullypio-
duced goods und seivices. Foi tlese tleie is idle cupucity (luiicuts,
piimuiyundIunioiliglsclooling,betjakoibicycleiicksluwiides),
und/oi tleii impoit content is low. Plustic goods uie mude liom
stock pioduced in Indonesiu und tuined into goods tleie; cotton
clotliequiiesimpoitedcottonbutulltlepiocessingcunbedonein
Indonesiuinluctoiieswitlidlecupucity.Tleincieuseddemundtleie-
loiegeneiuteslimiteddemundloiimpoits.
Similuily, sclool leeding to benelit muinly pooi clildien cun
luve low impoit content und, il used us puit ol u piogium to stubi-
lize tle piice ol puiticului goods, cun leud to incieused pioduction.
A smull depieciution in tle iupiul encouiuges domestic pioduction
undieducestleimpoitcontentoluwidevuiietyolgoodsundwould,
tleieloie,peimituluigeistimulus.
The limits of development based on commodity exports
A muIoi ieuson loi tle stugnution ol Indonesiu’s luboi-intensive
munuluctuied expoits wus tlut tle countiy sulleied liom “Dutcl
35
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
diseuse.” Indonesiu wus u muIoi beneliciuiy ol tle commodity
boom ol 2004–2008. But tle iesulting incieuse in tle vulue ol tle
iupiul ieduced tle competitiveness ol luboi-intensive expoits.
Some unulysts downpluyed tle impoitunce ol tle exclunge
iute und tle stugnution ol luboi-intensive expoits und impoit-
competinggoods.Tleyuiguedtluttlecountiy’scompuiutiveudvun-
tugewususucommodityexpoitei.Evenilcommoditypiicesdeclined
liomtleiiliglpoint,tleiiuigumentwent,tleywouldiemuinubove
tleii listoiicul levels becuuse ol tle giowtl ol tle PRC und otlei
economies. And witl some udIustment in policies, Indonesiu could
compensuteloiloweipiicesbygieuteiquuntities.Acommodity-led
stiutegy,tleyuigued,wouldgeneiuteenouglincometolunduluige
expunsionolnontiudedgoodspioduction,especiullyiesidentiulund
otleiconstiuction,sullicienttopiovideemploymentloitlegiowing
luboiloice.
Buttlutuigumentisuweukone.Fiist,itstuitsliomtlepiemise
tlut Indonesiu is u iesouice-iicl economy und could lollow in tle
lootsteps ol countiies like Austiuliu tlut becume weultly, tlunks to
ucommodity-ledstiutegy.Butonupeicupitubusis,Indonesiuisnot
iesouice iicl. Its iesouice endowment is luvoiuble compuied witl
tlePRCoiIndiu,butnotcompuiedtoMuluysiu,mucllessAustiuliu.
Cuiient commodity expoits (udmittedly un impeilect guuge ol
iesouiceendowmentbutunindicution,neveitleless),slowMuluysiu
ut 6 times Indonesiu’s pei cupitu commodity expoits, Austiuliu ut
12times,undevenTluilundut2timestlutolIndonesiu.Indonesiu
cunsuielyexpundtlequuntityolmineiulstlutitexpoitsundguin
some benelits in teims ol tuxes und otlei income, but loi commo-
dityexpoitstodiivetleeconomywouldiequiieuwlollyunieulistic
expunsion.
Second,commoditydevelopmentdoesnotpiovidemuclemploy-
ment:unincieuseinexpoitsolcoulundotleimineiulsolS10billion,
u S0% incieuse, would cieute only 2S0,000 Iobs, equul to wlut
S1 billion ol luboi-intensive munuluctuied expoits would cieute
(Tuble6).ItwouldulsoiesultinsomeindiiectIobs,butsincemucl
oltleincomewouldgotoloieigneisoitotleweultly,tleindiiect
benelits would ulso be limited. Commodity-led giowtl would still
leuvemillionsundeiemployedundpooi,losteiingununequuldistii-
butionolincome.
Finully,mostnutuiuliesouicesuieconcentiutedonsomeiegions
ol tle outei islunds, wlile tle bulk ol tle populution und most ol
tlepooiundundeiemployeduieonJuvuundBuli.Acommodity-led
stiutegywouldleudtogiosslyunbuluncedgiowtl.
36 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
5. Regaining market share: Enhancing
Indonesia’s competitiveness
The need and the potential
Regaining a share of the world market for labor-intensive
manufactured exports
Ultimutely, uny ciedible stiutegy needs to include tle tiuly iupid
giowtl ol luboi-intensive expoits. Some sociul piotection piogiums,
most notubly PNPM, will cieute pioductive employment; so will u
stimulus piogium loi domestic consumption und investment; und
moie iupid giowtl ol commodity expoits will ulso contiibute, espe-
ciullyindiiectly.Buttleyuieinsullicienttoieducetlebucklogolovei
1S million udditionul unemployed und undeiemployed, wlile giving
pioductiveemploymenttotle2millionwloIointleluboiloiceeucl
yeui.Tlisisulugeundeiutilizediesouice.Sliltingtlemliomlow-oi
nonpioductiveIobstouselulemploymentwilliesultinulugeguinin
nutionulincome.
Reguining tle 0.S% ol woild muiket sluie tlut Indonesiu once
lud would incieuse Indonesiu’s textiles und guiment expoits by
S3billionuyeui,uddingiouglly7S0,000woikeis(Tuble6)undmoie
ustlewoildmuiketgiows.Tliswouldieemploytlosewloluvelost
Sector Period
Increase
in
exports
(Sbillion)
Increase
in
quantity
(Sbillion
utlixed
piices)
Increase in
employment
(1,000)
Employment for
every $ billion of
increased exports
(1,000)
Current Constant
Coul 199S–
2006
S.0 4.6 S8.S 12 13
Otlei
mining
199S–
2006
6.0 1.6 2S9.0 43 162
Textilesund
guiments
1990–
199S
3.3 2.8 800.0 242 286
Motoicycles
undcuis
2000–
2006
4.7 S.0 171.0 36 34
Clemiculs
und
leitilizei
1990–
1996
1.2 1.0 60.0 S0 60
Souice:Autlois’culculutions;incieuseinexpoitsliomBPSunnuulexpoitdutu;employmentliom
BPSAnnuulIndustiiulSuiveys.
Table 6: Labor-intensive and non-labor-intensive exports
37
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
tleii Iobs due to tle iecession und udd some moie. Between 1990
und1993,Indonesiuguinedneuilyulullpeicentugepointinmuiket
sluie.Duplicutingtlutleutwouldudd6millionpioductiveIobs.But
eventlen,Indonesiuwouldbeusmullpluyeiwitl3.S%oltlewoild
muiket.Noindividuulcompetitoiwouldbemussivelyluimed,muking
suclunuclievementeminentlyleusible.
TlesumeluctoistlutwouldenubleIndonesiutoieguinitssluie
oltletextilesundguimentmuiketwouldulsoupplytoitssluieol
tleluinituieundsloemuikets,wleieitwusonceumuIoicompe-
titoi.TleiupidgiowtlolIndonesiunexpoitsintleluboi-intensive,
simple-teclnology industiies occuiied liom 198S to 1992, even
tlougl some muIoi competitois enteied tle woild muiket ut tle
sumetime.
In 2008, Indonesiu ulso expoited some S36 billion ol miscellu-
neous munuluctuied goods, up liom Iust S9 billion in 1996. Wlile
someoltleseiequiiedlewwoikeis(suclusleitilizeis,clemiculs,und
iion und steel), otleis employed u substuntiul numbei ol unskilled
woikeis(suclustoys,kitclenwuie,undplusticpioducts).Iltleieuie
incentivesloitleexpoitolluboi-intensivegoods,someoltlesemis-
celluneousmunuluctuieswillulsogiowmoieiupidly.
Competing more effectively with imports
NotonlylusIndonesiulostmuiketsluieloiluboi-intensiveexpoits,
someolitsmunuluctuieisluveulsolosttlebuttlewitlimpoits,inclu-
ding illegul ones. Higl luboi costs, und ligl costs moie geneiully,
mukemunuluctuieispioducingloitledomesticmuiketvulneiubleto
competitionliomimpoits.TuiillslelpbutsmugglingisumuIoipio-
bleminucountiylikeIndonesiuwitllongcoustlinesundsubstuntiul
coiiuption.Tlepolicyclungesdesignedtolelpexpoiteis,especiully
uloweicuiiency,wouldenubledomesticpioduceistocompetemoie
ellectivelywitlbotllegulundillegulimpoits.
The potential for agricultural exports and tourism
Tleie iemuins consideiuble potentiul loi expunding ugiicultuiul
expoits.Tlebigsuccessstoiyintliscutegoiylusbeenpulmoil(liom
S1 billion in 1996 to S1S billion in 2008), but tleie uie ieul ques-
tionsonwletleiitcuncontinuetogiowiupidlygivenenviionmentul
conceins. But no sucl conceins uttucl to most otlei pioducts. Tley
luve giown liom SS.S billion to S14.S billion ovei tle sume peiiod.
Amongtlem,lieslliuits,lloweis,undsomevegetublesluvebigpoten-
tiul liom u tiny buse. Tiuditionul pioducts, including iubbei, spices,
und beveiuges, cun ulso giow und piovide Iobs. Lustly, Indonesiu
still lus unexploited touiism potentiul, wlicl is inleiently luboi
38 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
intensive.Buliisusuccessstoiy,buttleiestolIndonesiuiemuinswoe-
lullyundeidevelopedintlisiespect.
Feasible growth
Successlul countiies, including Indonesiu ut times in its pust, luve
expundedluboi-intensiveexpoitsut20%–30%uyeui.Indonesiuntex-
tiles,guiments,sloes,undluinituiegiewutneuily30%uyeuiliom
198S to 1997, despite slowei giowtl towuid tle end ol tle peiiod.
(Evenquuntities,notIustvulues,giewutneuily2S%uyeuiduiingtlis
peiiod.)Otleicommoditiestlutludsuclliglgiowtliutesincluded
expoitsolsliimp,unotleiluboi-intensivepioduct,undmiscelluneous
munuluctuiedpioducts.
Tlistlenposestlequestion:HowcunIndonesiuieguinitsubility
tocompeteintlewoildmuiket?
Breaking the major constraint: Achieving
competitive costs
Indonesiucunieguincompetitivenessloiluboi-intensiveexpoitsund
loidomesticpioduceiscompetingwitlimpoitsilitcunloweiitscosts.
To uclieve tlut iequiies muking smull udvunces in u iunge ol uieus,
iutleitlunlocusingonusingleluctoiinvolvedinliglcosts.
Taking advantage of reduced risk and uncertainty, good
economic performance, and declining competitiveness
of others
Indonesiu’subilitytoieguinsomeolitslostsluieoltlewoildmuiket
isligleicuiientlytlunitlusbeenintleiecentpustbecuuseoltle
countiy’sstiongeipositionintwokeyiespects.
Fiist, its imuge lus impioved. Histoiicully it lus been seen us
unstuble, witl u ligl iisk ol politicul pioblems und uniest. Tle suc-
cesslulelectionundtleoveiwlelmingmunduteoltlepiesidentluve
clungedpeiceptions.Puiudoxicully,evennewteiioiistincidentsluve
lud some positive elements in teims ol Indonesiu’s successlul pio-
giumtodeulwitlteiioiism.Additionully,tlelucttlutIndonesiulus
weutleied tle iecession bettei tlun mucl ol tle iegion lus been u
stiongplus.
Second,luboicostsintlePRC—tlemostloimidublecompetitoi
in luboi-intensive expoits—uie iising. In 2007 und 2008, PRC yuun
wugesincoustuliegionsioseiupidlyundnewluboi-piotectionmeu-
suies luve ulso iuised luboi costs. In uddition, tle yuun uppieciuted
ulmost20%uguinsttledolluiundmoieuguinstotleicuiienciesliom
200Sto2008.Wugesindolluiteimstleieloieincieusedubout60%
liom2006to2008(TubleS).
39
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Reducing the high cost of infrastructure services
Building low-cost, local rural infrastructure—PNPM. Attention lus
been locused on tle need loi muIoi nutionul inliustiuctuie develop-
ment. But tleie is consideiuble potentiul loi incieused income und
employment liom impioved villuge inliustiuctuie. Tle iuiul puit ol
tlePNPMpiogiumloiluboi-intensivedevelopmentolvillugeiouds,
iiiigution, diinking wutei, und so on lus slown un uveiuge econo-
miciuteolietuinol70%(Pupunek2007).Allowingmotoiizedtiuns-
poittoieuclvillugeslucilitutesuslilttoligl-vuluevegetublesliom
lowei-vulue iice und cussuvu, loi instunce. Pioviding tempoiuiy, oll-
seuson employment to un estimuted 24 million wlen tle piogium
coveistlewlolecountiy(in2010)ulsomukesusignilicuntcontiibu-
tiontoieducingundeiemploymentundpoveity.
Betteivillugeinliustiuctuieulsomeunsloweicostsloiexpoiteis
olsuclugiicultuiulpioductsuscocou,teu,undspices.Equullyimpoi-
tunt, it incieuses tle potentiul loi developing new ugiicultuiul pio-
ducts:lloweis,especiullyoiclids;tiopiculliuits;undsomevegetubles.
Finully, it lucilitutes ieducing Indonesiun dependence on impoits. Il
ucoldcluinisestublisledloiexpoitsollieslliuitsoilloweis,tlut
cunulsolosteipioductionolunimulpioductstlutuienowimpoited,
suclusmilk.IiiigutionbuiltbyPNPMpeimitsdoubleundtiipleciop-
ping, ieducing tle yeuis wlen tle countiy needs to impoit iice und
incieusingtleyeuiswlenitcunexpoit.
Improving the national physical infrastructure: Implementation
capacity. Tleieisuwell-documentedcontiibutiontoliglcostsliom
pooi iouds, powei outuges, und inudequute poits. Well-lunctioning
inliustiuctuie cun be instiumentul in unlocking tle dooi to piospe-
iityloimunyiegions.Itisnotonlyielevunttointeinutionulcompe-
titiveness,itisulsociuciultointegiutingtledomesticeconomy.Tlut
integiutionslouldluvetoppiioiity,includingdevelopmentolnutio-
nuliouds,poits,inteiislundtiunspoitsystems,undcompetitivelieiglt
industiies. A ieusonubly ellicient logistics system slould be in pluce
tointeiconnectbusinessesutdilleientlevelsolopeiutionindilleient
puitsoltlecountiy.
Indonesiu is lugging wuy belind competitois in inliustiuctuie,
piimuiily becuuse ol limited implementution cupucity. Tlis lus been
uggiuvuted by tle unticoiiuption cumpuign: olliciuls uie uliuid to
uwuidcontiuctswitloutinnumeiubletime-consumingsuleguuids,loi
leuiolbeingsuspectedolcoiiuption.Tiunspuientbiddingbypiivute
investoisisonepossiblesolutionwitliespecttosomepuitsolinlius-
tiuctuie.Insomecountiies,bonusestocontiuctoisloieuilydeliveiy
undbelow-estimutelinulcostsluvelelped.
Human and institutional infrastructure. Astleplysiculinliustiuc-
tuie is ligl cost, so uie some uspects ol tle lumun inliustiuctuie.
40 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Univeisul piimuiy educution wus u signilicunt uclievement ol tle
Suluitoyeuis,undinquuntitutiveteims,seconduiyundteitiuiyedu-
cutionisutpuiwitlotleiAsiuncountiies.Buttleieuietwobigdille-
iencesbetweenIndonesiuundcountiieslikeIndiu.
Fiist, tle gieut muIoiity ol Indiu’s seconduiy sclools und uni-
veisities emplusize memoiizution und iote leuining, us do tlose in
Indonesiu.ButIndiulususubstuntiuleliteeducutionulsystem,wlicl
cuteispiimuiilytouppei-incomegioups.Howevei,itdoesuccommo-
dutemunyoltlebiigltestliomtlemiddleclussundevensomeliom
pooieilumilies.TleIndiuninstitutesolmunugementundolteclno-
logyuieutpuiwitlsomeoltlebestuniveisitiesintlewoild,usistle
DelliScloololEconomics,undulundlulolsimiluiinstitutions.Wlile
tleseeliteuniveisities,undcompuiubleseconduiysclools,uieusmull
liuction ol tle wlole educutionul estublislment, tle totul numbeis
tlutgiuduuteliomtlesescloolsuiesullicientlygieutto
º stullulltleenteipiisestlutneedtleteclniculundmunugeiiul
competencetleyimpuit;
º piovideloiuluige,giowing,unddynumicoutsouicingsectoi;
und
º pioducegiuduutestoexpoitusubstuntiulnumbeitotleligl-
teclcoiiidoisintleUnitedStutesundelsewleie.Aluigeund
incieusing piopoition luve ietuined to Indiu, und luve been
umong tle most uctive entiepieneuis in tle ligl-tecl lield
tleie.
Indonesiu ulso bousts ol some well-estublisled elite univeisities
undtleieluvebeensubstuntiulimpiovementsutbotltleuniveisity
undseconduiy-scloollevels,butlew,iluny,wouldiunkwitltletop
inteinutionul univeisities. In uny cuse, tleii numbei ol giuduutes is
quite inudequute loi tle countiy’s needs. Tley uie lundicupped by
tletendencyolmunyseconduiyscloolstoteucltleiistudentsnotto
tlinkindependentlyundtounquestionublyucceptuutloiity.
No otlei Asiun countiy lus tle sume quulity und numbeis us
Indiu’sligleieducution,buttlePRClusbeenuggiessivelydeveloping
itsuniveisitysystem.BungludeslundPukistunluveumuclbioudei
buse in Englisl-speuking competence und, on u smullei scule, luve
benelitedliomsimiluielitesystemsolseconduiyundteitiuiysclools
us Indiu’s. Indonesiu’s seconduiy und univeisity system is still quite
inudequute loi tle needs ol u luige countiy. Weuk educution iuises
costs,especiullyloiexpoiteistiyingtocompeteintlewoildmuiket.
Tle second big dilleience is tlut Indonesiu lucks tle tiudition
ol entiepieneuislip und piolessionul munugement tlut is stiong in
41
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Indiu.Indiuluslumiliestlutluveopeiutedluigeinteinutionulliims
loi 2 centuiies, liims tlut luve lud to innovute und become moie
piolessionultostuycompetitive.OtleiSoutlAsiuncountiiesluvelud
40–S0yeuisolsuclexpeiience.Indonesiu’sbusinessesventuiedinto
tlewoildmuiketinuluigewuylesstlun20-oddyeuisugo.Tlis,too,
isulundicup.
Onlytimewillcuiesomeoltlesepioblems.ButIndonesiuulsolugs
belindsomecompetitoisinestublislingluge,goveinment-suppoited
piogiumstostiengtleneducutionby,loiexumple,mussivescloluislip
piogiums loi loieign studies, und by using tempoiuiy uiiungements
witlloieigninstitutionstoupgiudetiuininginIndonesiuund,ubove
ull,toenloicewoild-clussstunduids.
Improving the investment climate
Agieutdeulolpiogiesslusbeenmude,butIndonesiustilliunksneui
tlebottomolmunyiutings,becuuseotleicountiiesluvemudepio-
giessuswell.Tlisisoneiespectwleietleieuiecleup,quickguinsto
beludinieducingcosts—ilbuieuuciuticobstuclescunbeoveicome.
Long-term changes: Corruption and governance
Aguintleielusbeengieutpiogiess,butIndonesiustillcontinuesto
iunk neui tle bottom. Quick guins cun come liom ieducing tle dis-
cietionololliciulstlutgivestlemtleiipoweitocollect“ients.”Foi
instunce, one cun eliminute tle need loi peimits to employ loieign
woikeis,butimposeutuxtlutincieuseswitltleiiskillundtiuining.
Tlut wuy tleie is un uutomutic incentive to use Indonesiun woikeis
undtotiuintlemilneeded,butnotunoppoitunityloibiibestoget
uwoikvisu.
Lowering the effective cost of labor
Alteiullotleistepsluvebeentuken,tleieisnogettinguioundtle
needtoloweitlecostolluboiilIndonesiuistoieguinitscompetiti-
venessinluboi-intensiveexpoits.Tleieuie,ulteiull,millionsolwoi-
keiswlowuntIobsinmunuluctuiing,butcunnotgettlem,becuuse
Indonesiu cunnot ellectively compete. Otlei millions uie loiced to
migiuteundenduiepooiconditionstogetuIob.Fouimuinstepscould
mukeudilleience.
Dealing with “Dutch disease”—effective exchange rate management.
In 2008, tle dollui ut one time tiuded ut Rp12,000 und wus ubove
Rp11,000 loi S montls. Tlis iupiul depieciution pioduced none ol
tle leuied cutustioples. Tleie wus no punic, und no collupse ol tle
exclungeiute.Butitsligltlyloweiedtledolluiwugecost,despiteun
incieuseintleiupiulwuge.Tleiupiullussinceuppieciutedbyovei
42 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
20%,oi1S%ilonecompuiesmultiplemontls.Tluttiunslutesintoun
incieuseintlecostolluboiloiexpoiteisundtlosecompetingwitl
impoitsby1S%–20%.BunkIndonesiuneedstoiecognizetlutustiong
iupiullusbeenexpensiveloiIndonesiu—itlusbeenumuIoiluctoi
undeiminingexpoitsustlepiincipulengineloigoodIobs.
Tlis does not meun tlut Indonesiu slould ubundon u muiket-
deteiminedexclungeiuteundietuintoulixedoimunugedone.Noi
isittoudvocuteumussivedevuluution.Rutlei,tlisisunuigumentloi
doingwlutviituullyeveiyotleicountiyinAsiuulieudydoes,numely,
stoppuslingloiustiongdomesticcuiiency(undilinteiveningtostu-
bilizeit,stubilizeitdownwuid,notupwuid);undwelcomeudeclinein
tlevulueoltleiupiulusincieusingIndonesiuncompetitiveness,iutlei
tluntieutingitusucutustiopletobeieveisedussoonuspossible.
But,uboveull,ellectiveexclungeiutemunugementmeunsopeiu-
tingmonetuiyundlisculpoliciestobenelittleieulsectois,tobenelit
pioductionundemployment,undnotpiimuiilytobenelittlosewlo
boiiowubioudoiwloguinliomtlespieudinloieignundIndonesiun
inteiestiutes.Ilspeculutoisleuitluttleiupiulmuydecline,tlutwill
tendtodiscouiugesloit-teiminllowsolloieignmoneyundcontiibute
toieveisingtleinllowolsloit-teimmoneyund,witlit,tleuppieciu-
tionoltleiupiul.
Iltleiupiul’sdepieciutionistoogieut,itwillcuusepioblemsloi
compunies und bunks witl u luige piopoition ol dollui-denominuted
debt(iltleiiincomeisiniupiul).Depieciutioncunulsowoisentleii
bulunce sleets. Expoiteis luve no pioblem becuuse tleii euinings
incieuse us well, und usuully moie tlun tleii debt seivice obligu-
tions. Becuuse inteiest iutes luve been signilicuntly lowei outside
Indonesiutluninside,tleieisusubstuntiulumountolloieigncuiiency–
denominuteddebt.WlentleiupiulieucledRp11,S00–Rp12,000,itdid
notseemtocieutemuIoipioblems.Ilpioblemsdouiise,goveinment-
ussisteddebtienegotiutionmuybenecessuiytodeulwitltlem.Buttle
benelitsolugiuduuldepieciutionol10%–20%outweigltlesecosts.
Compensate for any significant devaluation by stabilizing the prices
of staple foods.Asignilicuntdevuluutionoltleiupiultendstoincieuse
inllution.Ituutomuticullypiotectsdomesticpioduceisliomcompeti-
tionbyiuisingtlecostolimpoitedgoods.Foistuplegoodsconsumed
by tle pooi, piice incieuses cun be minimized by eliminuting tuiills
(on iice) oi quuntitutive iestiictions on impoits. Il neitlei ol tlese
meusuiesispossible,tempoiuiysubsidiesolgoodstlutloomluigein
tleexpendituiesoltlepooi,suclussoybeuns,muybeupiicewoitl
puyingtoieveisetledeclineinluboi-intensivemunuluctuiing.
A grand national pact? Minimum wages and labor regulation. An
uttemptin2009toimposelimitsonminimumwugeincieusesluiled
43
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
in tle luce ol stiong opposition liom woikeis. It muy be moie suc-
cesslultolosteiu“giundnutionulpuct”—unugieementumongwoi-
keis,employeis,undtlegoveinment—undeiwliclwoikeisugieeto
modeiute demunds loi liglei minimum wuges und uccept u modili-
cutionoliulesonliiingundliiing.Tliswouldieducetleiicostsin
ietuin loi Iob guuiuntees by employeis und loi pieleience on being
coveiedbytlesociulinsuiuncepiogiumstluttlegoveinmentisestu-
blisling.Suclpuctsluvewoikedinotleicountiies.Ilunutionulpuct
cunnotbeuclieved,piovinciulpuctsmigltspuileultlycompetition
umongsomepiovincestouttiuctinvestment.
Training and technology transfer.Anotleisteptlutluslelpedin
somecountiiesistoimpioveluboipioductivitybyusmulltiuininglee
onexpoiteis,oiullliimsinunindustiy.
6. Lessons for Asia: How countries differ
in terms of the recession’s impact
and appropriate policy responses
Applicability and limits of Indonesia’s methodology
Tleuppioucloimetlodologyusedintlispupeicunbeuppliedtouny
countiypiovidedtluttleobIectiveissimilui:toquicklyquuntilytle
impuctoleconomicdevelopmentsoutsidetlecountiyontlecountiy
conceined,suciilicingtlepiecisiontlutwouldbeguinedliomunu-
lyzing tliid- und louitl-iound ellects in oidei to pioduce iesults
ielutivelyquicklyundintimetolelpliumepoliciestodeulwitltle
impuct.
Tuble1piovideduuselulclecklistoltlemuIoiluctoistlutneed
tobetukenintouccounttoincludeullmuIoiliist-undsecond-iound
ellectsintleunulysis.Itslouldbeespeciullyuselulinensuiingtlut
twoolten-oveilookedvuiiublesuietukenintouccount:tlebenelitsol
u iecession und second-iound ellects. We piesented u simple mucio
model to estimute seconduiy ellects (tle multipliei), not included
in most unulyses ol tle impuct ol clunges in tle woild muiket on
Indonesiu’seconomy.Obviously,someluctoiswillbeolmuclgieutei
impoitunce in otlei countiies tlun Indonesiu, und some will be ol
mucllessimpoitunce.
Ouiuppiouclisleuvilydependentonusingtleinitiulimpuctol
tleciisisonvuiiousvuiiublestoloiecusttleultimuteimpuct.Ittleie-
loie depends leuvily on up-to-dute inloimution, wlicl is dillicult to
obtuinoutsidetlecountiyconceined.Despiteextensiveelloits,most
oltledutuuvuilubleliomoutsidetlevuiiouscountiiesdidnotcovei
tleliistmontlsoltleciisiswlenwedidtleunulysis6montlslutei.
44 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tle uppioucl we used is tleieloie most suituble loi unulysts witlin
ucountiytlutcunobtuincuiientdutunotuvuilubleontleinteinet.
The differential impact of the recession as a result
of structural factors
Wlenusingtleselindingsloipolicy,itwillbeimpoitunttoiecognize
ut tle outset tlut Asiun countiies lull into seveiul cutegoiies us tle
iesultolstiuctuiuldilleiences,undtluttlesedilleiencesullectpolicy
iecommendutions in u lundumentul wuy. Tuble 7 iepiesents u liist
uttemptutdistinguislingsuclstiuctuiuldilleiences.
Trade dependence
One ol tle lessons liom tle iecent ciisis is tle impoitunce ol stii-
kingubuluncebetweenexpoitoiientutionundtledomesticeconomy.
Tle uppiopiiute bulunce, ol couise, dilleis umong countiies, luigely
becuuseoldilleiencesintlesizeoltleeconomy.Inteinutionultiude
willluveusmulleiioleintleeconomyoltleluigeicountiies,otlei
tlingsequul.Exceptintlesmullestcountiies,tledomesticeconomy
is impoitunt in secuiing economic stubility und boosting economic
giowtl. Tle ciisis uguin undeiscoied tle impoitunce ol developing
utleustuminimulumountol“stiuctuie”intledomesticeconomy,to
uvoidexcessivedependenceontiudeundgieutvulneiubilitytoextei-
nulslocks.
FiomTuble7,onecunconcludetluttleieuieutleusttwogioups
olcountiiesinAsiuwitliespecttotleioleolexpoitsoiinteinutio-
nul tiude: tlose wleie expoits exceeded 7S% ol tle gioss domes-
tic pioduct (GDP) und tlose wleie tley weie ut 4S% oi below. We
would expect tlut tle decline in expoit euinings us u iesult ol tle
woildiecessionwouldlittleliglexpoiteisluideitluntlosewleie
expoitsweieollessimpoitunce—uguin,otleitlingsequul.Indeed,it
wusuiguedeuilieitlutexpoitsutonly29%olGDPinIndonesiuweie
oneieusontluttleimpuctoltleiecessionontlutcountiywusless
tlunonitsneiglbois.
Foreign currency reserves and current account balance:
The ability to fund an expansion of domestic demand
Tle vulneiubility to loieign slocks depends, ol couise, not only on
tleimpoitunceoltiudeinnutionulincomebutulsoontleubilityol
tlegoveinmenttoucttocounteibuluncetleimpuctolclungesintle
bulunceolpuyments.Aiouglmeusuieisgivenbytlesizeoltleloieign
exclungeieseivesundtlesizeundsignoltlecuiientuccountbulunce.
Heie,tlePRCisinucutegoiybyitsell.Itsloieignexclungeieseives,
45
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
I
n
d
i
c
a
t
o
r
I
n
d
o
n
e
s
i
a
B
a
n
g
l
a
d
e
s
h
C
h
i
n
a
,

P
e
o
p
l
e

s

R
e
p
u
b
l
i
c

o
f
I
n
d
i
a
M
a
l
a
y
s
i
a
P
h
i
l
i
p
p
i
n
e
s
S
r
i

L
a
n
k
a
T
h
a
i
l
a
n
d
V
i
e
t

N
a
m
E
x
p
o
i
t
s

o
l

g
o
o
d
s

u
n
d

s
e
i
v
i
c
e
s

1
2
7
1
4
1
,
4
2
S
2
7
0
2
1
7
6
S
1
0
1
8
7
S
S
G
D
P

(
S

b
i
l
l
i
o
n
,

c
u
i
i
e
n
t
)
4
3
3
6
8
3
,
3
8
2
1
,
0
4
S
1
8
6
1
4
4
3
2
2
4
6
7
1
E
x
p
o
r
t
s

o
f

g
o
o
d
s

a
n
d

s
e
r
v
i
c
e
s

a
n
d
/
o
r

G
D
P

(
%
)
2
9
2
0
4
2
2
6
1
1
7
4
5
3
1
7
6
7
7
F
o
i
e
i
g
n

c
u
i
i
e
n
c
y

i
e
s
e
i
v
e
s

i
n

2
0
0
8

S
2
6
2
,
0
0
0
u
2
4
7
9
1
3
7
3
1
1
1
2
3
I
m
p
o
i
t
s

o
l

g
o
o
d
s

u
n
d

s
e
i
v
i
c
e
s
1
2
9
2
0
1
,
0
9
2
3
2
9
1
8
3
7
2
1
3
1
7
7
6
9
A
v
e
i
u
g
e

m
o
n
t
l
l
y

i
m
p
o
i
t
s
1
1
2
9
1
2
7
1
S
6
1
1
S
6
M
o
n
t
h
s

o
f

i
m
p
o
r
t
s

c
o
v
e
r
e
d

b
y

r
e
s
e
r
v
e
s
5
4
2
2
9
6
6
3
8
4
B
u
l
u
n
c
e

o
n

c
u
i
i
e
n
t

u
c
c
o
u
n
t
1
0
1
3
7
2

1
7
2
9
7

1
1
4

7
M
o
n
t
h
s

o
f

i
m
p
o
r
t
s

c
o
v
e
r
e
d

b
y

s
u
r
p
l
u
s

o
n

c
u
r
r
e
n
t

a
c
c
o
u
n
t
1
1
4

1
2
1

1
1

1
G
D
P

~

g
i
o
s
s

d
o
m
e
s
t
i
c

p
i
o
d
u
c
t
.
u

A
s

i
e
p
o
i
t
e
d

i
n

n
e
w
s
p
u
p
e
i
s

i
n

e
u
i
l
y

2
0
0
9
.
S
o
u
i
c
e
s
:

A
s
i
u
n

D
e
v
e
l
o
p
m
e
n
t

B
u
n
k
,

K
e
y

I
n
d
i
c
a
t
o
r
s

f
o
r

A
s
i
a

a
n
d

t
h
e

P
a
c
i
f
i
c
,

i
e
c
e
n
t

i
s
s
u
e
s
.
T
a
b
l
e

7
:

D
i
f
f
e
r
e
n
c
e
s

a
m
o
n
g

A
s
i
a
n

c
o
u
n
t
r
i
e
s

r
e
l
e
v
a
n
t

t
o

p
o
l
i
c
y

f
o
r

d
e
a
l
i
n
g


w
i
t
h

t
h
e

2
0
0
8

2
0
0
9

r
e
c
e
s
s
i
o
n

(
S

b
i
l
l
i
o
n
,

d
u
t
u

l
o
i

2
0
0
7
)
46 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
udequute to puy loi 22 montls ol impoits il tle countiy euined no
loieignexclungeutull,uiemoietlundoubletloseoltlenextcountiy,
Indiu,witlieseivessullicienttocovei9montlsolimpoits.Inuddi-
tion,tlePRCwusiunningusuiplusontlecuiientuccountudequute
tocovei4moiemontlsolimpoits.Asuconsequence,tlePRClusno
piucticul limits liom tle bulunce ol puyments to tle stimulus it cun
piovideloitledomesticeconomy.
At tle otlei end ol tle spectium uie countiies like Bungludesl,
SiiLunku,undVietNumwloseloieignexclungeieseiveswouldcovei
3–4montlsolimpoitsundwitlusmullpositiveoinegutivebulunce
ontlecuiientuccount.Howbigustimuluspuckugetleiieconomies
cunulloidmuydependmoieonpsyclologytlunoneconomics.Apuc-
kugeol3%olGDPwouldincieusedemundbyS2billioninBungludesl
undwouldexpundimpoitsbyS0.6billioniltlemuiginulpiopensity
to impoit weie 30%. Its cuiient uccount suiplus would disuppeui,
but its ieseives would not need to be toucled. But tle ieseives ol
tlesecountiiesuienotluigeenougltocopewitlmuclcupitullliglt.
Tleieloie,ulltlesecountiiescuniunumodestdomesticstimuluspuc-
kuge, but its mugnitude will be deteimined moie by tleii guess us
towlentleywouldbecomevulneiubletocupitullliglt.Indonesiuis
closeitotlesecountiiestlunitistotlePRCinitsubilitytoexpund
domesticdemund.
Among tle iemuining countiies coveied in Tuble 7, Indiu und
Tluilund uie in tle best position to lollow u piesciiption ol domes-
tic demund expunsion–led giowtl, witl ieseives equul to 9 montls
und8montls,iespectively.ButIndiuisulieudyiunningbotluluige
lisculundcuiientuccountdelicit,undTluilundlusupioblemolpoli-
ticulunceituinty.Tlesecountiies’scopeloistimulusistleieloieulso
limitedbypoliticulundpsyclologiculluctoisundtleiesultingiiskol
cupitullliglt.
Insloit,ulltlecountiiesunulyzedcunlollowtlecuiientconsen-
sus piesciiption to deul witl tle iecession by expunding domestic
demund,butneuilyullcundosoonlytoulimiteddegieebeloietley
luce u bulunce-ol-puyments constiuint. Tle PRC is tle muIoi excep-
tion.TleconstiuintcouldbesubstuntiullyieleusedbyconceitedAsiu-
widestimulus.
Increasing Asia-wide growth: Concerted stimulus
in major countries
One countiy’s impoits uie unotlei’s expoits. Tlut tle cuiient ieces-
sion lus been sloit is undoubtedly becuuse muny muIoi economies
luveintioducedmussivestimuluspuckuges.Buttleseuiecomingto
47
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
unendututimewlengiowtlincountiieslikeIndonesiuisstillquite
inudequute to its needs. Given tle incieuse in intiu-Asiun tiude tlut
lus tuken pluce in tle lust decude, u conceited stimulus in ull, oi ut
leustmostol,tlemuIoiAsiuneconomieswouldbemuclmoieellec-
tivetlununcooidinutedstimulusbyulewindividuulcountiies.
TlePRCcouldmuketlegieutestcontiibutiontosuclunelloit
since it luces no piucticul constiuints. Il some ol its stimulus is in
tle loim ol expunsion ol consumei demund, not Iust inliustiuctuie
investment, it would ubsoib some expoits ol consumei goods liom
otlei Asiun countiies oi it would iesult in u decline in consumei
goodsexpoitsliomtlePRC,openingupmuiketstootleicountiies,
piimuiilyinAsiu.Usinginput–outputtublesundtiudedutu,itwould
not tuke long loi u iougl culculution ol wlut kind ol conceited
stimulusispossiblebyintiu-Asiuncoopeiution,bycoopeiutionwitlout
tlepuiticiputionolJupunoioltlePRC,oi(tlemostlimitedcuse)by
coopeiution only witlin tle Associution ol Soutleust Asiun Nutions
(ASEAN). One could ulso distinguisl between stimulus tlut piimu-
iily incieuses investment oi piimuiily consumption, und wletlei
incieused consumption is piimuiily by tle pooi oi tle nonpooi,
undsoon.
Since tlis would be u clussic win–win situution wleie eveiyone
benelits liom some coopeiution, sucl un uppioucl muy luve some
clunce ol success. But becuuse ol tle “liee iidei” pioblem und tle
dillicultyolnegotiutions,unugieementwouldnotbeeusy.
Magnitude of the problem of underemployment
and unemployment
Countiies dillei ulso in tle seiiousness ol tleii unemployment und
undeiemploymentpioblem.Tleunulysisoltlispioblemisveiypui-
tiulloiluckoldutuontlepioblemolundeiemploymentoidisguised
unemployment—woikeis wlo slow up in tle dutu us employed but
uddlittletooutput(zeiooilowmuiginulpioductolluboi)unduienot
ieullyneeded.Butitiscleuitluttleieuiegieutdilleienceswitlies-
pecttotleluboimuiket,undtlisluspioloundimplicutionsloipolicy.
FoicountiieslikeMuluysiu,wliclseemtoluvebeenubletopioducti-
velyemploytleudditionstotleluboiloice,muIoipolicyieloimsmuy
be only somewlut uigent. Howevei, countiies like Indonesiu, wleie
un udditionul 1S% ol tle luboi loice lus been udded to tle undei-
employed und unemployed, need to locus tleii elloits on cieuting
Iobstlutwilltuintlemliomsolelyconsumeisintopioduceisuswell.
Reguiningcompetitivenessintlewoildmuiketisessentiulintlemix
touclievetlisundcuniequiiesignilicuntpolicyieloims.
48 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Conclusion
Tlecuiientglobuliecessionlusiutleisuipiisinglyludlittleimpucton
Indonesiu.Tlisisloituitoussincetlecuiientsociulpiotectionsystem
isligllyliugmentedunddoesnotieuclulltloseinneed.Coveiuge
olwoikeisintleloimulsectoiislow.TlemuIoiityolwoikeisintle
inloimulsectoiuienotcoveiedundpiotectionoltlepooiundvulne-
iubleiemuinsinudequuteloitleneedsolunemeigingmiddle-income
countiy.WliletleNutionulSociulPiotectionSystem(SJSN)Luwpio-
videsunumbitiousvisionolulutuienutionulsociulsecuiitysystem,
tleieuiemunyoutstundingquestionsieguidingtlelevelolbenelits
piovided,scopeolcoveiuge,ulloidubility,undlisculsustuinubility,us
well us tle necessuiy institutionul ieloims to ensuie deliveiy ol sei-
vicesundbenelits(WoildBunk2009).
References
Busii, M. Clutib und Gustuv F. Pupunek. Foitlcoming. Sociul piotec-
tioninIndonesiu.RepoitloiADB,Jukuitu.
Busii, M. Clutib und SIumsu RuluidIu. 2009. Indonesiu nuviguting
beyondiecoveiy:Giowtlstiutegyloiunuiclipelugiccountiy.
Diult iepoit loi tle Oigunisution loi Economic Co-opeiution
undDevelopment,Puiis.
Geeitz,Clilloid.1970.Agricultural involution: The processes of ecologi-
cal change in Indonesia.Beikeley:UniveisityolCuliloiniuPiess.
Huit,GilliunP.1986.Power, labor and livelihood.Beikeley:Univeisity
olCuliloiniuPiess.
Pupunek, Gustuv F. 2007. Tle employment und poveity impuct ol
PNPM. Piogium Nusionul Pembeiduyuun Musyuiukut, Tle
Nutionul Community Empoweiment Piogium. Unpublisled
iepoitloitleWoildBunk,Jukuitu.Apiil.
Sclydlowsky,DunielM.1980.Asloitmucio-economicmodeloltle
Indonesiuneconomy.InGustuvF.Pupunek,ed.The Indonesian
Economy.NewYoik:Piuegei.
Sclydlowsky, Duniel und Muitlu Rodiiguez. 1982. Tle vulneiubility
ol smull semi-industiiulized economies to expoit slocks: A
simulutionunulysisbusedonPeiuviundutu.InM.Syiquinund
S. Teitel, eds. Trade, stability, technology, and equity in Latin
America.NewYoik:AcudemicPiess.
49
The impact of the world recession on Indonesia
and an appropriate policy response: Some lessons for Asia
Sumuito,Sumuitono,AsepSuiyuludi,undWidyunti.2008.Tleellec-
tiveness ol tle Ruskin piogium. SMERU Reseuicl Institute,
Jukuitu.Febiuuiy.
Woild Bunk. 2006. Muking tle new Indonesiu woik loi tle pooi.
Jukuitu.Novembei.
———. 2008. Indonesiu’s Unconditionul Tiunslei Piogium (BLT):
Mytlundlucts.PoweiPointPiesentution,Jukuitu.
———. 2009. Poveity ieduction und sociul piotection. Unpublisled
policynote.Jukuitu.
50 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 1: Philippines: Monitoring poverty
and social protection
Ensuiingundmuintuiningudequutelevelsolsociulpiotectioniequiies
unellectivemonitoiingmeclunism.TlePlilippinesispeilupsunique
in tlut it lus botl piivute und public monitoiing systems. Tle Sociul
WeutleiSystem(SWS)isupiivutenonpiolitinstitutionestublisledin
198Stlutieguluilygeneiutessociulsuiveydutuundusesusell-iuting
systemolinloimutioniepoiting.SWSpiomotesudvocucytliouglstu-
tisticsbykeepingpoveityissuesintlepubliceye.
TleSWSlussince1992piovideddutuonpoveityonuquuiteily
busis und tleieloie uugments tle Goveinment’s Fumily Incomes und
ExpendituiesSuivey,wlicliscuiiiedoutonlyonceeveiy3yeuis.In
euclSWSsuivey,tlelouseloldleudisuskedtopointtowleieleoi
sletlinkstlelouseloldluiesinu“slowcuid,”usingonlytlewoids
“pooi”und“notpooi.”
Tomid-2009,86obseivutionpointsweiepiovidedbytleSWSsui-
vey.Tletiendissimiluitotlutliomtlegoveinment:ugiuduulieduc-
tioninpoveitysince1992.Howevei,tleSWSpoveitylevelsuiemucl
liglei.Foi2004–2009,SWSdutupiesentpoveityuswellinexcessol
S0%,wlilegoveinmentliguiesslowudeclineinpoveitysince1992
undupoveitylevelbelow30%since2001.
TleSWSsuiveylussince1998uskedquestionsonloodconsump-
tionusingtlesumeslowcuid.Tlesuiveyulsousksliomtimetotime
low muny louselolds ieceived economic ussistunce, und tle souices
olsuclussistunce.Tleinloimutiongivessomeinsigltintotleellecti-
venessolpublicleedingpiogiums.TleJune2006SWSsuiveysslowed
tlut ut u time wlen 13.9% ol louselolds weie lucing lungei, only
3.0%oltlepopulutionludusedtlegoveinment-subsidized“Tindulun
Nutin” stoies. Similuily, ol tle 3.6S million louselolds wlicl lud
uccesstolieeiiceinscloolleedingpiogiums,tlesuiveyslowedtlut
only360,000louseloldsludieceivedsucliice.
Souice: Mului Mungulus in “Tle Role ol Civil Society in Poveity Monitoiing:
Tle Cuse ol tle Plilippines.` www.udb.oig/Documents/Events/2009/Poveity
-Sociul-Development/pupeis.usp
51
Impacts of the economic crisis in
East Asia: Findings from qualitative
monitoring in five countries
1

Carrie Turk and Andrew Mason
2

Introduction
Ellective quuntitutive monitoiing ol tle poveity und sociul impucts
ol tle economic ciisis culls loi liequent luboi loice und living stun-
duids suiveys tlut geneiute cleuned dutusets witl minimul time lugs.
Administiutive dutu cun sometimes piovide un ulteinutive option loi
suivey-busedmonitoiingwleiequulityisligl,collectionisliequent,
unddutuuiesluied.Howevei,stutisticulsystemsintlelow-incomeund
lowei-middle-income countiies in Eust Asiu geneiully do not supply
dutuwitltleliequencyundspeedtlutuienecessuiyloicompielen-
sivemonitoiingclungeduiingtimesoleconomicundsociultuibulence.
1
TlispupeiistlepioductolwoiklundedIointlybytleEustAsiuundPucilicPoveity
Reduction und Economic Munugement Depuitment und tle Sociul Development
Depuitment ol tle Woild Bunk. Oxlum GB wus un uctive puitnei und co-lundei
oltleieseuiclinVietNum.FieldwoikinCumbodiuwuslinuncedbyutiustlund
piovidedbytleUnitedKingdom’sDepuitmentloiInteinutionulDevelopment.An
euilieiveisionoltlispupeiwusieviewedbycolleuguesundlelplulcommentsweie
piovidedbyAiielFiszbein(HDN),MuikusKostnei(EASES),AndiewNoiton(SDV)
PieielluPuci(PRMPR),MuitinReicllubei(EASPR),undXiuoYe(EASPR).Nuuzneem
Buimu(EASPR),LucilluBiuni(EASHD),GiucieOclieng(SDV),undJumeleRigoloni
(EASHD)piovidedstiutegicundlogisticulsuppoit.MunyWoildBunkstullbusedin
countiyollicesluvesuppoitedtleimplementutionoltlelieldieseuicl,iesolving
pioblems us tley uiose und keeping tiglt scledules on tiuck. Tlese include Tim
ConwuyundSumsenNeuk(Cumbodiu);MugnusLindelowundHeleneCuilsonRex
(LuoPeople’sDemociuticRepublic);BoloimuuGuiIuvundAltuntsetsegSliilegmuu
(Mongoliu);FiedeiicoSundei,PumoinsuiutTunsunguunwong,undMutlewVeiglis
(Tluilund); und Vuleiie Kozel, Le Minl Pluong, und Muitin Rumu (Viet Num).
Tle teum giutelully ucknowledges discussions witl Robeit Clumbeis und Nuomi
HosseinuttleInstituteolDevelopmentStudiesinSussexundwitlWendyWulkei
uttleAsiunDevelopmentBunk.Tlesediscussionspiovidedlelplulinputsintotle
designunduppioucles.Anyeiioisiemuintleuutlois’own.
2
CuiiieTuikisustulluttleSociulDevelopmentDepuitmentundAndiewMusonis
leudeconomistloipoveityieductionuttleWoildBunk.Tlelindings,inteipietutions,
undconclusionsoltlispupeiuietleuutlois’ownundslouldnotbeuttiibutedto
tleWoildBunk,itsExecutiveBouidolDiiectois,oiunyolitsmembeicountiies.
52 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tlemostiecentpoveitydutuuvuilubleuieliom2007(oieuiliei),
wlileonlyoneoitwocountiiesluveluboiloicedutuuvuilubleliom
2009.Insomecuses,suclustlePlilippines,summuiystutisticsliom
luboiloicesuiveysbecomeuvuilubleielutivelyquickly,butunitiecoid
dututlutuienecessuiyloiunulysisuieuvuilubleonlyulteisomedeluy.
As u iesult, monitoiing ciisis impucts using quuntitutive dutu ulone
in Eust Asiu is likely to piovide only u puitiul undeistunding ol tle
poveityundsociulconsequencesoleconomicstiessuseventsunlold.
Toimpioveitsundeistundingoltlesociulimpuctsoltleciisisin
ieultime,tleWoildBunklussupplementedelloitstogutleiundunu-
lyze quuntitutive dutu witl u seiies ol iupid quulitutive ussessments.
BetweenMuiclundJune2009,itsuppoitedsuclussessmentsoltle
impuctsoltleciisisinlivecountiiesinEustAsiu,numelyCumbodiu,
Luo People’s Demociutic Republic (Luo PDR), Mongoliu, Tluilund,
und Viet Num. In botl Cumbodiu und Mongoliu, u second iound ol
ieseuicl wus implemented in August 2009, witl two moie iounds
plunnedineuclcountiybeloietleendolJune2010.Fuitleiiounds
olieseuicluieplunnedinbotltleLuoPDRundTluilund,unduseiies
ol loui ieseuicl iounds uie expected in tle Plilippines.
3
Tlis woik
piovideduneuilyussessmentoltlesociulimpuctsoltleciisisundis
nowgeneiutingullowolinloimutionontleevolutionolvulneiubility
undiesiliencetoeconomicstiess.
Rellecting tle diveisity in countiy ciicumstunces, budgets, und
economic ieulities, tlese ussessments luve vuiied in size, scope, und
emplusis.Collectively,tleseussessmentsluveengugeduppioxi mutely
9S0peopleintlelivecountiiessolui.Tleyluveinvolveddiscussions
witl u bioud iunge ol people, including luimeis, leideis, tiudeis,
owneisolmiciobusinesses,inloimulsectoiwoikeis,woikeisinexpoit-
oiiented loimul sectoi enteipiises, inloimul uitisunul mineis, youtl,
women,enteipiiseundindustiiulpuikmunugeis,sociulwoikeis,villuge
undcommunityleudeis,undnongoveinmentoigunizution(NGO)pei-
sonnel.Tlispupeisummuiizestlemuinlessonsundlindingsliomtle
liveliist-ioundussessmentsundtwosecond-ioundussessments.
Scope and methodology
Assessments in eucl ol tlese countiies weie designed in-countiy, in
consultution witl locul stukeloldeis. Tle design pluse involved tle
3
InVietNum,OxlumGBundActionuiduiewoikingwitluloculinstitutetoimplement
iepeutedioundsolieseuicl.
53
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
Table 1: Focus of rapid assessments in five countries
Transmission
mechanism
explored Groups covered by research
Cumbodiu
(two
iounds
complete)
Luboimuiketslocks
iesultingliomlulling
demundloiexpoits
Fullingdomesticdemund
loigoodsundseivices
Fullingiemittuncesliom
domesticundoveiseus
souices
Foimulsectoiwoikeisinexpoit-oiiented
industiies(mostlywomen)
Migiuntwoikeisintleinloimulsectoiin
uibunuieus(menundwomen)
Remittunce-dependentlouseloldsiniuiul
uieus(menundwomen)
Villugeleudeis
Luo
People’s
Demociutic
Republic
Luboimuiketslocks
iesultingliomlulling
demundloiexpoits
Fullingdomesticdemund
loigoodsundseivices
duetocontiuctionol
touiismsectoi
Fullingiemittuncesliom
oveiseussouices
Foimulsectoiwoikeisinexpoit-oiiented
industiies(mostlywomen)
Migiuntwoikeisintleinloimulsectoiin
uibunuieus(menundwomen)
Houseloldswloseliveliloodsuie
connectedtotletouiismindustiy
Houseloldsiniuiuluieusdependenton
iemittuncesliomTluilundundietuined
migiunts(menundwomen)
Communeundvillugeleudeis
Mongoliu
(two
iounds
complete)
Fullinincomesiesulting
liomudveise
movementsin
commoditypiices
Reduceduccesstobusic
seivicesiesultingliom
lisculciisis
Fullinieulwuges
iesultingliominllution
ussociutedwitl
cuiiencydepieciution
Migiuntsinuibunuieusinunstuble,low-
incomeoccuputions
Heidingcommunitiesdependenton
cuslmeieluiming
Inloimul,uitisunulmineis
Foimulsectoimineis
Communeundvillugeleudeisundsociul
woikeis
Tluilund Luboimuiketslocks
iesultingliomlulling
demundloiexpoits
Fullingdomesticdemund
loigoodsundseivices
Fullingiemittuncesliom
domesticundoveiseus
souices
Foimulsectoiwoikeisinexpoit-oiiented
industiies(mostlywomen)
Migiuntwoikeisintleinloimulsectoiin
uibunuieus(menundwomen)
Remittunce-ieceivinglouseloldsiniuiul
uieus(menundwomen)
Repiesentutivesoltlebusinesscommunity
undnongoveinmentoigunizution
communities
VietNum Luboimuiketslocks
iesultingliomlulling
demundloiexpoits
Fullingdomesticdemund
loigoodsundseivices
Fullingdomestic
iemittunces
Foimulsectoiwoikeisinexpoit-oiiented
industiies(mostlywomen)
Houseloldenteipiisesdependenton
expoitmuikets(menundwomen)
Migiuntwoikeisintleinloimulsectoiin
uibunuieus(menundwomen)
Remittunce-ieceivinglouseloldsiniuiul
uieus(menundwomen)
Entiepieneuis,industiiulzonemunugeis,
undcommuneundvillugeleudeis
Souice:Autlois.
54 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
identilicution ol likely meclunisms tliougl wlicl ciisis impucts
would be tiunsmitted und possible gioups tlut miglt be ullected.
Reseuicl sites, sumples, und questions weie closen to exploie tlese
countiy-levellypotlesesuboutwlomigltbeullectedtliouglvuiious
meclunisms. Tiunsmission meclunisms und vulneiuble gioups dil-
leied ucioss countiies und consequently no two ussessments luve
tle exuctly sume design, tlougl muny ol tle ieseuicl uieus oveilup
uciosscountiies.Tuble1liststlelocusoltleussessmentsintlelive
countiies,liglligltingtletiunsmissionmeclunismsexploiedundtle
gioupstlutweiecoveiedintleieseuicl.
Inullcountiies,tlewoikwuscuiiiedoutinpuitneislipwitllocul
ieseuiclinstitutesundsometimeswitlmultipleoigunizutions(us,loi
exumple,inVietNum).Tleussessmentsmudeuseoluiungeolpuiti-
ciputoiyieseuiclteclniquestlutuienowcommonlyusedinpuitici-
putoiypoveityussessments.Tleseincludebotlgioup-busedexeicises
(sucl us iunking teclniques, time÷tiend und/oi clunge unulyses, oi
cuid-busedexeicises)undindividuulinteiviews.Inullcountiies,tleie
weie sepuiute meetings witl women und in seveiul countiies tleie
weiesepuiutemeetingswitlyoungpeople.Tleseteclniqueslucilitute
ununulysisoldilleiencesinexpeiiencesbyvuiiouspeopleundgioups,
undulltleussessmentsluvelindingstlutsuggestdilleientimpuctsby
sex,uge,oibotl.Tleseteclniquesuieulsouselulloigutleiinginloi-
mutionuboutsociulielutionsuttlecommunitylevel.
Puiticipuntsintleussessmentsweienotselectediundomly.Botl
tlesmullsizeundtlesumplingpiocessmeuntlutlindingsuieillus-
tiutive iutlei tlun stutisticully iepiesentutive oi geneiulizuble. In
Cumbodiu,tlequulitutiveussessmentsluvebeendesignedtocoincide
witl quuntitutive dutu collection exeicises. Otleis luve been desig-
nedtobuildoneuilieioiongoingieseuiclexeicisesintlesumesites
(Cumbodiu,Mongoliu,undVietNum).
Altlougltleleteiogeneityincountiyciicumstuncesmeunstlut
eveiy ussessment wus woiking on u dilleient ieseuicl outline, ovei-
lupping uieus weie tieuted witl some consistency ucioss countiies.
Wiitten guidunce given to ieseuicl teums wus customized loi tle
countiy context, but discussions on specilic tlemes weie guided by
tle sume coie questions. Reseuicl teums exploiing luboi muiket
slocksinexpoit-oiientedloimulsectoisinVietNumstiuctuiedtleii
woik uiound tle sume set ol questions us ieseuicl teums exploiing
luboi muiket slocks in expoit-oiiented loimul sectois in Cumbodiu,
LuoPDR,undTluilund.Reseuiclteumsinvestigutingtleimpuctsol
lullingiemittuncesweieullusingtlesumebusicsetolquestions.Inull
countiies,ieseuiclteumsinvestigutedtlesumesetolquestionsubout
uccess to loimul und nonloimul sulety nets us well us tle costs und
benelitsolseekingdilleientloimsolsuppoit.
55
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
Tle intention ol tle seiies ol ussessments wus to piovide lin-
dings quickly, piimuiily loi countiy und iegionul use. Tle emplusis
wusnotontlepioductionoledited,linislediepoitstlutwouldsuit
widespieudciiculution,undseveiuloltleiepoitsuienotpiesentedus
publislublemuteiiul.Tlepieleiencetopiioiitizeiupidiesultsiutlei
tlunpublislubleiesultswuspiomptedbytleundeistundingtluttle
ciisisisstillevolving,tlutimpuctsuieclunging,undtlutlindingsmuy
becomequicklyoutduted.
Tle lindings luve been used quite extensively, including in u
vuiiety ol biielings und piesentutions, botl inside und outside tle
Woild Bunk, but tlese outputs luve geneiully been piepuied ultei
ieveiting to iuw dutu liom locus gioup tiunsciipts. Countiy iepoits
will become uvuiluble on ieseuicl puitneis’ websites, but ieudeis
sloulduppioucltleseiepoitsundeistundingtletiglttimelimitstlut
weieimposedonieseuiclteumsundtlespecilicinstiuctionstodocu-
mentlindingsusquicklyuspossible.
Tlelollowingsectionpiovidesusummuiyolsomeoltlelindings
liomtleussessments,oigunizedbytlemeiutleitlunbycountiy.
Findings from the assessments
Tlis section summuiizes some ol tle muin lindings und messuges
liom tle ussessments in live countiies. Some cuveuts to tlis sum-
muiyuieimpoitunttobeuiinmind.Fiist,tleselindingsuiediuwn
liomieseuiclwitlgioupstlutluvebeenpie-identilieduslikelyto
be ullected by tle ciisis. Tlis uppioucl to sumpling muy luve two
pitlulls. Tle liist is tlut it muy leuve out gioups tlut uie ullected,
butweiesomelowoveilookedustleussessmentwusbeingdesigned.
Tlesecondistlut,byexcludinggioupstlutuienotullectedbytle
ciisis,tlelindingsmuyseemtooveistutetleimpoitunceoltleciisis
ielutivetootleidevelopmentclullenges.Munyoltlepuiticipuntsin
tleieseuiclweienonpooi,undsomuinstieumpioblemsolclionic
poveity uie not cuptuied systemuticully in tlis woik, despite tleii
impoitunce in deteimining u medium-teim inclusive development
tiuIectoiy.Andbecuusetlelindingsuienotnutionullyiepiesentutive,
itisnotpossibletogiveucleuisenseolpiopoitiontotlelindingsus
nutionul-levelplenomenu.
4

4
TleWoildBunkteumplunstousesomeoltlelindingsliomtliswoikustlebusisol
lypotlesestobetestedonnutionullyiepiesentutivesuiveydutu,onceuppiopiiute
dutubecomeuvuiluble.
56 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tlesecondcuveutistlutmostoltleselindingsweiegutleiedin
Muicl–June2009,undsubsequentwoikinCumbodiuundMongoliu
suggests tlut ciicumstunces muy clunge ovei time, even ovei sloit
peiiods.Tliscouldbeloiunumbeiolieusons.Economiclundumen-
tuls muy still be slilting und impucts muy clunge us u iesult. Some
goveinmentsmuyluveinteivenedwitlciisisiesponsestlutmuyluve
inlluenced impucts. In otlei instunces, und moie commonly obsei-
vedoveitimeinCumbodiuundMongoliu,liist-ioundiesponsestlut
peopleudoptedtocopewitltleciisismuytlemselvesluveinitiutedu
secondioundolimpucts.Itispossibletlutlindingsmuyluvebecome
outdutedluiilyquicklyusuiesult.
Tliid,diiectuttiibutionollindingstotleeconomicciisisispio-
blemutic in tle ubsence ol u counteiluctuul. Tlis summuiy links lin-
dingstotleeconomicciisisbusedoniespondents’desciiptionsoltle
timingwitlwlicltleyluveexpeiiencedclungesundondesciiptions
ol cuuses und ellects tlut weie iepoited by iespondents. It seems
ielutively sule to uttiibute some clunges to tle economic ciisis (loi
exumple, u ieduction in woiking louis in guiment luctoiies). Otlei
clunges,lowevei,muybediivenbyumoiecomplexiungeolluctois
(loiexumple,unluvoiublemovementsintleteimsoltiudeloivulne-
iublelouselolds).
Munyoltleimpuctsundiesponsesdiscussedweieligllycontext-
specilicunddelyeusygeneiulizutionintobioudtiends.Tleimpuctol
ieducedwoikinglouis,loiexumple,wusobseivedtovuiyuccoiding
tounumbeiolluctoisincludingtlelollowing:uccesstosuvingsund
iemittunces; tiunsleiubility ol occuputionul skills und ubility to lind
supplementuiy woik in tle inloimul sectoi; uvuiluble inloimul sup-
poit stiuctuies; living costs (especiully woik-ieluted tiunspoit costs)
und ubility to suivive on ieduced income; und, sometimes, wletlei
extendedlumiliesiniuiuluieusluduccesstougiicultuiullund.Acioss
tlelivecountiies,ieseuiclteumsnoteduiungeolvulneiubilities,but
ulso,dependingoncommunityundlouseloldciicumstunces,signili-
cuntiesilienceundubilitytocope.
Tlelindingspiesentedbelowuieoigunizeduioundmuinimpucts
undiesponsestoimpuctstlutweiediscussedintlelivecountiies.
Labor market shocks
Tleussessmentsinvolveddiscussionsuboutiecentclungesinputteins
olpuidluboiinloimulundinloimulsectois.Luboimuiketslocks,pii-
muiilyintleloimolieducedlouisolwoikundeuinings,weieextie-
mely notewoitly in ull countiies except tle Luo PDR. Tlese slocks
geneiullyuppeuiedlessintleloimolopenunemploymentundmoie
57
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
intleloimolundeiemploymentinEustAsiuneconomies.Reseuicl
teumsnotedsomeiesilienceumongbotlloimulundinloimulsectoi
woikeis,oltenielutedtouccesstosuvings,suppoitliomiuiuluieus,
stiengtlolsociulnetwoiks,undleveloloccuputionulmobility.
Layoffs and unemployment
Someenteipiisesinindustiiulzonesuieiespondingtouieductionin
oideisbycuttingstull.Tlisoltenoccuistliouglnonienewulolsloit-
teim contiucts, nonconliimution ol stull on piobution, oi bonuses
loi voluntuiy iesignutions. Foimul luyolls tlut muy be suppoited by
seveiuncepuyuiiungementsinsomecountiiesweienotloundtobe
common in Eust Asiu. Acioss tle live countiies, nobody inteiviewed
ludieceivedseveiuncepuymentsoiunemploymentbenelits.Tlismuy
luvebeenunissueolsumplingustleieweiesecondlundiepoitsol
woikeisieceivingseveiuncepuymentsinTluilund.
Tlougltleieweiesomeiepoitsolpeopleietuiningtolomevil-
lugesiniuiuluieusulteibeingluidoll,tliswusbynomeunstleonly
iesponse.Someludietuined,buttlisluigelyconstitutedutempoiuiy
ietuin to contiibute biiel inputs ol luboi loi ugiicultuiul woik und
liequently tle stuted intention ol ietuinees to lome villuges wus to
ietuintouibunuieusundseekwoik(seediscussionintlelollowing
puges).Evenloitlosewloietuined,iespondentssuggestedtluttlis
wouldnotbeunimmediuteiesponsetoIobloss;migiuntswouldbe
likelytospendseveiulmontls(somepeopleestimuted3–4montls)in
tleuibunuieuseekingotleiwoikbeloieietuiningtotleiuiuluieu.
In muny instunces, luid-oll woikeis iemuined in uibun uieus.
Puiticuluily in Eust Asiu, tlose wlo uie luid oll iepoited switcling
employmenttotleinloimulsectoi.Consequently,undeiemployment
und ieduced euinings weie moie commonly obseived impucts ol
luyolls tlun open unemployment. In some instunces, woik in some
inloimul occuputions wus lucing gieutei competition us u iesult ol
tleinlluxolwoikeispieviouslyemployedintleloimulsectoi.Some
inteivieweesiemuinedunemployedsoustoseekotleiloimulsectoi
woik,buttleseweiegeneiullywoikeisubletodiuwoneitleisuvings
oi iemittunces, oi u combinution ol botl. Tleie weie ulso occusions
wlensomewoikeisweieusingtleteiminutionolemploymentusun
oppoitunitytoietuintostudies.
Notullsectoisweieequullylitbylullingoideisundsomeentei-
piises tlut lud seen u slowdown in tle liist montls ol 2009 weie
iepoitingunuptuininoideis.Geneiully,tleseussessmentslocusedon
woikeisinsectoistlutludbeenidentiliedusvulneiubletouslowdown
intleglobuleconomy,undtlisisiellectedintlelindings.Howevei,
58 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
inteiviewswitlenteipiisesundiepiesentutivesoltlebusinesssectoi
indicuteumoiecomplicutedpictuieoltiendsinoideisundpioduc-
tion,witlsomesectoisenIoyingunincieuseinoideis.Tleiewussome
optimisminbotltleLuoPDR(loiexumple,piinting)undinVietNum
(loi exumple, pluimuceuticuls und motoibike puit munuluctuieis).
Witlin one industiiul complex, some enteipiises miglt be luying oll
stull(loiexumple,cuimunuluctuiing),wlileotleismigltbeliiing
(motoibikepuitmunuluctuiing).Luid-ollstullwoikeisweienotneces-
suiilyubletosecuiewoikinieciuitingliims,lowevei,becuusetleii
skills uie not mobile ucioss occuputions. In tlese instunces, uctions
tlutincieuseoccuputionulmobilitymuyieducepeiiodsolunemploy-
mentloiloimulsectoiwoikeis.
Working reduced hours
Fiims uie stiuggling to ietuin stull und muny loimul sectoi woikeis
iemuin employed on ieduced louis. Wlile tleie luve been some
luyolls,tleieuieulsootleienteipiiseiesponsestotleimpeiutiveto
ieduceluboicosts.Tlisispuiticuluilytlecusewleiecostsolieciuit-
mentundietiuiningwillbeligl,undmunyenteipiisesweiepuiticu-
luilykeentoietuinskilledstull.Tlesemeusuiesinvolveuieduction
inwoikinglouis,includingcuncellutionoloveitime,enloicingiotu-
tionul duys oll, und ieullocuting luboi to tusks oll tle pioduction
line, sucl us counting stock, cleuning tle luctoiy, oi tiuining. Tlose
stillemployedintleseenteipiisesuieoltenwoikingieducedlouis,
usuully iepoited us uiound 70% ol iegului louis, but sometimes us
low us S0%. Woikeis employed on ieduced louis weie udopting u
iungeolstiutegiestocopewitltlelullineuinings.Tlesestiutegies
obseived in countiies wleie louis weie being ieduced included tle
lollowing:
‡ Supplementing shorter hours in formal sector employment with
additional work in the informal sector. Foi exumple, u woi-
kei in u guiment luctoiy miglt woik 70% ol lei time in tle
luctoiyundsupplementtliswitlwoikinuiestuuiunt.Becuuse
tlewoikinsupplementuiyoccuputionsmuybelesswellpuid,
muintuining loimei euinings olten iequiies longei totul woi-
kinglouistlunpieviously.Totullouiswoikedinpuidemploy-
ment muy iise us louis woiked in tle piimuiy Iob lulls. Tle
second iound ol ieseuicl in Cumbodiu indicuted tlut some
guiment luctoiy woikeis wlo lud been living on ieduced
wuges loi seveiul montls weie supplementing incomes witl
commeiciulsexwoik.
59
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
‡ Supplementing shorter hours in formal sector employment
with training or higher education. In Viet Num, tiuining
centeisuioundsomeindustiiulpuikslududuptedbotltleii
cuiiiculu und louis to uccommodute u new muiket ol puit-
timewoikeis.
‡ Supplementing reduced earnings with drawing down savings or
with remittances from rural households.Seveiuloltlecountiies
wleie tle ussessments luve tuken pluce luve been giowing
quitelustloiseveiulyeuisundsomewoikeisluvebeenuble
tobuildupcusloigoldsuvingsoitobuyussetssuclusIeweliy
tluttleycunnowsell.Ruiullumiliesweieunimpoituntsouice
olsuppoitinseveiulcountiies,sendingeitleimoneyoilood
tosuppoituibunliveliloods.
‡ Reducing expenditures, including changing consumption patterns
and halting remittances to rural areas.Munywoikeisiepoited
buying cleupei lood (eitlei less-pieleiied oi lowei-quulity)
undeitleiieducingoicompletelystoppingtleiemittuncestlut
tley weie sending to iuiul uieus. Guiment sectoi woikeis in
Cumbodiu,loiinstunce,iepoitedtluttleyludpieviouslysent
S20–S30umontltolumiliesiniuiuluieusbutludnoweitlei
stoppedtleseiemittuncesoiieducedtlemdiumuticully.Tlis
wuscoiioboiutedbyinteiviewsiniuiuluieus.Woikeisintei-
viewedweieconceinedtlutiuiullumilieswouldbeunubleto
buyudequuteugiicultuiulinputsloitlenextciopundtlutu
second iound ol impucts would include ieduced ugiicultuiul
pioduction.
Insecurity in the urban informal sector
Woikeis in tle uibun inloimul sectoi uie lucing puiticuluily ligl
levels ol income insecuiity. All tle ussessments included discussions
witlpuiticipuntsintleuibuninloimulsectoi.Tlelive-countiysumple
includes:
º lome-bused seumstiesses, poiteis, und constiuction woikeis
inBungkok;
º tiunspoit seivice piovideis, muiket tiudeis, und skilled und
unskilledconstiuctionwoikeisinCumbodiu;
º muiket tiudeis und tiudesmen in Uluunbuutui, und smull
businessesinpiovinciultownsinMongoliu;
º muikettiudeis,tiunspoitseivicepiovideis,iestuuiuntwoikeis,
undpiovideisoltouiism-ielutedseivicesintleLuoPDR;und
60 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
º constiuction woikeis, poiteis, und domestic woikeis in
VietNum.
Woikeisintleinloimulsectoiexpluinedtluttlecombinutionol
tle2008piiceiisesundeiiuticoppoitunitiesloiwoikludmudetleii
liveliloods extiemely liugile. In ull countiies witl tle exception ol
tleLuoPDR(wleieciisisimpuctsweiegeneiullylimited),woiklud
becomeluideitolindloiulltleinloimulsectoigioupsinteiviewed.
Asexumples,constiuctionwoikeiseveiywleie(uguinexcepttleLuo
PDR)iepoitedieductionsinduyswoikedolS0%–70%,dependingon
tle countiy und skills level. Poit woikeis in Bungkok weie woiking
leweilouisuduyuspoiteisundluvingtosupplementeuiningsliom
poit woik by collecting iubbisl loi iecycling. Home-bused seums-
tiessesinBungkokiepoitedbotluieductioninoideisunduieduc-
tionintlepieceiute.MuikettiudeisinMongoliuexpluinedlowiising
piicesloiimpoitedpioductsludieduceddemundloitleiimeiclun-
diseundtiudingvolumes.
Reduced demund loi inloimul sectoi seivices, und tle ieullocu-
tionolluboiliomtleloimultotleinloimulsectoitlutiesultsliom
Ioblosses,isincieusingcompetitionloiinloimulsectoiwoik.Insome
cusestliswusdepiessingpiicesloiseivices.Foiexumple,inTluilund
iespondentsexpluinedtlutsomunypeopleweienowsupplementing
incomesbygutleiingplusticwuteibottlesloiiecycling,undtluttle
piiceolleiedloiwuteibottlesluddiopped.CyclodiiveisinCumbodiu
compluinedtluttlenumbeiolcyclosludincieused,uttiuctedbytle
lowstuit-upcosts.
Consequences desciibed by iespondents olten included ieduced
udult lood consumption putteins und lowei iemittunces. Cyclo dii-
veisundunskilledconstiuctionwoikeisinCumbodiuiepoitedleeling
weukliomluckollood,lollowingmunymontlsollimitedeuinings.
Uibun inloimul sectoi woikeis liequently iepoited luving seveiul
dependents in iuiul uieus und indicuted tlut income insecuiity is
tiunsmitted diiectly to lome villuges in seveiul countiies. Conceins
ubouttleimpuctsolieducediemittuncesonieceivinglumiliesweie
common,puiticuluilywitlieguidtolinuncingpost-piimuiyeducution
undugiicultuiulinputs.
Pressures on nominal and real wages
Tleloodundluelpiiceincieusesoleuily2008weieieleiiedtoiepeu-
tedly ucioss countiies us u cuuse ol giowing luidslip. Botl loimul
undinloimulsectoiwoikeisdesciibeduneiosionolieulwugesduiing
61
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
2008piioitotleonsetoltleglobuleconomicciisisusloodundluel
piicesclimbed.Inmostcountiies,wugesludiisensomewlutduiing
tlepeiiodoliupidinllution,tlougliepoitedlybylesstluntlepie-
vuilinginllutioniutegiventlesegioups’consumptionputteins.Witl
some exceptions, wuges loi puid woik lud luigely been stuble since
Septembei 2008. Tlis wus geneiully us tiue loi tle inloimul sectoi
(botluibunundiuiul)usloitleloimulsectoi.Piicesolloodundluel
ludeusediniecentmontlsinmostcountiies,butinMongoliutleie
wusconsideiubleunduniveisulconceinumongullinteiviewedgioups
ubouttlewelluieimplicutionsolcontinuedpiiceincieuses.
Less commonly, tleie weie ulso some iepoits ol wuge cuts. In
Mongoliu, seveiul iespondents woiking in tle loimul sectoi ielei-
ied to iecent downwuid piessuie on wuges. Tleie weie compluints
tlut employeis weie puying below tle ugieed, contiucted umount;
contiucts weie usuully ugieed ut tle minimum wuge (MNT180,000
u montl) but low-income gioups inteiviewed suid tlut olten, tley
ieceivedonly80%oltleugieedumount.Seveiullow-incomewoikeis
suidtlutwugesuctuullypuidweiebuielyudequutetocoveitiunspoit
costs. Muny ol tle iespondents wlo lived on tle luitlest city outs-
kiits, tlut is, ut some distunce liom tleii woik, lud ietieuted liom
puid woik to enguge in loiticultuie oi otlei lome-bused uctivities
becuusetlemuiginbetweentiunspoitcostsundwugeswustoosmull
to be woitlwlile. Agiicultuiul woikeis in Cumbodiu noted u ieduc-
tioninduilyiutesoveitlepievious3montls.Home-busedwoikeis
in Tluilund desciibed u ieduction in piece iutes loi sewing und loi
mukinguitilucts.
Inseveiulcountiies,tleieweieiepoitsolwugesnotbeingpuid.
Tliswuscommonlystutedbyconstiuctionwoikeis,wlowouldcuiiy
outwoikonlytolindtluttlecontiuctoiluddisuppeuied.Butsimilui
situutionsulsouppliedtolome-busedwoikeisinTluilundundloimul
sectoiwoikeisinMongoliu.IntleLuoPDR,migiuntswloludietui-
nedliomwoikinginTluilundiepoitedseveiulstoiiesolbeing,intleii
woids,“cleuted.”Tleieweiemunyinstuncesolwugesbeingpuidlute.
Migration and remittances
Discussions ubout inteinutionul migiution putteins took pluce in
Luo PDR, Tluilund, und Viet Num, und discussions ubout domestic
migiutionputteinsweieleldinCumbodiu,Mongoliu,Tluilund,und
VietNum.Reseuiclteumslounduvuiietyolclungesinmigiutionund
iemittunceputteinsusuiesultoltleciisis.Findingssuggestuiunge
ol context-specilic beluviois iutlei tlun bioud tiends. In puiticului,
62 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tleie wus no sense tlut tleie wus u widespieud, long-teim ietuin
ol iuiul–uibun migiunts to iuiul uieus und, in some pluces sucl us
Cumbodiu,munycommentedtluttleieveisewuspossiblytiue.
In some instunces, woikeis in uibun uieus wlo oiiginuted
liom iuiul uieus weie ietuining lome. In Cumbodiu, Tluilund, und
Viet Num tleie weie second-lund iepoits ol luid-oll oi discouiuged
woikeis ietuining to iuiul uieus und visuul evidence in tle loim ol
“ioomtolet”signsonudveitisementbouids.Tentutiveestimutesliom
piovinciul udministiutive souices in Viet Num suggested tlut ubout
2S%oltloseleuvingceituiniuiulsitesloiwoikludietuinedintle
liistquuiteiol2009.Reseuicleisintleindustiiulzonesolsoutlein
VietNumnotedtlutoccupuncyolientuluccommodutionwususlow
us40%insomeuieus.Oneside-ellectoltliswusincieusedcostsloi
migiuntsiemuininginuibunuieususoppoitunitiesloiioomsluiing
und cost pooling weie declining. Respondents indicuted tlut it wus
geneiully tle leust skilled, leust educuted, leust uttucled to u sociul
netwoik,undoldei(ovei40yeuis)migiuntswlotendedtoluvemost
dillicultycopingwitltletiglteningluboimuiketundwloweiemoie
inclined to ietuin lome. Tle ietuin ol migiunts wus desciibed us
luvingmultipleimpucts,including:
‡ A drop in income that could be dramatic as a proportion of
household income (up to 75%) for highly remittance-dependent
households. Foi tlese louselolds, consumption lud become
liglly constiuined, sometimes impucting tle cupucity to puy
loi educution-ieluted costs. Tlis is puiticuluily notuble in
Cumbodiu. Impoituntly, louselolds’ ubility to cope witl
unloieseenslocks(suclusleultlcuie)luddiminisledsince
wuge-euiningmigiuntlumilymembeiswouldtypicullysloul-
deitlesesudden,luigecosts.Foimunylouselolds,lowevei,
iemittuncesweiepuyingloi“extius,”sucluslouseconstiuc-
tionoiduiublegoods.InTluilund,loiexumple,munylouse-
lolds suid tlut tley weie uble to get by loi u wlile witlout
iemittunces. Resilience wus olten connected to louselold
owneislipolugiicultuiullund.
‡ The possibility of long-term impacts of the drop in income. A
ieduction in tle quulity ol nutiitionul intuke, un incieuse in
clild ubsenteeism (oi diopouts) liom sclool, indebtedness,
suleolpioductiveussets,unduninubilitytoinvestsulliciently
in inputs loi tle next ugiicultuiul ciop weie ull noted us
consequences ol tle cessution ol iemittunce income. Tlese
ellects muy ull geneiute longei-teim impucts on liveliloods
undwell-being.
63
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
‡ Increased competition for local, day-laboring jobs in rural areas.
Retuinedwoikeisweieuddingtotleloculpoololuvuilubleduy-
luboieisiniuiuluieusundubilitytolindwoikwusconsequently
constiuined.Fieeluncewoikeis,sucluscuipenteisinuiuiul
piovinceinVietNum,iepoitedtluttleycouldpieviouslylind
20 duys woik pei montl duiing tle ugiicultuiul low seuson.
Tleycouldnowonlylindwoikloi10–1Sduyspeimontl.In
Cumbodiu, iespondents in iuiul uieus noted tle competition
loi ugiicultuiul woik wus tougl und tlut duily iutes loi
ugiicultuiulwoikludlullen.InMongoliu,inloimul,uitisunul
mineisiepoitedtluttleiewusincieusedcompetitionloiwoik
us pooiei leiding louselolds, unuble to cope witl tle low
piices, weie tiunsleiiing to mining. Piovideis ol cumel iides
notedtlutmoieundmoiecumelowneisweiecompetingloi
leweitouiistsiniuiulMongoliu.
‡ Reduced purchasing power in the local rural community.
Slopkeepeis,loodselleis,undbuildeisullnotedtluttleiewus
lessmoneyuioundintleiivillugeundtluttleyludsulleied
udiopinincomeusuiesult.AneggselleiiniuiulVietNum,
loiexumple,suidtlutslewusnowsellinglulltlenumbeiol
eggsuduyielutivetouyeuiugo.Tliswuspuiticuluilyimpoi-
tunt loi louselolds tlut weie moie dependent on oll-luim
uctivities,loiexumpleinCumbodiu,wleielundlessnessisbe-
comingupioblem.AsonewomuninCumbodiusuidtoillustiute
leipoint,“Youcunseetlisslopbelindusisulieudyclosed,
togetlei witl otleis in tle villuge. Tle iemuining ones will
closesoon.PeopleintlevillugeIustcomeundgetstullwitlout
puyingbecuusetleydidnotluvemoneytopuylikebeloie,but
tleystillneededit.Tleysuidtleywouldpuysoon.Tleownei
iun out ol money to buy moie stull und closed tle slop . Loss
ol Iobs is not only outside tle villuge but ulso in tle villuge .
Tlisplucewillbeuwlulveiysoon.”
Muny ietuined migiunts weie intending to stuy only loi u sloit
peiiod.Munyludietuinedsotluttleycouldlivemoiecleuplywlile
wuitingloiuibunoiindustiiulluboimuiketstopickup.Seveiulweie
uctivelyengugedinIobseuiclliomudistunce,witlsociulnetwoiks
keepingtleminloimedolpotentiuloppoitunitieseitleiinuibunuieus
oiinindustiiulpuiks.
Tleieweieulsomunylow-incomewoikeislivinginuibunuieus
wloexpluinedtlutuietuintoiuiuluieuswussimplynotunoption.
Inmunyinstunces,low-incomegioupsinuibunuieusluvemovedpei-
munently uwuy liom iuiul uieus. Some no longei luve ugiicultuiul
64 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
lund (loi exumple, in Cumbodiu) oi otlei ussets necessuiy to estu-
blisl liveliloods in iuiul uieus (loi exumple, leids ol livestock in
Mongoliu).InMongoliu,munyoltleiuiul–uibunmigiuntsuiemoti-
vutedbytleneedtouccesseitleiligleieducutionloitleiiclildien
oibetteimediculcuietlunisuvuilubleiniuiuluieus.Aietuintoiuiul
uieuswusnotseenusupossibilityuslongustleneedtouccesstlese
seivicespeisisted.
In otlei instunces, iuiul iesidents weie plunning to migiute
to uibun uieus, despite knowledge tlut competition loi woik wus
intense.TliswuspuiticuluilytlecuseinCumbodiu,wleiemunyiuiul
iesidents luve sold mucl oi ull ol tleii ugiicultuiul lund in iecent
yeuisundluvebeenlivingollucombinutionololl-luimuctivitiesund
iemittunces liom lumilies in uibun uieus. As income liom tleii oll-
luim uctivities declines (u consequence ol lulling puiclusing powei
intleiivilluges)undusiemittuncesdiop,munyexpluinedtluttley
weie unuble to sustuin busic consumption. Tleie weie muny iele-
iences to tle need to encouiuge moie lumily membeis to move to
uibun uieus wleie tley could ut leust piovide loi tleii own living
expenses.Inteiviewswitlkeyinloimuntsintlevillugenotedtluttle
outllowolyoungpeopleliomtlevillugewusincieusing.Tleieweie
seveiul iepoits ol lemule clildien going to woik in Plnom Penl us
domesticwoikeis.
Wleie oveiseus woikeis lud lost Iobs und ietuined, tle income
slockmigltbeuggiuvutedbytledebttlutwusincuiiedtomigiute
intleliistpluce.InLuoPDR,Tluilund,undVietNum,ieseuiclteums
exploiedtlepossibilitytlutoveiseusmigiuntsmigltluveietuined.
In tle Luo PDR, inteiviews witl lumilies ol migiunts in Tluilund
und witl migiunts wlo lud ietuined liom Tluilund suggested tlut
tleciisisludlimitedimpuctonmigiutionputteins.Putteinsolbotl
legulundillegulmigiutionliomtleLuoPDRgeneiullyuppeuitobe
dominutedbytempoiuiymigiution—betweenulewmontlstoulew
yeuis—witldecisionstoietuintotleLuoPDRoltenmotivutedbyluc-
toisotleitlundillicultyinsecuiingemploymentinTluilund.Fumilies
intleLuoPDRmentionedminimulluidslipusuiesultoltleietuin
olumigiunt.
InTluilundundVietNum,oigunizedoveiseusemploymentmediu-
tedbyemploymentugenciesentuilsliglupliontcosts.Somelumilies
luve incuiied debts to linunce u peiiod ol oveiseus employment in
unticipution ol ligl ietuins. Tlese ligl ietuins do not muteiiulize il
woikeisuieiequiiedtowoikleweilouisoilosetleiiIobs.Tleieweie
someinstuncesintleieseuiclwleieoveiseuswoikeisweieietuining
uleudoliepuyingtleiidebtsundweielucingconsideiubleluidslip.
65
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
Tleieweiemunystoiiesoluibuniesidentsoioveiseusmigiunts
cuituilingtleiiiemittuncestoiuiuluieus,undtleseweieconliimed
byiuiuliesidents.InCumbodiu,Tluilund,undVietNum,ucleuistoiy-
line ol declining iemittunce llows liom uibun/industiiul woikeis to
iuiul lumilies emeiged. Tlis wus vuliduted by inteiviews botl witl
sucl woikeis, wlo desciibed seveie ieductions in tle iemittunces
tley weie sending und witl tle iuiul lumilies, some ol wlom weie
lucingluidslipusuiesultoltleieduction.InTluilund,iespondents
iepoiteduieductioniniemittuncesliomoveiseus.Tleseiemittunce-
ieceivinglouseloldsweienotumongtlepooiestgioupstlemselves
noi did tley uppeui close to poveity us u iesult ol tle lull in iemit-
tunces.Howevei,tleieseuiclteuminTluilundnotedtlutuieduction
inpuiclusingpoweiumongtlesegioupslusconsequencesloilowei-
incomegioups(suclusconstiuctionwoikeis)wlopiovidegoodsund
seivicesoltenlinuncedbyiemittuncellows.
Tleieweieulsostoiiesoliemittuncesundsuppoitllowingliom
iuiultouibunuieustosuppoitupiolongedIobseuicloitosupple-
mentieducedincomes.Altlouglmostdiscussionievolveduioundu
llow ol iemittunces liom wuge-employed oi inloimul-sectoi woikeis
inuibunuieustoiuiuluieus,tleieweieunumbeiolinstunceswleie
iemittunces miglt tiuvel in tle opposite diiection. In botl Tluilund
und Viet Num, some iuiul lumilies weie suppoiting migiunt lumily
membeisinuibunuieuswloweielucingincomecuts.Tlemoieiecent
ioundolieseuiclinCumbodiuulsoobseivedwoikeisinguimentluc-
toiies, wlo weie living oll ieduced wuges, ieceiving puyments liom
iuiullumilies.InMongoliu,low-incomeuibunlouseloldsmentioned
tluttleyweieusedtoieceivingsuppoitliomiuiullumilymembeisin
tleloimolmeutundunimulpioducts.Tliswusdesciibedusdeclining
iniecentmontlsbecuuseolluidslipiniuiuluieus.
Price shocks
Aciosstlelivecountiies,munypuiticipuntsieleiiedtotleloodund
luel piice iises ol 2008 us u souice ol luidslip. Tlougl oil piices
luveeusedliomeuilieiligls,puiticipuntsmudemunyieleiencesto
tle constiuints to mobility piesented by ligl tiunspoit costs. Some
uibun populutions expluined tlut oveiull consumei piices iemuined
ligl—especiullyielutivetoincome—despitesomeieductioninpiices
olstuples.IniuiulMongoliu,wleietlecuiiencylusdepieciuted,tle
combinution ol u lull in tle piice ol muin pioducts (cuslmeie und
meut)unduiiseintlepiiceolbusic,oltenimpoited,loodstulls(sult,
sugui,undlloui)lussliltedtleteimsoltiudeuguinstleideis.
66 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Smullloldei, iuiul louselolds iemuin vulneiuble to lulling com-
modity piices. Pioduceis ol meut, wool, und cuslmeie in Mongoliu
weielumiliuiwitltlelucttlutcommoditypiiceslluctuute.Tleysug-
gested tlut wlen piices lluctuuted witlin ceituin puiumeteis, tley
weieubletocope,oievenpiolit,liompiicemovements.InMongoliu,
lowevei, pioduceis weie expeiiencing lluctuutions tlut weie unex-
pectedundunplunnedloi.InMongoliu,munyleidinglouseloldslud
tukenlounsontleexpectutiontlutcuslmeiepiiceswouldiiseintle
spiingustleyluddonetlepieviousyeui.Wlenpiicesdioppedund
tlen iecoveied only sligltly, muny louselolds weie unuble to iepuy
tlelounstluttleyludcontiucted.
Aiungeolluctoisgoveinslowiesilientoivulneiublelouselolds
miglt be to commodity piice movements. In Mongoliu, louselolds
witl smull leids weie linding tle ieduction in piice ol unimul pio-
ducts moie dillicult to munuge tlun luimeis witl substuntiul leids
(moietlunS00unimuls).Houseloldstlutludtukenoutlounsintle
expectution ol piice iises weie in u mucl moie vulneiuble position
tlun tlose witlout debts. Houselolds witl multiple income souices
(loi exumple, liom contiucts witl livestock compunies, oi liom sup-
plementuiy uctivities sucl us pioduction ol duiiy goods loi sule,
wool-spinning,oilelt-muking)iepoitedmoiecontioloveiwlentley
sold cuslmeie und so weie uble to munuge piice lluctuutions moie
udvuntugeously.
HigltiunspoitcostsconstiuinmobilityundIobseuiclundiestiict
muiketingoptionsloimoieiemoteluimeis.Fuelundtiunspoitcosts
weiediscussedbypuiticipuntsinunumbeiolcontexts.InMongoliu,
puiticipunts in one locus gioup debuted wletlei ligl luel piices oi
liglpiicesolbusicloodpiicesweiemoiedumugingtotlemundeven-
tuullyugieedtlutliglluelcostsludcuusedmoiepioblems.Wleie
leideis live some consideiuble distunce liom towns, ligl tiunspoit
costs cun iestiict tleii ubility to uccess muikets und incieuse tleii
ieliunceoninteimediuiies.
In Cumbodiu, woikeis in tle uibun inloimul sectoi desciibed
low tley weie now less uble to visit tleii iuiul lomes to piovide
suppoitundluboibecuusetlecombinutionolligleitiuvelcostsund
lowei incomes mude sucl visits unulloiduble. In Viet Num, migiunt
constiuction woikeis suid tley would not be uble to ietuin to tleii
lomepiovinceuntiltleyludsuvedenouglmoneyloitiunspoit.And
in Mongoliu, some puiticipunts in uibun locus gioups indicuted tlut
tiunspoit costs liom tle outskiits ol town (wleie tley lived) to tle
towncentei(wleietleywoiked)weiesoligltluttleyludgivenup
tleiiIobsundweienowgiowingundsellingvegetublesinsteud.
67
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
Sources of support
Inullliveussessments,ieseuiclteumsuskediespondentsuboutuccess
tosouicesolsuppoit,botlloimul(sucluscusltiunsleisoisociulsecu-
iity) und inloimul (piovided tliougl nongoveinment meclunisms).
Witl tle exception ol Mongoliu, iespondents in tle low-income
countiiesludulmostnouccesstoloimulsuletypiotectionmeclunisms.
Neuily ull gioups in tle live countiies, uguin witl tle exception
ol Mongoliu, weie unuble to uccess loimul sulety net oi sociul pio-
tectionmeclunisms.Fuimeis,puidugiicultuiulwoikeis,loimulsectoi
employees(botlluidollundwoikingonieducedlouis),undinloimul
sectoiwoikeisdesciibedusituutionwleieunyussistuncetleyieceived
cumeliomnongoveinmentsouices.Tlismuybeinpuitbecuuseloi-
mulsociulussistuncemeclunismsuietuigetedutpooigioups,wlile
puiticipuntsintleussessmentsweieoltenvulneiubletociisisimpucts
butnotpooi.InVietNum,loiexumple,sociulussistuncemeclunisms
existbutuiesluiplytuigeteduttlepooiundwouldnotluveincluded
tlegioupsincludedintleieseuicl.Itmuyulsobetlutsomeiespon-
dentsweieteclnicullyeligibleloiceituinsociulussistuncepiovisions,
buttleiiligllevelsolmobilitymeunttluttleyweieeitleiuniegiste-
iedoiunuwuieolpiocessestocluimbenelits.
Tlis iuises doubts ubout tle ellectiveness ol pioviding ciisis-
ieluted suppoit tliougl existing sulety net piogiums. Il some ol tle
gioupstlutuiemostullectedbytleciisisuienotuccessingsuclpio-
giums,itmuymeuntlutudditionullundingclunneledtliouglexis-
ting sulety nets is un impeilect meclunism to suppoit ciisis-ullected
gioupsunlesssomemodilicutionsuiemude.InTluilund,loiexumple,
ultlougl ceituin piovisions lud been put in pluce to suppoit tlose
disudvuntuged by tle ciisis, nobody wlo wus inteiviewed iepoited
uccessingtlesebenelits.
Mongoliu wus un exception umong tle low-income countiies in
tlut most iespondents weie uccessing benelits liom u cusl tiunslei
piogium. Neuily ull louselolds witl clildien tlut weie inteiviewed
weie uccessing tle “clild money” piogium, wlicl mukes smull
montllyundluigeiquuiteilypuymentstolouseloldswitlclildien.
Tle lew louselolds witl clildien tlut weie not uccessing tlis weie
liglly vulneiuble gioups ol inloimul, uitisunul mineis. Muny ol tle
low-income louselolds seemed liglly dependent on tlese puy-
ments. Tley desciibed using tlese lunds loi busic consumption und
loiout-ol-pocketeducutionpuyments.Tleymentionedtluttleclild
moneypuymentsuctedusuguuiuntee,ullowingtlemtobuyloodon
ciedit liom locul slopkeepeis. Seveiul louselolds in Mongoliu ulso
68 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
mentioned tle impoitunce ol tle pension puyments tlut tley weie
ieceiving,wleietleieweieoldeilouseloldmembeis.
In tle ubsence ol goveinment suppoit, ciisis-ullected people in
pooi countiies lull buck on u iunge ol inloimul souices ol suppoit.
In tle low-income countiies studied, tleie weie muny exumples ol
suppoit piovided by liiends, lumilies, locul ussociutions oi gioups,
temples,undnongoveinmentoigunizutions(NGOs).Tlouglnoneol
tlesemeclunismsissullicienttoensuiemuintenunceolpiioiincome
levels,tleypiovideunimpoituntundveiybusiclevelolsuppoitloi
extiemelypooilouselolds.Someexumplesinclude:
º Job-sluiinguiiungementsumonginloimulsectoiconstiuction
woikeisinHuNoi,VietNum
º Inloimul suvings und ciedit gioups in Cumbodiu und tle
LuoPDR
º Piovisionolloodloitlelood-pooiinCumbodiu
º BoiiowingsmulllounsundbuyingloodoncieditinCumbodiu,
Mongoliu,undVietNum
º SociulnetwoikspiovidinginloimutiononIobsumongLuoPDR
migiuntstoTluilundundIobseekeisinCumbodiuundVietNum
º FooddistiibutionsclemesestublisledbytleWomen’sUnion
inuiuiulvillugeinVietNum
º Community-piovidedsuppoitloiluneiulexpensesinCumbodiu
º Piovision ol plysicul secuiity (“looking out loi eucl otlei”)
umongiicksluwdiiveisundunskilledconstiuctionwoikeisin
PlnomPenl,Cumbodiu
º Mobile-plonesluiingumongconstiuctionwoikeisinVietNum
und lood pooling umong unskilled constiuction woikeis in
CumbodiuundVietNum
º MutuulluboiexclungeiniuiulCumbodiu
º PiovisionolmiciolinuncebyNGOsinCumbodiu.
Differences driven by gender and age
Gendeidilleiencesinbotlimpuctsundcopingstiutegiesweienoted
undweiegeneiullyielutedeitleitogendeidilleiencesininteiuctions
intleluboimuiketoitogendei-delinedioleswitlintlelouselold.
Agewusulsounimpoituntdeteiminuntolimpuctintleluboimuiket.
Somesectoislitluidbytleciisisuietlosetlutuiedominutedby
lemule employment. Most ol tle guiment woikeis inteiviewed weie
women. Tlese women lud seen u ieduction in income ut best und
unemployment ut woist. Young, single women uppeuied moie iesi-
lient to tlese impucts tlun tlose wlo weie muiiied witl clildien.
69
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
In Cumbodiu, wleie most ol tle inteiviewed guiment woikeis weie
muiiiedwitltwooitlieeclildien,womenexpiessedligllevelsol
unxietyuboutpiovidingloibusicconsumption.Muiiiedwomenweie
less likely to live in on-site doimitoiies und expluined tlut tiunspoit
costsweiepunitiveintlecontextolieducedeuinings.
Muny women weie woiking veiy long louis to muintuin income
levels.InbotlTluilundundVietNum,tleieductioninlouisoluvui-
luble woik in tleii muin Iob meunt tlut women weie olten seeking
supplementuiy woik. As tlis udditionul woik wus geneiully pooily
iemuneiuted, long louis weie needed in oidei to euin u ieusonuble
umount.Munywomenexpiessedunxietytlutclildienweiebeinglelt
unuttendedloilonglouiswlilemotleiswoikedluteintotleevening.
Sometimesunpuidwoikolclildcuiewustukenoveieitleibyeldeily
louseloldmembeisoibytleoldeiclildien.Womeniniuiuluieustlut
weie conlionting un income sloitlull (iesulting liom ieduced iemit-
tunces)desciibedtleneedtointensilyluim-busedundoll-luimwoik.
Economic stiess wus undeistood to be geneiuting tensions und,
sometimes,sliltingiolesintlelouselold.Botlmenundwomenmude
muny ieleiences to incieuses in tle numbei ol uiguments between
lusbundsundwives,sometimesincludingviolence.Mucloltliswus
diivenbystiessoveimoney:tuktukdiiveisintleLuoPDRsuidtlut
uigumentswouldbewoiseiltleyietuinedwitlinsullicienteuinings
oiludspenteuiningssociulizing,undCumbodiu’sguimentsectoiwoi-
keis mude u diiect link between ieduced income und ligl levels ol
tension. Accoiding to one puiticipunt, “Muny lumilies seem to luve
veiy liequent uiguments und most ol tle cuses ielute to income .
Somewivescunnotstuyintleiilousebecuusetleyuieuliuidoltleii
lusbunds.” Exceptionully,inMongoliu,womeniepoitedunimpiove-
mentindomesticielutionsbecuusemenweiewoikingsucllonglouis
tleiewusnotimeloiliglting.
Inteiviewees ieleiied to disciiminution in tle luboi muiket.
Women in Mongoliu expluined tlut tley weie unuble to lind woik
becuusewomenludtobeyoung(desciibedusbeingundei30)und
uttiuctivetolindwoik.A43-yeui-oldwidowinMongoliuexpluins:
Wlen I upply loi u Iob, compunies suy I um ulieudy
old und ollei me u cleuning Iob. Tle cleuning Iob puys
100,000togiogumontl.Witl100,000togiogumontl,
it is impossible to suivive. I luve to puy 1,000 togiog
u duy loi tiunspoit. Besides, I luve to eut ut woik.
Tleieloie,Idonotwoik.Igiowvegetublesintlespiing
undsummeitimes.
70 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Inteiviews suggested tlut udveitisements olten specilied botl
ugesundplysiculcluiucteiisticsusciiteiiuloitleIob.
Asugeneiuliule,iespondentsweietiyingtopiotecttlenutiition
undeducutionolclildien.Noimullyiespondentssuggestedtlutlood
consumptionloiudultswouldbecuttopiotecttlenutiitionulintuke
ol clildien, ultlougl muny suggested tley weie muking economies
inteimsolloodquulity.Similuily,puientsweiecleuilymukingelloits
tokeepclildieninsclool,despiteeconomicluidslip.Onlyiniuiul
Cumbodiuweietleieieleiencestoeitleiswitclingsclools(liompii-
vutetopublic)oitoincieusedubsenteeismoidiopoutsliomsclool.
Inseveiuloltlelow-incomecountiies,tleieweieiepoitsolclildien
combining luboi witl educution. Tlougl not pieventing educution,
puidwoikmuyinteileiewitltlequulityolleuiningoutcomesilpuid
woikciowdsoutnecessuiylomewoik.
Recent, steep incieuses to tle out-ol-pocket costs ol educution
weie iecoided in Mongoliu. Motleis expluined tlut iequests by teu-
cleisloiudditionulpuymentsundsuppliesludincieuseddiumuticully
sincetlestuitoltlescloolyeui.AltlouglMongoliuisexpeiiencing
ulisculciisis,expendituiesinbusicseivicesluvebeenpiotected.No
teucleisweieinteiviewed,butteucleisundeducutionseivicepiovi-
deismuybeexpeiiencinguneiosionolieulwuges(duetodepieciu-
tion ol tle cuiiency und consequent incieuse in piices ol impoited
pioducts)tlutisseveieenougltointeileiewitlseivicepiovision.Tle
stionglyseusonulnutuieoleducutionexpensesinMongoliuwusulso
noted witl concein; luige puyments (puiticuluily loi teitiuiy educu-
tion)weieneededinAugustwlenmeutpiicesweielow.
Extendingtimeineducutionisupluusibleiesponsetoluboimui-
ket conditions loi bettei-oll young people. In Mongoliu, students in
teitiuiyeducutionexpiessedielielutnotbeingunemployedundlud
uspiiutions ol linding woik wlen tleii studies weie completed. But
univeisitystudentsulsoexpluinedtlutseveiulclussmutesluddiopped
outiecently,unubletocoveibusiclivingcostswlilenotwoiking.
Community-level impacts
Reseuicl teums noted botl positive und negutive impucts ut tle
communitylevel.Inmunyinstuncestleieweieindicutionsolsociul
tension, puiticuluily in situutions wleie competition loi woik wus
intense. Muny mentioned incieused ciime levels, puiticuluily petty
tlelt. Tleie weie ulso muny exumples ol mutuul suppoit, lowevei,
undweiepuiticuluilynotublewleieuccesstoloimulsociulsuletynets
wusextiemelylimitedumonggioupsinteiviewed.
71
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
Tensionsussociutedwitlcompetitionloiscuicewoikweiementio-
nedinsomeinstunces.InBungkok,poitwoikeispointedtocompeti-
tionliomillegulmigiuntsliomneiglboiingcountiiesusposingunluii
competition.LuoPDRmigiuntsietuiningliomTluilundsuidtleiewus
littledisciiminutionuguinsttlem,butstutedtlutmigiuntsliomsome
otleicountiiesintleiegionweietieutedlesswellbytleloculpopulu-
tion.Asyet,unylostilitiesludstoppedsloitolplysiculliglts.
Anincieuseinciimewusmoieolteniepoitedtlunudecieusein
ciime. Some gioups oi communities iepoited u ieduction in ciime.
Unskilled constiuction woikeis uttiibuted tlis diiectly to tle ciisis;
tleieductioninwoikundeuiningsludmeuntuieductioninulcolol
consumptionundulcolol-ielutedciime.Inmunypluces,lowevei,tle
tlieut ol tlelt wus botl commonpluce und incieusing, us indicuted
bytlelollowingquotesliomiuiulCumbodiu:“Wetlinktluttleltis
incieusing becuuse ol luidslip in tle uieu . but we uie not uliuid ol
it unymoie becuuse we uie living in empty louses . we luve notling
loi tlem to steul` und ¨I luve no ideu wlut to do loi u living . muybe
Iumgoingtobeutlielmysell!”
Animul tlelt wus extiemely common in some puits ol iuiul
Mongoliu. In one locus gioup discussion, eveiyone piesent lud lost
unimuls to tlelt, some ol tlem signilicunt numbeis (loi exumple,
12 loises in one go). Puiticipunts lypotlesized tlut botl giowing
luidslipludlueledtleincieuse,buttlutitludbeenluitleilucilitu-
tedbyexpundedoutieuclolmobileplonenetwoiks,wliclullowed
tlieves to communicute witl eucl otlei. Wlile iuiul iesidents woi-
iiedubouttleltolunimulsundbuigluiies,uibuniesidentsinulow-
incomeuieuolBungkoknotedtleincieuseintleltolmotoibikesund
electiicity.Tleieweieconceinsuboutincieusingdiugubuseinsome
ieseuicl sites, und un obseivution tlut becoming u diug deulei wus
onewuyolmukingmoneyuslegulemploymentbecumelessuvuiluble.
Tle community is olten tle only souice ol suppoit loi some ol
tlemostvulneiublegioups.Itwusupiovideiolcuslundloodlouns
und sometimes ol lood lundouts. In Viet Num, women weie leuving
unextiucupoliiceuttlepointolmilling.Tliswusbeingpooledund
usedtoleedveiypooilouselolds.Tletemplespiovidedsomesuppoit
in Cumbodiu. In uibun uieus, sociul cupitul und sociul netwoiks uie
lundumentul loi botl inloimul und loimul woikeis in times ol ciisis.
Inloimul uiiungements sucl us Iob sluiing umong constiuction duy
luboieisluveemeigedusimpoituntinspieudingtlecostsoltlesliin-
kingluboimuiket.SociulnetwoiksuieieducingtlecostsolIobseuicl
undieciuitmenttliouglinloimutionsluiing(oltenellectivelycutting
outexpensiveinteimediuiies)undlelpincontuiningtlecostolliving
tliougl Ioint cooking uiiungements tlut peimit economies ol scule.
72 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tley uie ulso un impoitunt souice ol smull louns tlut uie extiemely
impoituntinsmootlingconsumptioninpeiiodsolvolutileincome.
Changes in impacts over time
InCumbodiuundMongoliu,twoioundsolieseuiclluvebeenconduc-
tedwitltlesume,oisimilui,gioupsoveiu4-montlpeiiod.Inbotl
countiies,pooieigioupsullectedbytleciisisuieexpeiiencingconsi-
deiuble stiess. Tleie uie iepeuted ieleiences to tle uccumulution
olunseiviceubledebtundtotlesuleolpioductiveussets.Lesspooi
gioupsmuybeiesilientenougltoiemuinubovetlepoveityline,but
tleieisevidencetlutliveliloodsluvebeenweukenedunddumuged,
leuvingnonpooilouseloldsluiilyvulneiuble.Wlentleciisisiecedes,
itispossibletlutmunylouseloldswillbeleltwitldiminisledsuvings,
eioded usset buses, und moie debt, even il tley uie not below tle
poveityline.Tletuinuioundloitleselumilieswillnotbeimmediute.
Sloit-teim coping stiutegies ol pooiei louselolds luve longei-
teim implicutions, suggesting tlut iemovul ol tle slock will not be
enougltoiestoieliveliloods.InMongoliu,pooieileidinglouselolds
sold cuslmeie ut tle time wlen gouts uie combed, wlen cuslmeie
piices weie low. Some weultliei leideis could wuit loi u iecoveiy
inpiicesbecuusetleyludotleiincomesouicesoisuvings,buttlis
optionwusnotuvuilubletopooieileideis.Pooieileideisludulowei
incometlunusuul,becuuseoltlelowcuslmeiepiice,undweieuble
tobuylesswitltlisincomebecuuseoltleiiseinconsumeipiices.As
u iesult, tle income liom cuslmeie sules iun out euiliei tlun usuul,
piomptingpooieiluimeiswitloutotleioptionstosellmeuttolinunce
busicconsumption.
Tle piice ol meut lus ulso lullen, puitly u seusonul puttein und
puitly,peilups,becuuseoloveisupply.Itisnownecessuiytosellmoie
unimulstlunusuultolinuncebusicconsumptionundlumpyeducution
costs.Tleselouseloldswilllucetlenextwinteiwitlusmulleileid.
Even il tle cuslmeie piice iises, it will be luid to iestoie tle losses
incuiied.Tlelollowingquotutionsuieieveuling:
Iluveuclildwloisustudent.Tletuitionisnowbetween
7S0,000und1milliontogiog.Iusedtosell30sleeput
tle piice ol S0,000 togiog to puy lis tuition und living
costsinUluunbuutui.Nowtuitioncostsluvegoneupund
livingcostsuiemoieexpensiveinUluunbuutui.Piobubly,
Ineedtosell100sleeputtlepiiceol2S,000togiogloi
myson.
73
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
We used to buy u S0-kilogium bug ol lloui by selling
onesleep.Butnowitisimpossible.Weluvetoselltwo
sleep.Tletiudeismustbedoingveiywell.
CyclesolindebtednessuppeuitobecommoniniuiulCumbodiu,
wleieseveiulconsecutivemontlsolieducediemittuncesluveundei-
mined incomes. Tle loss ol iemittunce income lus lud u signilicunt
impuct on iuiul louselolds, puiticuluily tlose witl smullei lundlol-
dingsoilimitedussets.Tleselouseloldsexpluinedtluttleywould
noimullyieceiveuioundS20umontlliomlumilymembeisinlucto-
iies.Inteiviewssuggestedtluttleyludieceivedveiylittleiniemit-
tuncesloiseveiulmontls.Witllessmoneyciiculuting,otleisouices
ol income, sucl us locul smull businesses und oll-luim uctivities, uie
luiling.Alocusgioupdiscussioninonevillugedesciibestlesituution:
We ull still luve smull plots ol lund to giow iice loi
oui own consumption. Tle luivest liom tlis (ubout
0.Slectuiesoiless)oltenpiovidesenougliiceloiubout
4–6 montls’ consumption ut most. Tle iest ol oui iice
needsuiemettliougliemittuncesliomouiclildienwlo
woikusguimentwoikeis,oiincomeliomsellingluboioi
smullbusinessessucluscukeselling,motoituxidiiving,
weuving pulm tlutcles, oi muking biooms loi sule.
Unloitunutely, demund loi oui pioducts und seivices is
nowloweicompuiedwitl3montlsugo.Itlusdioppedby
ubout70%compuiedwitltlistimelustyeui.Wenowluve
nomoieiiceinouilouse.Westuitedtopuicluseiicein
Apiil 2009. Witl tlis substuntiul decline in oui euining
ubility,weluvenotenouglloodtoeutundluvetoloiuge
in oui iice lields. Huidslip lus doubled compuied witl
wlutwelucedduiingtlewetseusonlustyeui.
Tleieseuicleisiepoittluttlieelouseloldswloludsoldtleii
lundtosetupbusinessesludnowsoldeitleitleiilundoilomesteud
lundtopuyolltleiidebts.Atleusttwolouseloldsweieiepoitedto
luve iun uwuy liom tle villuge becuuse tley could not iepuy tleii
debts.SimiluicyclesoldebtweieobseivedinMongoliu.
Foi pooiei louselolds, investments in lumun cupitul muy be
tlieutened. Tlis wus iuised us u concein in ull countiies, but most
puiticuluily in Cumbodiu und moie cleuily in tle second iound ol
ieseuicl,wleietwoioundsludtukenpluce.Pooieilouseloldscom-
monlyiepoitedieducingtleiiloodintuke,tlouglmostsuidtluttley
weieseekingtopiotecttlenutiitionulintukeolclildien.Wleietwo
74 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
ioundsolieseuiclludtukenpluce,stoiiesoliemovingclildienliom
sclool,olclildluboi,undolloigoneleultlexpendituiesweiemoie
commonumongpooieigioupstlunintleeuilieiioundolieseuicl.
Itispossibletluttleincidenceolclildluboiwusligleibecuusetle
second iound ieseuicl took pluce duiing sclool loliduys. But tleie
weieseveiulieleiences(inCumbodiu)togiilswoikinguwuyliomtle
villugeusdomesticwoikeis.Tleieweieulsoieleiencestowomenin
tle guiment industiy supplementing ieduced incomes witl woik in
mussugepuiloisundkuiuokebuis,woiktlutbiingsuiungeolvulne-
iubilitiesundlongei-teimiisks.
Reducedincomesussociutedwitltleeconomicciisisluvedimi-
nisled pooiei louselolds’ ubilities to munuge otlei, moie ioutine
slocks. Seusonul lluctuutions in piices, diouglt, pest inlestutions,
unnuulpuymentsloieducution,undleultlexpendituiesulliepiesent
u iunge ol iisks tlut iuiul louselolds in pooi countiies commonly
encountei. Reseuicl teums noted tlut one ullect ol tle ciisis wus to
leuvepooieilouseloldsmoieexposedundlessubletomunugetlese
otleiiiskstluntleymigltnoimullybebecuusetleyludlessincome
to diuw on, lewei ussets to sell, und ligl existing debt tlut pieven-
tedunymoieboiiowing.Tleinteiuctionbetweenciisis-ielutedslocks
undotleislocksludtlepotentiultoseiiouslyundeimineliveliloods.
Less diumutic stoiies ol sculed-buck consumption und use ol
suvingsuiecommonumongmoieiesilientlouselolds.Evenweultliei
louseloldsiepoitedcuttingoutnonessentiulsundswitclingtolowei-
quulity loods. Use ol suvings wus commonpluce. Altlougl it ullows
louselolds to uvoid u cycle ol indebtedness, tle eiosion ol suvings
muy leuve tlese neui-pooi louselolds less uble to tuke iisks und to
investintlelutuiewlentleeconomypicksup.
List of country reports
Cambodia
Cumbodiu Development Reseuicl Institute. 2009. Speciul iepoit on
vulneiuble woikeis suivey in Plnom Penl, Kundul, Kompong
Speu,SiemReup,undButtumbung.PlnomPenl.
———. 2009. Rupid ussessment ol tle impucts ol tle economic ciisis
on Cumbodiun louselolds und vulneiuble woikeis’ income,
consumptionundcopingstiutegies.Secondiound.PlnomPenl.
Sovunnuiitl, So. 2009. Inloimul iisk munugement/sulety net piuc-
tices:Expeiiencesoltlepooiundvulneiublewoikeis.Plnom
Penl.
75
Impacts of the economic crisis in East Asia:
Findings from qualitative monitoring in five countries
Vutly,SendundKemSotloin.2009.Rupidussessmentoltleimpucts
oltleeconomicciisisonCumbodiunlouselolds:Focusgioup
discussions witl vulneiuble woikeis und iuiul louselolds.
PlnomPenl.
Lao People’s Democratic Republic
IndoclinuReseuicl.2009.Tiunsciiptsollocusgioupdiscussionsund
in-deptlinteiviews.Vientiune.
Mongolia
GlobulReuclCentei.2009.Alinuliepoitloistudyontleciisisimpli-
cutionsloilouseloldlivelilood.Uluunbuutui.
———. 2009. Second iound ieseuicl on monitoiing tle impucts ol
tleeconomicciisisinMongoliu.Uluunbuutui.
Thailand
Cluntuvunicl,Supung,MyuTlun,SumuinLuodumiongclui,undAitit
Wong-u-tlitikul.2009.Finuliepoitoliupidussessmentontle
impucts ol tle economic downtuin on woikeis in Tluilund.
Bungkok.
Viet Nam
DinlTliTluPluong.2009.Rupidussessmentontlesociulimpucts
oleconomicciisisinVietNum:Cusestudiesonduyluboieisin
“mobileluboimuikets”inHuNoi.HuNoi.
Nguyen Ngoc Anl. 2009. Rupid ussessment ol tle economic ciisis
impuctsonenteipiiseslocutedinindustiiulpuiksneuiHunoi.
HuNoi.
NguyenTumGiung.2009.Aiupidussessmentontlesociulimpuctsol
tleeconomicciisisontwociultvilluges.HuNoi.
VietnumeseAcudemyolSociulSciences.2009.Repoitoninitiuliesults
ol quick suivey ol globul linunciul–economic ciisis impuct on
enteipiisesundemployeesinTlunlHou,NgleAn,HuiPlong,
HoCliMinl,BinlDuongundDongNui,VietNum.HuNoi.
WoildBunk,OxlumGB,undCAF(VASS).2009.Rupidussessmenton
sociulimpuctsoleconomicciisisinVietNum.HuNoi.
76 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 2: Bangladesh
Muny countiies weie not ullected by tle 1997–1998 Asiun linunciul
ciisisduetotleiilimitedlinunciulundtiudetieswitltleglobuleco-
nomy. Bungludesl wus one ol tlem. Howevei, since tlen tle countiy
lusbecomeincieusinglyintegiutedintotleglobuleconomy,sucltlut
tiude und iemittunces cume to piovide uvenues loi tiunsmitting tle
iecentglobuleconomicslocks.
Expoits uie tle muin tiunsmission clunnel. Tle ieudymude gui-
mentssectoidiiectlyemploysuiound3millionwoikeisundindiiectly
muny moie. Expoits, puiticuluily ol woven und knitted guiments,
luvelluctuutedsinceNovembei2008,ultlouglieudy-mudeguiments
seemed to be piotected liom u seveie downtuin since tley cutei to
tlelowendoltlemuiket.MuIoicommodityexpoitsolliozensliimp,
leutlei, und Iute pioducts, wlicl employ ut leust 1 million woikeis,
luve ulso been ullected. Tle impuct ol ieduced demund loi expoits
wouldluvebeenligleiwitlouttlesluiplullinimpoitpiicesolluel,
leitilizei,undiuwmuteiiuls.
Remittunces liom woikeis ubioud luve become incieusingly
impoitunt und iose liom only 3% ol GDP in 199S to 10% ol GDP. In
2008,neuily6millionpeopleweieemployedubioudundiemittunces
in 2008/09 weie equivulent to S9.7 billion. Remittunce llows, wlile
slowing consideiuble vuiiubility, luve not been gieutly ullected since
muclolitemunutesliomtleGullstutes,wliclluvebeenlessullected
tlunindustiiulizedcountiiesbytleiecession.Incieuseduseolbunking
clunnelsmuyulsoluvelelpedmuintuiniemittuncelevels.
Tlemutedimpuctonieudy-mudeguimentexpoits,geneiullyligl
levelsoliemittunces,uswellusstiongugiicultuiegiowtl,modeiuted
tle impuct ol tle globul downtuin. Tlougl slowei tlun in tle tliee
pievious yeuis, giowtl still cume in ut ubout 6% in 2008/09.
Tle Goveinment ol Bungludesl piovided two stimulus puckuges.
Its Apiil 2009 puckuge wus woitl SS00 million und included ciedit,
subsidiesloipoweiundugiicultuiepioduction,undlundingloiusociul
suletynet.ItssecondpuckugeolS72SmillionwusunnouncedinJune
2009,witlincentivesloitleieudy-mudeguimentsundtextilesindus-
tiy,iescledulingollouns,undupioposedexpoitdevelopmentlundloi
impoitingmuclineiyloimunuluctuiing-expoitplunts.
Souice: Nuzneen Almed und Mustulu K. MuIeii in “Sociul Impucts ol Globul
Economic Slowdown: Tle Cuse ol Bungludesl.` www.udb.oig/Documents/
Events/2009/Poveity-Sociul-Development/pupeis.usp
77
Social impact of commodity price
volatility in Papua New Guinea
Dominic Patrick Mellor
1
Introduction
PupuuNewGuineuisuPucilicislund,witlupopulutionol6.Smillion.
Itisendowedwitlnutuiuliesouices,expoitingciudeoil,metuls,und
ugiicultuiul commodities. Mineiuls constitute 77% ol totul expoits,
ugiicultuie17%,loiestiyS%,undmuiineiesouices1%.Tlemuinugii-
cultuiulexpoitsuiepulmoil,collee,cocou,copiu,undcopiuoil.Cusl
ciops uie un impoitunt souice ol income ut tle nutionul und louse-
loldlevels,wlileienewuble-iesouicesectoisuieunimpoituntsouice
olincomeloiiuiulvilluges,wlicluccountloi81%oltlepopulution.
In tle pust couple ol yeuis, commodity piices luve been on u
iollei coustei. Oil piices souied to un ull-time peuk ol S147 u buiiel
inJuly2008,beloieslumpingtobelowS33inDecembei2009.Tle
piicelussinceiecoveiedtouioundS70.PupuuNewGuineu’sugiicul-
tuiul expoits weie ulso ullected, cuusing u signilicunt teims-ol-tiude
deteiioiution.
Despitesomeudveiseellectsliomtleglobullinunciulciisis,Pupuu
NewGuineu’seconomyispeiloimingwell.So,ultlougltleloculcui-
iencyexpoitpiiceindexdioppedby32%intlelustquuiteiol2008,
luctoissuclusuluigeliqueliednutuiulguspioIectundtlecountiy’s
insulution liom globul linunciul muikets lelped bullei tle impuct ol
tle ciisis. In uddition, euiliei piudent liscul policy duiing tle com-
modity boom iesulted in incieused suvings, uccumulution ol loieign
exclungeieseives,undpublicdebtieduction.Tleieulgiossdomestic
pioductgiowtlestimuteloi2009slouldbeuleultly4.S%compuied
1
DominicPutiickMelloiisucountiyeconomistuttlePupuuNewGuineuResident
MissionoltleAsiunDevelopmentBunk(ADB).Tleviewsexpiessedintlispupeiuie
tloseoltleuutloi.Howevei,leisextiemelygiutelulloitlesubstuntiulcomments
piovided by M. Bouike (Austiuliun Nutionul Univeisity, Cunbeiiu), A. Butten
und T. Sumpson (Huivuid Univeisity). Tle uutloi is ulso tlunklul to P. Hettingei
(Bunk ol Pupuu New Guineu), D. Lucius, Y. Niimi, und C. Sugden (ADB) loi
ieviewing diult pupeis, us well us loi tle excellent ieseuicl suppoit piovided by
C.Boin(UniveisityolPupuuNewGuineu,PoitMoiesby)undS.Yeung(Univeisity
olNewSoutlWules,Sydney).
78 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tou0.4%contiuctionintleotleiPucilicislundeconomies,excluding
Timoi-Leste(ADB2009).
Countiyunulysisoltleciisisimpuctismuinlyuttlemucioecono-
miclevel,witlulocusontleloimuleconomy.Howevei,becuusetle
cusl economy employs only uiound one liltl ol tle populution, und
tleiuiulmuIoiitypioduceloitleiiownconsumptionwitlsomecusl
ciopsloiincome,udeclineincommoditypiicesdiiectlyullectsiuiul
income. Lowei goveinment ievenues muy ulso impuii busic seivice
deliveiy.Tleseluvesignilicuntsociulimplicutions.
Still, tle goveinment’s iesponse in tle post-ciisis 2009 budget
wussignilicunt,usitpiovidedloiumoieexpunsionuiylisculstunce.
Buttleieuieconceinsoveitlesizeundiuteolexpendituie:tlelis-
culstimulusolovei6.0%olgiossdomesticpioduct(wellubovetle
4%uveiugeloitleGioupol20countiies)wuslundedliomsuvings
uccumulutedduiingtlecommoditypiiceboom.Tleiemuybelimitu-
tionsintlepublicsectoi’subsoiptivecupucityundtlequulityolsome
iecent,luige-sculeexpendituieinitiutivesisopentoquestion.
Public sociul piotection piogiums to ussist tle vulneiuble uie
luigely nonexistent, puitly due to ubsence ol udministiutive cupucity
toidentilytlepooi,muintuiniecoids,undimplementpiogiums.(Foi
instunce,nolouseloldbudgetsuiveylusbeencuiiiedoutsincetle
mid-1970s.) Some goveinment-munduted piogiums piovide piotec-
tionloiwoikeisintleloimulsectoi,buttleseluvelittleimpucton
tloseintleinloimulsectoi.
Sociul piotection is tleieloie luigely piovided by tiuditionul
copingmeclunisms,gioundedinstiongetlnicgiouplinks.Suclcus-
tomuiy obligutions loi gioup membeis piovide u limited sulety net,
undpuitlymitigutetlecommonsociulundeconomiciisks.Howevei,
tlistiuditionulsociulsystemisbecomingincieusinglystietcledwitl
incieusedmobilityunduibundiilt.
Two analytical approaches
Tlesociulimpuctolcommoditypiicevolutilityisexploiedtliouglun
incomeunulysisundusubstitutionunulysis.
Tle income unulysis is upplied to vuiious teims-ol-tiude slocks:
kinu devuluution in 1994; depiessed commodity piices duiing
2001–2003; ligl commodity piices duiing 2007–2008; und tle glo-
bullinunciulciisis.Tlisunulysismuysledligltonvulneiubilitiesol
dilleient gioups to lutuie ciises. Distinct populution gioups iely on
dilleientcuslciopsloiincome.Exuminingtleimpuctoltleseslocks
on income und expendituies gives un indicution ol tle net welluie
79 Social impact of commodity price volatility in Papua New Guinea
impuct.Houselold-specilicconsumptionbusketsuciossdilleientcusl
ciop iegions uie constiucted. Detuiled iegionul piice dutu uie tlen
usedtoussesstleimpuctolexteinulslocksontlecostolliving.
Incomeunulysisdoesnot,lowevei,uccountloisubstitutionellects
ol piice clunges between impoited und domestic muiket goods. A
substitutionunulysisistleieloieuppliedtlutinvolvestleupplicution
olvectoiuutoiegiessioneconometiicteclniquestodetuiledconsumei
piice dutu ucioss dilleient iegions. Tle utilizution ol tlis extiemely
disuggieguteddutuenublesonetoempiiicullytesttleextenttowlicl
impoitedinllutionpussestliougltopiicesolimpoitedunddomestic
muiketgoods.Acusestudyolsweetpotutosubstitutionloiiiceisulso
consideied.
PieviousunulysisontlissubIectislimitedduetodutuconstiuints.
Tleieuie,lowevei,uielutivelyluigeumountoldututluttlisstudy
uttemptstobetteiutilize.Tlesedutuinclude(i)quuiteilyconsumei
piiceindex(CPI)uttleitemlevelbyiegion,1977to2009;(ii)1996
HouseloldIncomeundExpendituieSuivey(HIES)dutu;(iii)Mupping
AgiicultuiulSystemsolPupuuNewGuineuPioIect(MASP);(iv)ugii-
cultuiul commodity expoit dutu liom selected Quarterly Economic
Bulletins (QEB); und (v) distiict “disudvuntuge indexes” liom tle
Papua New GuineaRural Development Handbook.
Income analysis
Cash crop income by region
Agiicultuiuluctivities—lenceincomes—vuiywidely(Figuie1).
2
Tle
unulysisgioupspiovincesundeitlieecuslciopiegions:(i)collee—
Westein Higllunds, Eustein Higllunds, und Simbu; (ii) pulm oil—
Oio und West New Biituin; und (iii) cocou und copiu—Mudung und
EustNewBiituin.(Bouguinvillewusexcludedusnoiecentlouselold
suiveydutuweieuvuiluble.)
Tlis unulysis included 316 louselolds (180 collee, 9S cocou/
copiu, und 41 pulm oil). An expendituie piice index wus culculuted
loi eucl louselold by weiglting item-level CPI dutu ut tle iegionul
level.Anincomeindexwusculculutedusingpiicedutu,weigltedby
expoit ciop income souices loi eucl piovince. Tle net louselold
2
Altlougl tle MASP dutubuse is loi tle 1990–199S peiiod, tle bioud putteins
iemuin vulid. It piovides tle only ieliuble estimutes ol tle vulue ol commodities
soldintleinloimuleconomy(BouikeundHuiwood2009,p. 234).
80 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
impuctistleclungeinincomeindexlesstleclungeintleexpendi-
tuiepiiceindex.Foiexumple,ilduiinguspecilicpeiiodtleincome
indexincieusesbyS%wliletleexpendituiepiiceindexincieusesby
10%,tlenetieulincomeimpuctis–S%.
Tleculculutedincomeindexesuiebusedonlyonexpoitciopsund
donottukeintouccountpioducegiownloiownconsumptionundsule
inloculmuikets.Tlelutteimuyluvelessvolutilepiices,wliclwould
dumpen income movements. Tlis would piobubly not ultei ielutive
incomeclungesuciossiegions,butmuypotentiullydumpentlesize
oltleincomeellectsunulyzedintlissection.
Figuie 2 depicts low ieul incomes luve clunged between 1994
und mid-2009. Figuie 3 illustiutes tle cumulutive clunge in ieul
incomes ovei tle sume peiiod. Tle giupls uie lollowed by subsec-
tionstlutcontuinincomeunulysisoltletlieemuincuslciopiegions
duiingtlevuiiousteims-ol-tiudeslockslistedintlepievioussection.
Tlesizeoltleincomeellectsculculutedisluigeinsomeinstunces.
Tleiemuypotentiullybeupwuidbius,inubsoluteteims,becuusetle
culculutedincomeellectsdonotullowloisubstitutionellects.
Figure 1: Annual cash income of the rural population
across provinces, 1990–1995
Souice:MASP.
0
5
10
15
20
25
30
35
40
W
e
s
t
e
r
n
G
u
l
f
C
e
n
t
r
a
l
M
i
l
n
e

B
a
y
O
r
o
S
o
u
t
h
e
r
n

H
i
g
h
l
a
n
d
s
E
n
g
a
W
e
s
t
e
r
n

H
i
g
h
l
a
n
d
s
S
i
m
b
u
E
a
s
t
e
r
n

H
i
g
h
l
a
n
d
s
M
o
r
o
b
e
M
a
d
a
n
g
E
a
s
t

S
e
p
i
k
S
a
n
d
u
a
n
M
a
n
u
s
N
e
w

I
r
e
l
a
n
d
E
a
s
t

N
e
w

B
r
i
t
a
i
n
W
e
s
t

N
e
w

B
r
i
t
a
i
n
B
o
u
g
a
i
n
v
i
l
l
e
C
a
s
h

I
n
c
o
m
e

(
K
i
n
a

m
i
l
l
i
o
n
s
)
Oil palm Coffee Cocoa Copra Betelnut Fresh food Others
81 Social impact of commodity price volatility in Papua New Guinea
Figure 2: Change in real income across cash crop regions,
1994 to mid-2009(%)
GEC~globuleconomicciisis.
Souices:ComputedusingCPI,MASP,1996HIES,undQEBdutu.
–80
–60
–40
–20
0
20
40
60
80
100
D
e
c
-
9
3
D
e
c
-
9
4
D
e
c
-
9
5
D
e
c
-
9
6
D
e
c
-
9
7
D
e
c
-
9
8
D
e
c
-
9
9
D
e
c
-
0
0
D
e
c
-
0
1
D
e
c
-
0
2
D
e
c
-
0
3
D
e
c
-
0
4
D
e
c
-
0
5
D
e
c
-
0
6
D
e
c
-
0
7
D
e
c
-
0
8
I
n
c
o
m
e

m
i
n
u
s

e
x
p
e
n
d
i
t
u
r
e

(
%

c
h
a
n
g
e
)
Coffee
Palm oil
Cocoa and copra
GEC Price boom Price slump Devaluation
Figure 3: Cumulative change in real income across cash
crop regions, 1994 to mid-2009
GEC~globuleconomicciisis.
Souices:ComputedusingCPI,MASP,1996HIES,undQEBdutu.
Coffee
Palm oil
Cocoa and copra
GEC Price boom Price slump Devaluation
–100
–50
00
50
100
150
200
D
e
c
-
9
3
D
e
c
-
9
4
D
e
c
-
9
5
D
e
c
-
9
6
D
e
c
-
9
7
D
e
c
-
9
8
D
e
c
-
9
9
D
e
c
-
0
0
D
e
c
-
0
1
D
e
c
-
0
2
D
e
c
-
0
3
D
e
c
-
0
4
D
e
c
-
0
5
D
e
c
-
0
6
D
e
c
-
0
7
D
e
c
-
0
8
I
n
c
o
m
e

m
i
n
u
s

e
x
p
e
n
d
i
t
u
r
e

(
%

c
h
a
n
g
e
)
82 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Kina devaluation in 1994
In Septembei 1994, tle Pupuu New Guineu kinu wus devulued by
12.0%, und wus ullowed to llout in Octobei tlut yeui. Piioi to tlis,
tle centiul bunk lud udopted u lixed exclunge iute iegime, but it
wusunsustuinublebecuuseolpooilisculmunugement.Tlecuiiency
devuluution und subsequent depieciution iesulted in sluip incieuses
in impoit piices. It ulso incieused locul cuiiency cusl ciop incomes,
wlicluiedenominutedinUnitedStutes(US)dolluis.Tlenetellect
oltlesepiiceclungesonlouseloldsdependedontlecompositionol
expendituieundtlemuinsouicesolincome.
Initiully, tle cuiiency devuluution iuised kinu income levels ol
iuiulcommunitiesuciossulliegions.Howevei,tledepieciutioneven-
tuullypussedtliougltoligleiimpoitedinllution,mitigutingtleini-
tiulpositiveincomeellect.Tlenetincomeimpuctwuspositiveintle
pulm oil, und cocou/copiu iegions. Tle collee iegion declined due to
loweiinteinutionulpiices.
Ellects ol tle cuiiency devuluution ucioss louselolds vuiied
widely. Foi exumple, in tle collee iegion, tle net income decline
umongS.0%ollouseloldswusuptoS0%.(Figuie4).Intlecocou
Figure 4: Welfare distribution of coffee grower
households during kina devaluation
Souice:ComputedusingCPI,MASP,1996HIES,undQEBdutu.
0
5
10
15
20
25
%

o
f

h
o
u
s
e
h
o
l
d
s
–55 –50 –45 –40 –35 –30 –25 –20 –15 –10 –5
Welfare change (%)
83 Social impact of commodity price volatility in Papua New Guinea
und/oi copiu giowing iegion, ultlougl tle oveiull net welluie impuct
ucioss ull louselolds wus +31%, tleie wus still u negutive impuct in
4.S%ollouselolds.
Low commodity prices during 2001–2003
Fiom 2001 to 2003, piices ol expoit commodities weie depiessed.
Lowei commodity piices ieduced income ucioss ull iegions duiing
2000undeuily2001.Recoveiiesintleinteinutionulpiiceolpulm
oil und collee, und u sluip kinu depieciution boosted tle incomes
ol iuiul louselolds witlin tlese iegions, und iuised net income
betweentlelutteilullol2001und2002.Incontiust,inteinutionul
collee piices iemuined depiessed, wlicl ollset uny expoit compe-
titiveguinsliomuweukkinu.Tleimpuctollouseloldswitlintle
sumeiegionvuiies.Despitetleiecoveiyincocoupiicesduiing2002,
tle net income ol muny louselolds in tle cocou/copiu iegions dete-
iioiutedsluiply.Atotulol27%ollouseloldsexpeiiencedudecline
oluptoS0%.
High commodity prices during 2007–2008
In2007und2008,commoditypiicesincieusedsteeply.Higleiexpoit
commoditypiicesboostediuiulincomebutulsoincieusedtlecostol
impoitedlooditems.Tlestiongkinu,duetoluigelisculundcuiient
uccount suipluses, lelped mitigute tle impuct ol steep incieuses in
impoitedpiices.Howevei,ligleiluelpiicesulsoullectedtlecostol
goods,tliouglligleitiunspoitcosts.Tliswouldluvemoieseveiely
ullectediemotelouselolds,wliclspendugieuteipiopoitionoltleii
incomeontiunspoit.
Incomeguinsliomligleicommoditypiicesmoietlunollsettle
liglei cost ol living in tle pulm oil und cocou/copiu iegions. Tle
collee iegion, on uveiuge, wus sligltly woise oll. Tlis wus muinly
becuuse tle incieuse in collee piices wus ielutively smull, und most
kinuincomeguinsweieollsetbytleuppieciutingkinu.Onuveiuge,
tlecostollivingloicolleelouseloldsincieusedby18.7%oveitle
1S montls to end-June 2008, compuied to 1S.0% in tle pulm oil
iegion und only 11.4% in tle cocou/copiu iegion. Tle net welluie
impuctuciosslouseloldsvuiiedwidely.Tlosetlutexpeiiencedtle
gieutest loss spent u gieutei piopoition ol tleii income on public
tiunspoit,keiosene,undiice.
84 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tleie is some coiielution between u louselold’s “disudvuntu-
geness” und welluie (Figuie S).
3
Houselolds in moie iemote und
disudvuntugeddistiictsoltleHigllundsweiemoielikelytobeudvei-
selyullectedbytleligleipiicesloiimpoitedcommodities.Anulysis
oltleconsumptioncompositionoltleselouseloldsslowtluttypi-
cully, u gieutei piopoition ol tleii income wus spent on tiunspoit,
keiosene,undstuplelooditems.
Global financial crisis
Tle ciisis did not signilicuntly ullect tle piice ol collee und cocou.
Howevei, kinu piices ol pulm oil und copiu declined steeply in lute
3
PiovinceswitlinPupuuNewGuineuconsistoldistiicts.Tle2001Papua New Guinea
Rural Development Handbookcieuteduliumewoikloicompuiingdistiictsbyiunking
live puiumeteis—lund potentiul, ugiicultuiul piessuie, uccess to seivices, income
liom ugiicultuie, und clild mulnutiition. Tlese cieute u “disudvuntuge index,”
wlicliunksdistiictsliomtlemostdisudvuntugedtotleleustdisudvuntuged.Tle
colleecuslciopiegioncontuinslouseloldsliom20distiicts,including4 seiiously
disudvuntuged,S modeiutelydisudvuntuged,1 sligltlydisudvuntuged,und10not
disudvuntuged.
Figure 5: Correlation between disadvantage index
and welfare of coffee region districts during high
commodity prices, 2007–2008
Souice:ComputedusingCPI,MASP,1996HIES,QEBdutu,unddisudvuntugeindexes.
y = 0.2185x + 20.835
0
5
10
15
20
25
30
–20 –15 –10 –5 0
Welfare impact (%)
D
i
s
a
d
v
a
n
t
a
g
e

i
n
d
e
x
(
L
o
w
e
r

t
h
e

m
o
r
e

d
i
s
a
d
v
a
n
t
a
g
e
d
)
85 Social impact of commodity price volatility in Papua New Guinea
2008 und euily 2009. Despite ieduced ievenues, tle Goveinment
muintuined un expunsionuiy liscul policy stunce. Tlis led to u wide-
ningdelicit,wliclputdownwuidpiessuieontlekinuinlute2008.
Tle depieciution would luve lelped solten tle impuct on kinu
incomesolloweiinteinutionulcommoditypiices,butulsocontiibuted
to inllution. All cusl ciop iegions sulleied u net income loss duiing
tlispeiiod,witlpulmoiliegionssulleiingtlemost.Oveionequui-
tei ol pulm oil louselolds expeiienced welluie losses ol ovei S0%.
Remotepulmoilsmullloldeiswitllimitedulteinutiveincomewould
luvebeenpuiticuluilyvulneiuble.
Tle lollowing obseivutions muy be diuwn liom tle income
unulysis:
º Pupuu New Guineu expoits u diveise iunge ol mineiul und
ugiicultuiul commodities. Hence, ut mucioeconomic level,
tle economy is less vulneiuble to commodity-specilic teims-
ol-tiude slocks. Howevei, some subiegionul gioups muy be
vulneiuble.Foiexumple,smullloldeilouseloldsinpulmoil
iegionsmuyluvecomeundeigieuteieconomicstiessduiing
tleciisis.
º Vulneiubility ol louselolds to udveise teims-ol-tiude slocks
depends on tle diveisity ol ulteinutive cusl ciop income
souicesintleiegion.Dependenceonusinglecuslciopmukes
tlesecommunitiesmoievulneiubletopiiceclunges.
º Vuiiutionmuyexistintlewelluieimpuctollouseloldswitlin
unypuiticuluicuslciopiegion.Tlus,louseloldswitlintle
communitymuystillbeutiiskeveniltleiegionoveiullisnot
signilicuntlyullected.Remotecommunitieswitllimiteduccess
toseivicesundmuiketstendtobemoievulneiubletoteims-
ol-tiudeslocksbecuuseugieuteipiopoitionoltleiiincomeis
spentontiunspoit.
Tlisunulysisdoesnotcuptuieunysubstitutionellectsliomielu-
tive piice clunges. Foi instunce, sluip incieuses in iice muy leud to
giowinggieuteiquuntitiesolsweetpotuto.Tlenextsectionempiii-
cullyteststlesesubstitutionellects.
Substitution analysis
Import dependent or self-sufficient?
PupuuNewGuineuisoltenieguidedusunimpoitdependentcountiy
undtlepopulutionistlouglttolivemuinlyonimpoitediice.Tlisis
86 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
ieinloiced by tle weiglts in tle nutionul CPI, estimuted to luve un
impoitcomponentol70%.Tliswouldsuggesttlutcitizensuieveiy
vulneiubletoimpoitedinllution.
Most Pupuu New Guineuns uie, lowevei, sell-sullicient in lood
pioduction. Uibun populutions uie moie likely to be vulneiuble to
impoitpiiceslocks.Impoitediicepiovidesunestimuted9%ollood
eneigy, und wleut-bused loods u luitlei S%. Locully giown stuples
piovideunestimuted68%,witlsweetpotutobyluitlemostimpoi-
tuntoltloseciops(BouikeundHuiwood2009).TleCPIweigltsuie
busedonulouseloldsuiveyconductedin1977olusumpleoluibun
dwelleis wlose consumption putteins would be veiy dilleient liom
tlemuIoiityiuiulpopulution.
Tle vulneiubility ol louselolds to udveise piice slocks ulso
dependsontledomesticmuiketsupplyiesponseintleiiloculity.An
udveise teims-ol-tiude slock iesulting liom sluip declines in expoit
commoditypiiceswillplucedownwuidpiessuieontlekinu.Tliswill
iuise tle cost ol impoited goods und incieuse inllution. In tle sloit
teim,tlepiiceoldomesticullymuiketedloodciopswilliise(income
ellect) but piices muy eventuully euse due to u pioduction iesponse
(substitution ellect). Tle lollowing unulysis sets out to empiiicully
quuntily tle extent to wlicl ielutive piices between impoited und
domesticmuiketgoodsclungeiniesponsetouslock.
Methodology
Poit Moiesby, Goioku, Lue, und Mudung weie exumined becuuse
detuiled quuiteily CPI dutu uie uvuiluble liom 1977 to tle piesent.
Fouipiiceindexesweieconstiucted:impoitedgoods,impoitedstuple
goods,domesticmuiketgoods,unddomesticstuplegoods.Tleimpoi-
tedpiiceindexesincludeloieigngoods,unddomesticgoodstlutluve
uliglimpoitcomponent(e.g.,soltdiinksundbeei).Unitioottests
weiepeiloimedtoensuiestutionuiityolullvuiiubles.
4
Tocontiolloitleclungeinexclungeiuteiegimein1994,models
weie iegiessed ovei tle wlole time seiies (121 obseivutions), und
tle peiiod ultei tle louitl quuitei ol 1994 (S9 obseivutions). Tle
exclungeiutewusmoievolutileulteitlellout,wlentlemostsignili-
cuntteims-ol-tiudeslocksoccuiied.
An oidinuiy leust squuies (OLS) model wus used to estimute
tle degiee ol exclunge iute puss-tliougl to impoited und domestic
4
AugmentedDickey-FulleitestsundtlePlillips-Peiiontestgivetlesumeiesults.
87 Social impact of commodity price volatility in Papua New Guinea
goods,undtlesubsetolstuplegoodsloieucluibuncentei.Tlemodel
issimiluitotleoneusedbySumpsonetul.(2006).
INFmeusuiesinllution,Di,tuiequuiteilydummyvuiiubles,VATis
udummyloitleintioductionolvulueuddedtuxintletliidquuitei
ol1999,XRistlepeicentugeclungeintleexclungeiute,
S
und is
loieigninllution.
6

TleOLSmodelspecilicutionwususedtoestimutetledegieeol
second-ioundpuss-tliouglliomincieusesinpiicesolimpoitsucioss
eucluibuncentei.
DOMundIMPuiemeusuiesolinllutionoldomesticundimpoited
goods,iespectively.
A vectoi uutoiegiession (VAR) liumewoik wus udopted to test
tle ielutionslip between exclunge iute movements und inllution ol
impoitedunddomesticgoods
S
TleexclungeiuteismeusuiedusuweiglteduveiugeolcuiienciesuguinstPupuu
NewGuineu’smuIoitiudepuitneis.
6
Foieign inllution is meusuied us u weiglted uveiuge uguinst loieign inllution in
PupuuNewGuineu’smuIoitiudepuitneis.
™ š
=
+ + ¨ + + = A
3
1
2 1 4 .
) ( ) (
i
F
t
t t i i t
L L VAT D INF İ þ þ Ȗ Ȗ XR
t
(1)
¯
=
+ A + = A
3
1
1 ,
) (
i
t t t i i t
IMP L D DOM İ þ ¸ (2)
i t
t
i
i
t i
DOM IMP İ o o + A + A = A
÷
= =
÷ ¯ ¯
1 1
1 1 t
t
(3)
t
IMP i t
t
i
i
t i t
DOM IMP İ o o + A + A = A
÷
= =
÷ ¯ ¯
1 1
1 3
(4)
t
DOM i t
t
i
i
t i t
IMP DOM İ o o + A + A = A
÷
= =
÷ ¯ ¯
1
6
1
1 5
(S)
88 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tle exclunge iute (XR) is set us exogenous, us it is deteimined
luigelyliomexteinulluctois.
Foi eucl VAR specilicution, tle Akuike’s Inloimution Ciiteiion
(AIC), Sclwuiz’s Buyesiun Inloimution Ciiteiion (SBIC), und tle
Hunnun und Quinn Inloimution Ciiteiion (HQIC) uie used to detei-
minetleminimumluglengtliequiiedloieiioiteimstobenoimully
distiibutedundindependent.
TleVARiesultsuieusedtoculculutetleimpulseiesponselunc-
tion(IRF),wliclillustiutestlecompletetimepiolileoltleellectolu
stunduiddeviutionslocktotleexclungeiuteonbotltlecontempo-
iuneousundlutuievuluesolimpoitedunddomesticpiices.IRFcup-
tuiestlediiectundleedbuckellectscuusedbytleendogeneityoltle
vuiiublesoveitime.IRFsuiegeneiutedloieucluibuncenteioveitwo
sumplepeiiods.
Results
Tuble 1 piesents tle iesults ol tle OLS estimution ol Equution 1. Tle
long-iunpuss-tliouglisculculutedusucumulutivesumoltleestimuted
coellicientsolexclungeiutevuiiunts,ieguidlessolsignilicuncelevel.
Table 1: Estimation results of exchange rate pass-through
to imported prices
a
Estimation period: Q1 1979 to Q2 2009 (122obseivutions)
Dependent
variable:
Port Moresby Goroka Lae Madang
Coef. p-value Coef. p-value Coef. p-value Coef. p-value
Exclunge
iute
–0.037 0.280 –0.026 0.371 0.006 0.86S –0.011 0.746
Exclunge
iute(–1)
–0.13S 0.000 –0.1S0 0.000 –0.167 0.000 –0.187 0.000
Exclunge
iute(–2)
–0.091 0.010 –0.0S8 0.054 –0.06S 0.055 –0.061 0.090
Exclunge
iute(–3)
–0.086 0.020 –0.131 0.000 –0.060 0.097 –0.122 0.002
Exclunge
iute(–4)
–0.0SS 0.141 –0.019 0.541 –0.098 0.008 –0.027 0.486
Long–iun
puss–tliougl
40.S% 38.S% 38.4% 40.8%
coel.~coellicient.
u
Boldp-vuluesuiesignilicuntuttle10%level.Foieigninllutionlugsunddummyvuiiublesuieexcluded
liomtletuble.
Notes: Stunduid deviutions uie in puientleses. ¯ ~ signilicunt ut 10%; ¯¯ ~ signilicunt ut S%;
¯¯¯~Signilicuntut1%.
Souice:Autloi’sculculutions.
89 Social impact of commodity price volatility in Papua New Guinea
F
i
g
u
r
e

6
:

I
m
p
u
l
s
e

r
e
a
c
t
i
o
n

f
u
n
c
t
i
o
n
:

S
t
a
n
d
a
r
d

d
e
v
i
a
t
i
o
n

s
h
o
c
k

t
o

e
x
c
h
a
n
g
e

r
a
t
e
G
O
R

~

G
o
i
o
k
u
,

L
A
E

~

L
u
e
,

M
A
D

~

M
u
d
u
n
g
,

P
O
M

~

P
o
i
t

M
o
i
e
s
b
y
.
S
o
u
i
c
e
:

A
u
t
l
o
i

s

c
u
l
c
u
l
u
t
i
o
n
s
.

0
.
4
0

0
.
3
5

0
.
3
0

0
.
2
5

0
.
2
0

0
.
1
5

0
.
1
0

0
.
0
5
0
.
0
0
0
.
0
5
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
P
O
M
G
O
R
L
A
E
M
A
D
P
O
M
G
O
R
L
A
E
M
A
D
P
O
M
G
O
R
L
A
E
M
A
D
P
O
M
G
O
R
L
A
E
M
A
D
A
l
l

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
7
7

Q
2

t
o

2
0
0
9

Q
2

0
.
4
0

0
.
3
5

0
.
3
0

0
.
2
5

0
.
2
0

0
.
1
5

0
.
1
0

0
.
0
5
0
.
0
0
0
.
0
5
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
S
t
a
p
l
e

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
7
7

Q
2

t
o

2
0
0
9

Q
2

0
.
4
0

0
.
3
5

0
.
3
0

0
.
2
5

0
.
2
0

0
.
1
5

0
.
1
0

0
.
0
5
0
.
0
0
0
.
0
5
1
2
3
4
0
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
A
l
l

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
9
4

Q
4

t
o

2
0
0
9

Q
2

0
.
4
0

0
.
3
5

0
.
3
0

0
.
2
5

0
.
2
0

0
.
1
5

0
.
1
0

0
.
0
5
0
.
0
0
0
.
0
5
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
S
t
a
p
l
e

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
9
4

Q
4

t
o

2
0
0
9

Q
2
90 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tletimingundmugnitudeolexclungeiutepuss-tliougltoimpoit
piices uie similui ucioss ull centeis. Exclunge iute movements luve
signilicuntellectsbetweenoneundlouiquuiteis.Tleestimutedlong-
iun puss-tliougl is between 28% und 40% ucioss ull centeis. Puss-
tliougltoimpoitedstupleitemstendstobeluigei,vuiyingbetween
40%undS0%.TledynumicVARiesultsdepictedinFiguie6ieinloice
tlelindingsliomtlestuticOLS.Tluslouseloldstlutspenduluige
piopoitionolincomeonimpoitedstuplesmuybemoievulneiubleto
tleliist-ioundpuss-tliouglellectsolunexclungeiutedepieciution.
Acioss ull uibun centeis, tle puss-tliougl lus been luigei since tle
kinuwusllouted.
TleiesultsliomOLSmodels(1)und(2)suggesttlutexclunge
iute movements uie not signilicunt in deteimining clunges in piices
oldomesticgoods.Figuie7plotstleIRFsolpiicesolimpoitedund
domestic goods to u stunduid deviution slock in tle exclunge iute.
Tleieissomedegieeolpuss-tliougltodomesticpiices,buttlepuss-
tliougl to impoited piices is signilicuntly luigei in ull centeis. Tle
impuctondomesticstuplemuiketgoodsisloundtobesmullei.
Animplicutionoltlelowpuss-tliougltodomesticpiicesistlut
louselolds tlut do not consume veiy muny impoited goods would
tendtobemucllesssensitivetotleinllutionuiyellectsolexclunge
iute depieciutions tlun pieviously tlouglt. Tlis suggests tlut muny
PupuuNewGuineunsmuyuctuullybeluiilyiesilienttoimpoitedpiice
slocks.
Tlemugnitudeundtimingolpuss-tliougltotledomesticmui-
ket uie quite low ucioss ull centeis, but tleie is some sliglt vuiiu-
tion. In Lue und Mudung, tleie uppeuis to be un initiul incieuse in
domesticpioducepiicestlutwouldpotentiullyincentivizeincieused
pioduction.Tleseuiebotlpiovinciultownswitllust-giowinguibun
populutions witl no uccess to lund, und iely incieusingly on loimul
sectoiwugeemployment.Tleincieusingdependenceoltlesepopulu-
tionsonstupleloodsucquiiedtliouglloimulmuiketsystemscieutes
demund tlut encouiuges pioduceis in suiiounding uieus to incieuse
pioduction.
Sluip depieciutions in tle kinu since it wus llouted luve led to
incieusedloculpioductionundunimpiovedcupucityloimuIoiuibun
centeistoleedtlemselves.Tleweukeikinulusincieusedtlepiiceol
impoits,wliclintuinlusincieusedtledemundloicleupeilocully
giown lood. Tlis lus lelped spui locul pioduction. Tle substitution
ellect is u possible explunution loi tle weukei second-iound puss-
tliouglolexclungeiuteslockstodomesticpiices.
Tle supply-side iesponse is lowei in Goioku. Most people luve
uccesstolundundviublesubsistenceugiicultuiuloptions.Tlisieduces
91 Social impact of commodity price volatility in Papua New Guinea
F
i
g
u
r
e

7
:

C
u
m
u
l
a
t
i
v
e

i
m
p
u
l
s
e

r
e
a
c
t
i
o
n

f
u
n
c
t
i
o
n
:

S
t
a
n
d
a
r
d

d
e
v
i
a
t
i
o
n

s
h
o
c
k

t
o

e
x
c
h
a
n
g
e

r
a
t
e
S
o
u
i
c
e
:

A
u
t
l
o
i

s

c
u
l
c
u
l
u
t
i
o
n
s
.

0
.
6
0

0
.
5
0

0
.
4
0

0
.
3
0

0
.
2
0

0
.
1
0
0
.
0
0
0
.
1
0
0
.
2
0
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
I
m
p
o
r
t
s
D
o
m
e
s
t
i
c
I
m
p
o
r
t
s
D
o
m
e
s
t
i
c
I
m
p
o
r
t
s
D
o
m
e
s
t
i
c
I
m
p
o
r
t
s
D
o
m
e
s
t
i
c
P
o
r
t

M
o
r
e
s
b
y

A
l
l

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
7
7

Q
2

t
o

2
0
0
9

Q
2

0
.
6
0

0
.
5
0

0
.
4
0

0
.
3
0

0
.
2
0

0
.
1
0
0
.
0
0
0
.
1
0
0
.
2
0
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
G
o
r
o
k
a

A
l
l

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
7
7

Q
2

t
o

2
0
0
9

Q
2

0
.
6
0

0
.
5
0

0
.
4
0

0
.
3
0

0
.
2
0

0
.
1
0
0
.
0
0
0
.
1
0
0
.
2
0
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
L
a
e

A
l
l

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
7
7

Q
2

t
o

2
0
0
9

Q
2

0
.
6
0

0
.
5
0

0
.
4
0

0
.
3
0

0
.
2
0

0
.
1
0
0
.
0
0
0
.
1
0
0
.
2
0
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
Q
u
a
r
t
e
r
s
M
a
d
a
n
g

A
l
l

I
m
p
o
r
t

I
t
e
m

I
n
d
e
x
1
9
7
7

Q
2

t
o

2
0
0
9

Q
2
92 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tle incentive to giow moie domestic muiket ciops in iesponse to
impoit piice slocks. Houselolds would insteud incieuse subsistence
ugiicultuiul pioduction. Tlis would potentiully ieduce tle excess
supplyollieslpioduceloitleloimulmuiket.Insuclunevent,tle
giowing settlement populutions uiound piovinciul towns, wlo luve
nouccesstolundtoengugeinsubsistenceugiicultuie,wouldbemost
vulneiuble. Tlese people would be ullected by incieused piices loi
impoitgoodsundligleipiicesloidomesticmuiketgoodsduetosup-
plysloituges.
Inteiestingly in Poit Moiesby, tle luigest uibun centei in tle
countiy,tleIRFdoesnotpiovidestiongevidenceoluninitiulincieuse
inpiicesoldomesticgoodstlutwouldincentivizeincieusedpioduc-
tion. On tle contiuiy, piices initiully lull und oveiull puss-tliougl is
veiylow.OnepossibleexplunutionistlutPoitMoiesbyisuielutively
weultlyuibuncenteiwitltwoligllydelinkedconsumeimuikets:one
gioupolveiyligl-incomeconsumeis(exputiiutesundweultlyPupuu
NewGuineuns)tlutbuymuinlyimpoitedgoodsliomtleloimulsec-
toi;undunotleigioupollowei-incomelouseloldstlutbuymuinly
locullypioducedgoods.Iltleliistgiouptendstoluveuliglpiopen-
sitytoconsumeimpoitedgoodsliomtleloimulsectoi,ieguidlessol
ielutive piice clunges between impoited und domestic goods, even
il tle piice ol impoited goods incieuses, tleie would be little extiu
demundloidomesticgoodsund,subsequently,noieusonloiudomes-
ticsupplyiesponse.
Case study of rice and sweet potato
Vuiiutionsiniegionuldomesticsupply-sideiesponsescunbeillustiu-
ted by un exuminution ol movements in tle piice ol iice und sweet
potuto liom 1979 to 2008. Rice is un impoited stuple good, wlile
sweetpotutoistletiuditionulstuplelood.Tledevuluutionoltlekinu
in1994undsubsequentudveiseteims-ol-tiudeslockspussedtliougl
to iupid incieuses in impoit piices. Steep iises in tle piice ol iice
between199Sund2008weieseeninulliegions.Piicesollieslloods
ulsoincieusedoveitlispeiiod,butnotusiupidlyduetoincieusesin
supply.Locullygiownstupleloodssuclussweetpotutouienowmoie
competitivelypiiceduguinstimpoitediicetluntleyweiebeloie1994
(Figuie8).
93 Social impact of commodity price volatility in Papua New Guinea
F
i
g
u
r
e

8
:

A
v
e
r
a
g
e

p
r
i
c
e

o
f

r
i
c
e

a
n
d

s
w
e
e
t

p
o
t
a
t
o

a
c
r
o
s
s

d
i
f
f
e
r
e
n
t

r
e
g
i
o
n
s
S
o
u
i
c
e
:

N
u
t
i
o
n
u
l

S
t
u
t
i
s
t
i
c
u
l

O
l
l
i
c
e

o
l

P
u
p
u
u

N
e
w

G
u
i
n
e
u
.
P
o
r
t

M
o
r
e
s
b
y
0
2
0
0
4
0
0
6
0
0
8
0
0
1
,
0
0
0
1
,
2
0
0
1
,
4
0
0
Y
e
a
r
I n d e x
0
2
0
0
4
0
0
6
0
0
8
0
0
1
,
0
0
0
1
,
2
0
0
1
,
4
0
0
I n d e x
P
o
r
t

M
o
r
e
s
b
y

R
i
c
e
P
o
r
t

M
o
r
e
s
b
y

S
w
e
e
t

P
o
t
a
t
o
L
a
e

R
i
c
e
L
a
e

S
w
e
e
t

P
o
t
a
t
o
M
a
d
a
n
g

R
i
c
e
M
a
d
a
n
g

S
w
e
e
t

P
o
t
a
t
o
G
o
r
o
k
a

R
i
c
e
G
o
r
o
k
a

S
w
e
e
t

P
o
t
a
t
o
M
a
d
a
n
g
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
Y
e
a
r
L
a
e
0
2
0
0
4
0
0
6
0
0
8
0
0
1
,
0
0
0
1
,
2
0
0
1
,
4
0
0 1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
Y
e
a
r
I n d e x
G
o
r
o
k
a
0
2
0
0
4
0
0
6
0
0
8
0
0
1
,
0
0
0
1
,
2
0
0
1
,
4
0
0 1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
Y
e
a
r
I n d e x
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
94 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Delinitiveconclusionscunnotbediuwnontledegieeolsupply-
side iesponsiveness ol domesticully muiketed goods to incieuses in
tle piice ol impoited goods. Howevei, tle iesults point towuid tle
lollowing:
º Exclungeiutepuss-tliougltoligleipiicesolimpoitedgoods
isstiongundsimiluiuciossullmuIoiuibuncenteis.Tlepuss-
tliouglellectisligleiloiimpoitedstuplegoods.Tlus,low-
income louselolds tlut spend u gieutei piopoition ol tleii
incomeonimpoitedstuplegoodsmuybemoievulneiuble.
º Second-iound puss-tliougl to domestic muiket goods lus
beensignilicuntlyloweitlunimpoitedgoods,especiullyliesl
pioduce stuples, since tle kinu wus llouted. It seems tlut
competitively piiced domestic goods luve, to some degiee,
cieutedincentivesloiloculpioduction.Tlisstiongsupply-side
iesponse lus ullowed louselolds to substitute locully giown
goodsloiimpoitedstuples.
º Tle timing und degiee ol second-iound puss-tliougl to
domestic piices vuiy ucioss uibun centeis. Tleie is some
evidenceoldomesticgoodsupplyiesponseinLueundMudung,
wlicluieuibunuieustlutluvegiowingpopulutionswitlno
uccesstolund,undwliclielymuinlyonloimulsectoiwuge
employment.Higleiieliunceonstupleloodsmuycieutestiong
incentivesloiloculpioduceistomeetdemundsloituges.Tle
supply-side iesponse uppeuis weukei in Goioku, wleie tle
muIoiityoltlepopulutionlusuccesstolundundtleoptionol
subsistenceluiming.Iltlisistiue,tlesettlementpopulutions
uioundtlesetypesoliuiulpiovinciultownstlutdonotluve
diiect uccess to lund to enguge in subsistence ugiicultuie
wouldbepuiticuluilyvulneiuble.Tledelinkednutuieoltle
Poit Moiesby consumei muiket muy expluin wly tleie is
littleevidenceoldomesticsupplyiesponsetoimpoitedpiice
slockstleie.
Conclusions
Tlis socioeconomic unulysis suggests tlut, ultlougl Pupuu New
Guineuluspiovenluiilyiesilienttotleglobullinunciulciisisuttle
mucioeconomic level, subiegionul populution gioups muy be vulne-
iubletoteims-ol-tiudeslocks.Vulneiubilitydependsontlediveisity
olulteinutiveincomesouices,iemoteness,unduccessibilitytoseivices
undmuikets.
95 Social impact of commodity price volatility in Papua New Guinea
Tleieisuligldegieeolpuss-tliouglliomexclungeiuteslocks
to impoited stuple loods ucioss ull uibun centeis. Tleieloie, low-
income louselolds tlut spend u gieutei piopoition ol income on
stupleloodsuiepuiticuluilyvulneiubletoimpoitedinllution.Tleieis
someevidencetluttlesecond-ioundpuss-tliougltodomesticgoods
isloweiinuibuncenteistlutluveluigepopulutionswitllittleuccess
tolundundtlutielymuinlyonloimulsectoiwugeemployment.Tlis
muybebecuuseligldemundloistupleloodsspuisstiongsupply-side
iesponses to impoit piice slocks. Tlis would indicute tlut lundless
settlement populution gioups uiound iuiul piovinciul towns muy be
lessiesilienttoudveisepiiceslocks.
Since public sociul piotection piogiums to ussist tle pooi und
vulneiubletocopewitliisksuienonexistent,tleGoveinmentslould
considei moie cuielully tuigeted suppoit loi subpopulution gioups
wlentleyuieconliontedwitlseveieteims-ol-tiudeslocks.Altlougl
tiuditionulsociulsystemsluvepiovenellectiveinpiovidingsomesup-
poit, tlese uie expeiiencing incieusing stiess, luigely due to uibun
diilt.
References
Asiun Development Bunk (ADB). 2009. Pacific Economic Monitor.
Munilu.August.
Bunk ol Pupuu New Guineu. Selected issues. Quarterly Economic
Bulletin.PoitMoiesby.
Bouike, R.M. und T. Huiwood. 2009. Food and agriculture in PNG.
Cunbeiiu:AustiuliunNutionulUniveisity.
Fiesl Pioduce Development Agency (FPDA). 2008. Feeding Poit
Moiesby.
Gibson, J. 2000. Tle Pupuu New Guineu Houselold Suivey. The
Australian Economic Review33(4):377–380.
Hunson,L.W,B.J.Allen,R.M.Bouike,undT.J.McCuitly.2001.Papua
New Guinea rural development handbook.Cunbeiiu:Austiuliun
NutionulUniveisity.
Nutionul Stutisticul Ollice ol Pupuu New Guineu. 1977. Consumei
piiceindexteclniculnotes.PoitMoiesby.
Sumpson,T.,J.Yubom,W.Nindim,undJ.Muiumbini.2006.Exclunge-
iute puss-tliougl in Pupuu New Guineu. Bunk ol Pupuu New
Guineu,PoitMoiesby.
96 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 3: Uzbekistan
TleglobulciisisullectedUzbekistuntliougltwomuIoiclunnels:tiude
undiemittunces.TlepiicesolmuIoicommodityexpoitssucluscotton,
coppei,unduiuniumlellsluiply,wlileexpoitvolumesoluutomobiles,
textiles, und liuits und vegetubles lell us u iesult ol slowei exteinul
demund. Tle decline in expoit ievenues wus, tlougl, puitly mitigu-
tedbyligleiexpoitpiicesolgusundbyincieusedgusexpoitstotle
RussiunFedeiution.
Remittunces liom woikeis ubouid, piimuiily in tle Russiun
Fedeiution, lud incieused liom ubout S1.3 billion (6.1% ol gioss
domestic pioduct [GDP|) in 200S to S3.0 billion (14.0% ol GDP) in
2008.Tleytlenlell,lowevei,ontlelossolIobsintlelostcountiy
undbytledepieciutionoltleRussiuncuiiency.
To counteiuct tle impuct ol tle ciisis, tle Goveinment ol
Uzbekistuniespondeduttleendol2008bypiovidinguS1.3Sbillion
(3.9%olGDP)unti-ciisispuckugeloi2009–2012.Tlepuckugelusloui
muIoicomponents.Fiist,itsuppoitsinvestmentuctivitytliouglliscul
undmonetuiymeusuies,includingieducedcoipoiutetuxes,incieused
bunkingliquidity,undexpundedciedittopiivuteentiepieneuis.Itulso
liltspiolibitionsuguinstsloit-teimexteinullouns.
Tlesecondcomponentwusdiiectedutexpoiteisundincludestux
piivileges loi expoiteis ol linisled textile pioducts; tempoiuiy ieduc-
tion in umoitizution puyments; ieduced bunk lending iutes; und cups
onpiiceincieusesolgus,electiicity,undwutei.
Tle tliid component locuses on developing piivute entiepie-
neuislipbyloweiingtuxesloismullindustiiulenteipiisesundsluiply
ieducing lees loi setting up u business. Tle linul component looks to
impioveeducutionullucilities,ucceleiuteinliustiuctuieconstiuctionin
iuiuluieus,undupgiudeioudundiuillinks.
Souice: Jlunnu Futtukovu in “Globul Finunciul Ciisis: Clullenges loi Employ-
ment, Modeinizution, und Sustuinuble Giowtl in Uzbekistun.` www.udb.oig/
Documents/Events/2009/Poveity-Sociul-Development/pupeis.usp
97
Assessing social outcomes through
the Millennium Development Goals
1
Shiladitya Chatterjee and Raj Kumar
2
Relevance of Millennium Development Goals
for measuring poverty and social outcomes
TleMillenniumDevelopmentGouls(MDGs)iepiesentumuIoiudvunce
inlowpoveityismeusuied,ustleyussesstlemultidimensionulityol
poveity in u moie lolistic sense tlun pieviously. MDGs cun ulso be
consideied us u set ol entitlements, us goveinments uie iequiied to
meetceituintuigetsbyceituindutes.Inuddition,tleMDGsiepiesent
u globul consensus on meusuiing tle muny dimensions ol poveity.
MDGsulsopiovidestunduidizedmetlodsolmeusuiingpoveityumong
countiiesundsociulpiogiesswitlinucountiyoveitime.Howevei,tle
MDGsulsoluveseveiulweuknesses,usnowdiscussed.
Aggregative nature
MDGs uie ut u liglly uggiegute level. Tley do not piovide decen-
tiulizedinloimutionbysubnutionuludministiutivecutegoiies,suclus
stutesoipiovinces;bygendei;bydisudvuntugedpopulutiongioups,
sucl us indigenous peoples, minoiities, oi buckwuid custes (tle lut-
tei ciiticul in Soutl Asiu); noi by iuiul und uibun cutegoiies. Some
luveuiguedtlutMDGindicutoisslouldbedisuggiegutedbyincome
gioups,ustleoveiulluggiegutiveMDGindexloiucountiydoesnot
indicute tle tiue MDG outcomes uclieved by pooiei gioups. On tle
otleilund,munycountiiesluveudoptedtleMDGsintleiiownplun-
ning system und luve pioduced tleii own MDG indicutois, muny ol
tlemwitluwidevuiietyoldisuggiegution,wlilesomecountiiesluve
uddedindicutoistlutspecilicullydesciibetleiipoveityunddepiivution
1
InputsliomHuislunFu,SyedNuiuzzumun,ClovisFieiie,undRomunuDomingouie
ucknowledgedwitltlunks.
2
Sliludityu ClutteiIee is un udvisei in ADB’s Stiutegy und Policy Depuitment.
RuIKumuiisuloimeisenioieconomicudviseitotleUnitedNutionsEconomicund
SociulCommissionloiAsiuundtlePucilic(UNESCAP).
98 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
pioblems. Tlese countiy-specilic MDG dutu uie olten, lowevei, not
compuiublewitlintledevelopingAsiuniegion.
Multiple indicators—Comparison issues
Tle munilold nutuie ol tle MDG indicutois mukes tlem somewlut
dilliculttocompuieintotulity.Attemptsluvebeenmudetosummu-
iizetleMDGdututoenublesomecompuiisonolpeiloimunceumong
countiies(suclusbyestimutingtlepeicentugeolindicutoisinwlicl
euclcountiyis“olltiuck”undcompuiingtlisuciosscountiies);und
mukingussessmentswitlinuiegionoltleMDGindicutoistlutuietle
woistpeiloiming(byestimutingtlepeicentugeolcountiiestlutuie
“olltiuck”intlutindicutoiundcompuiinguciossindicutois).
Butsuclmeusuiesuieuppioximutesundluveseveiuldeliciencies.
Tle moie scientilic wuy to pioceed muy be to tiy und develop com-
posite indexes bused on stiong ussociutions between gioups ol indi-
cutoisundtlendevelopingusingleindicutoioutoltlese.Howevei,
wlilecompuiisonwillbecomeleusible,suclcompositeindicutoiswill
loseinloimutionundtleiewillbegieutsubIectivityunduibitiuiiness
involvedintlecloiceolweigltsundmetlodsoluggieguting,iedu-
cingtleiivulue.
Data gaps and delays in estimates
MuIoi pioblems loi iepoiting MDGs uie vuiiutions und gups in dutu
umongsubiegionswitlindevelopingAsiu(Figuie1).Especiullyintle
Pucilicsubiegion,MDGdutuiemuinputcly.Anotleiissueistlut,in
munycuses,obseivutionsuieveiylew,cuusingpioblemsinussessing
piogiess.Foiexumple,euilieiestimutesonmuteinulmoitulityiutios
luvebeenwitldiuwnusunieliuble,leuvingonlytle200Sestimutes.
IntlecuseolHIV/AIDS,tleestimutespiepuiedotleitlunloi2001
und2007employednonstunduidmetlodologyundsouienotcompu-
iuble.AsolAugust2009,lulltlecountiiesintleiegionstillluddutu
onleweitluntwotliidsoltleindicutois.
PooieicountiiessulleimostliomuluckoldutuonMDGindicu-
tois.Fuitleimoie,dutugutleiingisoltenliugmentedumongdilleient
ministiies und ugencies. To be uselul loi policy muking, u conside-
iubledegieeoltuiloiing,loculizing,unddisuggiegutionisnecessuiy.
Dutucollectionisoltensuppoitedbydonoisinpooieicountiies,but
ustleiicommitmentisnotulwuyssustuined,suiveysoltenendupus
one-timeelloits,mukingtime-seiiescompuiisonsdillicult.Tleieuie
ulsopioblemsolcupucityutstutisticulollicesloibotldutucollection
und unulysis. A conceited elloit to impiove MDG dutusets is being
99 Assessing social outcomes through the Millennium Development Goals
F
i
g
u
r
e

1
:

D
a
t
a

g
a
p
s

i
n

i
n
d
i
c
a
t
o
r
s

f
o
r

t
h
e

M
i
l
l
e
n
n
i
u
m

D
e
v
e
l
o
p
m
e
n
t

G
o
a
l
s
S
o
u
i
c
e
:

U
N
E
S
C
A
P

c
u
l
c
u
l
u
t
i
o
n
s
,

2
0
0
9
.
O
n
e

d
a
t
a

p
o
i
n
t
T
w
o

d
a
t
a

p
o
i
n
t
s
T
h
r
e
e

d
a
t
a

p
o
i
n
t
s

o
r

m
o
r
e
3
1 1 1
4
3
1
2
1 1
5
4 4
3
2
1 1
3 3
6
4
2
6
5
7
1
0
1
0
1
0
2
3
2
3
4
5
6
3 3
2
5
6
8
5
7
2
6 6
8
6
7
6
8
1 1
1
1
1
2
3
3
2 4
3
4
3
1
2
4
2
2
9
3
3
6
4
6
5
2
5 3
5
5
5
5
4
7
3
6
3
4
5
1
5
8
6
5 3 5
7
1
0
1
2
1
5 1
4
1
7
1
9
1
7 1
8
2
3
2
1 2
2
2
2
2
4
2
3
2
5
2
5
2
7
2
7
2
9
2
9 2
8
2
7
3
2
3
4
2
4
3
1
3
0
2
5
2
7
2
8
3
8
4
0
3
8 4
1
3
8
3
8 3
7
4
1
4
2
4
1
4
2
3
8
3
9
4
1
3
8
4
7
4
0
3
8
3
8
4
2
4
3 4
2
3
9
0
0
1
0
2
0
3
0
4
0
5
0
6
0
A
m
e
r
i
c
a
n

S
a
m
o
a
N
o
r
t
h
e
r
n

M
a
r
i
a
n
a

I
s
l
a
n
d
s
G
u
a
m
N
e
w

C
a
l
e
d
o
n
i
a
F
r
e
n
c
h

P
o
l
y
n
e
s
i
a
C
h
i
n
a
,

M
a
c
a
o

S
p
e
c
i
a
l

A
d
m
i
n
i
s
t
r
a
t
i
v
e

R
e
g
i
o
n
N
a
u
r
u
N
i
u
e

H
o
n
g

K
o
n
g
,

C
h
i
n
a
T
u
v
a
l
u
P
a
l
a
u
C
o
o
k

I
s
l
a
n
d
s
M
a
r
s
h
a
l
l

I
s
l
a
n
d
s
K
o
r
e
a
,

R
e
p
u
b
l
i
c

o
f
S
i
n
g
a
p
o
r
e
K
i
r
i
b
a
t
i
S
o
l
o
m
o
n

I
s
l
a
n
d
s
T
o
n
g
a
S
a
m
o
a
V
a
n
u
a
t
u
B
r
u
n
e
i

D
a
r
u
s
s
a
l
a
m
A
f
g
h
a
n
i
s
t
a
n
F
i
j
i

I
s
l
a
n
d
s
,

R
e
p
u
b
l
i
c

o
f
M
a
l
d
i
v
e
s
T
u
r
k
m
e
n
i
s
t
a
n
K
o
r
e
a
,

R
e
p
u
b
l
i
c

o
f
M
y
a
n
m
a
r
P
a
p
u
a

N
e
w

G
u
i
n
e
a
T
i
m
o
r
-
L
e
s
t
e
B
h
u
t
a
n
G
e
o
r
g
i
a
P
e
o
p
l
e

s

R
e
p
u
b
l
i
c

o
f

C
h
i
n
a
M
a
l
a
y
s
i
a
I
r
a
n

(
I
s
l
a
m
i
c

R
e
p
u
b
l
i
c

o
f
)
S
r
i

L
a
n
k
a
T
a
j
i
k
i
s
t
a
n
T
h
a
i
l
a
n
d
M
o
n
g
o
l
i
a
P
a
k
i
s
t
a
n
A
r
m
e
n
i
a
K
a
z
a
k
h
s
t
a
n
K
y
r
g
y
z

R
e
p
u
b
l
i
c
U
z
b
e
k
i
s
t
a
n
B
a
n
g
l
a
d
e
s
h
L
a
o

P
e
o
p
l
e
'
s

D
e
m
o
c
r
a
t
i
c

R
e
p
u
b
l
i
c
T
u
r
k
e
y
I
n
d
o
n
e
s
i
a
I
n
d
i
a
N
e
p
a
l
A
z
e
r
b
a
i
j
a
n
P
h
i
l
i
p
p
i
n
e
s
V
i
e
t

N
a
m
C
a
m
b
o
d
i
a
100 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
mude by tle Asiun Development Bunk–United Nutions Economic
und Sociul Commission loi Asiu und tle Pucilic–United Nutions
Development Piogiumme (ADB–UNESCAP–UNDP) puitneislip on
tleMDGs(seeBox).
Anussociutedpioblemistlelongdeluyinmukingtleestimutes
uvuiluble.Tlus,lutestestimutesuvuilublegeneiullyieluteto2006loi
mostMDGindicutois.Wleneconomicvolutilityisexpeiienced—sucl
usintlecuiientglobuleconomicciisis—tlelutestestimutesmuybe
consideiublyoutollinewitlexpectedtiends.Tlisgeneiully2–3yeui
luginestimutionmukespolicyloimulutionbusedonMDGdutuveiy
dillicult.
Statistical capacity building supported
by the ADB–UNESCAP–UNDP Regional Partnership
Tleiegionulpuitneislipenvisugesiegionulundsubiegionullevelsup-
poit undei its new pluse ol uctivities in 2009–2012 to incieuse und
impioveuvuilubilityolMilleniumDevelopmentGouls(MDG)dutuund
to stiengtlen tle cupucity ol nutionul stutisticul systems to pioduce
tlem.Specilicullytleoutputsunductivitiesplunneduie:
º Conducting diugnostic needs ussessment in countiies witl
tle gieutest needs on tle use ol existing vitul stutistics und
tlequulityolvituliegistiutionsystemsundtlepioductionol
disuggiegutedMDG-ieluteddutuusingpopulutionundlousing
censuses.
º Tleieultei piepuiing u diult iegionul uction plun to optimize
deliveiyolsuppoitundoigunizingumultistukeloldeiiegionul
loiumonvitulstutisticsundquulityolvituliegistiutionsystems
to linulize tle uction plun und obtuin indicutions ol suppoit
liomgoveinments,donoiundpuitneiugencies.
º Activities undei tle uction plun would be deliveied tliougl
iegionul und subiegionul/nutionul woikslops on tle pioduc-
tionoldisuggiegutedMDG-ieluteddutuusingpopulutionund
lousingcensusesunddutuunulysis.Anexpeitgioupmeeting
onstiutegyundgoodpiucticesloipiomotingellectiveuseol
MDG-ieluteddutuloipolicyunulysisundudvocucywouldulso
beoigunized.Finully,ulundbookongoodpiucticesloiuseol
MDG-ieluteddutuwouldbepiepuiedunddisseminuted.
Souice:Autlois.
101 Assessing social outcomes through the Millennium Development Goals
Insomecuses,itmuybepossibletopiepuiesuclestimutesontle
busis ol pioxies. Foi exumple, good pioxies ol iuiul poveity muy be
uvuilubleliomwugeiutesolugiicultuiulluboieisilsuclstutisticsuie
uvuilublemoieliequentlyustleyuieinIndiuundIndonesiu.Quickei
estimutesolsociulindicutoissuclusloieducution,leultl,undwutei
supplyundsunitutionmuybeuvuiluble—utleustusluiuspublicsei-
vices uie involved—liom udministiutive dutu souices il tlese cun be
collectedsystemuticully.Yetsucldutu,ioutinelycollectedbygovein-
ments, uie not ulwuys piopeily used in nutionul stutistics. Tley cun,
tlougl,bemudeuvuilublewitllesstimelug,iendeiingcostlysuiveys
unnecessuiy—undADBlusbegunupiogiumolcollectingsucldutu.
Howevei,tleyuiedilliculttocompuieumongcountiies,wliclisone
ol tle muin inteinutionul obIectives loi gutleiing MDG dutu. Tlus,
ultlougl cuiient MDG dutu souices iepoit dutu ultei consideiuble
deluys,cleupeiundquickeiulteinutivesuieuvuilubleundneedtobe
exploied.
Recent projections on the Millennium
Development Goals
Asiu und tle Pucilic lus mude impiessive piogiess in uclieving tle
MDGs in seveiul uieus. It is un euily uclievei in ieducing gendei
dispuiities in piimuiy und teitiuiy educution, stopping tle spieud ol
HIV/AIDS und tle incidence und incieuse ol deutl iutes ussociuted
witl tubeiculosis, ieducing consumption ol ozone-depleting subs-
tunces, und lulving tle piopoition ol people witlout uccess to sule
diinkingwuteiiniuiuluieus.Moieovei,itisontiucktouclieveotlei
two impoitunt tuigets: ensuiing univeisul uccess ol clildien to pii-
muiy sclool und lulving tle piopoition ol people living below tle
S1-u-duypoveityline.Howevei,piogiesslusbeenslowinotleiuieus,
sucl us impioving muteinul leultl, ieducing lungei, ensuiing tlut
clildiencompleteulullcouiseolpiimuiyeducution,ieducingclild
moitulity,ensuiinguccesstocleunwuteiinuibunuieusundbusicsuni-
tutioneveiywleie,undieducingcuibondioxideemissions(wleie,in
luct,ullsubiegionsslowuiegiessivepeiloimunce).
Tleussessmentoliegionulpiogiessinvuiiublymusksgieutdispu-
iitiesutulllevels,undtlePeople’sRepublicolClinu(PRC)undIndiu,
loiexumple,muydistuibiegionulcompuiisonsbecuuseoltleiisize.
Luige dilleiences in piogiess ulso exist umong countiies. Tle lutest
piogiessloiullindicutoisundcountiiesissummuiizedinTuble1.
102 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
T
a
b
l
e

1
:

C
o
u
n
t
r
i
e
s

o
n

a
n
d

o
f
f

t
r
a
c
k

f
o
r

s
e
l
e
c
t
e
d

M
i
l
l
e
n
n
i
u
m

D
e
v
e
l
o
p
m
e
n
t

G
o
a
l
s

G
o
a
l
1
2
3
4
6
7
$ 1 . 2 5 / d a y p o v e r t y
U n d e r w e i g h t c h i l d r e n
P r i m a r y e n r o l l m e n t
R e a c h i n g g r a d e 5
P r i m a r y c o m p l e t i o n
G e n d e r p r i m a r y
G e n d e r s e c o n d a r y
G e n d e r t e r t i a r y
U n d e r - 5 m o r t a l i t y
I n f a n t m o r t a l i t y
H I V p r e v a l e n c e
T B i n c i d e n c e
T B p r e v a l e n c e
F o r e s t c o v e r
P r o t e c t e d a r e a
C O
2
e m i s s i o n s
C F C c o n s u m p t i o n
W a t e r , t o t a l
S a n i t a t i o n , t o t a l
E
a
s
t

a
n
d

N
o
r
t
h

E
a
s
t

A
s
i
a
R
E
E
E
E
E
E
E
S
S
R
R
R
R
E
S
S
R
E
C
l
i
n
u
,

P
e
o
p
l
e

s

R
e
p
u
b
l
i
c

o
l
E
E
E
E
E
E
S
S
O
E
E
E
E
R
E
E
S
R
e
p
u
b
l
i
c

o
l

K
o
i
e
u
E
R
R
O
O
E
R
O
E
E
E
R
H
o
n
g

K
o
n
g
,

C
l
i
n
u
R
E
E
E
E
E
E
E
R
M
u
c
u
o
,

C
l
i
n
u

S
E
R
E
S
E
E
R
M
o
n
g
o
l
i
u
S
O
E
R
E
E
E
E
O
S
O
O
E
R
E
R
E
S
S
R
e
p
u
b
l
i
c

o
l

K
o
i
e
u
E
E
E
E
S
S
S
O
R
R
E
R
R
S
S
o
u
t
h

E
a
s
t

A
s
i
a
E
O
O
S
E
E
E
E
O
S
E
E
E
R
E
E
O
E
O
B
i
u
n
e
i

D
u
i
u
s
s
u
l
u
m

E
E
E
E
E
E
S
S

R
E
R
E
E
E

C
u
m
b
o
d
i
u
S
S
S
S
O
O
O
S
S
S
E
E
E
R
E
R
E
E
O
I
n
d
o
n
e
s
i
u

S
E
O
E
E
E
E
O
O
R
E
E
R
E
R
E
S
S
L
u
o

P
e
o
p
l
e

s

D
e
m
o
c
i
u
t
i
c

R
e
p
u
b
l
i
c
S
S
S
S
S
O
S
O
O
O
R
E
E
R
E
R
E
O
O
M
u
l
u
y
s
i
u
E
E
E
R
E
E
E
E
S
S
R
E
E
R
E
R
E
E
R
M
y
u
n
m
u
i

S

S

S
S
E
O
E
R
E
R
E
E
E
P
l
i
l
i
p
p
i
n
e
s
S
S
R
R
R
E
E
E
O
S
O
E
E
R
E
E
E
E
O
S
i
n
g
u
p
o
i
e

O
E
R
E
E
O
E
E
R

c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
103 Assessing social outcomes through the Millennium Development Goals
G
o
a
l
1
2
3
4
6
7
$ 1 . 2 5 / d a y p o v e r t y
U n d e r w e i g h t c h i l d r e n
P r i m a r y e n r o l l m e n t
R e a c h i n g g r a d e 5
P r i m a r y c o m p l e t i o n
G e n d e r p r i m a r y
G e n d e r s e c o n d a r y
G e n d e r t e r t i a r y
U n d e r - 5 m o r t a l i t y
I n f a n t m o r t a l i t y
H I V p r e v a l e n c e
T B i n c i d e n c e
T B p r e v a l e n c e
F o r e s t c o v e r
P r o t e c t e d a r e a
C O
2
e m i s s i o n s
C F C c o n s u m p t i o n
W a t e r , t o t a l
S a n i t a t i o n , t o t a l
T
l
u
i
l
u
n
d
E
E

E
E
E
E
E
E
E
O
E
R
E
R
E
E
E
T
i
m
o
i
-
L
e
s
t
e

R

O

S
S

O
E
R
E
E

S
S
V
i
e
t

N
u
m
E
E
O
O

O

E
E
R
E
E
E
E
R
E
E
E
S
o
u
t
h

a
n
d

S
o
u
t
h

W
e
s
t

A
s
i
a
S
S
O
S
S
E
O
S
S
S
E
E
E
R
E
E
S
S
S
A
l
g
l
u
n
i
s
t
u
n

S

S
R

S
S

O
E
R
O
R
E
S
R
B
u
n
g
l
u
d
e
s
l
S
O
R
E
S
O
O
O
E
E
R
E
R
E
S
S
B
l
u
t
u
n

S
S
S
E
O
R
S
S
O
E
E
E
E
E
E
R
R
I
n
d
i
u
S
S
O
S
S
E
O
S
S
S
E
O
E
E
E
R
E
E
S
I
i
u
n
,

I
s
l
u
m
i
c

R
e
p
u
b
l
i
c

o
l
E
O
S

E
E
O
E
O
S
R
E
E
O
E
R
E
O
R
M
u
l
d
i
v
e
s

O
E

E
E
E

E
E
O
E
E
O

R
E
R
S
N
e
p
u
l
S
S
S
S
S
E
O
S
O
O
O
E
E
R
E
E
E
E
S
P
u
k
i
s
t
u
n
E
R
S

O
O
O
S
S
O
O
E
R
E
R
E
S
O
S
i
i

L
u
n
k
u
S
O
E
E
E
E

S
S
O
O
E
R
E
R
E
O
E
T
u
i
k
e
y
R
E
S
E
E
S
S
E
E
E
E
E
E
R
E
E
S
N
o
r
t
h

a
n
d

C
e
n
t
r
a
l

A
s
i
a
R
E
E
E
E
E
E
E
S
S
R
R
R
R
E
S
S
R
E
A
i
m
e
n
i
u
O
R
S
E
E
E
E
E
O
O
O
E
E
R
E
R
E
E
S
A
z
e
i
b
u
i
I
u
n
E
S
E
E
E
E
E
O
O
O
R
E
E
O
E
R
E
S
R
c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
T
a
b
l
e

1

c
o
n
t
i
n
u
e
d
104 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
G
o
a
l
1
2
3
4
6
7
$ 1 . 2 5 / d a y p o v e r t y
U n d e r w e i g h t c h i l d r e n
P r i m a r y e n r o l l m e n t
R e a c h i n g g r a d e 5
P r i m a r y c o m p l e t i o n
G e n d e r p r i m a r y
G e n d e r s e c o n d a r y
G e n d e r t e r t i a r y
U n d e r - 5 m o r t a l i t y
I n f a n t m o r t a l i t y
H I V p r e v a l e n c e
T B i n c i d e n c e
T B p r e v a l e n c e
F o r e s t c o v e r
P r o t e c t e d a r e a
C O
2
e m i s s i o n s
C F C c o n s u m p t i o n
W a t e r , t o t a l
S a n i t a t i o n , t o t a l
G
e
o
i
g
i
u
R
O
O
E
R
E
E
E
S
S
O
E
E
O
E
R
E
E
R
K
u
z
u
k
l
s
t
u
n
S
E
E
E
E
E
E
E
S
S

R
R
R
E
R
E
S
R
K
y
i
g
y
z

R
e
p
u
b
l
i
c
R
E
R
E
O
E
E
E
S
S
O
E
E
O
E
R
E
E
S
R
u
s
s
i
u
n

F
e
d
e
i
u
t
i
o
n
E

R
R
E
E
E
S
S
R
E
E
O
E
R
R
E
R
T
u
I
i
k
i
s
t
u
n
E

E
E
O
E
R
S
S
S
R
R
R
O
E
R
E
S
E
T
u
i
k
m
e
n
i
s
t
u
n
E
S

S
S

R
E
O
O
R
R

U
z
b
e
k
i
s
t
u
n
R
E
O
E
E
E
E
R
S
S
O
R
R
E
E
E
E
R
O
P
a
c
i
f
i
c
R
R
R
R
S
S
R
E
E
R
E
R
R
A
m
e
i
i
c
u
n

S
u
m
o
u

E
E
R
O

C
o
o
k

I
s
l
u
n
d
s

R

R
E
E

S
S

R
R
E
E
R
E
S
E
F
i
I
i

I
s
l
u
n
d
s

R
R
R
E
E

S
S
O
E
E
E
E
R
E
R
S
F
i
e
n
c
l

P
o
l
y
n
e
s
i
u

E
E
O
E
R

E
R
G
u
u
m

E
E
O
E

E
R
K
i
i
i
b
u
t
i

E

E
E
E

S
S

E
E
O
O
E
E
O
S
M
u
i
s
l
u
l
l

I
s
l
u
n
d
s

R

R
E
E

S
S

E
E

O
R
E
R
O
M
i
c
i
o
n
e
s
i
u
,

F
e
d
e
i
u
t
e
d

S
t
u
t
e
s

o
l

E

S
S

E
E
O
O

E
E
R
N
u
u
i
u

R
E
E

R
R

E
E

R
E

c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
T
a
b
l
e

1

c
o
n
t
i
n
u
e
d
105 Assessing social outcomes through the Millennium Development Goals
G
o
a
l
1
2
3
4
6
7
$ 1 . 2 5 / d a y p o v e r t y
U n d e r w e i g h t c h i l d r e n
P r i m a r y e n r o l l m e n t
R e a c h i n g g r a d e 5
P r i m a r y c o m p l e t i o n
G e n d e r p r i m a r y
G e n d e r s e c o n d a r y
G e n d e r t e r t i a r y
U n d e r - 5 m o r t a l i t y
I n f a n t m o r t a l i t y
H I V p r e v a l e n c e
T B i n c i d e n c e
T B p r e v a l e n c e
F o r e s t c o v e r
P r o t e c t e d a r e a
C O
2
e m i s s i o n s
C F C c o n s u m p t i o n
W a t e r , t o t a l
S a n i t a t i o n , t o t a l
N
e
w

C
u
l
e
d
o
n
i
u

E
E
O
O
R

N
i
u
e

E
E
E

E
E
R
O
R
E
E
E
N
o
i
t
l
e
i
n

M
u
i
i
u
n
u

I
s
l
u
n
d
s

E
E
R
O

R
E
P
u
l
u
u

E
E
E

S
S

E
E
E
E
R
E
R
S
P
u
p
u
u

N
e
w

G
u
i
n
e
u

R

S
S
R
O
E
R
E
R
E
S
S
S
u
m
o
u

E

E
E
E

S
S

E
E
E
E
R
E
R
E
S
o
l
o
m
o
n

I
s
l
u
n
d
s

E
O

S
S

E
E
R
E
E
E
S
S
T
o
n
g
u

E
R
E
E
E
E
S
S

E
E
O
E
R
E
E
R
T
u
v
u
l
u

E
E

S
S

E
E
O
O

E
S
E
V
u
n
u
u
t
u

R

O
E
O

S
S

E
E
O
E
E
R
R
S
A
s
i
a

a
n
d

t
h
e

P
a
c
i
f
i
c

O
S
O
S
S
E
O
E
S
S
E
E
E
R
E
E
S
A
s
i
a

a
n
d

t
h
e

P
a
c
i
f
i
c


(
e
x
c
l
u
d
i
n
g

P
R
C

a
n
d

I
n
d
i
a

)
O
S
S
S
S
E
E
E
S
S
R
E
E
R
E
O
S
C
F
C

~

c
l
l
o
i
o
l
l
u
o
i
o
c
u
i
b
o
n
;

C
O
2

~

c
u
i
b
o
n

d
i
o
x
i
d
e
;

T
B

~

t
u
b
e
i
c
u
l
o
s
i
s
.
N
o
t
e
s
:

E

~

e
u
i
l
y

u
c
l
i
e
v
e
i
,

O

~

o
n

t
i
u
c
k
,

S

~

s
l
o
w
,

R

~

i
e
g
i
e
s
s
i
n
g

o
i

n
o

p
i
o
g
i
e
s
s
.
O
n
-

u
n
d

o
l
l
-
t
i
u
c
k

i
u
t
i
n
g
s

l
o
i

u
c
l
i
e
v
e
m
e
n
t

o
l

2
0
1
S

t
u
i
g
e
t
s

u
i
e

b
u
s
e
d

o
n

t
i
e
n
d
s

o
l

p
i
o
g
i
e
s
s

s
i
n
c
e

1
9
9
0
.

R
u
t
i
n
g
s

u
i
e

p
i
o
v
i
d
e
d

b
y

U
N
E
S
C
A
P
,

b
u
s
e
d

o
n

t
l
e

U
n
i
t
e
d

N
u
t
i
o
n
s

M
D
G

D
u
t
u
b
u
s
e

l
o
i

M
D
G

i
n
d
i
c
u
t
o
i
s

(
p
o
s
t
e
d

1
S

J
u
l
y

2
0
0
9
)
.
S
o
u
i
c
e
s
:

A
D
B
,

U
N
E
S
C
A
P
,

u
n
d

U
N
D
P

2
0
1
0
.

T
a
b
l
e

1

c
o
n
t
i
n
u
e
d
106 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Economic slowdown and its impact on the
Millennium Development Goals
Even witlout tle economic slowdown, most countiies weie going
tomissseveiulMDGtuigets.Tleslowdownlusmudeuclievingtle
MDGsmoieelusive.
Tleslowdownwillullectcountiies’peiloimunceinseveiulwuys.
Witlgiowtlslowing,tleiegion’sbiggestsuccess—declineinincome
poveity—willlluttenundinsomecountiiesevenieveit.Luckoldecent
woikundincomeoppoitunitieswillbeluitleicompoundedbydecli-
ning iemittunces, especiully liom uibun woikeis to tleii lumilies in
iuiuluieus.TlelossolIobs,decliningincome,undsliinkingtiunsleis
will pievent iuiul lumilies liom iising out ol poveity oi pusl uibun
(undiuiul)vulneiublegioupsintopoveity.
In 2008, witl iesults liom new globul puiclusing powei puiity
dutuliom200Sbecominguvuiluble,tleWoildBunkievisedtleintei-
nutionulpoveitylineloiextiemedepiivutionliomS1uduytoS1.2S.
Bused on ADB estimutes (Buuei et ul. 2008), tle piopoition ol peo-
ple living in ubsolute poveity—equivulent to tle new S1.2S-u-duy
extiemepoveityline—lusdeclinedliomS2.3%(1.4billionpeople)ol
tleiegion’spopulutionin1990to27%(903millionpeople)in200S,
unditisestimutedtoluvedeclinedluitleitoubout20%in2009.In
udditionunestimuted1.8billionpeople(S4%oltlepopulution)still
stiuggle ut tle muigins, on less tlun S2 u duy (Buuei et ul. 2008).
Tlesepeopleiemuinextiemelyvulneiubletolullingbuckintopoveity
tliougl uny kind ol economic slock, including liom enviionmentul
souices.
Witlouttleciisispiogiessinpoveityieductionwouldluvebeen
be liglei ol couise. ADB unulysis suggests tlut tle udveise impuct
ol tle economic downtuin muy leud to un udditionul 80 million
extieme pooi—people euining less tlun S1.2S u duy—in tle iegion
in 2010, compuied witl u “witlout ciisis” scenuiio undei wlicl tle
ligl giowtl iutes ol 2007 continued (Buuei et ul. 2008). UNESCAP,
ussumingvuiiousmeunincomegiowtliutesundclungesinincome
distiibution,estimutesunimpuctoltleciisisonpoveityol32million
(S1.2S)und40million(S2.00)(Tuble2),in2010.ADBestimutestlut
tlepioIectedgiossdomesticpioduct(GDP)declineintleiegionmuy
leudtounudditionul71millionvulneiublepeople—tloselivingundei
S2uduy—in2009und108millionmoiein2010(ADB2009).
Tle slowdown in giowtl will ulso ullect tle non-income MDGs.
Witl less income uvuiluble, pooiei louselolds will postpone less
uigentneedsuspuitolcopingmeclunisms.Tlismuyinvolvepulling
107 Assessing social outcomes through the Millennium Development Goals
Table 2: Estimates of the number of people trapped
in poverty in Asia and the Pacific owing to the global
economic crisis, various scenarios (millionsolpeople)
Slow mean
income
growth
Average
mean
income
growth
Fast mean
income
growth
Income distribution 2009 2010 2009 2010 2009 2010
No change
S1.2Suduy 7.7 12.2 14.8 23.4 20.4 32.0
S2uduy 9.3 14.6 18.2 28.S 2S.7 39.9
Change
S1.2Suduy 7.S 11.9 14.S 22.9 20.4 31.7
S2uduy 9.0 14.3 17.8 28.0 2S.2 39.7
Souice:UNESCAPstullculculutions.
clildienoutolscloolundgivinglessuttentiontoleultlcuie.Inuddi-
tiontotlelullindemundloibusicseivices,publiclylundedbusicsei-
vicesmuyulsoexpeiiencebudgetcutsloileultl,educution,undotlei
sociulundmunicipulseivices.
Wlile culculuting giowtl-MDG elusticities muy be pioblemutic,
us sociul beluvioi is not u diiect lunction ol income ulone, one cun
constiuctsuclelusticitiestopiedictclungesinnonincome-MDGout-
comes.Usingtleelusticitiesusculculutedliompieviousciisisobseivu-
tions(Tuble3),onecunseetlutclungesingiowtlwillluvesignilicunt
impuctsonnutiitionundtleleultlMDGsoutcomes,undullectmini-
mullytleeducutionoutcomes
3
(Tuble4).Howevei,unecdotuliepoits
undlieldsstudiesslowtluteducution—especiullyolmigiuntwoikeis
clildien—lusbeenmoieullectedtlunleultloutcomesbytlisciisis.
Tleuboveiesultsindicutetluttleiegionwillbeonlymuiginully
ullected by tle economic slowdown in cuse ol inlunt und undei-S
moitulity,undpiimuiycompletioniutes.Amoiesignilicuntimpuctis
3
Tle metlod employed is to simulute clunges bused on tlese elusticities to tle
piedicted2008vuluesoltleMDGindicutois,wlicluieestimutedusingusimple
leustsquuiestiendlinelittedtoobseivedindicutoivulues.Tledeluysuieculculuted
by litting new tiend lines to tle euiliei vulues und tle clunged 2008 vulues und
culculutingtledilleiencebetweenoiiginulundnewuclievementdutes.Tlepeiiod
ol deluy is ullected botl by tle clunge in tle 2008 indicutoi vulue us u iesult ol
lullingiowtluswellustlegeneiulspeedolimpiovementoltleiegionulvulues
obseivedintlepust.
108 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 3: Impact of a 1% increase in per capita GDP on
selected indicators for the Millennium Development Goals
Indicator Elasticity
Populutionundeinouiisled –0.483
Inluntmoitulityiute(0–1yeui)pei1,000livebiitls –0.462
Undei-Smoitulityiutepei1,000livebiitls –0.430
Muteinulmoitulityiutiopei100,000livebiitls –0.304
Gendeipuiityindexinpiimuiyeniollment 0.023
Piimuiycompletioniute 0.049
Neteniollmentiutioinpiimuiyeducution 0.0S4
Gendeipuiityindexinteitiuiyeniollment 0.109
Souices:ADB,UNESCAP,undUNDP2008.

Achievement
status
Delay in
achievement
(montls)
Infant mortality rate Slow –
1%giowtlieduction Slow 1
2%giowtlieduction Slow 2.S
3%giowtlieduction Slow 4
Under-5 mortality rate Slow –
1%giowtlieduction Slow 1
2%giowtlieduction Slow 2
3%giowtlieduction Slow 3
Gender parity index in primary
enrollment Euilyuclievei

1%giowtlieduction Euilyuclievei 0
2%giowtlieduction Euilyuclievei 0
3%giowtlieduction Euilyuclievei 0
Primary completion rate Slow –
1%giowtlieduction Slow 0
2%giowtlieduction Slow 0.8
3%giowtlieduction Slow 1
Gender parity index in tertiary
enrollment Euilyuclievei

1%giowtlieduction Euilyuclievei 0
2%giowtlieduction Euilyuclievei 1
3%giowtlieduction Euilyuclievei 1
Undernourished population Slow –
1%giowtlieduction Slow 1.S
2%giowtlieduction Slow 3
3%giowtlieduction Slow 4.S
Underweight children under 5 Slow –
1%giowtlieduction Slow 3
2%giowtlieduction Slow 7
3%giowtlieduction Slow 10
–~nodutu.
Souice:Autlois’estimutes.
Table 4: Impact of economic slowdown on
Millennium Development Goals
109 Assessing social outcomes through the Millennium Development Goals
expectedonlungei(undeinutiition),especiullyolclildienundeiS.
Tle impuct on piimuiy eniollment und gendei equulity in educution
islikelytobesmulltlougltleimpuctwillbegieuteitlelongeitle
slowdownpeisists.
Conclusions
AltlougltleMDGindicutoiscunellectivelyussesspiogiessinpoveity
ieductionintlelolisticsense,umuIoilimitutionistleiidutugupsloi
some indicutois, puiticuluily in tle Pucilic. Mucl moie uttention to
tlisissueisnecessuiy.
AnussessmentolpiogiessontleMDGsindicutesmixediesults.
AsiuundtlePucilicisontiucktouclieveuniveisuluccessolclildien
topiimuiyscloolundlulvetlepiopoitionolpeoplelivingbelowtle
poveitylineolS1.2Suduyundisuneuilyuclieveiinieducinggendei
dispuiitiesinpiimuiyundteitiuiyeducution,ieducingtlespieudol
HIV/AIDS und tle incidence und incieuse ol deutl iutes ussociuted
witl tubeiculosis, ieducing consumption ol ozone-depleting subs-
tunces, und lulving tle piopoition ol people witlout uccess to sule
diinkingwuteiiniuiuluieus.Intleotleiuieus,puiticuluilypiimuiy
educutioncompletion,lungei,undsunitution,tleMDGsuieunlikely
tobeuclieved.Moieovei,tleieuiecountiyundsubiegionulvuiiutions.
LeustsutisluctoiypeiloimeisuieLDCsundPucilicislundeconomies.
Iltlecuiientciisisispiolonged,uclievementoltleMDGscould
besignilicuntlydeluyed,unlessstimuluspuckugesundsociulspending
uiegeuiedtosuppoitingpoveityundsociulsectoigouls.WitlonlyS
yeuisiemuiningloitleMDGstobeuclieved,muclstiongeielloits
uppeuineeded.
110 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
References
Asiun Development Bunk (ADB). 2009. Globul economic ciisis und
ADB's iesponse: An updute. Munilu. Decembei. www.udb.oig/
Documents/Policies/Globul-Economic-Ciisis/in430-09.pdl
ADB, United Nutions Economic und Sociul Commission loi Asiu und
tle Pucilic, und United Nutions Development Piogiumme
(ADB, UNESCAP, und UNDP). 2008. A lutuie witlin ieucl
2008:RegionulpuitneislipsloitleMillenniumDevelopment
Gouls in Asiu und tle Pucilic. Document ST/ESCAP/2S01.
Asia-Pacific MDG Study Series.
———.2010.AclievingtleMillenniumDevelopmentGoulsinuneiu
ol globul unceituinty. Bungkok. Febiuuiy. lttp://content.undp
.oig/go/cms-seivice/stieum/usset/?ussetid~2269033
&bcsi scunD4A612CF62FE9S76~9l mpWwNvl I u+6
+uTPlAyxQsAAAACDFkJ:1
Buuei, A., R. Husun, R. Mugsombol, und G. Wun. 2008. Tle
Woild Bunk’s new poveity dutu: Implicutions loi tle Asiun
Development Bunk. ADB Sustainable Development Working
Paper Series. No. 2. Asiun Development Bunk, Munilu. www
.udb.oig/Documents/Piesentutions/New-Poveity-Estimutes/
Poveity-Dutu-Implicutions.pdl
111 Assessing social outcomes through the Millennium Development Goals
Box 4: Projecting the poverty impact
of the recession
Timelyussessmentoltleeconomicundsociulimpuctsoluneconomic
iecession is ciiticul loi tle loimulution und implementution ol ellec-
tive policy iesponses. Foitunutely, u simple metlodology ol ex unte
impuct ussessment, wlicl involves only two steps, is uvuiluble. Tle
liiststepguugeslowtleciisisullectsnutionulundlouseloldincomes.
A stiuigltloiwuid uppioucl is to use gioss domestic pioduct (GDP)
giowtl pioIections witl und witlout tle iecession in lieu ol uctuul
clunges in GDP giowtl. Tle lutest GDP giowtl pioIections loi 2009
und 2010 iepiesent tle income scenuiios witl tle ciisis. Busic GDP
pioIectionsloi2009und2010tlutweieieleusedIustpiioitotleonset
oltleciisisuieusedtouppioximutetleincomescenuiiowitlouttle
ciisis.TledilleiencebetweentlebuselineundtlelutestpioIectionsuie
usedusupioxyloitleincomeslockduetotleciisis.Tlesecondstep
istogeneiuteincomeellectsonpoveityusingtleconceptolelusticity
olincomewitliespecttopoveity.
Using tlis metlodology und publicly uvuiluble Woild Bunk dutu
loi21developingcountiiesinAsiu,tleiecessionisestimutedtopie-
ventutotulol64millionpeopleliomemeigingoutolpoveityundei
tle puiclusing powei puiity (PPP) S1.2S-u-duy poveity line duiing
2009–2010. Ol tlese, neuily 18 million uie liom Indiu und 9 million
liom tle People’s Republic ol Clinu (PRC). Undei tle PPP S2-u-duy
poveityline,tleiecessionwusestimutedtopievent72millionAsiuns
liomemeigingliompoveityduiingtlesumepeiiod.Oltlese,17mil-
lionuieliomIndiuundulmost14millionliomtlePRC.
Tlese pioIections do not, tlougl, include medium- und longei-
teim impucts, noi do tley sled uny liglt on tle distiibution ol tle
udveise ellects ol tle iecession, neitlei ol wlicl policy mukeis cun
ignoie.
Souice: Guungluu Wun und Rutl Fiuncisco in “How is tle globul iecession
impuctingonpoveityundsociulspending?Anexunteussessmentmetlodology
witl upplicutions to developing Asiu.` www.udb.oig/Documents/Events/2009/
Poveity-Sociul-Development/pupeis.usp
113
The impact of the global economic
slowdown on value chain labor
markets in Asia
Rosey Hurst, Martin Buttle, and Jonathan Sandars
1
Introduction
In2009,Asiuexpeiiencedtlewoild’smostseiiousiecessionsincetle
1930s.Tleiecessionlusullectedtleiegioninvuiiouswuys,tlemost
seiiousimpuctbeingontiudetliouglvuluecluins(ADB2009).Tle
ellectsonAsiu’sluboimuikets,woikeis,undtleiilumiliesluvebeen
lui-ieucling. Retienclments luve been widespieud in muny expoit-
oiiented munuluctuiing industiies ucioss tle iegion, und woiking
louis und wuges luve lullen. In iesponse, millions ol woikeis uie
migiuting buck to iuiul uieus oi slilting to inloimul und vulneiuble
employment(oiucombinutionoltletwo).
A piimuiy concein is tle impuct on louselold poveity, in puiti-
culuiloitlosewoikeisundlouseloldstlutluveiisenIustubovetle
poveity line in iecent yeuis, tlunks to enlunced muiket integiution
undnewloimulemploymentoppoitunities.Tlesewoikeisundlouse-
loldsuienowveiyvulneiubletolullingbuckintopoveityusuiesult
oltleciisis.Tleieloie,tleciisislussignilicuntimplicutionsloiluboi
muiketundsociulpiotectionpolicies.
Tlispupeidiscussestleimpuctoltleglobuleconomicslowdown
onvuluecluinluboimuiketsintleindustiiesundspecilicgeogiuplic
uieus ucioss tle Asiun iegion wleie tle slowdown lus lud u signi-
licunt impuct. Tliougl unulyzing vulue cluins, it mukes un initiul
uttempttoussesstleimpuctoltleciisisonenteipiises,tleiiwoikeis,
undloculgoveinments’seivicepiovision.
1
RoseyHuistisdiiectoiundco-loundeiolImpuct,uconsultuncyliimspeciulizingin
undeistundingundimpiovingluboipiucticesinsupplycluins.
114 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Literature review and concept development
Conceptualizing global value chains and labor
markets in Asia
Uneven falls in global trade and global value chains
One ol tle leutuies ol tle cuiient economic slowdown lus been tle
lull in woild tiude, ut u iute unmutcled in tle postwui peiiod. Tle
InteinutionulMonetuiyFund(IMF)piedictedtlutwoildoutputwould
lull by 0.S% in 2009 (IMF 2009). In compuiison, tle Woild Tiude
Oigunizution (WTO) piedicted tlut tle volume ol tiude would lull
byusmuclus9%in2009(WTO2009).Tleseglobulliguies,lowe-
vei, lide iegionul und sectoi vuiiutions. Tle Plilippines’ electionics
industiy expeiienced u 20%–30% contiuction in 2009 (Lopez 2009).
VietNum’slootweuiindustiysuwu10%slowdownintleliist7montls
ol2009(Nguyen2009)undtleexpoitvulueolIndonesiu’sluinituie
industiydioppedby3S%intleliistquuiteiol2009(Tumbununund
Suguidu 2009). Fuitleimoie in Muicl 2009, WTO wuined tlut tle
piospects loi Asiun expoit tiude weie especiully bud, puiticuluily loi
uutomobiles,electionics,undotleiconsumeiduiubles.Tlesesectois
uieligllyintegiutedintotleiegion’sglobulvuluecluins(GVCs)und
uiesusceptibletoclungesintleeconomiccycle.
GVCs cut ucioss nutionul boideis. Smull steps in tle pioduction
piocess uie cuiiied out in dilleient countiies, witl components und
puit-linisleditemsciossingboideismultipletimesduiingtlepioduc-
tionpiocess.Eveiytimecomponentsciossuboidei,tleyuieincluded
in tiude liguies. Howevei, tle lulls in tiude liguies ielutive to out-
putcunnotsimplybeexpluinedbymultiplecounting.Tiudetliougl
GVCsisulsoullectedbyuccesstociedit,wliclinnoimultimesuctsto
smootltiude.GVCscunbeconsideieduclunnelloitleiupidtiuns-
missionollinunciulslocks,inpuiticuluitliouglunegutiveinteinutio-
nul“cuscudeellect”ustledeniulolciedittoimpoiteisinonecountiy
leudstocieditpioblemsloiselleisinotleis,ieducingtleiiuccessto
ciedit,undullectingintuintleiiubilitytoimpoitundluitleiingtle
cuscude(EscuitlundGonguet2009,MilbeigundWinklei2009).
Theories of GVC development and governance
SincemuclolAsiu’spioductionisoigunizedtliouglGVCsciossing
nutionul boideis, und becuuse ol tle iupid tiunsition ol linunciul
slockstliouglGVCs,onemigltexpectudispiopoitionutelullintiude
duiinguneconomicslowdowncuusedbyubunkingciisis(Escuitlund
115 The impact of the global economic slowdown on value chain labor markets in Asia
Gonguet 2009, Milbeig und Winklei 2009, und Yi 2009). Howevei,
tlisdoesnotexpluinwlysomecluinsuieullectedmoietlunotleis.
Tosomeextent,tleexplunutionistleielutivelong-iunincomeelusti-
citiesolgoodspioduced,cuusingvuiiutioninlullsindemund.Anotlei
ieusoncouldbetlepoweiielutionsbetweendilleientoigunizutions
intlevuluecluin.
Vuluecluinucudemicsluvedevelopedunumbeioluselultypolo-
giesloiundeistundingdilleiencesbetweenvuluecluins.Tlesimplest
distinctionisbetweenbuyei-ledcluins(usinligl-luslionconsumei
goods, sucl us guiments) und pioducei-led cluins (wleie levels ol
meclunizution und cupitul investment uie ligl, sucl us uuto puits).
A second uppioucl is Geielli et ul.’s (200S) typology ol GVC govei-
nunce. Tlis seeks to undeistund industiiul oigunizution, tle powei
ielutionsbetweenuctois,undtleieloiesupplieis’scopeloicuptuiing
moievulueliomtlecluin.Tletleoiysuggeststluttleieuietliee
impoituntvuiiubleswliclcontiibutetolowuvuluecluinisgoveined
und develops. Tlese uie: complexity of transactions, ability to codify
information(e.g.,designvuiiubles,quulity,undluboistunduids),und
capabilities of the supply base.Tletleoiygeneiuteslivetypesolgovei-
nunceielutionslipstlutcunoccuiinGVCs—lieiuicly,cuptive,ielu-
tionul,modului,undmuiket—wlicliungeliomligltolowlevelsol
explicitcooidinutionundpoweiusymmetiy(Figuie1).
Tlese live cutegoiizutions uie u uselul leuiistic wuy to tlink
tliougltleunevenimpuctsoltledowntuinondilleientsectois’und
countiies’ luboi muikets. In tleoiy, tle moie vulue cluins iellect tle
muiket-busedloim,tlemoiellexibilitysupplieiswillluvetolindnew
buyeis und piotect tlemselves liom lulls in demund liom oveiseus
clients. Tle llipside is tlut in sucl vulue cluins, buyeis uie ulso liee
towulkuwuyliomsupplieis.Incuptiveundielutionulloimsolvulue
cluingoveinunce,usupplieimuybelockedintoielutionslipswitlleud
liimsinvuluecluinsundtleieloiemoiesubIecttotlevuguiiesoltle
slowdowninconsumeimuikets,iltleiibuyeisuieudveiselyullected.
Tle lollowing illustiutes low goveinunce stiuctuies evolve ovei
time,undsledsligltonclungesinGVCs.
Apparel industry—from captive to relational. Asiu lus been tle
epicentei ol expoit-oiiented uppuiel pioduction liom tle luttei puit
ol tle 20tl centuiy. Geielli ut ul. uigue tlut tle key to its success
lusbeenincieusesinsupplieicompetence,undtluttlislusbeentle
muindiiveibelindtlesliltliomcuptivetoielutionulvuluecluinsin
tleuppuielindustiy.
Electronics—from hierarchy to modular and beyond.Foimostoltle
20tl centuiy, tle electionics industiy lus been dominuted by luige,
veiticullyintegiutedliims.Astleciviliunindustiyintle1980sbegun
116 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
to giow iupidly witl tle peisonul computei, u iunge ol otlei vulue
cluin lunctions weie “outsouiced.” Tlis diove u signilicunt sluie ol
tlewoild’spioductioncupucityintoulundlulolluge,globullyope-
iutingcontiuctmunuluctuieis.Suclmunuluctuieisintioduceduligl
degieeolmoduluiityintovuluecluins.
Linkages between global value chains and labor markets
Tle ielutions between developed woild compunies und tleii Asiun
supplieis in GVCs luve luge implicutions loi woikeis’ Iobs, wuges,
und skills tliouglout Asiu. Since tle lute 1990s, tleie luve been
vigoiousdebutesoveiwletleitlegiowtlolvuluecluinslusledto
sustuinubleundleultlygiowtlcontiibutingtoincieusedwelluieloi
ull,oiwletleitletypesolIobscieutedundtlecompetitionbetween
countiies luve led to u “iuce to tle bottom” us countiies compete
to muke tleii luboi muikets llexible to uttiuct loieign diiect invest-
ment.TleWesteinmediuluvesteieotypedpioductionIobsinGVCs
ussweutslopIobsduetotlemunyincidencesolpooiluboistunduids
loundinluctoiiesinAsiu.
Figure 1: Typology of value chain governance
High
High
Low High
High High
High
Low
Low
Low
Low High High High High
Complexity of
transactions
Ability to codify
transactions
Capabilities in the
supply base
Furniture
Electronics (current)
Automobiles
Apparel
(current)
Apparel,
Footwear
(industry infancy)
Electronics
(industry infancy)
Case study
Hierarchy Captive Relational Modular Market
End use
Materials
C
h
a
i
n
s
V
a
l
u
e
High Low
Degree of explicit coordination
Degree of power asymmetry
Lead
firm
Lead
firm
Lead
firm
Integrated
firm
Customers
Suppliers
Component and
material suppliers
Component and
material suppliers Captive suppliers
Turnkey
supplier
Relational
supplier
Price
Tlesmulllineuiiowsiepiesentexclungebusedonpiicewliletleluigeiblockuiiowsiepiesent
tlickeillowsolinloimution.
Souice:AduptedliomGeiellietul.(200S).
117 The impact of the global economic slowdown on value chain labor markets in Asia
Fuitleimoie, GVC luboi muikets uie liglly gendeied. Tle
Inteinutionul Luboui Oigunizution piedicts tlut women will be dis-
piopoitionutelylitbytleslowdown,witluS.7%iiseinunemployed
women in 2009, compuied witl u 4.9% iise loi men. Fuitleimoie,
wlilewomen’swoikisvuluedlesstlunmen’swoik,women’swuges
oltencontiibutetotlesuppoitoldependentsundlouseloldincomes
(Reuteis 2009). Tlus us women uie pusled out ol tle loimul luboi
muiket, tleie cun be widei consequences loi louselold incomes.
Industiiulpioductionisiegionulizedundgeogiuplicullyconcentiuted
inindustiiulclusteis,meuningtlutmunywoikeisinGVCsuieeitlei
inteinuloiinteinutionulmigiunts.Tukentogetlei,itisieusonubleto
ussumetluttlemostvulneiublewoikeisuciossullvuluecluinsectois
will be migiunts, woikeis employed tliougl ugencies on tempoiuiy
contiucts,undwomen.
How enterprises and labor markets may respond to
the slowdown
Intimesolciisis,vuluecluinluboimuiketsuielikelytobeullected
indilleientwuysundtouvuiiedextent.Itisimpoitunttoundeistund
lowliimsindilleientsectoisiespondtoucontiuctioninincome.Tle
keyquestionsuie:HowuieluboimuiketsudIusting?Wlutgioupsuie
mostvulneiubletoclungesinluboimuiketstliouglincieusedunem-
ploymentundieducedwuges?
AsunulysisconductedbytleAsiunDevelopmentBunkslows(ADB
2009), unemployment is on tle iise ucioss mucl ol Asiu (Tuble 1).
Aggieguteliguies,lowevei,cunmusksignilicuntclungesintleluboi
muiket,suclustlemovementolwoikeisliommunuluctuiingtotle
seivicesoiinloimulsectois.
Table 1: Unemployment across Asia (%)
Economy 2007 2008 2009
Clinu,People’sRepublicol 4.0 4.2 4.3
HongKong,Clinu 4.0 3.3 S.1
Indonesiu 9.8 8.S 8.1
Muluysiu 3.2 3.3 4.0
Plilippines 7.4 8.0 7.S
Tluilund 1.6 1.7 2.1
VietNum 4.6 4.6 n.u.
n.u.~dutunotuvuiluble.
Souice:AduptedliomADB(2009).
118 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Aggiegute liguies ulso lide undeiemployment, wleie woikeis’
louisluvebeencut.TlisissignilicuntusGVCenteipiisesuielikely
to ieduce woikeis’ louis und ieduce woikeis’ wuges in iesponse to
u diop in tiude. Tlis cun luve piolound consequences loi tle most
vulneiublewoikeis.InmunycountiiesuciossAsiu,stututoiyminimum
wuges olten lull belind tle cost ol living, meuning tlut woikeis uie
unubletopiovideloitlebusicneedsoltlemselvesundtleiilumilies.
(Stunduidindustiiulwugesuieoltenligleitluntleminimumwuge,
tlougltleytooieguluilylullsloitolulivingwuge).Woikeiswlodo
noteuinulivingwuge,eitleitliougltleiinoimullouisoioveitime
louis,cunbeloicedintoucycleolpoveity.
Inextiemecuses,GVCenteipiisesuielikelytoietienclwoikeis,
pusling tle most vulneiuble woikeis—sucl us migiunt woikeis,
tempoiuiy woikeis, und women—into tle inloimul economy. As tle
ciisis deepens und moie woikeis uie ietiencled, tlese demund-side
luctoiscunbeinlluencedluitleibysupply-sideluctoissuclusmigiunt
woikeis moving lome, tlus ieducing tle luboi muiket. As ietien-
cledmigiuntwoikeismoveuwuyliomindustiiuliegions,tlislum-
peis elloits to iecovei us demund ienews. Enteipiises muy discovei
tlut tleie uie sloit-teim luboi sloituges, becuuse woikeis luve
moveduwuy.
Policy implications
AnyiesponsetotledowntuinmustsimultuneouslypiotectIobs,but
ulso continue u piocess ol industiiul upgiuding. Tle implicution is
tlut, wleie industiiul upgiuding lus occuiied und enteipiises cun
cuptuiemoievulueliomtlecluin,tleieisgieuteillexibilitytoies-
pondtoslocks.AsmunyvuluecluinIobsuielow-quulityIobs,govein-
mentsmuyconsideitleslowdownunoppoitunitytosliltuwuyliom
low-vuluesectoistosectoiswleiemoievuluecunbecuptuied.Tlis
muy be u iisky stiutegy. “Veiticul speciulizution” is tle outcome ol u
complex inteiielutionslip between u wide uiiuy ol luctois including
ucountiy’seconomiclistoiy,woikeis’skillsets,pluceintleGVC,us
wellusucountiy’seconomicdevelopmentstiutegy.Tleieisconside-
iuble putl-dependency in u countiy’s economic development, wlicl
muyconstiuingoveinmentsliomudoptinguneweconomicdevelop-
mentstiutegyusuiesponsetotledowntuin.
Tle liteiutuie indicutes tlut tleie uie u numbei ol policy impli-
cutionsloiAsiuneconomiesuttemptingtoiespondtotledowntuin,
includinguneed:
º Topiovidelisculstimulusintlesloitteiminoideitosuppoit
uggiegutedemund
119 The impact of the global economic slowdown on value chain labor markets in Asia
º To uddiess tle issue ol piotectionism wleie GVCs cioss
multipleboideis
º To ensuie tlut enteipiises luve sullicient tiude ciedit to
continueexpoitingintledowntuin
º Toswitclliomulocusonexpoitmuiketstoexpunddomestic
muiketsloimunuluctuiedgoods
º Toexpundintiuiegionultiudeinlinisledgoods
º Toenluncesociulsecuiitysuletynets,especiullyloivulneiuble
woikeis.
In tle sloit teim, Keynesiun liscul stimulus piogiums cun lelp
suppoituggiegutedemund.InNovembei2008,tleGoveinmentoltle
People’sRepublicolClinu(PRC)unnounceduSS86billionstimulus
tobespentby2010onuiungeolnutionulinliustiuctuieundsociul
welluiepioIects.Tlislugestimuluswusestimutedut7%olGDP.
Policymukeisundgoveinmentsuielikelytoexpeiiencepoliticul
piessuietopiotectdomesticindustiiesduiinguneconomicdowntuin.
Atiuditionuliesponselusbeentoimposetuiillundnontuiillbuiiieis.
One implicution ol tle giowtl ol GVCs is tlut tiuditionul loims ol
piotectionism,suclustuiillbuiiieis,uiemoielikelytoluvenegutive
impuctsbecuusecountiies’economiesuieincieusinglyinteilinked.
ConventionulwisdomsuggeststlutAsiunexpoitmuiketswillnot
iecovei until tle economies ol tleii customeis’ muikets luve ieco-
veied. Milbeig und Winklei (2009) suggest tlut otlei economies in
Asiuluvetolollowsuitundlindotleinonexpoitsouicesoldemund,
oi diveisily tiude putteins to locus moie on tiude witl otlei Asiun
economies.Intlelongteim,tleciisismuyieinloiceexistingtiends
usconsumeidemundloivuluecluinconsumeigoodssliltsliomtle
UnitedStutesundEuiopetowuidAsiu.
Alongwitlsuppoitingpioductiontliouglstimuluspiogiumsund
encouiuging intiuiegionul tiude, Asiun countiies slould ensuie tlut
sociul piotection piogiums piotect tle most vulneiuble woikeis und
louseloldsliomtleellectsoltledowntuin.
Analysis of field data
Tlispupeiunulyzestlelindingsoluseiiesolindividuulcountiylield
studiesconductedinAugust2009toundeistundtlevuiiedimpuctsol
tleslowdownonvuluecluinluboimuiketsuciossuvuiietyolindus-
tiiesundcountiies.
2
2
Foiululleiunulysis,seeulongeiveisionoltlispupeiutwww.udb.oig/Documents/
Events/2009/Poveity-Sociul-Development/pupeis.usp=luboi
120 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Value chain typologies
To muke meuninglul compuiisons between sectois und iegions und
todiuwouttlekeylessonsloipolicymukeisuciosstleiegion,tlis
pupeiluscutegoiizedtlecountiyvuluecluinsuccoidingtotletypo-
logycieutedbyGeiellietul.(200S)inTuble2.
Footwear industry, Viet Nam—Captive. Tlis vulue cluin
iesemblestleuppuielvuluecluininitsinluncy.Vietnumesemunuluc-
tuieistendtospeciulizeintleussemblyollootweui,witliuwmute-
iiulsunduccessoiiesimpoitedliomubioud.Tleligldegieeolpowei
usymmetiy between buyei biunds und munuluctuieis suggests tlut
tlisvuluecluincunbecluiucteiizedusucuptivevuluecluin.
Toys and textiles, PRC.Itisdilliculttocluiucteiizetleseindustiies
uccoidingtoGeiellitypology.Tletoysectoiiscluiucteiizedbysome
luctoiiesmukingspeciulistgoodsloibiundnumecustomeis(likelyto
beinielutionuloicuptivevuluecluins),uswellusluctoiiesmuking
cleupeigeneiictoys(likelytobeinmuiket-busedvuluecluins).
Table 2: Sectors by global value chain typology
Country Sector
Study
area Author
a
Categorization
according to
Gereffi typology
VietNum Footweui HoCli
MinlCity
HuoNguyen Cuptive Low
llexibility
Higl
llexibility
PRC Toys PeuilRivei
deltu
(Slenzen)
XiulunZlung Relutionul
PRC Electionics PeuilRivei
deltu
(Slenzen)
XiulunZlung Modului
Plilippines Electionics Cuvite MulouLopez Modului
PRC Fuinituie PeuilRivei
deltu
(Slenzen)
XiulunZlung Muiket
Indonesiu Fuinituie Ciiebon,
Jepuiu,
Solo(West
undCentiul
Juvu)
Aidlu
Suguidu
undTulus
Tumbunun
Muiket
PRC~People’sRepublicolClinu.
u
Seeieleiencesutendoltlispupei.
121 The impact of the global economic slowdown on value chain labor markets in Asia
Electronics—Modular.AsGeiellietul.(200S)suggest,tlisindus-
tiyglobullyisinupiocessoltiunsitionliomulieiuiclyundcuptive-
typevuluecluintoumoduluivuluecluin,usluige,tuinkeysupplieis
intioduceuligldegieeolmoduluiityintovuluecluingoveinunce.
Furniture—Market. Tle Indonesiu’s luinituie industiy is u tiudi-
tionulleiedituiybusinessdominutedbysmullenteipiises,witluten-
dencytoopeiuteinclusteisundluvingusoplisticutedmulti-luyeied
cultuieolsubcontiucting.
Enterprise-level survey analysis
Allsectoisluvelelttlediumuticimpuctoltleglobuleconomicdown-
tuin. In 2009, tle Vietnumese Leutlei und Footweui Associution
(LEFASO)estimutedtluttleindustiydeclinedbyuppioximutely10%
intleliist7montlsoltleyeui.TleSemiconductoiundElectionics
IndustiiesintlePlilippines(SEIPI),utiudeussociution,estimutestlut
electionicscontiuctedbybetween20%und30%in2009.InIndonesiu,
tleAssociutionolIndonesiunFuinituieundHundiciultMunuluctuieis
(ASMINDO)estimutestluttleexpoitvulueoltleluinituieindustiy
lellby3S%inQ12009.
Tle dutu liom tle enteipiise-level suiveys conducted in tlese
countiiessuppoittleviewtluttleslowdownlusullectedullsectois,
buttluttleimpuctsluvevuiiedumongsectois.Amongcompuniesin
tlePRCtextileindustiy,S6%iepoitedsliinkingdemundliomtleend
olQ22008.IntlePRCelectionicsundtoyindustiies,demundlellin
67%olenteipiisessuiveyed,undintleluinituieindustiy(intlePRC
undIndonesiu)undtlelootweuiindustiy(VietNum)demundlellin
ovei90%olenteipiises.Tlissuggeststluttleellectsoltleeconomic
downtuin luve been widespieud in ull sectois, witl tle muIoiity ol
enteipiisessulleiingineveiyindustiy.Tlelullindemundisiellected
intlepiopoitionolcompuniestlutluveiegisteiedudiopinievenues.
Aciossullsectois,enteipiisesluveiespondedtotledowntuinby
udIustingtleiiluboiloices(eitleibyieducingwuges,woikinglouis
undtlenumbeiolslilts,oibyluyingollwoikeis).Intextiles,electio-
nics,undtoys,100%olenteipiisessuiveyedludmudeudIustmentsto
tleiiluboiloiceulteiJuly2008.Inlootweui,tlispiopoitionwus96%
undinluinituie,70%.
Despitetleselulls,89%olbusinessesintoysund7S%inelectio-
nicsuieexpectingunincieuseinoideisintlenext6montls(uguin,
ielutivetoAugust2009).Fuinituieundlootweuiweietlemostpes-
simistic, witl 39% ol tle loimei und 32% ol tle luttei expecting u
decieuseoinoclungeinoideisintlenext6montls.
122 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Impact on jobs
Seveiulliimsluveiepoitedemployingudditionulemployeessincetle
beginningoltleciisis.Tuble3slowstlepiopoitionolcompuniesin
tlevuiioussectoistlutluvecutIobs,ieciuitednewwoikeis,oinot
mudeunyluboiloiceudIustments.
Table 3: Proportion of companies in survey making
employment changes, end Q2 2008–July 2009 (%)
Job
losses
New
jobs
No
change Total
Footweui 68 4 28 100
Electionics 32 48 20 100
Textiles 28 28 44 100
Fuinituie S4 2 43 100
Toys 60 40 0 100
Souice:ADBvuluecluinluboimuiketsuivey(August2009).
Altlougl u signilicunt piopoition ol compunies in electionics,
toys, und textiles luve ieciuited woikeis, it uppeuis tlut tleie lus
beenunetlossolIobs.InteimsoltlenumbeiolIobslost,lootweui
undelectionicsweiebyluitleluidestlitwitlenteipiisessledding
unuveiugeol191und141Iobs,iespectively,duiingtlepeiiod.
In tleoiy, sociul iegulutions sucl us seveiunce puy iequiiements
uctusubulleiloiluid-ollwoikeisundudisincentivetobusinessesto
luy oll woikeis. Tle PRC, Indonesiu, tle Plilippines, Tluilund, und
VietNumluveseveiuncepuylegislution.Seveiuncepuyiequiiements
uieingeneiultiltedtowuidIobpiotection,meuningtluttleobligu-
tionsonenteipiisesuiebuidensomeundtliscunpluyuguinstIobcieu-
tion.TleWoildBunk(2009)suggesttlutluiluietoiemitseveiunce
puyduiingtle1997–1998Asiunciisiswusupioblemwitlmunycom-
punies,especiullysmullundmedium-sizedenteipiisesluilingtolullill
tleiilegulobligutions.
Working hours and wages
Tleieisugeneiultiendoldeclininguveiugewoikinglouisunddecli-
ning uveiuge euinings umong ull tle industiies suiveyed. Tle two
industiies tlut uppeui to be woist oll uie lootweui (exclusively in
123 The impact of the global economic slowdown on value chain labor markets in Asia
VietNum)undluinituie(intlePRCundIndonesiu)(Tuble4).Inview
oltlenumbeiolIoblossesintleelectionicssectoi,onemigltexpect
usimiluiputteininluboiudIustments.Howevei,tlisdoesnotseemto
betlecuse,witlenteipiisesonlyiepoitingsmullclungesinwoiking
louisloitempoiuiyundpeimunentwoikeis.
Table 4: Decline in working hours and earnings,
end Q2 2008–July 2009 (%)
Industry
Working
hours
(peimunent)
Working
hours
(tempoiuiy)
Earnings
(peimunent)
Earnings
(tempoiuiy)
Electionics 3.70 0.22 1.S4 2.17
Footweui 23.13 26.67 11.02 22.0S
Fuinituie 12.91 20.00 1S.S0 20.89
Textiles 2.67 1.2S 1.2S 2.S0
Toys 0.S6 -2.S0
u
0.78 2.S0
Overall
average
10.88 12.06 8.69 12.75
u
Indicutesunincieuse.
Souice:ADBvuluecluinluboimuiketsuivey(August2009).
Tledutuslowtlutenteipiisesintleluinituieundlootweuiindus-
tiies luve, on uveiuge, ieduced tempoiuiy woikeis’ woiking louis
moietlunpeimunentwoikeis’.Tleieveiseistiueloienteipiisesin
tletoy,textile,undelectionicsindustiies.Tleluinituieindustiyisu
muiket-typevuluecluin,tleelectionicssectoiisucuptive-typevulue
cluin,butbotluieluboi-intensiveindustiiestlutmigltbeexpected
tobelitluidbytledowntuinundusuiesultieducelouisloitem-
poiuiywoikeis.
Tleevidencesuggeststlutieulwugesloitempoiuiyundpeimu-
nent woikeis luve lullen becuuse ol tle ciisis, witl wuges in luini-
tuieundlootweuibeinglitluidest.Inteimsoleuinings,enteipiises
iepoitluvingieducedtleeuiningsoltempoiuiywoikeismoietlun
tloseolpeimunentwoikeis.
Worker-level survey analysis
Keytoundeistundingtleimpuctoltledowntuinutwoikeilevelisto
undeistundwloismostvulneiubleundlowtleiiincomeundexpen-
dituieluvebeenimpucted.
124 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Impact across the formal and informal sectors
Evidence liom woikeis suppoits tle tiends ol lulling woiking louis
und uveiuge weekly wuges outlined in tle pievious section. Tle
extenttowlicltleyluvelullen,lowevei,vuiiesbetweenindustiies.
Fuinituieundlootweuiseemtobetleluidestlitinteimsoluieduc-
tioninwoikinglouis,wleieustoysundluinituieweietlewoistullec-
ted in teims ol u ieduction in weekly wuges. Inteiestingly, lowevei,
tleinloimulsectoiuppeuistoluvebeenleustullectedinteimsolu
ieduction in wuges, und uctuully suw un incieuse in uveiuge weekly
woikinglouis,suggestingtlutIobsuiebeinglostintleloimulsectoi,
und so un incieusing numbei ol woikeis uie tuining to tle inloimul
sectoiloiwoik.Tlelimitedlullinwugescouldbeexpluinedbytle
smullscopeloiluitleiieductions.
Impact on migrant workers
Dutu weie uvuiluble on migiunt woikeis loi tle PRC und Viet Num,
undgiveveiystiongevidencetosuggesttlutmigiutionundieduced
woikinglouisuiecoiieluted.Tleuveiugeieductioninwoikinglouis
loimigiuntwoikeisis18.4%compuiedtoIust8.0%loinonmigiunt
woikeis.Tleieisnocoiielutionbetweenmigiutionundwugeieduc-
tion. Howevei, tle uveiuge lull in wuges loi migiunt woikeis witlin
tlesumplewusligleitlunloinonmigiuntwoikeis—24.3%compu-
iedto22.4%.
Impact on workers by job type and skills level
AnulysisbyIobtypeundskillslevelslowedtlelollowingtiends:
º Nonpioduction stull (munugeis und suppoit stull) uie moie
likelytoluvebeenmudeunemployedsincetleendolQ22008
tlunpioductionstull.
º Pioduction stull uie moie likely to luve lud tleii louis
ieducedtlunnonpioductionstull.
º Nonpioduction stull luve seen tleii wuges lull moie tlun
pioductionstull.
º Skilledwoikeisuiemoielikelytoluvebeenmudeunemployed
tlununskilledwoikeis.
º Unskilled woikeis weie moie likely to luve lud tleii louis
ieducedtlunskilledwoikeis.
º Skilledwoikeisluveseentleiiwugeslullmoietlununskilled
woikeis.
125 The impact of the global economic slowdown on value chain labor markets in Asia
Accoiding to tle woikei-level unulysis, 76.2% ol nonpioduction
stullinteiviewedludbeenmudeunemployedcompuiedtoIustS8.3%
ol pioduction stull. Nonpioduction stull in tle sumple weie moie
likelytoluveludtleiiwoikinglouisieducedtlunpioductionstull,
ut66.2%veisus43.7%.Tlissuggestsustiutegyolcompuniesseeking
tocuttleiilixedcoststliouglIobcutsloiligleieuineisundsuluiied
stullsuclusmunugeis,piolessionuls,undsuppoitstull.Attlesume
time, compunies uie ulso ieducing tleii vuiiuble costs, but tliougl
cuttingtlelouisloipioductionstulliutleitluncuttingIobs.
Witlin tle sumple ol pioduction woikeis ucioss ull tle sectois
suiveyed, skilled woikeis uie moie likely to luve been luid oll tlun
unskilled woikeis: 61.2% veisus S0.9%. In uddition, skilled woikeis
uie less likely to luve lud tleii louis cut tlun unskilled woikeis:
61.3% veisus 79.1%. It seems counteiintuitive tlut luctoiies would
cut skilled woikeis und ieduce tle louis ol nonskilled; Indonesiu’s
und Viet Num’s lield studies suggested tlut munugeis weie keen to
ietuinskilledwoikeisbecuusetleyweieviewedususcuiceiesouice.
Skilled woikeis, lowevei, uie likely to cost moie und be enguged in
nonpioductionioles.
Remittances
Tleieisconsideiublevuiiutionumongdeclinesinwoikeis’iemittunces
ucioss sectois cuused by udIustments in tle luboi muiket. Tle woist
ullectedindustiywuslootweui,wleieS1%olwoikeissuidtluttley
ludbeenloicedtoieduceiemittunces.Asmulleipiopoitionolwoikeis
intleinloimulsectoi(26.9%)suidtluttleyludieducediemittunces.
Household-level survey analysis
Tleglobuleconomicslowdownlusulsoludseiiousnegutiveellects
on louselolds und living conditions. Ol tle louselolds suiveyed,
9S.S%cluimedtlutoveiulllouseloldincomeludlullenliomtleend
olQ22008tliouglJuly2009.
In iesponse, tleie lud been u ieduction in tle louselold bud-
getloibotlessentiulundnonessentiulitems:enteituinment,utilities,
undduiublegoodsseemedtobetleuieusluidestlit.Tleclungein
spendingpiioiitiesloilouseloldsvuiiedbycountiy.IntlePRCund
Indonesiu, enteituinment, utilities, und duiuble goods expendituie
weiemostoltencut.Educutionwustlelouseloldexpendituieleust
likely to be ieduced in tlose two countiies (Figuie 2). In Viet Num,
expendituieonloodwusmostoltencut(80.3%ollouselolds).Heultl
cuiespendingwustleleustlikelytobecut.
126 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
AligleipiopoitionolIndonesiu’slouseloldssuiveyedieduced
expendituiecompuiedtobotltlePRC’sundVietNum’slouselolds.
InIndonesiu,97.8%ollouseloldssuidtluttleyludcutspendingon
utilities und on enteituinment, und 9S.7% on duiuble goods. In tle
PRC, lowevei, tle equivulent liguies weie S6.S% (utilities), S2.8%
(enteituinment), und 46.1% (duiuble goods). Tlis suggests tlut tle
impuctonIndonesiunlouseloldsluspeilupsbeengieuteitluntle
impuctonPRClouselolds.
Conclusions and policy recommendations
Conclusions
All sectois luve been impucted by tle downtuin. Tle impucts luve
beenvuiieduciosstledilleientvuluecluinexpoitsectois:
º Inluinituie(tlePRCundIndonesiu)undlootweui(VietNum),
demundluslulleninovei90%olenteipiises.
º Inelectionicsundtoys(tlePRC),demundluslullenin67%
olenteipiises.
º Intextiles(tlePRC),S6%olcompuniescluimedtlutdemund
luslullen.
Figure 2: Proportion of households having cut their
expenditure, PRC, Indonesia, and Viet Nam (%)
PRC~People’sRepublicolClinu.
Souice:ADBvuluecluinluboimuiketsuivey(August2009).
0
E
d
u
c
a
t
i
o
n
H
o
u
s
i
n
g
H
e
a
l
t
h
F
o
o
d
D
u
r
a
b
l
e

g
o
o
d
s
U
t
i
l
i
t
i
e
s
E
n
t
e
r
t
a
i
n
m
e
n
t
10
20
30
40
50
60
70
80
90
100
Indonesia China, People’s Republic of
Viet Nam
127 The impact of the global economic slowdown on value chain labor markets in Asia
Enteipiises ucioss sectois und dilleient tieis luve iesponded to
tledowntuinbyieducingwoikeis’louisundietienclingwoikeis:
º Intextiles,electionics,undtoys,100%olenteipiisessuiveyed
suidtluttleyludmudeudIustmentstotleiiluboiloicesince
July2008.
º Inlootweui,tlepiopoitionwus96%.
º Inluinituie,tlepiopoitionwus70%.
In teims ol tle uveiuge numbei ol Iobs lost in eucl enteipiise,
lowevei,lootweuiundelectionicsweiebyluitleluidestlit.Tleie
wusugeneiultiendoldeclininguveiugewoikinglouisunddeclining
uveiuge euinings umong ull industiies suiveyed. Tle two industiies
tlutuppeuitobewoistolluielootweui(exclusivelyinVietNum)und
luinituie(tlePRCundIndonesiu).
Tukentogetlei,itseemstluttleVietNum’slootweuiindustiylus
beenluidestlitinteimsoltlelullindemund,Ioblosses,undieduc-
tioninwoikinglouis.Tlisisconsistentwitlwlutonemigltexpect,
consideiing tlut tle Viet Num’s lootweui industiy is u cuptive vulue
cluin.VietNum’slootweuiindustiyisinitseuilystugesoldevelop-
ment,uccoidingtoGeielli’stypology.Cuptivevuluecluinsuiemoie
likelytotiunsmitslocksexpeiiencedbyulullindemundloipioducts
intledestinutioncountiies.Fuitleimoie,tleindustiyistypiliedbyu
luigenumbeiolielutivelyunskilledIobs.
Geielli’stypologymuybeuselulinexpluiningtledynumicsoltle
downtuin ol Indonesiu’s luinituie industiy, wlicl lus been puiticu-
luilybudlylit.Insuclumuiketvuluecluin,buyeisuielieetodeseit
supplieisundsouicecleupeipioductselsewleie.TleGeiellitypology
islesslelplulinexpluiningtlepeiloimunceoltletoyundtextilesec-
toisintlePRC.
Tuble S is bused on tle totul sumple ol woikeis und suggests
tle woikeis most vulneiuble to tle negutive ellects ol tle down-
tuin,cutegoiizedbyIoblossesundieductionsinlouis,wuges,und
iemittunces.
Aciossullsectois,tempoiuiyundmigiuntwoikeisweietlemost
vulneiuble to ietienclment und clunges in tleii wuges und woiking
louis.Fuitleimoie,migiuntwoikeisweieluimoielikelytoluvetleii
louisieducedtlunnonmigiunts.Vulneiubilitymunilestsitselltliougl
clunges in woikeis und louselolds’ expendituie on busic necessities
suclusloodundnutiition,undutilitiesundtiunspoit,uswellusdiscie-
tionuiyexpendituieonenteituinmentundconsumeiduiubles.
128 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Policy recommendations
Aciossullcountiiestleieuiecleuistepstlutgoveinmentscuntuketo
piotecttlemostvulneiublewoikeisliomtleimpuctsoltleslowdown.
Duetotlewuyvuluecluinsciossinteinutionulboideis,goveinments
uieunlikelytoiesoittotuiillbuiiieistopiotecttleiinutionulindus-
tiiesliomtleonsluugltoltledowntuin.Howevei,goveinmentscun
piovidestimulusloidomesticindustiies,incieusingdomesticdemund
loigoodspioducedinvuluecluins.Oveitlelongteim,vuluecluin
industiieswillluvetosliltend-pioductmuiketsuwuyliomtleUnited
StutesundEuiopetowuidsAsiuundtopiomoteintiuiegionultiudeloi
linisledgoods.
Intlesloitteim,goveinmentsslouldulsomonitoitleuvuilubi-
lityoltiudelinunceloiexpoitingenteipiisestoensuietluttleyluve
sullicient uccess to tiude ciedit. Goveinments muy need to piovide
ulteinutivesouicesoltiudelinunceloienteipiisestlutuiestiuggling
touccesslinunceliomtiuditionulsouices.
Ensure social protection for the most vulnerable
workers
Tleie is cleui evidence tlut in some countiies, notubly tle PRC und
Viet Num, tle sociul piotection system is not integiuted loi vulne-
iublemigiuntwoikeis.Tlesegoveinmentssloulduimtoensuietlut
migiuntwoikeisluveuccesstosociulpiotectionsystems.InVietNum,
loiexumple,migiuntwoikeisluvenouccesstosociulpiotection,und
Table 5: Workers most vulnerable to the downturn
Job losses
Reduced
hours
Reduced
wages
Reduced
remittances
Gendei Mule Femule Femule Mule
Age Undei2S Ovei26 Ovei26 Ovei26
Migiunts Migiunts Migiunts Migiuntsund
nonmigiunts
Migiunts
Pioductionund/oi
Nonpioduction
Nonpioduction Pioduction Pioduction Pioduction
Skilledund/oi
Unskilled
Skilled Unskilled Unskilled Unskilled
Tempoiuiyund/oi
Peimunent
Peimunent Tempoiuiy Tempoiuiy Tempoiuiy
Souice:Autlois.
129 The impact of the global economic slowdown on value chain labor markets in Asia
tleiiclildienuienotpeimittedtogotopublicsclool.Tleiisingcost
ollivinglusputVietNum’smigiuntwoikeisundeisignilicuntstiuin.
Tlis could be eused by clunges in goveinment iegulutions ullowing
migiunt woikeis tle sume uccess to sociul piotection systems ucioss
tlecountiytluttleywouldieceiveintleiilomeiegion.
References
Asiun Development Bunk (ADB). 2009. Key Indicators for Asia and
Pacific 2009. www.udb.oig/documents/books/keyindicutois/
(uccessed14Septembei2009).
Escuitl,H.undF.Gonguet.2009.Supplycluinsundlinunciulslocks:
Reultiunsmissionclunnelsinglobulisedpioductionnetwoiks.
Posted16JuneonVoxeu.oig(uccessed4August).www.voxeu
.oig/index.plp?q~node/3662
Geielli, G., J. Humpliey, und T. Stuigeon. 200S. Tle goveinunce ol
globul vulue cluins. Review of International Political Economy
12(1):78–104.
Inteinutionul Monetuiy Fund (IMF). 2009. World Economic Outlook
Update.Globuleconomicslumpclullengespolicies.Junuuiy.
Lopez, M. 2009. Plilippine countiy study: Tle impuct ol tle globul
economicslowdownongendeiundvuluecluinluboimuikets
inAsiu.PupeiloitleconleienceontleImpuctoltleGlobul
EconomicSlowdownonPoveityundSustuinubleDevelopment
inAsiuundtlePucilic,28–30Septembei,HuNoi.
Milbeig,W.undD.Winklei.2009.Economicciisis,globulvuluecluins
undtlecollupseoldevelopingcountiyexpoits.Conceptnote
loi Depuitment loi Inteinutionul Development/Swiss Agency
loiDevelopmentundCoopeiutionpioIect,Cuptuiingtleguins:
Economicundsociulupgiudinginglobulpioductionnetwoiks.
www.sed.munclestei.uc.uk/idpm/uboutus/news/cuptuiing
-tle-guins-ieseuicl-synopsis.pdl
Nguyen, H. 2009. Tle impuct ol tle globul economic slowdown on
vulue cluin luboi muikets in Asiu: Tle cuse ol tle lootweui
und leutlei industiy in Vietnum. Pupei loi tle conleience
on tle Impuct ol tle Globul Economic Slowdown on Poveity
und Sustuinuble Development in Asiu und tle Pucilic,
28–30Septembei,HuNoi.
Reuteis. 2009. Woiking women in liont line ol slowdown. 30 July.
www. ieut eis. com/uit i cl e/l i l est yl eMol t /i dUSTRES6
T0C220090730(uccessed22Septembei2009).
130 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tumbunun,T.undA.Suguidu.2009.Tleimpuctoltleglobulecono-
micciisisontleluinituieindustiyinIndonesiu.Pupeiloitle
conleienceontleImpuctoltleGlobulEconomicSlowdownon
PoveityundSustuinubleDevelopmentinAsiuundtlePucilic,
28–30Septembei,HuNoi.
WoildBunk.2009.Aveitingulumunciisisduiingtleglobuldowntuin.
www.uniteloiclildien.oig/liles/woildbunk.pdl (uccessed
22Septembei2009).
Woild Tiude Oigunizution (WTO). 2009. WTO sees 9% globul tiude
declinein2009usiecessionstiikes.PiessieleuseSS4,23Muicl.
www.wto.oig/englisl/newse/pies09e/piSS4e.ltm
(uccessedSAugust2009).
Yi,K.2009.Tlecollupseolglobultiude:Tleioleolveiticulspeciu-
lizution. In Ricluid Buldwin und Simon Evenett (eds.) The
collapse of global trade, murky protectionism, and the crisis:
Recommendations for the G20.AVoxEU.oigpublicution.
Zlung,X.2009.Tleimpuctoltleglobuleconomicslowdownonvulue
cluinluboimuiketsinAsiu:TlecuseoltlePRC.Pupeiloitle
conleienceontleImpuctoltleGlobulEconomicSlowdownon
PoveityundSustuinubleDevelopmentinAsiuundtlePucilic,
28–30Septembei,HuNoi.
131
Global meltdown and informality:
An economy-wide analysis for
India—Policy research brief
1
Anushree Sinha
2
Introduction
Policy muking needs to tuke into uccount tle luct tlut tle iestiuc-
tuiing ol tle globul economy, togetlei witl wide-iunging economic
ieloims, is incieusing tle size ol tle inloimul economy woildwide.
Libeiulizutionpoliciesudoptedduiingtlelute1980sundeuily1990s
luve cieuted incentives to cut costs by liims in tle coipoiute sectoi.
Muny uutlois, including Stullings und Peies (2000), Cuii und Clen
(2002),Huiiiss-Wlite(2003),KunduundSuiungi(2007),undKundu
(2009),luvedesciibedtleiupidexpunsionoltleinloimuleconomy.
Sucl woik conlounded expectutions tlut inloimulizution would be
plused out in tle giowtl piocess ol developing countiies. On tle
contiuiy,tleieisconceintluttleinloimuleconomyistobeupeimu-
nentleutuieduiingtledevelopmentpiocessinsuclcountiies.
A veiy impoitunt concein is tlut tle employment dimension ol
tleinloimuleconomyisveiyluige.Atpiesent,inloimulemployment
isestimutedtobe3S%–8S%oltlenonugiicultuiulwoikloiceinAsiu,
und40%–97%inLutinAmeiicuundtleCuiibbeun,uccoidingtotle
Inteinutionul Institute loi Luboui Studies inloimulity dutubuse, us
iepoited in u iecent Woild Tiude Oigunizution–Inteinutionul Luboui
Oigunizution(WTO–ILO)(2009)iepoit.Fuitlei,tleiepoitstutestlut
countiieswitlluigeinloimuleconomiesuiemoietluntlieetimesus
likelytoincuiudveiseellectsoluciisisustlosewitlloweiiutesol
inloimulity.Itstundstoieusontlutinloimulityisnotonlyumutteiol
conceininteimsolsociulequity,butisulsoimpoituntloibetteidesig-
ningpolicyputlsloiimpiovedeconomicelliciency.
1
TlispupeiisumodiliedveisionoltlePolicy Research Brief,Vol.I,Febiuuiy2010,
publisled by tle Nutionul Council ol Applied Economic Reseuicl (NCAER) und
tle Asiun Development Bunk undei tle Regionul Knowledge Netwoik loi Poveity
ReductionundInclusiveGiowtl.
2
Tle uutloi is u senioi lellow ut NCAER. Sle ucknowledges tle suppoit ol
RuIeslJuiswul,ussociutelellow;BuiunPul,ieseuiclunulyst;undSudlunuSingl,
ieseuicltiuinee.
132 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Itisimpoitunttoiecognizeunddistinguisltlutduiingopeningup
undglobulizution,uneconomylucescompetitionuscompetitivepiices
lull,wleieusduiinguglobulslowdown,uneconomylucescontiuction
usglobuldemundsliinks.Botlessentiullyleudtousituutionwleie
liimsuiediiventobemoiecostellectivebut,intlelutteicuse,tle
piocessolcostcuttingbecomesmoiepiessing.Witlwoildiecession,
sectois tlut uie moie globully linked (wlicl could ulso be inloimul
sectois sucl us guiments oi iecycling ol pioducts) sliink lust, spui-
iingtlemtotuketleoptionolietienclingwoikeiswitlinuielutively
sloitpeiiodoidepiessingwugeswleneveipossible.
Insuclusituution,tleimpuctsonwoikeisuiemuinlytlieelold.
Fiist,loimulwoikeistendtoloseIobsusdemundloisuclluboiwitl
tlecoiiespondingwugesundbenelitslulls.Second,luid-ollwoikeis,
undongoingiuiul–uibunmigiutiontogetleiwitlieveisemigiution,
leudtounincieusedsupplyolluboilookingloiIobs.Lustly,usmostol
tleudditionulluboiloiceisunubletoIointleloimulwoikloicedue
toiecessionundotleibuiiieis(sucluslowskills,luckolciedit,weuk
buiguining powei), tle inloimul woikloice expunds, wlicl entuils
undeiemployment und lowei luboi pioductivity. Also, tle wuge lull
is clunneled botl tliougl demund-side luctois (lulling piices) und
supply-sideluctois(iisingluboisupply).
India’s situation
In tle cuiient globul iecessionuiy episode, Indiu’s gioss domes-
tic pioduct giowtl deceleiuted liom 9.8% in 2007/2008 to 6.7% in
2008/2009. Tle lutest World Economic Outlook Update (IMF 2010)
pioIects Indiu’s economy to giow by 7.7% in 2010. In compuiison to
tle ligl uveiuge giowtl ol 8.8% iecoided duiing tle S-yeui peiiod
2003/2004–2007/2008,giowtlin2009/2010stillpointstopeisistence
oltleslowdown(Figuie1).Tlissituutionlusmudemunyliimsintle
coipoiute sectoi iutlei neivous. Sucl liims tend to ietiencl woikeis
iutleipiomptlytocutcostswleneveipossible.Lupsesinluboimuiket
noimsluvecomeoutintotleopenusmoiewoikeisluceincomelosses.
InloimulwoikeisconstituteuluigesluieoltleIndiunwoikloice,und
mostsuiviveonlowwuges.AnussessmentbytleNutionulCommission
loiEnteipiisesintleUnoigunisedSectoi(NCEUS2007)puts92.4%ol
tletotulluboiloiceinIndiuusinloimulwoikeisin2004/200S.
Tle lowei globul demund lus iesulted in expoits lulling by
17% und impoits by us mucl us 26% duiing Apiil–Septembei 2009
(Figuie2).Itisieusonubletoexpecttlutusexpoitsdecline,tlesec-
toistlutluveligleiexpoitslucestiongcontiuctionpiessuie.
133
Global meltdown and informality:
An economy-wide analysis for India—Policy research brief
Figure 1: GDP growth, India, 1995/96–2009/10 (%)
Figure 2: Growth of exports and imports, India,
1995/96–2009/10 (%)
Souices:Handbook of Statistics on Indian Economy 2008–2009,ReseiveBunkolIndiu;undCentiul
StutisticulOigunisutionpiessieleuse,30Novembei2009,loiQ1undQ22009/10.
Souices:Handbook of Statistics on Indian Economy 2008–2009,ReseiveBunkolIndiu;undMinistiy
olCommeiceundIndustiypiessieleuse,1Junuuiy2010.
WepiesentleieununulysisloiIndiu,usingucomputublegeneiul
equilibiium(CGE)modelundpiovidesomesuggestionsloipolicyconsi-
deiution.CGEmodelspiovideuuseluluppioucltounulyzetleinteiuc-
tionbetweenloimulundinloimulsectoisiniesponsetopolicyieloims
undexteinulslocks.GibsonundKelley(1994);Buutistu,Lolgien,und
Tlomus(1998);SuvuidundAdIovi(1997);Sinlu(1999);Sinluund
Adum(2000);undPuquetundSuvuid(2009)luveusedsuclmodels
loiexuminingtleimpuctoluslowdownontleinloimuleconomy.In
tleii conventionul usuge, CGE models uie llexible piice models und
uieusedtoexuminetleimpuctolielutivepiiceclungesoniesouice
ullocutions(olgoodsundluctois)uciossuiungeoleconomicugents.
0
2
4
6
8
10
G
r
o
w
t
h

r
a
t
e
12
1
9
9
5
/
9
6
1
9
9
6
/
9
7
1
9
9
7
/
9
8
1
9
9
8
/
9
9
1
9
9
9
/
0
0
2
0
0
0
/
0
1
2
0
0
1
/
0
2
2
0
0
2
/
0
3
2
0
0
3
/
0
4
2
0
0
4
/
0
5
2
0
0
5
/
0
6
2
0
0
6
/
0
7
2
0
0
7
/
0
8
2
0
0
8
/
0
9
2
0
0
9
/
1
0
-30
-10
-20
0
10
20
30
G
r
o
w
t
h

r
a
t
e
40
1
9
9
5
/
9
6
1
9
9
6
/
9
7
1
9
9
7
/
9
8
1
9
9
8
/
9
9
1
9
9
9
/
0
0
2
0
0
0
/
0
1
2
0
0
1
/
0
2
2
0
0
2
/
0
3
2
0
0
3
/
0
4
2
0
0
4
/
0
5
2
0
0
5
/
0
6
2
0
0
6
/
0
7
2
0
0
7
/
0
8
2
0
0
8
/
0
9
2
0
0
9
/
1
0
134 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tle impuct ol tle globul slowdown on tle Indiun inloimul eco-
nomyundwoikeisisexuminedusinguCGEmodeldevelopedin2006
und uugmented in 2009—see Sinlu und Adum (2006) und Sinlu
(2009).Tlismodelpiesentsupiucticuluppioucltoexuminetleintei-
ielutionslipuciosssectoisolpioduction,woikeis,undtleiiincomes,
undvuiioustypesoldemund(sucluspiivutelouseloldconsumption,
investmentdemund,undexpoits)includingtleloimulundinloimul
components,iniesponsetoexteinulslocks.TleCGEstiuctuieisielu-
tively well suited loi munuging vuiious leutuies ol inloimulity in un
economywideliumewoik.
TleCGEmodelusedisstiuctuiedsotlut:(i)itluspioduction
muiketdistinctionsbyloimulundinloimulsubsectois,wleieinloi-
mul pioduction is cluiucteiized by ielutively liglei luboi intensity,
iellectingscuicityolcupitulbyinloimulliims;(ii)louseloldincome
llowsuiedistinguisledbytypesolwugesundcupitulucciuingliom
loimulundinloimuleconomicuctivities;(iii)itlusluboimuiketseg-
mentution,wleieieguluiwugesluvedownwuidiigiditybutcusuul
wugesluvenosuclbinding;und(iv)inloimulpioductionsectoisdo
notpuydiiecttuxtotlegoveinment,unliketleiiloimulcounteipuits
(tlouglindiiecttuxesuiepuidbysuclliimsontleiiinputconsump-
tion,etc.).
Tlelollowingtwoscenuiiosuieusedintle2009veisionoltlis
CGEmodel:
1. Expoitsmudetolullby8%byieducingwoilddemund,iellec-
tedbywoildpiicedeclinesundeinominulwugeiigidity.
2. As scenuiio 1 but witl ieul wuges lixed und nominul wuges
mudellexible.
Tlepuiposeoltlisexeiciseistwolold:liist,topioIecttlecom-
position ol tle loimul und inloimul sectois, us well us tleii ielutive
sluies; und second, to lind out wlut would luppen to tle inloimul
woikeisundtotlepooiwlomostlypuiticiputeusinloimulwoikeis.
Main results
TlelindingsliomtletwoscenuiiosonemploymentinTuble1slow
tlutudeclineindemundloiieguluiluboiisiellectedinunincieusein
tlesupplyolinloimulluboi.Attleuggiegute,employmentlullsintle
loimul sectoi but picks up in tle inloimul sectoi undei iecessionuiy
piessuies.
135
Global meltdown and informality:
An economy-wide analysis for India—Policy research brief
Table 1: Growth of employment by labor type(%)
Scenario 1 Scenario 2 Scenario 1 Scenario 2
CL RL CL RL
Subtotul:
Inloimul
0.S1 0 0.32 0 0.S0 0.3
Subtotul:
Foimul
0.02 –2.21 –0.S4 –1.20 –1.60 –1.0
Giundtotul 0.47 –2.21 0.26 –1.20 0 0
Unemployment 0 0.93 0 0.S0 0.93 0.S0
Employment 0.93 0 0.S0 0 0.93 0.S0
Giundtotul
(millions)
198.99 40.10 198.14 40.94 239.08 239.08
Unemployment
iute
0 0.02 0 0.01 0 0
CL~cusuulluboi,RL~ieguluiluboi.
Souice:Autlois.
Tle scenuiio lindings slow tlut tle loweiing ol woild piices
leuds to u lull in expoits, wlicl peicolutes down to tle domestic
economy und domestic piices. Tle luctoi wlicl iesults in gieutei
expunsionintleinloimuleconomy,numelywugeiigidity,ulsocuuses
inloimulcusuulwugestodecline.Foimulliimstendtoiepluceloimul
woikeis witl inloimul woikeis, oi loimul piocesses witl inloimul
ones, wlen luced witl competition. Tlis ultimutely slows tle eco-
nomy und geneiutes lowei demund us well us lowei ievenue. Tle
lowei demund impucts tle entiie economy und tle loimul sectoi
veiyudveisely.
FoimulwoikeisenIoyligleiieulwugesinscenuiio1,butunem-
ployment ulso goes up (Tuble 1). In scenuiio 2 wleie ieul iegului
wuges uie lixed, nominul wuges ol iegului woikeis lull but cusuul
wugesdonotlullusmucl(Tuble2).Tleulteinutivescenuiiosslow
tlutwitlmoiellexiblewuges(i.e.,witlieulwugeiigidityinsteudol
nominul wuge iigidity), ietienclment is less und inloimulizution ol
loimulwoikeisisslowei.
Figuie3liglligltstlelucttlutligleiinloimulitylusunincieu-
singly udveise impuct on oveiull piices und gioss domestic pioduct.
So,tleconceinslouldbelowtoieduceinloimulizution.Onewould
tlentlinktluttleneedoltlelouiistoensuietluttlepieconditions
uieinplucetoencouiugeloimulizutionoltleluboimuiket.
136 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Policy suggestions
Globulizutionisunimpoitunt,butnottleonly,cuuseoliupidexpun-
sionoltleinloimuleconomyindevelopingcountiies.Insomesense,
globulizutionisuctingusucutulystinexpundingtleinloimuleconomy
wlen otlei pieexisting conditions uie ieinloicing sucl u situution.
Wlen woikeis luve low buiguining powei, low oi no educution oi
skills,oiluckciedit,colluteiul,oiussets,etc.,tleyendupusinloimul
woikeis.Wlenmuiketsluceslocksusiecentlyexpeiienced,tlesituu-
tiongetsmoiewoiiisomeustlistendstobuttiessusituutionollow
uveiuge wuges. Low uveiuge pioductivity undeimines tle inclusive
giowtlugendu.
Loweipioductivityisoltenuttiibutedtoloweiskills.Atpiesent,
tleieuietuigetedpolicyinteiventionsinIndiutosculeuptleeducu-
tionulbuseundskillsdevelopment(see,loiexumple,MoL&E2009).
Table 2: Growth of wages and output (%)
Scenario 1 Scenario 2
Nominulwuges(iegului) 0.0 –2.37
Reulwuges(iegului) 2.1 0
Nominulwuges(cusuul) –4.22 –3.92
Reulwuges(cusuul) –2.2 –1.S8
Totuloutput –0.31 –0.13
Total –8.12 –7.66
Souice:Sinlu2009.
Figure 3: Growth of key variables
under two scenarios (%)
CPI~consumeipiiceindex,GDP~giossdomesticpioduct.
Souice:Autloi.
–250 –200 –150 –100 –50 0
GDP (Real)
CPI
Growth (%) Scenario 1 Growth (%) Scenario 2
137
Global meltdown and informality:
An economy-wide analysis for India—Policy research brief
AiecentiepoitbyNCEUS(2009)iecommendsexpundingtiuiningloi
inloimulwoikeisbyuctivepuiticiputionoldilleienttypesolstukelol-
deis—goveinment depuitments, tiuineis, piivute tiuining piovideis,
nongoveinmentuloigunizutions,undemployeis.Tiuiningisintended
topiovideusolidgioundingtotlegiowtlpiocess,uswellussuppoit
tlespieudolgiowtlbenelitstouwideicioss-sectionolwoikeis.
Skills upgiuding is impoitunt, but needs to be suppoited by un
uppiopiiute educutionul liumewoik. Medium- to long-teim policy
inteiventionsuienecessuiy,tuigetingsclooleducutionloiullclildien.
Revisitingtleeducutionpiogiums,suclustleSuivuSliksluAbliyun,
isciiticul.TlemonitoiingundenloicementconditionulitiesolSuivu
Slikslu Abliyun luve been inellective und weuk. To muke tle iiglt
impuct,incentive(unddisincentive)meusuiescouldlelputtuinedu-
cution loi ull. Tle need is to build ellicient conditionul cusl tiuns-
lei piogiums tlut tuiget cusl tiunsleis to pooi louselolds, muinly
women,conditionuloneniollingclildien.Goodexumplesliomotlei
countiies,suclusPiogiesu/Opoitunidudes(Mexico)undBolsuEscolu
(Biuzil),muybestudiedcuielullybypolicymukeis.Regulutoiybodies
luvingpiivute–publicpuitneistomonitoitlescloolsundconditionul
cusltiunsleisuievitul.
Tlellunkingpoliciesneedtoensuiepiopeiscloolinliustiuctuie
undteucleisuswelluspiivute–publicpuitneistomonitoicommunity
needsundcompluints.Houseloldstlutbelongtoliglei-incomecute-
goiiesundcunnotcluimuconditionulcusltiunsleineedtobeidenti-
lieduswell.Sucllouseloldsslouldbeeligibletoceituindiiecttux
benelitsiltleiiclildienoluges6–16yeuisuieeniolledinsclool.On
tleotleilund,substuntiullinesusupiogiessivepeicentugeolincome
slould be imposed on sucl louselolds wlen tleii clildien uie not
eniolledinsclool.
Aguin,lupsesinskillsundeducutionuienottleonlyluctoiscuu-
singinloimulityundloweiincome.HigllyskilledwoikeiscouldIoin
tle cusuul luboi loice il luced witl Iob loss. Inloimulizution cuuses
substuntiul losses to pioductivity und giowtl, us we luve seen liom
tlemodellindings.So,unequullyuigentpolicyinteiventioniscieu-
ting un enviionment loi geneiution ol quulity Iobs tlut cun piovide
decentwugestoluboimuiketpuiticipunts.
Undoubtedly,luboipolicyieloimswouldgoulongwuytouddies-
sing bettei Iob cieution, but sucl iegulution needs to be consideied
witlinubioudeiinstitutionulundpolicyliumewoik.Sucliegulution
slould,piimuiily,leudtobusicbenelitplunstlutcoveiloimulwoikeis
beingextendedtocoveicusuulundinloimulwoikeisuswell.Onone
level, tle need is loi u time-bound piogium to tuckle busic educu-
tionundskillsudvuncement.Onunotleilevel,elloitsuieneededto
138 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
develop muiket linkuges us well us bettei uccess to ciedit, licenses,
poits,tiunspoit,etc.,ustime-boundpolicypiogiums.
An ussoitment ol wide-iunging und multiluceted policy ieloims
isnecessuiytoimpioveluboimuiketoutcomes.Tliswoulddelinitely
iequiie luboi luw ieloims und institutionul ieloims loi ellicient und
impioved goveinunce. Specilicully, policies need to uddiess “decent”
wugesundsociulsecuiityloiwoikeis,tleiemovulolligludministiu-
tivebuiiieis,undseveiemuiketiegulutions;tleyulsoneedtoimpiove
uccesstolinuncetolucilitutetlecieutionolgoodIobs.Intleconsi-
deiutionolpolicypuckugesloisustuinedIobcieution,investmentcli-
muteieloimsnutuiullyneedliglpiioiity.Tleieloimmeusuiesneed
to be inloimed by necessuiy giussioots inloimution. Finully, sociul
uuditsneedtobebuiltin.
References
BuutistuM.R.,H.Lolgien,undM.Tlomus.1998.Doestiudelibeiu-
lisutionenlunceincomegiowtlundequityinZimbubwe?Tle
ioleolcomplementuiypolicies.TMD Discussion PaperNo.32,
TiudeundMucioeconomicsDivision,InteinutionulFoodPolicy
ReseuiclInstitute,Wuslington,DC.
Cuii, Muiilyn und Muitlu Clen. 2002. Globulizution und tle inloi-
mul economy: How globul tiude und investment impuct on
tle woiking pooi. Woiking pupei on tle inloimul economy,
InteinutionulLubouiOigunizution,Genevu.
Gibson,B.undB.Kelley.1994.Aclussicultleoiyoltleinloimulsectoi.
The Manchester School,LXII,No.1(Muicl):81–96.
Huiiiss-Wlite, Buibuiu. 2003. India working: Essays on economy and
society.Cumbiidge,UK:CumbiidgeUniveisityPiess.
Inteinutionul Monetuiy Fund (IMF). 2010. World Economic Outlook
Update.Wuslington,DC.Junuuiy.
Kundu, A. 2009. “Inclusive giowtl” und income inequulity in Indiu
undei globulisution: Cuuses, consequences und policy ies-
ponses.CountiyPolicyDiuloguesonInequulity,UNDPRegionul
Ollice,Colombo,SiiLunku.
Kundu, A. und N. Suiungi. 2007. Migiution, employment stutus und
poveity: An unulysis ucioss uibun centies in Indiu. Economic
and Political Weekly,27Junuuiy.
MinistiyolLubouiundEmployment(MoL&E).2009.Nutionulpolicy
on skill development. Goveinment ol Indiu, New Delli.
Febiuuiy.
139
Global meltdown and informality:
An economy-wide analysis for India—Policy research brief
Nutionul Commission loi Enteipiises in tle Unoigunised Sectoi
(NCEUS).2007.Repoitonconditionsolwoikundpiomotion
olliveliloodsintleunoigunisedsectoi.GoveinmentolIndiu,
NewDelli.
———.2009.Repoitonskillloimutionundemploymentussuiuncein
tleunoigunisedsectoi.GoveinmentolIndiu,NewDelli.
Puquet, Mutlieu und Luc Suvuid. 2009. Impuct ol inloimul
ie-expoitsbetweenBeninundNigeiiu:ACGEunulysis.Gioupe
de Recleicle en Economie et Developpement Inteinutionul,
Woikingpupei09-14,UniveisitedeSleibiooke,Quebec.
Suvuid,L.undE.AdIovi.1997.AdIustment,libeiulisutionundwelluie,
in tle piesence ol leultl und educution exteinulities: A CGE
uppliedtoBeninCentiedeRecleicleenEconomieetFinunce
Appliquees(Muicl),WoikingPupei97-07.
Sinlu,Anusliee.1999.Tiudelibeiulisutionundinloimullouselolds:
AstudyusinguCGEmodelloiIndiu.Research ReportNo.26,
QueenElizubetlHouse,UniveisityolOxloid,UnitedKingdom.
———.2009.Impuctolglobulslowdownonemploymentundincome
inIndiu:ACGEmodelunulysis.NCAERundWoildBunk,Indiu
(loitlcomingWoildBunkWoikingPupei).
Sinlu, Anusliee und Cliistoplei S. Adum. 2000. Tiude policy
ieloim und tle inloimul sectoi in Indiu. Pupei piesented ut
tle Tliiteentl Inteinutionul Conleience on Input-Output
Teclniques,Muceiutu,Ituly,August.
———.2006.Reloimsundinloimulizution:WlutliesbelindIobless
giowtlinIndiu.InBusudebGulu-KlusnobisundRuviKunbui
(eds.).Informal labour markets and development.Busingstoke,
UKundNewYoik:PulgiuveMucmillun.
Stullings, B. und W. Peies. 2000. Giowtl, employment und equity:
Tle impuct ol tle economic ieloims in Lutin Ameiicu und
tle Cuiibbeun, Economic Commission loi Lutin Ameiicu und
Cuiibbeun.BiookingsInstitutionPiess,Wuslington,DC.
WoildTiudeOigunizution(WTO)–InteinutionulLubouiOigunizution
(ILO). 2009. Globulizution und inloimul Iobs in developing
countiies.Genevu.
140 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 5: Thailand’s automotive industry
Tle Tlui uutomobile und puits industiy is one ol tle countiy’s most
celebiuted success stoiies. Cui pioduction slot up liom 160,280 in
1989to1,S76,000in2006,wlilecuiexpoitsIumpedliom14,000units
in1996to838,000in2008.Tleglobuliecession,lowevei,litpioduc-
tionliomubouttlelustquuiteiol2008.Wleieus124,000unitsweie
pioduced in Octobei 2008, only S3,000 units weie in Apiil 2009, tle
lowestvolumesincetle1997–1998Asiunlinunciulciisis.
Tle 41 uutomotive industiy enteipiises (mukeis und supplieis)
includedinusuiveyconductedinmid-2009iepoitedieducingemploy-
mentby23%betweenJune2008undJune2009.Ovei60%olietien-
cledwoikeisweietempoiuiywoikeis.Reductioninwoikinglouiswus
ulsounimpoituntcopingmeclunismloienteipiises.Piioitotleieces-
sion,mostenteipiisesiuntwowoikingslilts(16louis)plusoveitime
so tlut woikeis could legully woik 8 noimul louis (ut uppioximutely
SS.Sunloui)und3–4louisoloveitimeloiS.Sto6duysuweek.Tle
iecessionieducedwoikinputsto8louisuduyloiuS-duyweekwitl
some opeiuting only 3 duys u week. Woikeis included in tle suivey
iepoiteduneuily41%declineinieulincome.Unsuipiisingly,lulltle
woikeisinteiviewedcuttleiispendingonlood,utilities,tiunspoit,und
communicutions. Appioximutely u tliid iequested linunciul ussistunce
liomliiends.
Tle Tlui uutomobile industiy is clusteied in Bungkok und in
RuyongundClonbuiipiovinces,butwoikeisuiediuwnliomullpuits
ol tle countiy, in puiticului tle mucl less developed Noitleustein
iegion.About90%olsuiveyedwoikeisusedtosendiemittuncesbuck
to ielutives in iuiul uieus, uveiuging ubout S100 u montl. Tle ieces-
sion,lowevei,sluiplyieducedtlenumbeiolwoikingduys,wliclled
toieductioniniemittunceumountsinubouttlieequuiteisoltleintei-
viewedwoikeis.
TleexpeiienceolTluilund’suutomobileindustiyslowstlut,wlile
open unemployment muy be low, u ieduction in woiking louis muy
stillluveusubstuntiulimpuctonwoikeis’income.Fuitlei,tlesuivey
undeiscoiestlelucttlutglobuliecessionsmuyluvepionouncediegio-
nulimpucts(usuiesultolindustiiulclusteiing)undseconduiyimpucts
(geneiutedbyudeclineinuibun–iuiuliemittunces).
Souice: Aiclunun Kolpuiboon et ul. in “Globul Recession und Luboi Muiket
AdIustment: Evidence liom tle Tlui Automotive Industiy.” www.udb.oig/
Documents/Events/2009/Poveity-Sociul-Development/pupeis.usp
141
The social impact of the global
recession on Cambodia:
How the crisis impacts on poverty
Kimsun Tong
1
Introduction
TleglobullinunciulciisisbecumeulltoouppuientinSeptembei2008
witl tle luiluie ol seveiul luige linunciul liims bused in tle United
Stutes(US).Itlusspieudtomunycountiiesuciosstleglobe,inclu-
dingdevelopingcountiiessuclusCumbodiu.
Witl linunciul und teclnicul suppoit liom tle Oveiseus
Development Institute (ODI) und tle Woild Bunk, tle Cumbodiu
DevelopmentReseuiclInstitute(CDRI)lusconductedunussessment
oltleimpuctoltleciisisutvuiiouslevelsinCumbodiu:mucio(Juliliun
etul.2009);sectoi(ugiicultuie,guiments,touiism,undconstiuction)
(Juliliunetul.2009);louselold(Tongetul.loitlcoming);undindi-
viduul(Tongetul.2009).Tlispupeiliglligltstlekeylindings,und
exuminestlepublicsectoiiesponse.
Tle impuct ol tle downtuin on Cumbodiu’s economy is seveie,
muinlyduetotlecontiuctioninguiments,touiism,undconstiuction.
Tle most seveie ellect is on tle guiment industiy, witl 18% ol tle
totul ol 3S2,000 woikeis (muny ol wlom uie women) luving been
luidollbetweenSeptembei2008undMuy2009becuuseoluconside-
iublelullinexpoits.AccoidingtotleNutionulInstituteolStutistics,
tlissectoiemploys4%oltletotulwoikloiceunduccountedloi38%
oltotulemploymentinmunuluctuiingin2007.
Tlenumbeioltouiistuiiivulsintleliistlullol2009umountedto
1,086,S18—iougllytlesumeusintleliist6montlsol2008,undun
incieuseol12%ielutivetoJunuuiy–June2007.Howevei,touiismexpe-
iienceducontiuction(utunuveiugeol3.9%)loi6consecutivemontls
liomOctobei2008toMuicl2009.Asuiesult,munylotelsiecoided
1
KimsunTongisuieseuicllellowuttleCumbodiuDevelopmentReseuiclInstitute
Tleviewspiesentedleieuietloseoltleuutloiunddonotnecessuiilyiepiesent
tleviewsoltleCumbodiuDevelopmentResouiceInstitute.
142 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
lowoccupuncyiutes,undsomeluxuiylotelsluvetempoiuiilyclosed.
Hotelstulluietukingunpuidleuveoiuiebeingtempoiuiilyluidoll.
Constiuction uctivity is ulso set to decieuse seveiely us loieign
investoisinieulestuteeitleisculebuckoisuspendluigepioIectsdue
tocieditciunclesutlome.Mostpeoplewoikingintlesesectoisuie
vulneiuble to poveity. Wlen tley lose tleii Iobs, woik less, oi luve
lessincome,tleyuielikelytolullintopoveity.
The impacts of the crisis on poverty
Tlepoveityleudcountwusestimutedin2007ut3S%iniuiuluieus,
compuied witl 0.8% in Plnom Penl und 22% in otlei uibun uieus
(WoildBunk2009).Tlecountiy’soveiulliuiulpoveitylinewusequi-
vulent to S0.S8 in 2007 (Woild Bunk 2009). Bused on tle inteinu-
tionul poveity line ut puiclusing powei puiity, ubout 40.2% ol tle
Cumbodiunpopulutionol13.8millionlivedbelowS1.2Sund68.2%
belowS2in2004(Buueietul.2008).SincepoveityinCumbodiuis
leuvily iuiul und most iuiul uctivities uie bused on ugiicultuie, it is
impoitunt to considei tle ellects ol tle ciisis on tle iuiul economy
undugiicultuie.
Agiicultuieuccountedloiunestimuted27%olGDPin2007,und
uboutS9%oltlepopulutionisulsoestimutedtoielyontlissectoiloi
tleiilivelilood.Oveitlepustdecude,ugiicultuieisestimutedtoluve
beengiowingutununnuuliuteol4.6%compuiedto13.1%inlotels
und iestuuiunts (u pioxy indicutoi loi touiism); 2S.4% in textiles,
clotling, und lootweui (u pioxy indicutoi loi guiments); 13.9% in
constiuction;und9.1%loitletotuleconomy.Ollsettingtledeclines
intleiestoltleeconomy,ugiicultuieisloiecusttogiowsignilicuntly
involumeielutivetolustyeuiundisunlikelytobemuclullectedby
tleciisis(Juliliunetul.2009).
Ninety-louseloldpuneldutucollectedbyCDRIinninevillugesin
iuiulCumbodiuinMuicl2008undMuy2009ieveuledtlutbotlpei
cupituincomeundpeicupituconsumptionsliunksignilicuntlyduiing
tlepeiiod,byuiound30%und23%,iespectively.Wliletleiewusno
signilicuntclungeiniesidentiuloiugiicultuiullund-loldingsize,tle
vulueolnon-lundussetslellby38%oveitlesumepeiiod,olwlicl
duiuble ussets und livestock declined by 30% und 4S%, iespectively.
Asuiesult,poveityincidencelusincieusedin2009,usingtlepoveity
lineolS1
2
(WoildBunk2009)(Figuie1).Howevei,tlesumplesize
2
Tle2007iuiulpoveitylinewusuboutKR2,006,equivulenttoS0.49uttleexclunge
iuteolKR4,063/S1.
143
The social impact of the global recession on Cambodia:
How the crisis impacts on poverty
is smull und cunnot be tuken to be iepiesentutive ol iuiul uieus in
Cumbodiu.
Foiuibunuieus,uquuiteilysuiveyolduilyeuiningsbyvulneiuble
woikeisinPlnomPenlundtwootleipiovincesconductedbyCDRI
since2000ieveulstlut,umongtle10gioupsolvulneiublewoikeis
suiveyed,tleciisislitguimentwoikeistleluidest,becuusetlegui-
mentsectoiieliesleuvilyonUSundEuiopeunUnion(EU)demund.
3
Moiepiecisely,tleieulduilyeuiningsolguimentwoikeislellby17%
between Febiuuiy–Muy 2007 und Febiuuiy–Muy 2009. Tlis luigely
iellectsulixedwugeiute,udeclineinwoikinglouis,undliglinllu-
tion. Despite tlis lull in euinings, ieul duily consumption incieused
by 14% duiing tle sume peiiod, muinly due to u 21% decieuse in
ieul duily suvings. Obviously, guiment woikeis’ duily consumption
cunnotbesustuinedilbotlieulduilyeuiningsundsuvingscontinue
todecline.
Tlesuiveyulsoieveulstlutuveiugemontllynominuliemittunces
umong guiment woikeis umounted to S18.40 in Muy 2009, down
3
Tle10gioupsuiecyclodiiveis,guimentwoikeis,motoicycletuxidiiveis,poiteis,
iicelieldwoikeis,scuvengeis,skilledconstiuctionwoikeis,smullvegetubletiudeis,
unskilledconstiuctionwoikeis,undwuiteisund/oiwuitiesses.
Figure 1: Poverty incidence curve,
March 2008 to May 2009
Souice:CDRIsuiveysol90louseloldsinninevilluges,Muicl2008undMuy2009.
1
C
u
m
u
l
a
t
i
v
e

p
e
r
c
e
n
t
a
g
e

o
f

p
o
p
u
l
a
t
i
o
n

i
n

p
o
v
e
r
t
y
0 0.5 1 1.5 2
Per capita consumption ($)
March 2008 May 2009
0
.
2
.
4
.
6
.
8
144 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
liomS24.40inFebiuuiy2009,udecieuseol32%.Tlissteeplulllus
putgieutpiessuieontleiiielutives’liveliloods.
Focus gioup discussions leld in Muy 2009 in Siem Reup
piovince—Cumbodiu’s touiist lub—conliimed tlut touiism woikeis,
puiticuluily lotel und iestuuiunt woikeis, luve been ullected by u
declineintouiistuiiivuls.Consequently,somestullluvebeenencou-
iuged to tuke unpuid leuve oi luve been tempoiuiily luid oll, wlicl
meunstluttleyluvetoengugeininloimulIobssuclustuxidiiveis
oipuit-timeEnglislteucleis.Tliskindolluboimobilitylusledtuxi
diiveisundsmulltiudeistowoikevenluideiumidlowdemund.
Coping mechanisms of the poor
and vulnerable
Tle90-louseloldpuneldutuslowtlutubout3S%und40%,iespec-
tively,olsuiveylouseloldsweielitbyslocks,puiticuluilyidiosyn-
ciutic slocks, in 2008 und 2009. Tle ullected louselolds iepoited
tluttleyludspentunuveiugeolS1S8peilouseloldtocopewitl
tleseslocks.Moietlun80%oltleullectedlouseloldsluveudupted
toslocksbyudoptinguctivelouseloldstiutegiesinvolvedinmuking
use ol plysicul, linunciul, und lumun ussets uvuiluble to tle louse-
lold, including putting luitlei louselold membeis into tle luboi
loice,woikinglongeilouis,sellingussets,usingsuvings,boiiowing,
undmigiuting(Tuble1).Howevei,tleiewusnocleuievidencetlut
selling non-lund ussets, lund, und livestock wus used in iesponse to
tleciisis.
Table 1: Use of strategies by affected households
Households (%)
March 2008 May 2009
Aduptivestiutegies
u
3.13 S.S6
Activestiutegies 81.2S 94.41
Sociulnetwoikstiutegies
b
2.S0 13.80
u
Houseloldiesponsestoslockbyclungingconsumptionputtein.
b
Consistingolussistunceliomliiends,lumily,undnongoveinmentundgoveinmentoigunizutions.
Souice:CDRIsuiveysol90louseloldsinnineiuiulvilluges,Muicl2008undMuy2009.
145
The social impact of the global recession on Cambodia:
How the crisis impacts on poverty
T
a
b
l
e

2
:

P
e
r

c
a
p
i
t
a

r
e
a
l

c
o
n
s
u
m
p
t
i
o
n

b
y

q
u
i
n
t
i
l
e
,

2
0
0
8

(
S
)
Q
u
i
n
t
i
l
e

o
f

t
o
t
a
l

c
o
n
s
u
m
p
t
i
o
n
T
o
t
a
l

c
o
n
s
u
m
p
t
i
o
n
F
o
o
d
N
o
n
f
o
o
d
%

c
h
a
n
g
e

M
a
r

S
e
p

M
a
r
S
e
p
M
a
r
S
e
p
M
a
r
S
e
p
T
o
t
a
l

c
o
n
s
u
m
p
t
i
o
n
F
o
o
d
N
o
n
f
o
o
d
1

(
l
o
w
e
s
t
)
0
.
S
3
0
.
4
8
0
.
4
2
0
.
3
8
0
.
1
1
0
.
1
0

9
.
0
4

8
.
9
9

9
.
2
6
2
0
.
7
1
0
.
6
4
0
.
S
S
0
.
4
9
0
.
1
6
0
.
1
4

1
0
.
4
S

1
0
.
0
9

1
1
.
6
4
3
0
.
8
S
0
.
7
6
0
.
6
S
0
.
S
8
0
.
2
0
0
.
1
8

1
0
.
4
1

1
0
.
8
8

8
.
8
6
4
1
.
0
7
0
.
9
2
0
.
7
6
0
.
6
8
0
.
3
1
0
.
2
4

1
3
.
6
8

1
0
.
7
9

2
0
.
8
6
S

(
l
i
g
l
e
s
t
)
1
.
8
6
1
.
S
1
0
.
9
8
0
.
8
S
0
.
8
8
0
.
6
6

1
8
.
9
4

1
3
.
2
1

2
S
.
2
9
A
l
l
0
.
9
7
0
.
8
6
0
.
6
7
0
.
6
0
0
.
3
3
0
.
2
6

1
1
.
3
8

1
1
.
1
6

2
0
.
0
6
S
o
u
i
c
e
:

C
D
R
I

s
u
i
v
e
y

d
u
t
u

i
n

n
i
n
e

i
u
i
u
l

v
i
l
l
u
g
e
s
,

M
u
i
c
l

u
n
d

S
e
p
t
e
m
b
e
i

2
0
0
8
.
146 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
AdilleientdutusetcollectedinMuiclundSeptembei2008coveied
1,003louseloldsintlesumenineiuiulvillugesundsledmoieliglt
on louselolds’ iisk-coping meclunisms duiing lood piice incieuses.
AsslowninTuble2,consumptionolnonlooditemsdioppedby20%
liom Muicl to Septembei 2008 wlile lood items declined by only
11%(upeiiodduiingwliclinllutionieucledutliee-decudeliglol
26%,inMuy).Altlouglloodconsumptionlellinubsoluteteims,its
piopoition in totul louselold expendituie iemuins unclunged, sug-
gesting tlut louselolds weie iestiicting consumption ol nonlood
itemstopieseiveloodconsumption.
Altlougl dilleient cuse studies yield dilleient conclusions, tley
sluieucommonmessuge—iuiullouseloldsinCumbodiuuielikelyto
copewitltleimpuctolnegutiveslocksbytlemselves,uduptingtleii
uctivities und consumption cuielully, und using inloimul community
suletynets(wlicl,tlougl,uielikelytoweukenduiingluidtimes).
Government policy responses
To iespond to tle globul economic downtuin, tle Goveinment ol
Cumbodiuintioducedustimuluspolicypuckugetlutincludes:
º Incieusingbudgetexpendituietoollsettledeclineinpiivute
investment(topiomoteeconomicuctivity).
º Suspendingtlemontllytuinoveituxol1%onguimentluctoiy
expendituies.
º Announcingu10%ieductioninexpoitmunugementleesund
otleicosts.
º SettinguptleAgiicultuieSuppoitundDevelopmentFundloi
tlepiivutesectoi,especiullysmullundmediumenteipiises,by
piovidinglow-inteiest,sloit-teimciedittoluimeisinoideito
incieuseugiicultuiulpioductivityundloodsecuiity.
º EstublislingtlePiimeMinistei’sSpeciulFundtopiovidesloit-
teimvocutionultiuiningtowoikeiswlolosetleiiIobs.Upto
July2009,40,140luid-ollundunemployedwoikeisuttended
tlesloit-teimvocutionultiuiningcouisesgivenbytleMinistiy
ol Woiks und Vocutionul Tiuining. Ol tlese, 30,720 (76.S%)
weietiuinedinugiicultuieund9,420(23.S%)inindustiyund
meclunics.
º Negotiuting witl tle Woild Bunk to linunce uppioximutely
S13 million loi vuiious piogiums ussociuted witl tle sociul
suletynetsystem.
147
The social impact of the global recession on Cambodia:
How the crisis impacts on poverty
Howevei,itisunlikelytlutpooiundvulneiublegioupsineitlei
iuiuloiuibunuieusluveleltunyimpuctliomtlesemeusuies.
Recommendations for the
short and medium term
Tle iole tlut policy mukeis, donois, und nongoveinment oigunizu-
tionstukemuywelldeteiminetleoutcomeoltleimpuctoltleciisis
ongiowtlundpoveityinCumbodiu.Tleimpuctislikelytobeseveie
loipooiundvulneiublegioups.Becuuseoltleiieconomicundsociul
stutus,tleyuielikelytobeumongtleliisttosulleiliomunysoitol
slock,eitleiduetolossolIobundincomeoidiminisledpuiclusing
poweiduetopiiceincieuses.Giventlepievulenceoltlesegioupsin
Cumbodiu,itispuiticuluilyimpoitunttoemplusizetlepoliciestlut
uieneeded.Insomecountiies,wlenlucedwitlincieusedluidslip,
tle pooi uie ussisted (diiectly oi indiiectly) by tleii goveinments,
donois,undnongoveinmentoigunizutions.Tlissuppoitmuycomein
kindoiintleloimol,loiexumple,piicesubsidies,loodiutions,lood
coupons,woik-loi-lood,undscloolmeuls.
TleciisisdoesnotIustiesultinliglvuiiubilityinlivingstunduids,
buttleluckolmeunstocopewitliiskisucuuseolpeisistentpoveity.
Tleieloie, botl ex unte und ex post iisk-coping stiutegies, sucl us
piomotingcieditundsuvingsusinsuiunce,uswellusuciediblesociul
sulety net, could pluy u veiy impoitunt iole in piotecting tle pooi
undvulneiublegioupsuguinstiisk.Inuddition,inloimulsociulinsu-
iunceslouldbestiengtlenedus,tosomeextent,pooiundvulneiuble
gioupscouldusetleiiloculsociulcupitultopiotectconsumptionliom
incomelluctuutions.
Conclusions
Tle impuct ol tle globul economic downtuin on poveity und vulne-
iublegioupsisseveieinbotliuiulunduibunuieus.Tleimmediute
impuctuppeuistobelittingtlepooitliouglemploymentundiemit-
tunces, und is likely to woisen ovei tle medium teim due to weuk
loimulexunteundexpostiisk-copingstiutegies,inloimulsociulinsu-
iunce,undtleluckolpubliciesponse.TleGoveinmentolCumbodiu
slouldpiomoteinsuiunceloitlepooibysettingupuiegulutoiyliu-
mewoikloiumiciolinunceinstitutionundbypiovidingciedibilityto
tlesociulsuletynetsystem.
148 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
References
Buuei,A.,R.Husun,R.Mugsombol,undG.Wun.2008.TleWoildBunk’s
new poveity dutu: Implicutions loi tle Asiun Development
Bunk. ADB Sustainable Development Working Paper Series,
No. 2, Asiun Development Bunk, Munilu. www.udb.oig/
Documents/Piesentutions/New-Poveity-Estimutes/Poveity
-Dutu-Implicutions.pdl
Juliliun, Hossein, Clun Soplul, Glendu Reyes, Siung Clun Hung,
PlunnDulis,undPonDoiinu.2009.The global financial crisis
and developing countries: Cambodia. Plnom Penl: Cumbodiu
DevelopmentResouiceInstitute.
Tong, Kimsun, Klieng Sotly, und Plunn Dulis witl Hem Mettu, und
Pon Doiinu. 2009. Vulnerable workers survey in Phnom Penh,
Kandal, Kompong Speu, Siem Reap and Battambang. Plnom
Penl:CumbodiuDevelopmentResouiceInstitute.
Tong,Kimsun,SiungClunlung,undHemSocletlwitlPlunnDulis,
Hem Mettu, und Pon Doiinu. Foitlcoming. Tiends in living
stunduids ol 90 iuiul louselolds in poveity dynumic studies
villuges. Plnom Penl: Cumbodiu Development Resouice
Institute.
Woild Bunk. 2009. Poveity piolile und tiends in Cumbodiu 2007:
Findings liom tle Cumbodiu Socio-Economic Suivey (CSES),
EustAsiuundtlePucilicRegion.Junuuiy.
149
Women facing the economic crisis—
The garment sector in Cambodia
Sukti Dasgupta and David Williams
1
Introduction
Cumbodiu’simpiessiveeconomicgiowtliniecentyeuislusbeendii-
ven in luige puit by tle countiy’s guiment sectoi.
2
Owing to u luvo-
iuble inteinutionul tiude enviionment in tle 1990s, tle countiy’s
opennesstoloieigninvestment,unditsubundunceollowwuge,low-
skilledluboi,tleguimentindustiyquicklydevelopedintotlecountiy’s
single biggest expoit euinei und loimul employei, geneiuting ieve-
nues in excess ol S2 billion pei yeui und pioviding employment loi
tlousundsolwoikeis.Some90%oltlesewoikeisuieyoungwomen
liomCumbodiu’siuiulpiovinces—uieuscluiucteiizedbyliglpoveity
iutesundscuiceemploymentoppoitunities.Foimost,tledecisionto
migiuteistlusoneoleconomicnecessityiutleitluncloice:poveity
unduluckolwugeemploymentuctusupuslluctoiliomtlevilluges,
wliletlepiospectoluieguluiloimulwugeundunewundmoieinde-
pendentlilestyleuctusupullluctoitotleluctoiiesinunduioundtle
cupitul.Altlougltlesectoi’ssluieintotulemploymentiemuinssmull
(ubout4%oltleluboiloice),guimentwoikeisuieolciiticulimpoi-
tuncetobotltleuibunundiuiuleconomies.Despitetleiiielutively
lowincomes,tlevustmuIoiityiemitusignilicuntpoitionoltleiisulu-
iies lome to tleii lumilies, tlus ulliiming tle industiy’s iole us un
economiclilelineloiiuiulliveliloodsuciosstlecountiy.
Howevei,uttlesumetime,tleiecentglobuleconomicdowntuin
lusliglligltedtleucutevulneiubilityoltleguimentsectoitoextei-
nulslocks,undulsotlesloitcomingsolitslow-skill,expoit-ledmodel
ol giowtl. In 2009, it is likely Cumbodiu’s economy contiucted moie
1
Sukti Dusguptu und Duvid Williums uie stull ol tle Inteinutionul Luboui
Oigunizution(ILO),Bungkok.TleyuiegiutelultoKungClundiuiuiot,LivDunnet,
TuomoPoutiuinen,undAnneZiebuitlloivuluublecontiibutionsundsuggestions.
TlispupeidoesnotnecessuiilyiellecttleviewsoltleILO.
2
GDPgiowtllusiemuinedconsistentlyubove6%oveitlelust10yeuis,witlseveiul
consecutiveyeuisoldouble-digitgiowtlin2004–2007.
150 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tluntlutolunyASEANcountiy.Recentgoveinmentestimutessuggest
giowtlwusunominul1%,downliom10.2%in2007(DyeiundSovun
2009). Tle guiment sectoi und its muIoiity lemule woikloice luve
witloutdoubtbeenumongtlosewoistullected.Sluipdeclinesintle
United Stutes (US) und tle Euiopeun Union (EU) consumei demund
beginninginlute2008loicedmoietlun100luctoiiestoclose,
3
witl
munymoieluvingtoieducestull,suspendpioduction,undcutlouis.
AltlouglsomeoltlosewloluvelostIobsuttlistimewouldluvesince
loundnewemployment—botlwitlintlesectoiundoutside—uluige
numbeiwouldluveeitleiietuinedlometotleiivillugesoiiemuined
essentiullyIoblessoiundeiemployedintleinloimuleconomy.
An economic und luboi muiket iupid ussessment conducted loi
tle Inteinutionul Luboui Oigunizution (ILO) in euily 2009 piovided
woiiyingindicutionsoltlepossibleextentoltleslumpinCumbodiu,
undpuiticuluily,tleextenttowliclguimentmunuluctuiingwouldbe
impucted(Clundiuiuiot,K.etul.2009).Alteisledding27,000Iobs
in 2009, industiy iepiesentutives iecently estimuted tlut tlis liguie
wusnowcloseto70,000(ultlougltleolliciulgoveinmentliguieis
62,000).
4
Inuddition,munyguimentluctoiiesluveiesoitedtouiunge
olotleimeusuiesinubidtoiideouttleeconomicdowntuin,inclu-
dingwoiksuspensions,bunsonoveitime,undieducedwoikinglouis.
Alloltleseluveludunucutelinunciulimpuctontlesectoi’spiedo-
minuntly lemule woikloice, tle muIoiity ol wlicl luve lew suvings
und luige linunciul obligutions to lumilies outside tle city. Becuuse
oltlis,tleeconomicdowntuincunbeseennotIustusimpuctingtle
uibuneconomy,butulsotlepuitoltleiuiulonetlutisdependenton
tleincomesolguimentluctoiywoikeis.
Tlispupeiexuminestleimpuctoltleglobuleconomicdowntuin
on tle guiment sectoi und its woikeis in Cumbodiu, emeiging put-
teinsinluboimuiket,undcopingmeclunismsolwoikeis—witltle
obIectiveolunulyzingtlegendeiimpuctoltleciisis.Itusesbotlpii-
muiy und seconduiy dutu. Wlile tle seconduiy dutu oiiginutes liom
u iunge ol ucudemic und piolessionul souices, tle piimuiy ieseuicl
component is diuwn liom initiul iounds ol u suivey undeituken by
tle ILO und tle Cumbodiu Institute loi Development Study to tiuck
tleexpeiiencesolemployedundiecentlyunemployedguimentsectoi
woikeisoveiupeiiodol6montls.Tledutuundinsigltspiesentedin
tlispupeiiellecttleliistpluseoltlisieseuicl.
3
MinistiyolLubouiliguiesloi2009,citedinPlnomPenlPost,17Febiuuiy2010.
4
Estimutes ol tle Guiment Munuluctuieis Associution in Cumbodiu (GMAC),
June2009.
151 Women facing the economic crisis—the garment sector in Cambodia
Background and origins
of the garment sector
Despite iupid iecent uibunizution, mucl ol Cumbodiu’s 13.4 mil-
lion populution iemuins iuiul-bused und employed in ugiicultuie.
Agiicultuie geneiutes 32% ol gioss domestic pioduct (GDP) und
ubsoibs moie tlun lull ol tle countiy’s luboi loice (UNDP 2009).
Altlougl economic giowtl loi mucl ol tle lust decude lus been
impiessive (ubove 10% pei yeui duiing 2004–2007) und pei cupitu
incomes luve moie tlun doubled since 1997, poveity still ulllicts
neuilyutliidoltlepopulution,wlileincomeinequulity,puiticuluily
betweeniuiulunduibunuieus,isontleiise.
Cumbodiuisulsoupost-conllictnution,luvingonlysecuiedtotul
peuce in 1998 ultei neuily 3 decudes ol wui. Neveitleless, tle new
politiculenviionmenttlutemeigedultei1993(ulteiuUnitedNutions-
buckedelection),coupledwitluwuveoldonoi-buckedpiivutizution
undmuiketieloimsullowedloiuninlluxolloieigninvestoisundtle
emeigenceolulledgingguimentsectoi.Asideliomitsubundunceol
low-wugeluboi,tlepiincipuluttiuctiontotlecountiyuttlistimewus
itspieleientiultiudeuccesstotleUSmuiket(Cumbodiuwusexcluded
liom quotu iestiictions luced by neiglbois Tluilund, Indonesiu, und
tlePeople’sRepublicolClinu[PRC|).Tlisguvetlecountiyuconsi-
deiublecompetitiveudvuntugeintleeuilyyeuis,sometlingtlutlel-
pedspuitlesubsequentiupidgiowtlundexpunsionoltleindustiy,
lutei lelping it become Cumbodiu’s single biggest expoit euinei und
munuluctuiingemployei.
In1998,tleGoveinmentoltleUnitedStutesbegunnegotiutions
witl Cumbodiu to estublisl quotus loi guiment expoits. Tle ugiee-
menttlutlollowedullowedunnuullyiisingquotulevelsinexclunge
loiCumbodiuudoptingsoundluboipoliciesunddemonstiutingconti-
nuouspiogiessinluboiconditions.Accoidingly,tosuppoittlecountiy
toconloimwitltleseconditions,tleILO’sBetteiFuctoiiesCumbodiu
(BFC) Piogiumme wus initiuted—its piincipul iole being to monitoi
luboiconditionsundpiovideseivicestoimpiovewoikingconditions
und munugement in tle sectoi. To dute, Cumbodiu iemuins tle only
countiyglobullyinwliclsuclupiogiumlusbeenmudemundutoiy.
Following tle estublislment ol tle BFC piogium, tle indus-
tiy ulso estublisled u loimul employeis’ oigunizution, tle Guiment
MunuluctuieisAssociutioninCumbodiu(GMAC),ostensiblytolobby
tleMinistiyolCommeiceloitleinteiestsundconceinsolitsmem-
beis.Lutei,tlisiolewusexpundedtoincludewideinutionulissueslike
tiude policy und globul (guiment) industiy competitiveness. As tle
industiygiewinimpoitunceintleeuilyyeuisoltlisdecude,sotoo
didtleinlluenceolGMAC.
152 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Aguinsttlisbuckdiop,witlunubundunceolcleup—piedominuntly
lemule—luboiutlund,tleguimentsectoilustevolvedintoCumbodiu’s
mostimpoitunteconomicsectoiulteiugiicultuie.Mostguimentwoi-
keiscomeliomCumbodiu’siuiulpiovinces,wleiepoveityiswides-
pieudundguinlulemploymentscuice.Piovincesneuitlecupitul(sucl
us Kumpong Clum, Kundul, und Piey Veng) uie typicully key luboi
sendeis,lowevei,signilicuntnumbeisolwoikeisulsocomeliomlui-
tleiulield,puiticuluilytlenoitlundnoitlwest.Foimuny,tledeci-
siontomigiuteisoneoleconomicnecessityundiuiulmigiuntssend
moneytosuppoitlumiliesbucklome.Inucountiywitlsolewloimul
employment oppoitunities, puiticuluily loi tle low-skilled, tle pios-
pect ol u (ielutively) stuble Iob in un industiy witl u set minimum
wugeundconsideiubleoveitimepotentiulluspioventobeusignili-
cuntuttiuctionloimunyyoungwomenliomtlecountiyside.
S
Expoitsliomtleguimentsectoigiewliomnexttonotlingin1994
toS1.9billionin2004—tlebulkoltleseievenuescomingliomsulesin
tleUSundtleEU.Toduy,guimentsmukeupulmost90%olCumbodiu’s
expoits und some 16% ol GDP. At its peuk (pie-Octobei 2008), tle
industiyemployedubout3S0,000woikeis,neuily90%olwlomweie
women. Tle vust muIoiity ol luctoiies uie loieign-owned, witl Eust
Asiun,etlnicClineseinteieststlepiedominuntgioup.
6

Until2004,Cumbodiu’sguimentindustiyllouiisledwitltlepiele-
ientiultieutmentuccoidedundeitleMulti-FibeiAgieement(MFA)—
usystemolmostlybiluteiulquotusestublisledintle1970stopiotect
tle textile industiies ol leust developed countiies liom moie deve-
loped,lowei-costcompetitois.Witltleplusingoutoltlisugieement
inlute2004,Cumbodiu’squotuullocutiontodevelopedmuiketswus
lilted,exposingittogieuteicompetitionliomneiglboiingcountiies
witl moie integiuted und ellicient textile opeiutions (ADB 2006).

Despitetlis,tlesectoicontinuedtogiow—ulbeitutusloweiiute—
untiltlemostiecenteconomicdowntuin.
7
Insum,itiscleuitluttleguimentsectoiluspluyedunimmensely
impoitunt iole in tle sociul und economic development ol post-wui
S
Iniecentmontls,cullsluveintensiliedloiuievisiontotlecuiientminimumwuge,
liomSS0peimontltou“livingwuge”closeitoS100peimontl.
6
Accoiding to Ministiy ol Commeice liguies, tleie weie 262 iegisteied guiment
luctoiiesinCumbodiuusolMuy2009.
7
Accoiding to tle Economic Institute ol Cumbodiu (2006), tlis giowtl continued
loitlieemuinieusons:(i)tleUSundtleEUimposedsuleguuidstoiestiuinPRC’s
expoits, wlicl benelited Cumbodiu’s guiment munuluctuieis; (ii) Cumbodiu’s
luctoiies muintuined good luboi compliunce; und (iii) tiude lucilitution ieloims
ieducedtletimeundcostolexpoitundimpoitslipments.
153 Women facing the economic crisis—the garment sector in Cambodia
Cumbodiu.Moieovei,ultlougltlenutuieoltleemploymentcieuted
lus been oveiwlelmingly low skilled und low income, tle industiy
lusneveitlelessbeeninstiumentulinbotlenluncingwomen’spuiti-
ciputionintleloimuleconomyundinlucilitutingundsustuiningvitul
economic linkuges between u lust-giowing uibun sectoi und u moie
modestlydevelopingiuiulone.
Challenges to garment sector growth
Despiteitsimpiessivegiowtl,tleguimentsectoilucesmuniloldclul-
lenges.Todute,itietuinsonlyulimitedsluieoltlepotentiulvulue-
udded possible in tlis type ol munuluctuiing. Most luctoiies in tle
countiycontinuetowoikuttlebusic“cut-muke-tiim”(CMT)stugeol
tle vulue cluin—tle stuge witl tle lowest level ol economic vulue-
udded.Moieovei,intleubsenceoludomestictextilesindustiyusin
tle PRC und Tluilund, loi exumple, Cumbodiu’s luctoiies still luve
to impoit neuily ull tle iuw muteiiuls used in pioduction—u seveie
diug on botl leud times und cost competitiveness. Tle sectoi ulso
ielies leuvily on loieign diiect investment (FDI) loi its giowtl, tle
downsideoltlisbeingtlutusignilicuntpiopoitionoltlepiolitsgene-
iuteduieieputiiutedubioudiutleitlunietuined(undpotentiullyie-
invested)intlecountiy.
Cumbodiuulsolusinliustiuctuiedelicits,wlicldiiveupcostsol
pioductionundeiodetlecompetitivenessolitsguimentundmunu-
luctuiingindustiies.InVietNum,loiexumple,peiunitelectiicitycosts
uie typicully less tlun lull ol tlut in Cumbodiu.
8
Similuily, tiunspoit
costs in Cumbodiu uie ulso ligl—u pioduct luigely ol its pooi ioud
netwoik und costly slipping lees. Clullenges luve ulso uiisen us u
iesultoliecentclungesintleexteinultiudeenviionment.Following
tle iemovul ol vuiious inteinutionul tiude suleguuids beginning in
200S, Cumbodiu no longei lus pieleientiul uccess to tle US muiket
ielutivetoiegionulcompetitoislikeVietNumundtlePRC.Asuiesult,
Cumbodiu lus ulso lost one ol tle key motivuting luctois tlut luied
guimentmunuluctuieistotlecountiyintleliistpluce,undloimoie
tlun10yeuis,compelledtlemtostuy(ODI2009:4).

8
Woild Bunk liguies, cited in Higgins (2009) “Munuging tliougl tle ciisis—
stiengtleningkeysectoisloiCumbodiu’slutuiegiowtl,developmentundpoveity
ieduction: inliustiuctuie und eneigy to suppoit Cumbodiu’s munuluctuiing buse.”
Piesentution mude ut 2009 Cumbodiu Outlook Conleience. Avuiluble ut: www
.sciibd.com/doc/20421726/Cumbodiu-Outlook-Biiel-No-S
154 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Pioductivityisunotleiolt-citedconstiuinttoCumbodiu’siegionul
competitivenessinguimentpioduction.Peiunitluboicostsuieumong
tlelowestinAsiu(onlyBungludeslislowei)butsoisoveiullpioduc-
tivity. Tlis contiusts witl tle PRC, wlicl lus ielutively liglei luboi
costs(wliclvuiyliomS0.SStooveiS1peiloui,compuiedwitlS0.33
inCumbodiu)
9
but10%to2S%ligleipioductivitylevels(Nutsuduet
ul.2009:19).Ontopoltlis,itlusulsobeenuiguedtlutduiingtle
iecentglobuldowntuin,Cumbodiulusulsolostouttocountiieswitl
compuiuble levels ol pioductivity, like Bungludesl. Bungludesl lus
benelited,obseiveissuy,initsubilitytopioduceluigevolumesolout-
putloiloweicostspeiunit(ILO2009).Notingtlutguimentexpoiteis
in Cumbodiu uie subIect to iigoious monitoiing ol compliunce witl
luboistunduids,wliclolleisbuyeisupiotectionuguinstiepututionul
iisk,someinCumbodiuuccuseinteinutionulbuyeisolslunningetli-
culpuiclusingdecisionsinluvoiolcost-onlyconsideiutions.
Howevei,elloitsluvebeenmudebygoveinmentuswellusindustiy
undwoikeis’ussociutionstotucklesomeoltleseclullenges.Indeed,
skilldevelopmentisontopoltleugenduloitleguimentsectoiund
tiuining initiutives uie cuiiently undeiwuy. Wlile clullenges iemuin
on tle industiiul ielutions issue, ull sides luve slown u cleui piele-
ienceloiimpiovedielutionsundbetteidiulogueiniecentmontls.
10
Impact of the economic crisis
on garment manufacturing
Asnotedeuiliei,Cumbodiu’sguimentindustiylusluiedpuiticuluily
budlyumidtleiecentglobuleconomicdowntuin.Astlisliguietuken
liomuiupidussessmentoltleciisisimpuctslows,tleguimentsectoi
wusmostvulneiubletotleciisis(Clundiuiotetul.2009).
As US und EU ietuil sules plummeted duiing tle lust quuitei ol
2008 und into 2009, muny luctoiies in tle countiy weie luced witl
collupsingoideisundnewpiessuiesliombuyeisloisloiteileud-times
(between oidei und deliveiy) und incieused ciedit teims (i.e., liom
40 duys to 3 montls). Aguinst tlis buckdiop, tle industiy lus lost u
signilicunt numbei ol its expoiting luctoiies (und, in ull likelilood,
munymoieoltleuniegisteiedundunmonitoiedsubcontiuctingones),
witlmunymoieloicedintouiungeoliutionulizutionmeusuies,liom
oveitimecutstotempoiuiysuspensionsundmussluyolls.
9
See Jussin O’Rouike, cited in www.emeigingtextiles.com/?q~uit&s~080S23
-uppuiel-luboi-cost&i~liee
10
FoiexumplesuclsentimentsweieecloedintleloiuminDecembei2009on“Globul
EconomicCiisisundCumbodiunIndustiiulRelutions:ClullengesundWuyFoiwuid.”
155 Women facing the economic crisis—the garment sector in Cambodia
Given tle stiong dependence ol tle guiment sectoi on tle US
muiket,itislittlesuipiisetleiecenttiuIectoiyolitsexpoitsluvelol-
lowed u similui putl to tlut ol US ietuil sules. Sucl is tle extent ol
Cumbodiu’s ieliunce on tle Ameiicun muiket tlut duiing tle iecent
downtuin, us Nelmes (2009) slows, tle lute ol tle guiment sectoi
und its woikeis lus been inleiently tied to tle spending lubits ol
tleUSconsumei.Yeui-on-yeuiexpoitvuluesin2009sloweduveiuge
montllydeclinesolmoietlun20%,witltlesluipestlullscomingin
tleliistquuitei(Figuie2).
Tle luboi muiket impucts ol tlese expoit declines luve been
seveie,unduielikelytocontinuebeyondtleimmediute“ciisis”pluse
(Figuie 3). And, wlile most unulysts ugiee tlut guiment pioduction
will iemuin u key diivei ol Cumbodiu’s economy loi seveiul yeuis to
come (tleie uie lew signs ol economic diveisilicution us yet), muny
ulsoexpectupeiiodolpost-ciisisiestiuctuiing,witltlelikelyiesult
being u notuble downsizing ol tle industiy und its woikloice in tle
comingyeuis.
The gender impact of the crisis
Women muke up uppioximutely lull ol Cumbodiu’s luboi loice, und
uie us sucl u muIoi contiibutoi to tle nutionul economy
11
not leust
becuuse tley dominute tle countiy’s luigest loimul sectoi—guiment
munuluctuiing.Beyondtlis,womenulsopluyukeyioleuslouselold
11
AccoidingtotleMinistiyolWomen’sAlluiis(MOWA),womenmudeup49.4%ol
tleluboiloicein2004.
Figure 1: Sector vulnerability
Souice:Clundiuiuiotetul.(2009).
100
%

o
f

F
D
I

i
n

C
a
p
i
t
a
l

S
o
u
r
c
e
% of exports in output
90
80
70
60
50
40
30
20
10
0
0 10
Wood and paper
utilities
Food, beverages and
tobacco
Finance
Tourism
Construction
Textile & Clothing
Transport and
Communications
Mining
Rubber
Low Vulnerability
High Vulnerability
Real estate
20 30 40 50 60 70 80 90 100
Crops
156 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
–14.62
–18.35
–18.08
–12.13
–17.5
–26.4
–19.17
–35.24
40
30
20
10
0
10
20
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09
Y
e
a
r
-
o
n
-
y
e
a
r

d
e
c
l
i
n
e

(
%
)










Figure 2: Garment sector exports,
annualized rate of decline
Souice:MinistiyolCommeice,citedinPhnom Penh Post(vuiiousdutes).
leuds (iesponsible loi domestic duties), puiticuluily in iuiul uieus.
Wlenlousewoiksucluswusling,cooking,cleuning,undtukingcuie
olclildienisincluded,ieseuicllusslowntlutwomeninCumbodiu
tend to woik moie louis pei duy tlun tleii mule counteipuits
(ILO2007:38).
Howevei,tleieuieunumbeiolluctoistlutcontinuetoconstiuin
women’s economic empoweiment in Cumbodiu. As tle NSDP
2006–2010 notes, gendei dispuiities uie widespieud in tle countiy,
und u ioot cuuse ol poveity. One ol tle most ciiticul is women’s
unequuluccesstoeducution,puiticuluilyintleiuiuluieus.Tliitysix
peicentolwomenuieilliteiuteuscompuiedto1S%olmen(UNIFEM
etul.2004).Altlougliecentyeuisluveseennotubleimpiovementsin
liteiucyundsclooleniollmentumonggiilsinCumbodiu,puiticuluily
uttlepiimuiyscloollevel(wleielemulepuiticiputionisnowliglei
tlunloimules),tlesituutioniemuinstleoppositeintleseconduiy
und post-seconduiy systems, wleie mules still gieutly outnumbei—
und outpeiloim lemules (ILO 2007: 4S). Fuitleimoie, women
olten lull loul ol pievuiling sociul ideuls und uttitudes ubout powei
157 Women facing the economic crisis—the garment sector in Cambodia
und gendei ielutions, muny ol wlicl seive to undeimine tleii ubi-
lity to cluim tle equul iiglts giunted to tlem undei tle Cumbodiun
Constitution(CDRI1999).Tleluigenumbeisolwomenintleluboi
loice notwitlstunding, tle stiong identilicution witl men us bieud-
winneisundwomenuslouseloldmunugeisundcuieiscontinuesto
pievuil.Likewiseuietlemoiulcodestlutdeteimine“piopei”beluvioi
undconductolwomen,knownustleChba’p, wlicluiestilltuugltin
scloolstoduy.
12
InuMoWAsuiveyin200S,22.S%olwomeniepoi-
tedbeingsubIectedtodomesticviolence(MOWA200S).Piioitotle
giowtloltleguimentsectoi,tleonlyoptionloilowskilledwomen’s
employmentwusinugiicultuie,oltenusunpuidlumilyluboi,undtle
inloimulsectoi.
In tlis scenuiio, tle guiment sectoi piovided u loimul sectoi
employmentoppoitunityloilesseieducuted,lowei-skilledwomenin
Cumbodiu—undustleguimentsectoigiew,sodidwomen’ssluiein
loimul employment, wlicl iose liom 28% in 1998 to 40% in 2004.
12
See, loi exumple, Ledgeiwood (1996), und moie iecent ieleiences to sucl in
UNIFEMetul.(2004)undKiuynunski(2007).
200
O
c
t
-
0
6
J
a
n
-
0
7
A
p
r
-
0
7
J
u
l
-
0
7
O
c
t
-
0
7
J
a
n
-
0
8
A
p
r
-
0
8
J
u
l
-
0
8
O
c
t
-
0
8
J
a
n
-
0
9
A
p
r
-
0
9
J
u
l
-
0
9
220
240
260
280
300
320
340
360
380
S
i
z
e

o
f

w
o
r
k
f
o
r
c
e

(

0
0
0
)
Figure 3: Growth and decline of garment sector
workforce, 2006–2009
Souice:ILO’sBetter Factories Cambodia,MinistiyolCommeice(vuiiousdutes).
158 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Howevei,ontlewlole,womenuiestillbotlundeiiepiesentedinpuid
(loimul)employmentundgeneiullyloweipuidtlunmen(ILO2007).
Howevei, tiuditionul peiceptions ubout tle iole ol women in
societyundtlewoikpluceuieclunging.Oveitlelust1Syeuis,women
luveincieusinglybeenseenusnotonlyuslouseloldmunugeisbut
ulsolegitimuteincomeeuineis.Mucloltlislusbeenpieciselydue
totlegiowtloltleguimentsectoi,wliclulongsidetouiismluslel-
ped to cieute employment oppoitunities loi lundieds ol tlousunds
ol women wlose piioi Iob piospects would luve scuicely extended
beyondluimingoitleinloimuleconomy.Huvinginsteudloundtlem-
selvesustleeconomicdiiveisoltlecountiy’smostimpoituntsectois,
nottomentionoltenintleiiownlouselolds,womeninCumbodiu
luvebeguntoseetleiisociulstutusclunge.Coiiespondingwitltlis
lusbeenuiiseinlemule-leddecisionmukinguttlelouseloldlevel
undugiowingcommitmentumonglumiliestokeepinggiilsinsclool
loilongei.
13
Howevei, tlese clunges luve been neitlei lust noi compielen-
sive.Itwilltukemunyyeuisolcontinuousimpiovementineducutionul
uccess und oppoitunity loi giils to ieveise tle stiuctuiul imbulunces
tlutnowpieventwomenliomieulizingtlesumeemploymentpoten-
tiulusmen.Moieovei,tleguimentsectoiuloneisinnowuyupunu-
ceu to expunding women’s employment oppoitunities in Cumbodiu.
Altlouglitlusnodoubtlelpedelevutetleincomesundlivingstun-
duidsollundiedsoltlousundsolwomenwlomuyotleiwiseluve
swelledtleiunksoltleubsolutepooi,mostluctoiywoikeisuiestill
ielutivelypooi,undlewluvetleoppoitunitytoudvuncetleiicuieei,
eitleiintleguimentindustiyoioutside.Clungingtleseconditions
is u ciiticul long-teim clullenge loi policy mukeis in Cumbodiu, und
onetlutlusbecomeulltlemoiepeitinentinligltoltlecountiy’slust
giowingluboiloiceundtlecompoundinglossollemuleemployment
duiingtleglobuleconomicdowntuin.
Fuitleimoie, tle leuvy ieliunce on tle guiment sectoi pioved
veiycostlyloiwomenustlesectoiwusmostvulneiubletotleeco-
nomic ciisis. Cumbodiu’s women woikeis luve tleieloie boine u
dispiopoitionutebuidenoltleciisisimpucts,wlicluielikelytobe
exuceibuted due to tle pie-existing limitutions luced by women in
Cumbodiu’sluboiloice.Tleseluctoisloicewomenintoupositionol
13
Itmustbenotedleietlutnotkeepingyounggiilsinsclooldoesnotnecessuiilyoi
ulwuysiellecttiuditionuloicultuiullybusedpiedispositions,butoltenucombinution
olmoiepiucticulconstiuintsliketiunspoit(tosclool)undsuletyissues(i.e.,giils
tiuvelling to und liom sclool ulone). Tlis lus been liglliglted in u numbei ol
iecentgendeiussessments,includingUSAID(2006).
159 Women facing the economic crisis—the garment sector in Cambodia
puiticuluivulneiubilitytoeconomicslocks,cluiucteiizedbyuiunge
olluidslipsincludingloweuiningcupucity,pooiuccesstosuletynets
und sociul piotection, inudequute suvings, und debt. It is tleieloie
littlesuipiisetlutitistlesewomenwlouieumongtloseleustuble
tocope.
Conceinsluveulsobeeniuisedubouttleexposuieollemuleluc-
toiywoikeistovuiiousloimsoliiskyemployment,exploitution,unsule
migiution, und tiullicking us u iesult ol income loss und ietiencl-
ment.Reseuicloveitlepustdecude,loiexumple,lusieveuledlong-
stunding,oltencyclicul,luboillowsbetweentleguimentsectoiund
vuiiousloimsolsexwoik—botldiiectundindiiect.
14
Inligltoltle
cuiientdowntuin,suclllowsluveieceivedieneweduttention,witl
botlwidespieudspeculutionundsomeempiiiculevidencesuggesting
tlutunumbeiolnewlyunemployedwomen–uptooneliltl,uccoi-
dingtooneUnitedNutionsugency—luveendedupinligl-iiskIobs
in tle so-culled “enteituinment sectoi.”
1S
Tle implicutions loi tlese
woikeis,especiullywitlieguidtosuletyissueslikewoikpluceubuse
(includingexploitutionundtiullicking)undleultlissueslikeHIVund
AIDS exposuie, uie tlus potentiully veiy seveie, und slould not be
neglectedintlewideidebutesubouttledowntuinunditsullecton
women’semploymentinCumbodiu.
Understanding the impact of the crisis:
A tracking survey of garment workers
To undeistund tle impuct ol tle ciisis on tle guiment sectoi in
Cumbodiu, und puiticuluily its woikloice, tle ILO, suppoited by tle
United Nutions Development Piogiumme, is cuiiently undeituking
u 6-montl tiucking suivey ol 2,000 luctoiy woikeis, botl employed
undiecentlyunemployed.TleobIectiveoltlesuivey,wliclisbeing
cuiiiedoutbyCumbodiuInstituteolDevelopmentStudies,istodeve-
lopululleipictuieollowwoikeisluvebeenimpuctedbytleciisis,
low woikpluce conditions luve clunged, und wlut new luidslips
14
Seeloiexumple,Nusiguyu(2002).
1S
Moieovei, sucl movement could be voluntuiy oi tliougl giowing luidslips
(includingietienclment)intleguimentsectoi.Howevei,tlesestudiesluvesolui
tendedonlytoieveulcoiielutioniutleitluncuusulity,i.e.,incieusingnumbeisol
women loimeily employed in tle guiment sectoi enteiing diiect und indiiect sex
woikduiingtlepeiiodoltleeconomicciisis.See,loiexumple,UNIAP(2009).
160 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
und coping meclunisms luve become pievulent.
16
Tle study, wlicl
is bused on u puiposive but iundom sumpling metlodology, piobes
woikeisontleimpuctoltleiisituutionontleiilumilies,tleiilutuie
pluns(loiemployment,tiuining,migiution,undtlelike),undseeks
compuiisons umong tlose tlut luve lound new Iobs between tlis
woik und tleii pievious luctoiy Iobs. It employs tle use ol detuiled,
tuiloi-mude questionnuiies und suiveying teclniques (loi employed
und unemployed woikeis) to identily, question, und tiuck woikeis
oveiu6-montlpeiiod.Itconsistsolonebenclmuikingsuiveybeing
conductedbetweenSeptembeiundDecembei2009,undtwolollow-up
tiuckingexeicisesut3-montlinteivulsulteitlebenclmuikingsuivey.
Itcoveisusumpleolwoikeisliom199luctoiiesinunduioundPlnom
Penl,undincludesbotlexpoitingundnon-expoitingluctoiies.
17

Preliminary findings
Tle iesults piesented in tlis pupei uie bused on tle euily lindings
ol tlis exeicise.
18
Tle quuntitutive liguies piesented leie peituin to
tle434questionnuiiesintledutubuse,supplementedwitlquulitutive
dutuliomtle1,239completedinteiviews.Tledutuiepiesentswoi-
keisliom140luctoiiesinunduioundPlnomPenl.Tleieloie,wlile
notconclusive,tleselindingswillgiveussomesignsolwlutisluppe-
ningtowoikeisduiingtlecuiienteconomicdowntuin,undlowtley
uieiespondingtotlenewconditionstleyuielucing.
1. Profile of garment workers
Oltlesumple,81%uielemuleund19%uiemule.TlevustmuIoiity
uieinteinulmigiuntsliomtlepiovinces(9S%).Moietluntwo-tliids
16
In tlis suivey, “employed” ieleis to woikeis cuiiently employed in tle guiment
sectoi, und “unemployed” ieleis to woikeis wlo lud been ietiencled liom tle
sectoisince01Junuuiy2009.
17
Inoideitoexpoit,luctoiiesmustiegisteiwitltleMinistiyolCommeice(MOC).
Tle study delines expoiting luctoiies us tlose listed in tle MOC iegistiy, und
non-expoiting luctoiies us tlose not listed. Non-expoiting luctoiies olten uie
subcontiuctedbyexpoitingluctoiies.
18
Asol14Octobei2009,tlesuiveyteumludinteiviewed1,239woikeis(oi62%ol
totulsumplesizeol2,000woikeis,olwlicl1,083weieemployedund1S6weie
unemployed). Ol tlis numbei, 434 questionnuiies (oi 22% ol tle totul sumple,
compiising279employedund1SSunemployed)luvebeenclecked,vuliduted,und
enteiedintotleteum’sdutubuse.
161 Women facing the economic crisis—the garment sector in Cambodia
uiesingle,mostuielouseloldincomeeuineis,butlesstlunusixtl
uielouseloldleuds.TlemuIoiityolwoikeisdonotluveclildien,
buttleyuietypicullystillobligedtosuppoitlumiliesoltlieetolive,
includingpuients,giundpuients,undsiblings.Inteimsoleducution,
tlemuIoiityluvecompletedpiimuiysclool,butveiylewluvepio-
giessed beyond tle 9tl giude, oi undeituken uny loim ol Iob-bused
tiuining.Yeuisolexpeiienceintlesectoivuiy,buttlemediunduiu-
tionis2–3yeuis.Sloitcontiuctsuppeuitobecommonpluce,witlu
tliidolwoikeisluvingwoikeduttleiicuiientluctoiyundeiuyeui.
Aveiuge euinings vuiy between S70 und S100 pei montl, including
oveitimeundbonuses.Woikinglouisvuiy,butuietypicullybetween
48und60louispeiweek.
2. Employed workers
Oltlewoikeis,34%luveseenulullintleiiincomesince2008—by
unuveiugeolS16peimontl.OnutypiculincomeolS80peimontl,
tlis iepiesents ubout u 20% decieuse. Most olten, tlis is due to
ieducedoveitime(47%oliespondents);otleiieusonsincludesloitei
woikweeks,woiksuspensions,compulsoiyunpuidleuve,ieductions
inbonuses,undieductionsinieguluiwoikweeks.Filty-twopeicent
suytleynowluveinsullicientincomestosendmoneylometolumily.
Moietlunone-tliidolwoikeissuyitisnowmoiedilliculttouskloi
timeollliomtleiiemployei,und39%suywoikpluceleultlundsulety
conditionsluvedeteiioiutedsince2008.
Mostwoikeisluvecutbuckonbusicspendingduiingtleeconomic
downtuin.Commonwuystouclievetlisincludeieducingloodintuke,
tiuvelling uiound less, und downsizing oi incieusing tle numbei ol
woikeis sluiing u ioom. Compuied witl 2008, un uveiuge ol 10%
lewei woikeis suy tlut tley luve enougl money tlis yeui loi lood,
leultlcuie,tiunspoit,undiemittunces.Twentypeicentolwoikeissuy
tleiilumilylussentunotleimembeitolindwoik—mostcommonly
tlisisuyounglemulesibling—mostseekwoikintleguimentsectoi.
3. Unemployed workers
TlemuIoiityweieteiminutedduetoluctoiyclosuieoislowdownin
pioduction.Almostullludemploymentcontiucts,butmostweietei-
minutedbeloietleendoltleiicontiuct.Sevenoutol10woikeissuy
tleyweienotgivenudvuncenoticeoltleiiietienclment.Foitlose
wlodidieceivenotice,itwususuullylesstlun1week(7duys).Filty-
livepeicentweieietiencledulteiJune2009—unindicutionpeilups
tluttloseietiencledbeloietlistimeuieeitleiie-employed(intle
162 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
inloimul economy, loi exumple) oi no longei in Plnom Penl. Filty-
louipeicentieceivedseveiuncepuyliomtleiiemployei.Foity-eiglt
peicentsuytleyluveboiiowedmoneytocopewitlincomeloss:liom
lumily,liiends,undtoulesseiextent,moneylendeis.
Altlouglulmostlullsuytleyweieubletosuvemoneyliomtleii
pieviousIobs,moietlunS0%suytleyluvenowuseduptlesesuvings.
Among tle woikeis’ lumilies, 20% luve sent udditionul lumily mem-
beis to lind woik; tle piolile ol tlis woikei is tle sume us loi tle
employedwoikeis(uyounglemulesiblingseekingwoikintleguiment
sectoipiedominuntly).Lesstlun10%oltleunemployedluvelound
newIobs,undmostoltleseuiein“stop–gup”typesolwoik,typicully
intleinloimuleconomy.Some80%uiestilllookingloiwoik,wlile
7.7%luvenowgivenup.Only2.S%uiecuiientlyintiuining.Tiuining
piovideis vuiy liom piivute slops to public und piivute institutions,
wliletlecostvuiiesliomliee(loiupuit-timegoveinmentcouise)to
S200 (oi u six-montl lull-time piivute couise). Tle muIoiity ol woi-
keiswouldconsideiietiuining,botlloitleguimentsectoiundotlei
occuputions.Howevei,mostsuytleywouldneedlinunciulsuppoitund
llexiblecouisetimestoenubletlemtodoso.Job-seuiclingstiutegies
uiemostlyinloimul;two-tliidsolIobseekeisuieseuiclingloiwoik
tliouglliiends.Just2.4%luvelookedloivucunciesintlenewspupei.
Conclusions
Inlittlemoietlunudecude,guimentmunuluctuiinginCumbodiugiew
liom less tlun u lundlul ol luctoiies employing lundieds to u moie
tlunS2billion-u-yeuiindustiywitlubout3S0,000-stiongwoikloice.
Altlougltlemunugementundcupitulusedtodiivetlisgiowtlluve
beenoveiwlelminglyloieign,tlisimpiessivegiowtlstoiycouldnot
luvebeenuclievedwitlouttlecontiibutionolitspioductionwoik-
loice—oveiwlelmingly low-skilled women liom tle countiy’s iuiul
piovinces. As tle impoitunce ol tlis sectoi to Cumbodiu’s economy
lusgiown,sotoolustleioleolwomenintlenutionulluboimuiket.
Indeed,uswellusluellingutleustpuitiuliebuluncingolCumbodiu’s
economyuwuyliomugiicultuieundtowuidligltmunuluctuiing,tle
iupid giowtl ol tle guiment sectoi in iecent yeuis lus ulso diiven
u iesuigence in women’s iole us botl income euineis und decision
mukeisintlelouselold,tlouglulotmoieiemuinstobeuclieved.
Owingtotleguimentsectoi’ssuccess,loimulincome-euiningoppoi-
tunities luve been cieuted loi lundieds ol women wlose piospects
piioi to tlis would luve scuicely extended beyond luiming oi tle
inloimuleconomy.
163 Women facing the economic crisis—the garment sector in Cambodia
Altlougl totul employment in guiment munuluctuiing iemuins
smull, tle economic expectutions pluced on tlese woikeis uie olten
veiyligl.Mostguimentwoikeisiemitusignilicuntpoitionoltleii
montlly suluiies to tleii lumilies in tle piovinces, meuning tlut tle
totulnumbeissuppoitedbytleindustiyuieluigieuteitlunmeiely
tlose it diiectly employs (peilups 10% ol tle populution, uccoiding
to iougl estimutes). At tle sume time, owing to tle loieign-owned,
exteinully ieliunt nutuie ol tle guiment industiy, tlese woikeis uie
ligllyvulneiubletotlevuguiiesolinteinutionuldemundundecono-
mic slocks. Tlis is none moie evident tlun in tle cuiient economic
downtuin, wlicl despite luving its oiigins liom tlousunds ol miles
uwuy in tle US, lus lit Cumbodiu tliougl its FDI und expoit clun-
nels.Guimentluctoiiesundtleiiwoikeiscontinuetobeuitlebiunt
ol tle impuct—witl closuies, suspensions, und luyolls ullecting tens
oltlousundsolulieudyvulneiublewomenundlumilies,witllewoi
non-existentcopingmeclunisms.
PieliminuiyiesultsguinedliomtleILO–CIDStiuckingstudyindi-
cutesignilicuntlossolincomeumongguimentwoikeisunddilliculties
in coping witl tle cuiient economic downtuin. Tlese tiends uie ull
tle moie ucute given tle deuitl ol “ulteinutive” woik loi unskilled
womenundtlepioloundluckolsociulpiotectionmeclunismsintle
countiy.Despitetleluidslipsmunywomenluceuponietienclment
intlecupitul,lewwoikeisseetleiioptionsutlome(i.e.,intlepio-
vinces)usunybettei.Indeed,usitlusbeennoted,umuIoimotivuting
luctoiinmunywomen’sdecisiontomigiutetoluctoiiesintlecityin
tleliistpluceistleluckolincome-geneiutingoppoitunitiesutlome.
Tlis situution lus not clunged toduy, und ultlougl tle tiuditionul
“suletynet”oltlelumilyisstillunostensibleoptionloimunywomen
displucedbytleciisis,tlisstudylusieulliimedeuilieiieseuicllin-
dingsinidentilyingietuinmigiutionusulustiesoit.Tlutsuid,given
tlegeneiullylowlevelolsuvingsluctoiywoikeisluveuponietiencl-
ment,tlisstudylusloundmunywoikeistobeulieudyclosetotlislust
iesoit.Tleieisulsoutendencytopieseivetlissuvingbyspendingless
onlood,tiuvel,undotleis.Tleluckolulteinutiveemploymentoppoi-
tunitiesulsomukestlesewomenvulneiubletopotentiullyexploitutive
woikoisituutionsustleyseektotideoveiudillicultsituution.
Itisinteiestingtonotetluttocopewitlincomelossolwoikeis
intleluctoiies,usignilicuntpiopoition(uioundone-liltl)ollouse-
lolds luve sent unotlei lumily membei into tle woikloice to lind
extiuincome.Inulmostullcuses,tliswoikeiisulsouyounglemule,
typicully u sistei ol tle sume uge und educutionul piolile ol tleii
ielutive(s) in tle guiment sectoi. Moieovei, like tleii ielutive(s),
most set tleii siglts on guiment luctoiy woik, despite tle obvious
164 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
slowdown in tle sectoi. Tle compuiutively low entiy iequiiements
(i.e.,loieducution,skills,lunguugecompetencies,undotleis)undtle
lucttlutmostnewwoikeisluvecontuctsintlesectoi,oltenlelpstlis
Iobseuicl.Consequently,munyoltlewomensuiveyedleeltluttle
piospectsolemploymentinuguimentluctoiyuienotublyligleitlun
inotleioccuputions.
But wleie is tle guiment sectoi leuding is u ciiticul question
in tlis context. Wlile it is u luigely loimul sectoi muintuining busic
luboistunduids,itiscuiientlyestublisledusulow-pioductivity,low
vulue-udded sectoi. As tle cuiient economic downtuin exposes tle
stiuctuiul imbulunces in tlis sectoi, clunges will need to be mude
il long-teim giowtl is to be sustuined. Industiy unulysts luve noted
tlutCumbodiu’sguimentsectoimuyneedtomoveuptlevuluecluin
wlilecontinuingtomuintuincompliunce.
Tle cuiient policy iesponses to tle ciisis in Cumbodiu include
someconcessionstotleguimentsectoi.Onmucl-neededsociulpio-
tection, tle cuiient emplusis is on employment geneiution tliougl
publicwoikspioIects.Tleseuielikelytobenelitmenmoieunlesstle
pioIectsuiecuielullydesignedtouppeultowomenwoikeis.
Oneoltlemostciiticulclullengesloidecentwoikloilemulegui-
mentwoikeis,botlemployedundunemployed,isskillsdevelopment.
Access to muiketuble Iob-bused skills to impiove employubility botl
witlinundoutsidetleguimentindustiyisneeded.Moieovei,beloie
udultlood, tle continuution ol loimul sclooling umong young giils,
puiticuluilyintletypesollouseloldstlecuiientluctoiywoikloice
comeliom,isunotleiciuciulclullengetlutneedstobeoveicomeil
women uie to enlunce tleii cuieei piospects, oveicome gendei ine-
quulities,undbetteiinsulutetlemselvesliomeconomicslocks.Asit
stunds,womenintleguimentsectoiuieoveiwlelminglylowskilled
undloweducuted,witllewoppoitunitieseitleiloicuieeipiogiession
witlintlesectoioiulteinutiveemploymentoutsideit.Olcouise,puit
ol tlis ielutes to tle geneiul ubsence ol widei (loimul) employment
oppoitunitiesinCumbodiu,puiticuluilyloiwomen.Howevei,educu-
tionundskillsuiestilltlesuiestwuytocieuteundsuleguuidoppoi-
tunitiesloiwoik,undtoempoweiwomenbotlsociullyeconomicully
so tlut tley cun cluim tle iiglts und entitlements giunted to tlem
inCumbodiu’sConstitutionundenubletlemtomoveoutoltle“no
skills–lewoptions”tiup.Indeed,tlisisoneuieutlegoveinmentund
tleindustiyuielocusingonundpiogiessisbeingmude,ulbeitslowly.
Astlistiuckingstudyiscompletedtliougl2010,tlepictuieol
lowwoikeisundtleiilumiliesuieiespondingundudIustingtotleeco-
nomicdowntuin(unditssubsequentiecoveiy)willnodoubtbecome
cleuiei,undwitlit,policyiecommendutionsmoieuccuiutelydeiived.
165 Women facing the economic crisis—the garment sector in Cambodia
Tle specilicities ol tle lindings iepoited leie bused on u smull sub-
sumplemuyulsoclungeoncetlelullbuselineiscompleted.Howevei,
tlepieliminuiyiesultspiesentedintlispupeidooutlineseveiulcleui
luctstlutuppeuidilliculttodispute:numely,tlutinCumbodiu’sciisis,
itiswomenwoikeistlutuiebeuiingmucloltlebiuntoltleimpucts,
owingusitistotleiipiedominunceintleluidestliteconomicsectoi—
guiment munuluctuiing. Moieovei, witl typicully little educution oi
skills,undwitltlecountiyluckingbotldiveisiliedemploymentund
busicsociulpiotection,itistlesewoikeiswloconstitutesomeoltle
most vulneiuble und leust uble to cope witl tle negutive impucts ol
economicslocks.
References
AsiunDevelopmentBunk(ADB).2006.Secuiingemploymentloitle
pooi women in Cumbodiu’s guiment industiy. www.udb.oig/
PRF/Cumbodiu-Guiment-Industiy.pdl
Ainold. 2006. Tle Cumbodiu expeiiment in etlicul pioduction:
Dynumics ol u GMO uppioucl to piomoting luboi iiglts und
investment.UniveisityolNoitlCuiolinu,ClupelHill.
CumbodiuDevelopmentResouiceInstitute(CDRI).1999.Gendeiund
development in Cumbodiu: An oveiview. Working Paper 10.
www.cdii.oig.kl/webdutu/downloud/wp/wp10e.pdl
Clundiuiuiot,K.,S.Sinu,undL.Dunnet.2009.Rupidussessmentol
tleimpuctoltlelinunciulciisisinCumbodiu.ILO Asia–Pacific
Working Paper Series. ILO Subiegionul Ollice loi Eust Asiu,
Bungkok.
Dyei,E.undN.Sovun.2009.PMsuys2009suw“sliglt”giowtl.Phnom
Penh Post.18Muicl2009.
Higgins.2009.Munugingtliougltleciisis—Stiengtleningkeysectois
loiCumbodiu’slutuiegiowtl,developmentundpoveityieduc-
tion: Inliustiuctuie und eneigy to suppoit Cumbodiu’s munu-
luctuiingbuse.Piesentutionmudeut2009CumbodiuOutlook
Conleience. www.sciibd.com/doc/20421726/Cumbodiu
-Outlook-Biiel-No-S
Inteinutionul Luboui Oigunizution (ILO). 2007. Piomoting employ-
ment in Cumbodiu: Anulysis und Options. ILO Subiegionul
OlliceloiEustAsiu.
———.2009.Impuctoltleglobuleconomicciisisontleemployment
undlubouimuiketinBungludesl.CentieloiPolicyDiulogue/
ILO.
166 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Juliliun,H.,C.Soplul,G.Reyes,undS.ClunHung.2009.Cumbodiu.
Global Financial Crisis Discussion Series, Pupei 4. Oveiseus
Development Institute, London, United Kingdom. www.odi
.oig.uk/iesouices/downloud/3307.pdl
Kiuynunski, J.M. 2007. Women wulking silently: Tle emeigence
ol Cumbodiun women into tle public spleie. Centei loi
InteinutionulStudiesolOlioUniveisity.
Ledgeiwood, J. 1996. Women in development: Cumbodiu. Asiun
DevelopmentBunk,Munilu.
Li, C. 2006. Femule luboui migiution in Cumbodiu. In ESCAP. 2006.
Perspectives on Gender and Migration. lttp://utulgetuwuys
.com/ESID/GAD/Publicution/PeispectivesonGendeiund
MigiutionFINAL.pdl=puge~14
MinistiyolWomen’sAlluiis(MOWA).200S.Violenceuguinstwomen:
Abuselinesuivey. MOWA. PlnomPenl.
Mooie, A. E. 2009. Women uie diumonds: A biilliunt lutuie loi
Cumbodiumeunscieutinglemuleemploymentnow.OpEdloi
Truthout,20Octobei2009.www.tiutlout.oig/1020091
Moiiis, E. 2007. Piomoting employment in Cumbodiu: Anulysis und
options.ILOSubiegionulOlliceloiEustAsiu,Bungkok.
Nutionul Institute ol Stutistics, Goveinment ol Cumbodiu. 2008.
Piovisionul Populution Totuls. Census 2008. www.nis.gov.kl/
index.plp/stutistics/suiveys/census2008/piovisionul
-populution-totuls
Nutsudu, K., K. Goto, und J. Tlobuin. 2009. Clullenges to tle
Cumbodiun guiment industiy in tle globul guiment vulue
cluin.RCAPS Working Paper No. 09-3.RitsumeikunCenteiloi
AsiuPucilicStudies,RitsumeikunAsiuPucilicUniveisity,Jupun.
Nelmes,J.2009.GlobulCiisis—Impuct,Outlook,undPolicyOptions
loi Cumbodiu. Piesentution ut tle 2009 Cumbodiu Outlook
Conleience,12Muicl2009.
NIS.200S.CumbodiuSocio-EconomicSuivey2004.
Nusiguyu, K. 2002. Femule guiment luctoiy woikeis in Cumbodiu:
Migiution,sexwoikundHIV/AIDS.InA.Wlitukei,ed.Women’s
health in mainland Southeast Asia.US:HuwuitlMediculPiess.
Nisliguyu, K. n. d. Living uwuy liom lome: Piemuiitul sex und
covuiiutes—A cuse study ol luctoiy women in Plnom Penl,
Cumbodiu. Austiuliun Demogiuplic und Sociul Reseuicl
Institute,AustiuliunNutionulUniveisity.
OveiseusDevelopmentInstitute(ODI).2009.Muintuiningucompeti-
tiveedgeloiCumbodiu’sindustiy:Wideningoideepeningtle
stunduidsspectium.BuckgioundNote.
167 Women facing the economic crisis—the garment sector in Cambodia
Poiee,A.2009.Cumbodiulustocopewitlitsglobulconnection.Yale
Global Online. 11 August 2009. lttp://yuleglobul.yule.edu/
content/cumbodiu-lus-cope-its-globul-connection
Ruksmey, P. 2009. Retiuining on tiuck: Goveinment suys scleme is
yieldingiesults.Economics Today.16–31August2009.
Royul Goveinment ol Cumbodiu. 2006. Nutionul Socio-Economic
DevelopmentPlun2006-2010.PlnomPenl.
Soblum, Z. 2009. Globul ciisis: Bungludesl bucks tle tiend. Yale
Global Online. 14 Octobei 2009. lttp://yuleglobul.yule.edu/
content/globul-ciisis-bungludesl-bucks-tiend
Tly, N. 200S. Tle economic impuct ol guiment luctoiy woikeis on
tleii own lumily membeis in tle villuge. In Royul Univeisity
olPlnomPenl.RuiulUibunMigiutioninCumbodiu.Working
Paper No. 1.
UnitedNutions(UN).2009.CommonCountiyAssessment:Cumbodiu.
UnitedNutionsCountiyTeum,PlnomPenl,Cumbodiu.
United Nutions Development Piogiumme (UNDP). 2009. Cumbodiu
countiycompetitiveness:Diivingeconomicgiowtlundpoveity
ieduction.Insights for Action.
United Nution Intei-Agency PioIect on Humun Tiullicking (UNIAP).
2009. Exodus to tle sex tiude: Ellects ol tle globul linunciul
ciisisonwomen’swoikingconditionsundoppoitunities.SIREN
RepoitloitleUNIAP,PlnomPenl.20July.www.no-tiullicking
.oig/iepoitsdocs/siien/siiencb-04.pdl
United Nutions Development Fund loi Women (UNIFEM), Woild
Bunk, ADB, UNDP, und Depuitment loi Inteinutionul
Development(DFID).2004.Aluiisluieloiwomen:Cumbodiu
gendei ussessment. Plnom Penl. lttp://web.woildbunk.oig/
WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/
CAMBODIAEXTN/0,,contentMDK:20264079-pugePK:141137
-piPK:2178S4-tleSitePK:2938S6,00.ltml
UnitedStutesAgencyloiInteinutionulDevelopment(USAID).2007.
Fuctoiy-level vulue cluin unulysis ol Cumbodiu’s uppuiel
industiy. lttp://gipc.oig.kl/index.plp?option~comdocmun
&tusk~docdownloud&gid~13
. 2006. Gendei unulysis und ussessment. Volume 1: Gender
Analysis.USAID/Cumbodiu.
Depuitment ol Commeice, Goveinment ol tle United Stutes. 2009.
Ollice ol Textiles und Appuiel. lttp://otexu.itu.doc.gov/
msicty/vS380.ltm
168 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 6: Impact on women: Field studies
Duiing tle 1997–1998 Asiun linunciul ciisis, women weie dispiopoi-
tionutelyullected,undyoung,pooilyeducutedwomeninuibunuieus
tle most lit. Mindlul ol euiliei events, tle Asiun Development Bunk
commissionedlieldstudiesondilleientexpoitindustiiesintlePeople’s
Republic ol Clinu, Indonesiu, Plilippines, Muluysiu, Tluilund, und
VietNuminmid-2009.
Declines in demund loi muIoi expoits liom end–2007 weie seen
inulltlecountiies.Iniesponse,ietienclmentundieducedwoiklouis
weiecommonpluce,ultlougltleieweieimpoituntcioss-countiygen-
deidilleiences:inVietNum,womenloimedtleminoiityolietiencled
woikeis(sincetleyweiepeiceivedtobemoiepioductivetlunmen);
inIndonesiu,womenweietleliisttolosetleiiIobs(sincetleyweie
usuullyinvolvedinuspectsoltlepioductionpiocesspeiceivedusless
ciiticul).Oltleenteipiisesluyingollwoikeis,ulmostutliidluidollull
tleiilemulewoikeis.
Reguidless ol industiiul sectoi, stutus ol employment, und sex ol
woikei,iespondentsiepoitedincomedeclines.Automotivewoikeisin
Tluilundiepoitedincomedeclinesolubout40%,undelectionicswoi-
keis in tle Plilippines, lulls ol ubout 40–S0%. In Viet Num, women
iepoited u luigei lull in income ol 24.2% veisus 21.3%. All woikeis
iepoited ieductions in spending, witl educution tle lust item to be
ieduced.Neuily80%olTluilemuleuutomotivewoikeisiepoitediedu-
cingiemittuncestoiuiuluieus.
Tle downtuin loiced women und men to seek ulteinutive live-
liloods. In Viet Num, woiking in iestuuiunts und slops wus widely
iepoitedwlileinIndonesiu,ietiencledlemulewoikeisiepoitedbeco-
ming domestic woikeis oi looking to woik ubioud loi tle liist time.
Tleiecessionulsotiiggeiednegutivesociulimpucts,suclusincieused
lumilyconllict.
Tleiecessionundeiscoiesulessonoltleeuilieiciisis—ugendei-
iesponsive uppioucl to designing, monitoiing, und evuluuting econo-
mic iescue puckuges is needed. Countiies need to continue to collect
und unulyze gendei-disuggieguted dutu on tle luidest-lit sectois to
deteimine dilleientiul gendei impucts on woikeis und tleii lumilies
undtopiovidevoiceundvisibilitytowomentlutuieullected.Inpuiti-
cului,investingingendei-iesponsivesociulseivices—wlicliespondto
women’siolesuseconomicugentsuswelluspiovideisolcuieloitle
well-beingollumilies—isneeded.
Souice: Sumuntlu Hung in “Lesson Not Leuined? Gendei, Employment, und
Sociul Piotection in Asiu’s Ciisis-Allected Expoit Sectois.” www.udb.oig/
Documents/Events/2009/Poveity-Sociul-Development/pupeis.usp
169
No cushion to fall back on:
The impact of the global recession
on women in the informal economy
in four Asian countries
Zoe Horn
1
Introduction
Tle cuiient globul iecession lus lit luid, und lew economic uc tois
luvebeeninsulutedliomtleslocks.Tleieissignilicuntconceintlut
tlis downtuin could giuvely ulllict developing countiies, ellectively
destioyingtleeconomicpiogiessoliecentyeuis.Tlesizeundsigni-
licunce ol tle inloimul economy
2
in Asiu muke it u ciiticul point ol
investigutionloiundeistundingtleimpuctoltleiecessionontleieul
economyinemeigingcountiiesoltleiegion.Avuilubleliguiessuggest
tluttlecontiibutionoltleinloimuleconomytogiossdomesticpio-
duct(GDP)is41%loiAsiu,undinSoutlundSoutleustAsiuinloimul
employmentuccountsloitlegieutestiegionulpuiticiputionolinloi-
mulwoikeisoutsideSub-SuluiunAliicu(ILO2002).
Duiingciises,munyietiencledwoikeisundloimulwugeeuineis
enguge in inloimul uctivities to compensute loi declining wuges und
puiclusingpowei—tlisispuiticuluilyciiticulintleubsenceolloimul
sociul piotection. Tlis pupei inteiiogutes tle notion ol tle inloimul
economy us u “cuslion” loi its loimul counteipuit duiing economic
downtuins,undsuggeststluttlemoiepiessingissueistleieulitytlut
1
Zoe Hoin is pioIect cooidinutoi loi Women in Inloimul Employment: Globulizing
undOigunizing(WIEGO).
2
Tle “inloimul economy” is u somewlut contested concept. In tlis pupei, tle
inloimuleconomylusubiouddelinition,undincludesbotlenteipiisestlutuienot
legullyieguluteduswellusemploymentielutionslipstlutuienotlegullyieguluted
oi piotected. As sucl, tle inloimul economy compiises ol ull loims ol “inloimul
employment”—tlut is, employment witlout luboi oi sociul piotection—botl
inside und outside inloimul enteipiises, including botl sell-employment in smull
uniegisteiedenteipiisesundwugeemploymentinunpiotectedIobs.
170 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
inloimulwoikeis,luckingsociulundeconomicpiotectionsbydelini-
tion,luveno“cuslion”oltleiiowntolullbuckon.
Wlile tle inloimul economy muy piovide some ieliel liom tle
slocks ol tle ciisis, tlis inloimul sulety net is illusoiy. Employment
intleinloimuleconomymuyiiseduiingeconomicciises(Lee1998,
Tokmun 1992), but tlis does not necessuiily meun tlut tiuditionul
inloimulwoikeisoinewentiuntsuietliiving.Inieulity,globuleco-
nomic downtuin tlieutens to eiode tle liugile economic und sociul
position ol tlese woikeis, wlo olten luve slim muigins loi suivivul
in tle best ol times. Tlese ellects tend to be puiticuluily seveie loi
inloimully employed women, wlo uie oveiiepiesented umong low-
endsegmentsoltleinloimuleconomy.
Tlis pupei specilicully uddiesses lindings on tle impucts ol tle
economic ciisis on nonugiicultuiul inloimul woikeis in loui Asiun
countiies—Indiu,Indonesiu,Pukistun,undTluilund—undwitlintliee
inloimul nonugiicultuiul occuputionul sectois—constiuction woik,
lome-busedwoik,undwustepicking.Tlepupeidiscussestlespecilic
tiunsmissionclunnelsoltleciisistotleselectedinloimulsectois,us
well us tle udditionul stiuin ol deteiioiuting woiking conditions und
incieusedcompetitionliomnewentiuntsintleinloimuleconomy.Tle
gendei-specilicconsequencesoltleciisisuiediscussedinteimsoltle
stiuctuieundcompositionoltleinloimulsectoi,butulsousulunction
oltlelouseloldundindividuullevelimpuctsoltleciisis,ielutedto
sliltingiesponsibilityinpuidundunpuidwoikwitlinlumilies.
Ciiticully,tleciisisisluitleiundeiminingtleulieudypiecuiious
economic und sociul positions ol muny inloimul woikeis und tleii
lumilies,unddiivingtlemluitleiintoimpoveiisl ment.Resolvingtlis
situution demunds immediute und tlougltlul inteivention by locul,
nutionul,undinteinutionuluctoispositionedtopiovideussistunce,u
topictlisclupteituinstoinitsconclusion.
Research sample and methodology
Tlis cluptei is bused on lindings liom Indiu, Indonesiu, Pukistun,
undTluilund—countiiesincludedinunongoing,globulstudyontle
impucts ol tle ciisis on inloimul woikeis (Hoin 2009). Tle study
is being conducted by tle Inclusive Cities pioIect und cooidinuted
by Women in Inloimul Employment: Globulizing und Oigunizing
(WIEGO), in oidei to investigute tle ieul, on-tle-giound ellects ol
tle ciisis on tle inloimul economy und woikeis ucioss Aliicu, Asiu,
undLutinAmeiicu.ExpundedieseuiclinAsiuwusmudepossibleby
lundingliomtleAsiunDevelopmentBunk.Tlislundingextendedtle
171
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
study’sieseuiclumonglome-busedwoikeisundwidenedtlescopeol
investigutiontoincludeconstiuctionwoikeis.
Reseuicl included in tlis cluptei wus conducted by locul und
iegionul puitneis, specilicully membei-bused oigunizutions ol inloi-
mul woikeis und teclnicul suppoit oigunizutions tlut woik diiectly
witltlewoikingpooi.Tuble1depictstleglobulstudy’spuitneisin
Asiu, tle sectoi ol tleii woik, und tle locule wleie tley conducted
tleiiieseuicl.
Table 1: Study participation by sector and locale
Sector
Partner Country/City
Constiuction
woik
Sell-EmployedWomen’s
Associution
Almedubud,Indiu
Home-bused
woik
HomenetSoutl-EustAsiu
(HomenetTluilundundHomenet
Indonesiu);
HomenetSoutlAsiu(Homenet
Pukistun)
HutYuiundBungkok,
Tluilund;
Mulung,Indonesiu;
KusuiundSiulkot,Pukistun
Wustepicking KugudKuclPutiuKusltukuii
Puncluyut(KKPKP)
Pune,Indiu
Souice:Hoin(2009).
Dutuweiegutleiedtliougllocusgioupdiscussions,one-on-one
inteiviews witl woikeis, und key inloimunt inteiviews witl stull
liom membei-bused oigunizutions und oigunizeis ol inloimul woi-
keis.Atotulol10locusgioupsweieconductedinAsiu,louiolwlicl
weieconductedspecilicullyloitliscluptei.Reseuiclwusconducted
between July und Septembei 2009. Tlis cluptei includes dutu liom
136 inloimul woikeis ucioss tliee occuputionul sectois: 102 lome-
busedwoikeis,22wustepickeis,und12constiuctionwoikeis.Inull
sectois, tle muIoiity ol puiticipunts weie women, wlo iepiesented
91%oltletotulnumbeiolinteiviewees.
Gender and the Asian informal economy
Tle inloimul economy is leteiogeneous und complex. Employment
in tle inloimul economy includes ull iemuneiutive woik—botl sell-
employment und wuge employment—tlut is not iecognized, iegu-
luted, oi piotected by existing legul oi iegulutoiy liumewoiks und
noniemuneiutive woik undeituken in un income-pioducing entei-
piise(ILO2002).Inglobulvuluecluins,pioduction,distiibution,und
172 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
employmentcunlullutdilleientpointsonucontinuumbetweenpuie
“loimul”ielutions(i.e.,iegulutedundpiotected)utonepoleundpuie
“inloimul”ielutions(i.e.,uniegulutedundunpiotected)uttleotlei,
witlmunyinteimediutecutegoiiesinbetween.Woikeiscunulsomove
ucioss tle loimul-inloimul continuum oi opeiute simultuneously ut
dilleientpointsulongit,oibotl(Clen2007).
Women tend to be oveiiepiesented in tle inloimul economy in
Asiu,ustleyuiewoildwide.Tleinloimuleconomyinmostcountiies
lus u liglei piopoition ol women woikeis tlun men woikeis
(UN 2000). In Indiu und Indonesiu, inloimul employment uccounts
loi9outoleveiy10womenwoikingoutsideugiicultuie,undmoie
tlun lull ol economicully uctive women uie inloimully employed in
PukistunundTluilund(Tuble2).
Table 2: Share of nonagricultural workforce, female and
male, in the informal economy and women’s share of
the informal economy (%)
Country
Share of nonagricultural
labor force that is in the
informal economy
Women’s share
of the informal
economy in the
nonagricultural
labor force
Women
Men
Indiu 91 23 70
Indonesiu 88 43 69
Pukistun 61 64 n.u.
Tluilund S4 47 49
n.u.~dutunotuvuiluble.
Souices:DutuloiIndiu,Indonesiu,undTluilunduieliomUN(2000),cluitS.13,p.13.Dutuloi
PukistunuieliomKlunetul.(2001).
Tleieisusignilicuntoveilupbetweenbeinguwomun,woikingin
tleinloimulsectoi,undbeingpooi(Clen2001).Compuiedtotlemule
inloimulwoikloice,womenintleinloimulsectoiuiemoielikelyto
beown-uccountwoikeis(i.e.,sell-employedwoikingbytlemselves)
undsubcontiuctwoikeis,unduielesslikelytobeemployeisoipuid
employeesolinloimulenteipiises.Tlesegendei-buseddilleiencesin
employmentstutuswitlintleinloimuleconomyluveimplicutionsloi
ielutivesociulundeconomicvulneiubilityduiingciisis,uswillbedis-
cussedintlenextpuges.
173
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
Transmission channels of the global
recession to selected informal sectors
Tle ellects ol tle economic downtuin on uibun inloimul sectois in
Asiuuieoccuiiingbotlinpuiullelundusuconsequenceoltleellects
ol tle ciisis in tle loimul economy. Inloimul sectois uie being lit
bymunyoltlesumeloicesullectingtleloimuleconomy:sliinking
consumption, diopping demund, und piice instubility. In uddition,
ultlouglinloimulmuiketsluvesomeinleientllexibility,tleiiiesi-
lience is now being tested to tle limit by tle impucts ol tle ciisis.
Findings suggest tlut moie und moie inloimul woikeis uie compe-
ting loi lewei customeis und loi lewei und smullei contiucts. Tlis
ieulity is puiticuluily giim given tle unemployment pioIections by
tle Inteinutionul Luboui Oigunizution, wlicl estimutes tlut tle
numbeiolloimullyunemployedpeopleuciossSoutlundSoutleust
Asiuwillluveiisenby10millionbetween2007undtleendol2009
(ILO2009u).
Home-based workers
Oveitlepustlewdecudes,mucloltleinloimulizutionundleminizu-
tionoltleluboiloicesinAsiu’sdevelopingcountiies(Cluimes2001)
lus been ieluted to tle giowtl ol lome-bused woik. Olliciul stutis-
ticsonlome-busedwoikinmostcountiiesuieextiemelylimited,und
tleieuielewliguiesontleexuctgendeicompositionoltliswoikin
vuiiouscountiies.Howevei,mostevidencesuggeststluttliswoikisu
dispiopoitionutelyciiticulsouiceolincomeloiwomen,
3
wlouccount
loi S0%–7S% ol lome-bused woikeis wleie stutistics uie uvuiluble
(ILO2002).Home-busedwoikeisincludetlesell-employedwlouie
enguged in lumily businesses oi own-uccount opeiutions, us well us
puid woikeis woiking undei subcontiucting uiiungements, botl ol
wlomuieincludedintlelindingsoltlispupei.
Specilicpioductionuctivitiesloilome-busedwoikeisinteiviewed
loi tlis pupei in Indonesiu, Pukistun, und Tluilund uie included in
Tuble 3. Subcontiucted woikeis uie moie likely to be involved in
expoited-oiientedwoik,wlilesell-employedwoikeisuiemostlikely
toselltleiigoodslocully.
3
Foiuieviewoltlisevidence,seeClenetul.(1999).
174 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Decieused demund witlin ciiticul globul und iegionul muikets
duiing tle globul economic ciisis lus seiious consequences loi sub-
contractedlome-busedwoikeis.Asiu’stigltlyintegiutedsupplycluin
tiunsmittedtleexteinuldemundslockiupidly—betweenSeptembei
2008undFebiuuiy2009,expoitslellutununnuulizediuteolubout
70% in emeiging Asiu (IMF 2009). Lowei demund lus iesulted in
loweivolumesolcontiucts:60%olsubcontiuctedpuiticipuntsiepoi-
ted tlut tley lud ieceived smullei und moie inliequent contiucts
liommiddlemenintlepievious6montls.Neuilylullsubcontiucted
lome-bused woikeis iepoited woiking lewei louis eucl duy (49%)
undleweiduyspeiweek(44%)tluntleydid6montlseuiliei.Tlis
in tuin lud ullected tleii incomes: 64% ol tlem iepoited tlut tleii
incomesludlullenintlepievious6montls.
Decliningincomeumongcustomeisinloculmuiketssignilicuntly
ullectedtleself-employedlome-busedwoikeis:84%oltlesewoikeis
iepoited decieused demund ovei tle pievious 6 montls, wlile 7S%
iepoitedtluttlevolumeoltleiitiudeluddecieusedintlispeiiod.
Howevei, lowei demund oi volume ol sules did not tiunslute into
decieusedwoiklouisumongtlesell-employed.Unlikesubcontiucted
lome-bused woikeis, tley do not depend on middlemen to piovide
tlemwitlwoikoideis.Rutlei,sell-employedwoikeisoltenwoiked
longei louis to muintuin tleii piolit muigins. Tliity-loui peicent
Table 3: Home-based work activity, employment
structure, and market for products
Country
Employment
structure/
Product
Export
market
Domestic
market
Local
market
Indonesiu Subcontiucted
Budmintoniuckets/
sluttlecocks
Sloes v
v
v
v
Tluilund Subcontiucted
Cuiuccessoiies
Guiments
Leutleiwoik
Sell-employed
Foodpiocessing
Guiment
v
v
v
v
v
v v
v
v
Pukistun Subcontiucted
Socceibulls
Sell-employed
Reedmuts
v
v
v
v
v
v
Souice:Autloi.
175
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
weie woiking moie louis eucl duy, wlile tleii duys ol woik eucl
weekiemuinedluigelystuble.Neveitleless,ulugepiopoition(84%)
ol sell-employed lome-bused woikeis iepoited tlut tleii montlly
incomesludlullenduiingtleliistlullol2009.
Botlsell-employedundsubcontiuctedlome-busedwoikeisiepoi-
ted incieused numbeis ol woikeis in tleii sectois: 34% und 36% ol
iespondents,iespectively.Accoidingtoiespondents,womenuietui-
ningtolome-busedwoikinmuclgieuteinumbeistlunmen,wlicl
isconsistentwitltlepie-ciisisgendeicompositionoltlesectoi.Yet
notulltloseseekingsuclwoikuielindingit.Asell-employedlome-
busedwoikeiinTluilundiepoited,“About20womenwloweieluid
ollliomtleluctoiies,includinguwomunwitlunewboinbuby,cume
touskmeloipiecewoik,butIluvenowoiktogivetlem.”
4
Subcontiucted lome-bused woikeis, most ol wlom uie women,
uiepuiticuluilyvulneiuble.Inconditionsolexcessluboisupply,piece
iutes(tlenoimulloimolpuymentloitlesewoikeis)cunbediiven
veiylowundtluswoikeis’sluieintlevuluecluinlullsluitlei,even
tlougl muny sucl woikeis uie liglly skilled. Among subcontiucted
woikeisincludedintlisstudy,neuilyS0%iepoitedtluttlepieceiute
tleyieceiveludlullenintlepievious6montls.
Waste pickers
Tle iecession in industiiulized countiies lus ieduced demund loi
expoits liom key munuluctuiing countiies, puiticuluily tle People’s
RepublicolClinu,undweukenedtlemuiketloitleiecyclublesused
intlepioductionoipuckugingolexpoitgoods.Tlisbeguntoinlluence
inteinutionulpiicingdynumicsuseuilyusOctobei2008.Intleglobul
study (Hoin 2009),
S
wuste pickeis expeiienced tle sluipest decline
indemundundsellingpiicesumongtlesectoisinvestiguted.Tuble4
depicts tle piice clunges iepoited by wuste pickeis in Pune, Indiu,
betweenJunuuiyundJune2009.Tletubleieveulstluttleiepoited
piicesloiwustemuteiiulslud,onuveiuge,dioppedbyS%–7%liom
euilytomid-2009,buttlepiicesolplusticmilkbugsundcuidbouid
luddioppedbyusmuclus20%und16%,iespectively.
Duiing ciises, economic stiess is olten slilted down tle cluin,
und losses uie tiunsleiied dispiopoitionutely to inloimul wuste pic-
keis,wlotypicullyoccupytlebottomiungolloculundglobulsupply
4
Inteiviewwitlulemulelome-busedwoikei,16June2009,Bungkok,Tluilund.
S
Tle globul study included wuste pickeis liom Bogotu, Colombiu, und Suntiugo,
Clile.
176 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
cluins.WustepickeisinIndiu’scitiesieceiveuslittleusS%oltlepiice
tlut industiy puys loi iecyclubles, wlile middlemen pocket tle iest
(Medinu200S).Inuddition,inmunyAsiuncountiies,ucleuimuIoiity
olstieetunddumppickeisuieoltenwomenundclildien,wlilemen
uie moie likely to be involved in tle piocessing und selling ol ieco-
veiedmuteiiuls,unduiemoielikelytobemiddlemenundmunugeis
(Fuiedy1990.)Tleielutivelylowpositionolwomeninwusteindustiy
supplycluinstypicullymukestlemevenmoiedependentduiingluid
times—pievious studies luve ulso concluded tlut women uie olten
puid less loi tle wuste muteiiuls tley sell, und ieceive less by wuy
ol udvunces oi louns liom middlemen (loi exumple, see Mullei und
Scleinbeig2003).
AssuggestedbyFuiedy,womencunim piovetleiieuiningswlen
tley uie involved in stiong coopeiutive oigunizutions tlut inteivene
witl inteimediuiies und tiudeis (Fuiedy 1990.) In tle globul study,
tlewustepickeisinPune,Indiu,wlileullwomen,iepoitedlessdiu-
muticpiicedeclinestlunbotltleiimuleundlemulecounteipuitsin
LutinAmeiicu.TlePunewustepickeisweieinvolvedinligllyoigu-
nized wuste-iecycling sclemes, witl lull selling wuste tliougl tleii
Table 4: Price changes for different categories
of waste materials reported by waste pickers,
January–June 2009 (%)
Material
Pune, India
(Inlosys)
Pune, India
(Univeisity)
Cuidbouid –7 –16
Ollicepupei –1 –12
Sciuppupei –2 –4
Newspupei –4 0
Gluss 0 0
Plustic
Blow-molded –4 –10
InIection –13 –2
PET –7 –11
Feiiousmetul –17 +7
Aluminum –13 +9
Plusticbugs 0 –12
Milkbugs—plustic –20 –12
Average change –7 –5
PET~Polyetlyleneteiepltlulute.
Souice:Hoin(2009).
177
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
own coopeiutive.
6
Wletlei being oigunized bulleied tlem liom tle
moie diumutic piice declines iepoited liom otlei countiies iemuins
unempiiiculquestiontlutneedsluitleiinvestigution;lowevei,study
iesultsseemtosuggesttluttleiewussomemitigutingellect.
Still, 77% ol tle wuste pickeis in Pune iepoited u decline in
incomeoveitlepievious6montls.Beingoigunizedundluvingtleii
own coopeiutive did not bullei Pune wuste pickeis liom tle decline
inwusteuvuilubility.Puiticipuntsiepoitedtlutieducedconsumption
locully,duetotougleconomictimes,wusleuvinglesswusteloipickeis
to collect. Wuste pickeis collecting liom un inloimution teclnology
puik noted tlut locul liims, us u cost-suving meusuie in iesponse to
tleiecession,ludieducedtleiiuseolnewspupeisundpiintpupei—
twoveiyvuluublewustemuteiiuls.Tlecoopeiutivesciupstoiewleie
tlesewoikeissoldtleiimuteiiuliegisteiedunulmostS0%diopintle
totulvolumeolmuteiiultleybiougltloisule.
Construction workers
Economic downtuin und tle ligl cost ol building muteiiuls in
Almedubud,Indiu,luvecuibedconstiuctionunddevelopmentlocully.
Hulltleconstiuctionwoikeisinteiviewedloitlisstudyindicutedtlut
tleii volume ol woik lud lullen. Six montls euiliei, tley olten lud
10–1Sduysolwoikumontl,butnowludonlyS–6.Tliswustlecuse
umongmenwlowoikedinskilledluboi,suclusmusoniy,plumbing,
und tile woik, us well us women wlo geneiully piovided unskilled
luboi,suclusluulingcementoistuiningundsunding.Duilyeuinings,
lowevei,luvelullendispiopoitionutely.InFebiuuiy2009,unskilled
woikeis ieceived 100–1S0 iupees u duy loi tleii luboi, but ut tle
timeoltleiiinteiviewsinAugust2009weieieceivingRs70–Rs80pei
duy.Skilledwoikeisdidnotiepoitudeclineinduilyeuinings;tley
ieceivedRs200–2S0uduybotlinFebiuuiyundAugust2009.
Incieusedcompetitionwitlintleinloimuleconomylusulsoluit
woikeis.Sell-EmployedWomen’sAssociution(SEWA)estimutestlut,
in Almedubud City, Indiu, tle decline ol key industiies sucl us diu-
mondpolislingduetotleeconomicciisislusincieusedtlenumbei
olinloimulwoikeisundiecentlyietiencledloimulwoikeisseeking
woikintleconstiuctionsectoibyulmost2S%(SEWA2009).Munyol
6
PunewustepickeiswlocollectwusteliomInlosysselltleiimuteiiultoucoopeiutive
sciupstoieiunbytleiiownoigunizution,KKPKP.TlosewloseivicePuneUniveisity
CumpusuieundeiuloimulcontiuctbetweenKKPKPundtleUniveisity,undeuin
usuluiy,upuitliomtlemoneytleyieceivetliouglsuleolsciup.Sciupisusuully
uccumulutedloiuweekundtlensoldcollectivelybytlegioupundtlepiolitsuie
sluiedequullyulteideductingexpenses.
178 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tlesenewentiuntsuiecompetingloiwoikinunskilledconstiuction
woik, us tle buiiieis to entiy uie lowei. Botl men und women uie
tukingupconstiuctionwoik,butwomenwilllikelybedispiopoitionu-
telyullected,botltlosewloweieulieudydoingunskilledconstiuc-
tionwoikundtlosewlouieseekingunskilledconstiuctionIobs.
New mule entiunts in constiuction possess u plysicul udvuntuge
undutimeudvuntuge:witlleweilouseloldduties,tleyuiegeneiully
ubletouiiiveeuilieiuttleieciuitmentcoineis(kadiya naka)wleie
mostconstiuctionwoikeisgutleieuclduytocompeteloiconstiuction
Iobs. Additionully, new lemule constiuction woikeis uie less likely to
luvetleskillstocompeteloiskilledconstiuctionIobs,tiuditionullytle
pieseiveolmen,unduieloicedtocompeteloiunskilledconstiuction
Iobs,tlusbecomingluitleiconcentiutedintlislowei-puyingwoik.
In sum, ieseuicl indicutes tlut inloimul woikeis uie ullected
bytleeconomicciisisinmunyoltlesumewuysusloimulwoikeis,
sulleiing diiectly und indiiectly liom declining demund, sliinking
consumption, und volutile piices. Moieovei, inloimul woikeis luce
incieusedcompetitionusmoiepeopleenteitleinloimuleconomyund
usmoieIobsuieinloimulized.
Womenuiesulleiingdispiopoitionutely.Tleimpuctsundcompe-
titionuiestiongestintlepooiest-puyingundlowestbuiiiei-to-entiy
inloimulsectoisundsubsectois,wleiewomenuieulieudyoveiiepie-
sented. Evidence ol tlis incieusing economic stiess und unceituinty
ut tle bottom ol tle globul economic pyiumid in Indiu, Indonesiu,
Pukistun,undTluilundsuggeststluttleinloimuleconomyisluidlyu
“cuslion”duiingeconomicdowntuin,leustolullloiwomen.
The increasing vulnerability of informal
workers and their families
Vulneiubility—tlepiobubilitytlutuslockwilliesultinudeclinein
well-being (Meliotiu und Biggeii 2002)—is being incieused by tle
economicciisis,puiticuluilyloiwomenwoikeisundclildieninlouse-
loldsdependentonincomeliomtleinloimuleconomy.Vulneiubility
is luigely u lunction ol u louselold’s ussets, wlicl uie tleii endow-
mentsolplysiculundlumuncupitul.Tleloundutionoltleseussetsis
tlestubilityunddiveisityollouseloldincome.Tlesizeundcompo-
sitionollouseloldsundluckoldiveisilicutionollumilyoilouselold
income souices iepoited by puiticipunts liglliglt tle impoitunce ol
inloimulwoikeis’incometotleiilouselolds.
Feweitlunone-tliid(27%)ollemuleiespondentsbutoveilull
(S8%) ol mule iespondents iepoited tlut tley weie tle piimuiy
179
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
income euinei in tleii louselold. Tuble S ieveuls tlut tleie wus un
uveiuge ol two income euineis in iespondents’ louselolds; muny ol
tlemwoikedintlesumeinloimulsectoiustleiespondent.Tleuve-
iuge louselold size iepoited by inloimul woikeis in tle loui Asiun
countiieswussix.
Between two-tliids und tliee-quuiteis (71%) ol iespondents
iepoitedtluttleysuppoitedclildien,undumongtleselouselolds,
tle uveiuge numbei ol clildien wus between two und tliee. Tleie
isevidencetluttleincome-euiningbuidenwitlintleselouselolds
muybeintensilyingusuiesultoltleciisis:18%oliespondentsiepoi-
ted tlut u louselold membei lud become unemployed duiing tle
pievious6montls,und41%iepoitedtluttleincomeoloneoimoie
louseloldmembeisludlullensignilicuntlyoveitlesumepeiiod.
Table 5: Household profiles
Sector
Average
no. of
earners in
household
Average
household
size
% of
households
with
children
Average no.
of children
among
households
with children
Constiuction
woikeis
2.2 4.0 S0 1.8
Home-bused
woikeis
2.7 6.3 7S 2.4
Wuste
pickeis
1.9 S.0 64 2.6
All 2.5 5.9 71 2.4
Souice:Hoin(2009)(upduted).
Evidenceliomeuilieieconomicciisessuggeststlutitisgeneiully
up to women to bulunce tle louselold budget und muintuin tleii
lumilies’livingstunduidsduiinguciisis(Mosei1996.)Munywoiking
pooiwomenspendulltleiiincomesonlouseloldexpendituies.Tlis
situution is puiticuluily clullenging loi women duiing tle cuiient
ciisis—incomesuiestietcledespeciullytlinsinceloodundluelpiices
luveiemuinedliglsincetleloodundluelciisisoleuily2008.
7
Intle
7
Wliletleoiiginoltleseincieusespiecedestleeconomicciisis,itisimpoituntto
notetluttleiesiduulimpuctsoltleloodundluelciisesol2008uiecompounding
tleellectsoltleeconomicciisisloimunywoikeis.InIndonesiu,loiexumple,piices
ioseby1S%–2S%loisugui,iice,undeggs,S0%loigusoline,und40%loipublic
tiunspoitoveitle12montlstoJuly2009.
180 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
globul study, lemule iespondents expiessed puiticului concein ubout
tlevulneiubilityoltleiiclildien,wlodonotundeistundwlylouse-
lold expendituies luve to clunge. Tlis liglliglts tle luct tlut tle
ciisis lus leigltened tle iole ol women us gutekeepeis in tle intei-
geneiutionultiunsleiolpoveity.
Food, typicully ullocuted u luige sluie ol tle louselold budget
umongtlepooi,isbeingiestiicted.Botltlequuntityundquulityol
loodisullected—leweimeulsuiebeingseived,wlile“luxuiy”items
sucl us milk und meut uie being cut. Wlile iespondents iepoited
luvingdillicultyinpuyingloiscloollees,lewiespondentsiepoited
iemovingtleiiclildienliomscloolultogetlei.Limiteddiopoutiutes
uiguubly iellect tle elloits ol lumilies, in dillicult ciicumstunces, to
piotect wlut is peilups tle most impoitunt type ol investment tley
cun muke, numely, tleii clildien. Medicul expendituie is geneiully
consideied u luxuiy ut tle best ol times. Neveitleless, some lome-
bused woikeis in Pukistun iepoited loigoing piesciiption medicines
loicleupeiundlessellectivetieutments,sucluslomeiemediesloi
commoninIuiiestotleiilunds.Tleyleuiedtliswouldimpucttleii
long-teimeuinings,becuusetleiilingeisuietletoolsoltleiitiude.
Inunelloittokeepupwitliisingexpenses,somewoikeisiesoi-
ted to boiiowing in tle inloimul ciedit muiket liom neiglboilood
stoiekeepeis oi locul moneylendeis. Some wuste pickeis boiiowed
liomsciup-slopowneis,wlilelome-busedwoikeisinTluilundiepoi-
tedboiiowingliommoneylendeistopuytledebtspilingupliomotlei
moneylendeis.Intleseinloimulcieditmuikets,woikeisweiebeing
cluigedupwuidsol30%umontl.Tleseinteiestpuymentsincieuse
linunciulpiessuieoninloimulwoikeisundieducetleiieuiningsovei
tlelongteim.
Decieusedlouseloldincomeisloicingmunywomen—including
tloseulieudyinloimullyemployed—todevotemoieundmoieoltleii
timetopuidwoik.Womenweiestionglydiiventocontinuewoiking
loi tle well-being ol tleii lumilies, und tleii clildien in puiticului.
Findingsliompustciises,uswellusevidenceliomtlecuiientecono-
micdowntuin,suggesttlutwomenuiestiugglingluideitoleedtleii
lumilies,wlilestillluvingtopiovideunpuidcuieunddomesticcloies
(ILO2009b).
Foi exumple, in tle study moie tlun u quuitei (27%) ol lemule
lome-bused woikeis iepoited tlut tley weie tle piimuiy euinei in
tleii louselold, wlile tley cuiiied out clild-cuie duties ulongside
tleiilome-busedpioduction.Tleyulsodidudispiopoitionuteumount
oldomesticwoik,sucluspiepuiinglumilymeuls,cleuningtlelouse,
wuslingclotles,undpiovidinglospitulitytoguests.
181
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
Decieused incomes luve meunt tlut some women cunnot ulloid
tle lew conveniences tlut would liglten tleii loud. A womun in
Tluilundiepoitedtlutslecouldnolongeibuypiepuiedmeulsloilei
lumily,wliclludsuvedleitimeundeneigyintlepust.Tlismeunt
slenowludtotukemoietimeliomleiincome-geneiutionuctivities
tocook.
It is cleui tlut lulling incomes, incieused unceituinty, und louse-
lold stiuin uie ulieudy tuking u toll on tle mentul leultl ol inloimul
woikeis,puiticuluilywomen.Accoidingtoiespondents,tleiiemotio-
nul iesouices weie iunning low, und tley iepoited leeling depiessed
undexluusted.Mucloltledepiessionwuslinkedtoleelingsolluiluie
unddisuppointmentinpiovidingloitleiiclildien.Woikeisweieulso
sensitivetoiisinglevelsolinsecuiityunddepiessionumongtleiilumily
membeis, wlicl incieused tleii sense ol guilt. A numbei ol women
iepoited leeling so oveibuidened tlut tley dieumed ol lleeing tleii
lomes—onlytletlougltoltleiiclildienkepttlemliomdoingso.
Conclusions and policy implications
Globul iecession undeimines tle piecuiious liveliloods ol tle tiu-
ditionul inloimul woikloice und tle ubility ol new entiunts to lind
slelteiintleinloimuleconomy(Giunt2006).Contiuiytoucommon
ussumption,tleieisnocuslionin,mucllessucuslionloi,tleinloi-
muleconomy.Tleieuieonlyunincieusingnumbeiolliimsundindi-
viduulscompetingloievei-decieusingslicesolusliinkingpie.
Consequently, tlis ciisis demunds immediute und tlougltlul
publicinteiventioninsuppoitolinloimulwoikeisundtleiilumilies.
Inloimulwoikeisiepiesentuluigeundsignilicuntsluieolwoikeisin
Asiu,especiullyindevelopingcountiies,sopiovidingsociulundeco-
nomicpiotectionloitlesewoikeisulongsidetlutgiventotleiiloi-
mulcounteipuitsisciiticulinnoimultimes,butpuiticuluilysoduiing
ciises. In uddition, elloits to suppoit tle inloimul economy must
include specilic meusuies to suppoit tle most vulneiuble inloimul
woikeis—women und clildien. An ellective ciisis-iesponse stiutegy
loi inloimul woikeis must be inloimed by tle sloit-, medium-, und
long-teimview.
Emeigencyielielmeusuiesuieessentiul.Cusltiunsleipiogiums
tuigeted ut specilic inloimul sectois must be uccompunied by tle
ucceleiuted dispeisul und suspended conditionulity ol existing cusl
tiunslei piogiums to ullow use ol lunds loi suppoiting liveliloods.
Expunded public woiks euimuiked loi employment umong tle pooi
182 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
und vulneiuble men und women uie unotlei key inteivention, sucl
ustleNutionulRuiulEmploymentGuuiunteeActinIndiu,pussedin
200S,wliclguuiunteesemploymenttoudultmembeisoleveiyiuiul
louseloldinIndiuloiutleust100duysineveiylinunciulyeui.Similui
sclemescouldbeimplementedonusloit-teimemeigencybusis,tui-
getedutspecilicsectoisolinloimulwoikeisundtlewoikingpooiin
luid-lituieus.Intlelongteim,sociulpiotectionloiinloimulsectoi
woikeisundtleiidependentsisulsociiticultliouglspeciullydesig-
nedsociulinsuiuncesclemes,tliouglsociulussistunceundtliougl
tleextensionundieloimolloimulsectoisociulinsuiunce.
Goveinments must ulso considei sectoi-specilic iescue pluns,
to be developed in consultution witl inloimul occuputionul gioups.
Specilicbuiloutsoiiescueplunswouldlelpinloimulwoikeismuin-
tuinexistingemploymentoppoitunitiesduiingtleciisisoisecuienew
employmentoppoitunitiesonceitlusended.Tlisdoesnotnecessuiily
iequiie udditionul spending but ieullocution ol spending und udIust-
ment ol policies. Tuble 6 piovides iecommendutions tlut slould be
implemented in sectoi-specilic iescue pluns. Bieuking tle ciippling
cycle ol peisonul und louselold debt, uggiuvuted by tle ciisis, is u
piioiity.Attleleuitoltlisissueistlecieutionoluccesstolow-inteiest
lounsundulocusonIobcieutionloiwomen,includingincentivesund
skillsdevelopmentloigiilsundwomeninoideitolucilitutestubleund
secuieemployment.
Table 6: Sector-specific recommendations
Construction
workers
Home-based
workers Waste pickers
Piomotionund/oi
enloicementol
minimumwugesloi
dilleientkindsol
constiuctionuctivities
Enloicementolbusic
suletystunduidsut
woiksites
Compensutiontowoikeis
loion-siteuccidents
Heultlundlileinsuiunce,
(inligltoltle
plysicullydemunding
undoltendungeious
woik)
Speciulizedskillstiuining,
puiticuluilyloiwomen
Piomotionund/oi
enloicementol
minimumwugesloi
subcontiuctedwoikeis
Accesstolowinteiest
businesslounsloisell-
employedlome-bused
woikeis
Cieutionolloimul
goveinmentliuisons,to
enlunceinloimution
undvisibility
Teclniculundmuiketing
ussistuncetosell-
employedwoikeis
Piovisionolclild-cuie
lucilitiesundsuppoit
loieducutionumong
woikeis’clildien,
puiticuluilygiils
Domesticpiiceiegulutions
Piovisionsolstoiuge
undsoitinglucilities,
tools,equipment(i.e.,
sucks,iukes,tiunspoit
velicles)
Incoipoiutionolwuste
pickeisintosolidwuste
munugementsystems
Investmentinieseuicl,
development,und
disseminutionolsectoi-
specilicteclnologies
Educutionundtiuining
couisesconceining
newwustepiocessing
metlods:e-wuste,
composting,bio-
metlunution,etc.
Souice:BusedonHoin2009.
183
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
Finully,inbotltlesloitundmediumteim,tlebuiiieistoinloi-
muluctivitiesslouldbeieducedundeitlepiincipleol“donoluim.”
Luws, iules, und iegulutions piolibiting oi undeimining tle liveli-
loodsolinloimulwoikeis,puiticuluilywomenundwoikingmotleis,
slouldbesuspended,utleusttempoiuiily.Inloimulwoikeiswloluve
no income-euining ulteinutives must be peimitted to muke u living
undsuppoittleiilumiliestliougltleciisis.Foilome-busedwoikeis,
tliscouldinvolvesuspensionolpolicybiusestlutluvoiloimulliims
undwoikeisoveiinloimulliimsundwoikeisinuccesstogoveinment
contiucts loi sucl items us sclool uniloims und lospitul linens. Foi
constiuction woikeis und inloimul wuste pickeis, tlis could include
cessutionolluiussmentbyuutloiities.
Tleglobuleconomicciisisslouldulsobeseenusuglobuloppoi-
tunity—toietlinkeconomicmodelsundpoliciestoincludetleinloi-
muleconomy.Tleciisispiesentsunoppoitunityloigoveinmentsund
otleiuctoistoinstitutelong-teim,meuninglulpolicyieloimtowuid
tle inloimul economy. It ulso piesents un oppoitunity to tlink dil-
leiently ubout tle inloimul woikloice und to ieliume tle muins-
tieuming—oi “loimulizution”—piocess us one uimed ut incieusing
euinings und ieducing iisks loi tle woiking pooi, not simply iegis-
tiution und tuxution ol inloimul enteipiises. Tle loundution loi tlis
newtlinkingmustbeunundeistundingtluttlewoikingpooiintle
inloimul economy need to be visible in economic stutistics und poli-
cies,luveuvoiceineconomicdecision-muking,undbeseenusluving
validity, oi legitimucy, us economic ugents und tuigets ol economic
policies.
Inloimully, employed women cun pluy u puiticuluily impoitunt
ioleusugentsolclungeintlisiespect.Womentendtobetleleust
visibleundmostvulneiubleintleinloimuleconomy,undyetuieolten
tle most poweilul economic und sociul ugents in tleii louselolds
und communities—tleii mobilizution und leudeislip will be ciiticul
toimpiovingtlelivesolmunywoikeisundtleiilumiliesuciossAsiu.
Foitlisieuson,itisciiticultlutgieuteigendei-specilicmonitoiingin
tleinloimuleconomybecomeupiioiitybotlloigoveinmentsundloi
economicundinteinutionulinstitutionsintlelutuie.
184 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
References
Cluimes, Jucques. 2001. Inloimul sectoi, poveity und gendei: A
ieviewolempiiiculevidence.BuckgioundpupeiloitleWorld
Development Report 2001.WoildBunk,Wuslington,DC.
Clen,Muitlu.2001.Womenintleinloimulsectoi:Aglobulpictuie,
tleglobulmovement.SAIS Review21(1):71–82.
———. 2007. Retlinking tle inloimul economy: Linkuges witl tle
loimul economy und tle loimul iegulutoiy enviionment.
United Nutions Depuitment ol Economic und Sociul Alluiis
(UN/DESA)Working PaperNo.46.
Clen,Muitlu,JennileiSebstud,undLesleyO’Connell.1999.Counting
tleinvisiblewoikloice:Tlecuseollomebused-woikeis.World
Development 27(3):603–610.
Fuiedy,Cliistine.1990.SociuluspectsolsolidwusteiecoveiyinAsiun
cities.Environmental Sanitation Review30.
Giunt, Uisulu. 2006. Uibun economic giowtl und clionic poveity.
Buckgiound pupei loi tle “Clionic poveity iepoit 2008–09.”
ClionicPoveityReseuiclCentie,Munclestei,UnitedKingdom.
Hoin, Z. E. 2009. No cuslion to lull buck on: Tle globul economic
ciisis und inloimul woikeis. Inclusive Cities Study, August.
www.inclusivecities.oig/pdls/GECStudy.pdl
Inteinutionul Luboui Oigunizution (ILO). 2002. Women und men in
tleinloimuleconomy:Astutisticulpictuie.Genevu.
———.2009u.Global employment trends.Junuuiy.Genevu.
———.2009b.Gendeiequulityuttleleuitoldecentwoik:Inteiview
witlJuneHodges.ILOmuguzineWorld of WorkNo.6S.
InteinutionulMonetuiyFund(IMF).2009.Regional economic outlook:
Asia and Pacific, Wuslington,DC.
Klun,S.R.,S.G.Kluttuk,undS.Kuzmi.2001.Huzuidouslome-bused
sub-contiucted woik in Pukistun. United Nutions Clildien’s
FundInnocentiReseuiclCentie,Floience.
Lee,E.1998.The Asian financial crisis: The challenge for social policy.
Genevu:InteinutionulLubouiOigunizution.
Medinu, Muitin. 200S. Wuste pickei coopeiutives in developing
countiies. Pupei piepuied loi WIEGO/Coinell/SEWA conle-
ience on membeislip-bused oigunizutions ol tle pooi,
Almedubud,Indiu.
Meliotiu, Suntosl, und Muiio Biggeii. 2002. Sociul piotection in
tle inloimul economy: Home-bused women woikeis und
outsouiced munuluctuiing in Asiu. Innocenti Working Paper
No. 97. United Nutions Clildien’s Fund Innocenti Reseuicl
Centie,Floience.
185
No cushion to fall back on: The impact of the global recession on women
in the informal economy in four Asian countries
Mosei,Cuioline.1996.Conliontingciisis:Acompuiutivestudyollouse-
loldiesponsestopoveityundvulneiubilityinlouipooiuibun
communities. Environmentally Sustainable Development Studies
and Monographs SeriesNo.8.WoildBunk,Wuslington,DC.
Mullei,MuiiuundAnneScleinbeig.2003.Gendei-linkedliveliloods
liom modeinising tle wuste munugement und iecycling sec-
toi:Aliumewoikloiunulysisunddecisionmuking.InViiginiu
MucluienundNguyenTliAnlTlu(eds.)Gender and the waste
economy: Vietnamese and international experiences. Hu Noi:
NutionulPoliticulPublislei.
Sell-Employed Women’s Associution (SEWA). 2009. Finunciul ciises
&employmentmeltdownininloimuleconomy:SEWA’sexpe-
iienceundimplicutions.Almedubud,Indiu.
Tokmun,V.E.1992.The informal sector in Latin America.Bouldei,CO:
LynneRienneiPublisleis.
United Nutions (UN). 2000. The world’s women 2000: Trends and
statistics. NewYoik:UNStutisticulDivision.
186 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 7: Pakistan
UnlikemunycountiiesinAsiu,Pukistun’seconomiclundumentulsweie
ielutively pooi beloie tle globul iecession. Tle economy lud giown
by u iespectuble 6.8% in 2006/07 but deceleiuted to 4.1% tle next
yeui. Altlougl muny commodity piices, especiully tlose loi luel oil,
slotupin2007,tlegoveinmentclosenottopussontleligleicost
toconsumeiswlicl,lowevei,ledtouluigelisculdelicit.So,wlentle
globuliecessionlit,tlecountiywusunubletopiovideulisculstimulus
puckugeunlikemunyotleiAsiuncountiies.
Tle iecession lud tlieutened to ullect Pukistun tliougl ieduced
expoiteuiningsundiemittunces.Expoitsloi2008/09declinedby6%
ielutivetotlepieviousyeui,witltextiles(typicullyuccountingloimoie
tlun lull ol expoit ieceipts) losing S% ol euinings. Remittunces luve
pluyedukeyioleintleeconomyiniecentyeuis,but,contiuiytoini-
tiul leuis, tley giew by 21% in 2009, possibly becuuse muny iemit-
tuncescomeliomtleUnitedAiubEmiiutes(UAE),SuudiAiubiu,und
otleiGullstutes,wliclweieielutivelyimmunetotleglobuliecession.
Remittunces liom tle UAE, loi exumple, giew by S4%. Suipiisingly,
ultlougltleUnitedStutes(US)undtleUnitedKingdom(UK)uiebotl
muIoi souices ol Pukistuni iemittunces und weie botl lit luid by tle
globuliecession,iemittuncesliomtleUSdeclinedbyonly1.S%wlile
iemittuncesliomtleUKioseby31.9%.
Tle new goveinment, wlicl ussumed ollice in Febiuuiy 2008,
mude luige cuts to public sectoi spending—ievising down tle Public
SectoiDevelopmentPlunloiFY2008/09by41%,loiexumple,undedu-
cutionundleultlullocutionsby29%und2S%,iespectively.Noididit
spuietlepoweiundwuteisectois.
Tleglobuliecessiontleieloielusludbotlsloit-undlong-teim
impucts.Sloweieconomicgiowtlsuggestsincieusedpoveitylevelsol
upto6%intlenextcoupleolyeuis.Iniesponse,tlegoveinmentintio-
ducedtleBenuziiIncomeSuppoitPiogiummetouugmenttleincome
oltlepooiestoltlepooi.Tlisgivestlepooimontllycuslsuppoitol
PR1,000(uppioximutelyS12),subIecttoceituinciiteiiu.
Souice:IdiessKluwuIuin“SociulImpuctoltleGlobulRecessiononPukistun.”
www.udb.oig/Documents/Events/2009/Poveity-Sociul-Development/pupeis
.usp
187
Gender and social protection in
Asia: What does the crisis change?
Nicola Jones and Rebecca Holmes, with Hannah Marsden,
Shreya Mitra, and David Walker
1
Introduction
Fuiluie to tuke into uccount tle gendei dimensions ol
tle ciisis muy muke nutionul iesponses less tlun
ellective; woise, tley muy uggiuvute tle woiking
und living conditions ol ceituin gioups ol woikeis und
deepen economic und sociul inequulities (DeIuidin und
Owens2009).
Tleellectsoltlecuiientglobuleconomicciisisuieligllygendeied:
emeigingevidencesuggeststlutwomen’spositionintleluboimuiket
intleiegion,especiullyinexpoitindustiies,lusspecilicconsequences
botl loi tle dilleientiul impucts ol tle ciisis und tle coping meclu-
nisms uvuiluble ut louselold und individuul levels (DeIuidin und
Owens2009).Women’sincomeislikelytobeieduced,becuusetley
lold most tempoiuiy, cusuul, seusonul, contiucted, und low-skilled
Iobs in tle inloimul sectoi, wlicl luve been puiticuluily ullected by
tleciisis.Reducedconsumptionolloodundseivicesulsolusspecilic
gendeidimensions.Moieovei,ulongwitltleiecentloodpiiceciisis,
tleeconomicciisisislikelytopiecipituteligleiinluntmoitulityund
moiegiilsbeingpulledoutolsclool(Hossuinetul.2009).
Someieseuicleissuggesttluttlepiotiuctednutuieoltlisciisis
isgivingcountiiesmoietime,compuiedwitltleAsiunlinunciulcii-
sisol1997–1998,toputtogetleiellectivepolicies.Inuddition,most
countiiesintleiegionnowluvemoiespacetoudoptsuppoitiveliscul
1
NicoluJonesundRebeccuHolmesuieieseuicllellows,DuvidWulkeiisunussistunt
ieseuiclollicei,undHunnulMuisdenundSlieyuMitiuuieieseuiclussistunts,ut
tleOveiseusDevelopmentInstitute(ODI),London.Weulsogiutelullyucknowledge
tleeditoiiulsuppoitpiovidedbyRooGiillitls.Tleviewspiesentedintlispupei
uietloseoltleuutloisunddonotnecessuiilyiepiesenttleviewsoltleODI.
188 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
undmonetuiypolicies,undulieudyluveinplucesociulpiotectionund
suletynetpiogiums,wliclweieusignilicuntpuitoltleiesponseto
tlepieviousciisisundluvebecomeintegiutedintobioudeisociulund
economic policy loi tle pooi ucioss Asiu moie geneiully (Jones und
Muisden2009).
Suipiisingly,lowevei,debutesonsociulpiotectionluvebeenielu-
tivelygendeiblind,eventlougltleieisevidencetluttle1997–1998
ciisis lud gendeied impucts und tlut investing in women und giils
lusmultiplieiellectsinteimsolpioductivity,elliciency,undsustuined
economic giowtl. Evidence on tle gendeied impucts ol tle cuiient
ciisisisincieusing,ultlouglmuclolitiemuinsliugmentedundsmull
scule.Diuwingontlis,undonevidenceliomtlepieviousciisisund
tleiecentloodpiiceciisis,tlispupeidiscussesemeigingimpuctsol
tle cuiient ciisis in Bungludesl, Indiu, Indonesiu, und Viet Num, to
uigue tlut policy iesponses must considei tle dilleientiul piioiities
undneedsolwomen,men,giils,undboys,undnotundeiminepolicies
undplunstlutpiomotegendeiequulityundwomen’sempoweiment.
Social protection: Incorporating gendered
economic and social risks
Todute,sociulpiotectionuppiouclesluvelocusedmoieoneconomic
iisk und vulneiubility, sucl us income und consumption slocks und
stiesses,undluvepuidlimiteduttentiontosociuliisks,suclusgen-
deiinequulity,sociuldisciiminution,unequuldistiibutionoliesouices
undpoweiutintiu-louseloldlevel,undlimitedcitizenslip,wlicluie
olten us impoitunt in pusling louselolds into poveity und keeping
tlemtleie(CPRC2008).
DeveieuxundSubutes-Wleelei(2004)delinesociulpiotectionus
encompussingusubsetolinteiventionsuddiessingiisk,vulneiubility,
undclionicpoveity,cuiiiedoutloimullybytlestuteoipiivutesec-
toi oi inloimully tliougl community oi intei- und intiu-louselold
netwoiks. Inteiventions lull undei loui leudings: protective (piovi-
ding ieliel), preventive (uveiting depiivution), promotive (enluncing
incomesundcupubilities),undtransformative (uddiessingconceinsol
sociulequityundexclusion).Tle“politicul”oi“tiunsloimutive”view
extendssociulpiotectiontouienussuclusequity;empoweiment;und
economic,sociul,undcultuiuliiglts,iutleitlunconliningitsscopeto
economiciisks,wlicltiunslutestonuiiowiesponsesbusedontuige-
tedincomeundconsumptiontiunsleis.
Figuie1demonstiuteslowbotleconomicundsociuliiskscunbe
ieinloicedoimediutedliomtlemuciotomicioleveltliouglpolicy
189 Gender and social protection in Asia: What does the crisis change?
F
i
g
u
r
e

1
:

I
m
p
a
c
t

p
a
t
h
w
a
y
s

o
f

v
u
l
n
e
r
a
b
i
l
i
t
y

t
o

e
c
o
n
o
m
i
c

a
n
d

s
o
c
i
a
l

r
i
s
k
s
H
H

~

l
o
u
s
e
l
o
l
d
.
S
o
u
i
c
e
:

H
o
l
m
e
s

u
n
d

J
o
n
e
s

2
0
0
9
.
E
c
o
n
o
m
i
c

a
n
d

S
o
c
i
a
l

R
i
s
k
s
R
e
m
i
t
t
a
n
c
e
f
l
o
w
s
M
a
c
r
o

s
h
o
c
k
s
L
e
a
d

t
o
M
e
s
o

e
f
f
e
c
t
s
M
e
d
i
a
t
e
d

b
y
:
P
o
l
i
c
y

c
h
o
i
c
e
s
S
o
c
i
a
l

e
x
c
l
u
s
i
o
n
s
y
s
t
e
m
s
a
n
d
I
m
p
l
e
m
e
n
t
a
t
i
o
n
p
r
a
c
t
i
c
e
s
a
s

w
e
l
l

a
s
H
o
u
s
e
h
o
l
d

(
H
H
)
c
a
p
a
c
i
t
y

a
n
d

a
g
e
n
c
y
I
n
d
i
v
i
d
u
a
l

e
n
d
o
r
s
e
m
e
n
t
s
C
o
n
t
r
o
l

a
n
d

u
s
e
o
f

a
s
s
e
t
s
L
i
f
e

c
y
c
l
e
s
t
a
t
u
s
G
o
o
d

g
o
v
e
r
n
a
n
c
e

a
t
d
e
c
e
n
t
r
a
l
i
z
e
d

l
e
v
e
l
C
i
v
i
l

s
o
c
i
e
t
y

a
g
e
n
c
y

t
o
d
e
m
a
n
d

e
n
t
i
t
l
e
m
e
n
t
s
E
f
f
e
c
t
i
v
e

d
e
l
i
v
e
r
y
-

q
u
a
I
i
t
v
-

a
f
f
o
r
d
a
b
i
I
i
t
v
L
i
v
e
l
i
h
o
o
d
o
p
p
o
r
t
u
n
i
t
i
e
s
R
e
v
e
n
u
e

m
a
n
a
g
e
m
e
n
t
P
r
i
c
e
s

o
f

g
o
o
d
s
a
n
d

s
e
r
v
i
c
e
s
F
i
s
c
a
l

s
p
a
c
e

o
p
t
i
o
n
s
E
n
v
i
r
o
n
m
e
n
t
a
l
c
h
a
n
g
e
s
F
i
n
a
n
c
i
a
l

f
l
o
w
s
H
u
m
a
n

c
a
p
i
t
a
l
S
o
c
i
a
l

c
a
p
i
t
a
l
T
e
r
m
s

o
f

t
r
a
d
e
A
i
d
H
H

c
a
p
a
c
i
t
y

t
o

e
n
s
u
r
e

a
s
u
s
t
a
i
n
a
b
l
e

l
i
v
e
l
i
h
o
o
d
H
H

c
a
p
a
c
i
t
y

t
o

p
r
o
v
i
d
e
f
o
o
d
,

p
r
o
t
e
c
t
i
o
n

a
n
d

c
a
r
e
H
H

c
a
p
a
c
i
t
y

t
o

i
n
v
e
s
t

i
n
h
u
m
a
n

c
a
p
i
t
a
l

d
e
v
e
l
o
p
m
e
n
t
P
O
L
I
C
Y

C
H
O
I
C
E
S
-

P
r
o
g
r
a
m
s

t
o

p
r
o
m
o
t
c

s
u
s
t
a
i
n
a
b
I
c

I
i
v
c
I
i
b
o
o
d
s
-

l
n
v
c
s
t
m
c
n
t

i
n

a
n
d

p
r
o
v
i
s
i
o
n

o
f

s
c
r
v
i
c
c
s
-

l
n
v
c
s
t
m
c
n
t

i
n

i
n
f
r
a
s
t
r
u
c
t
u
r
c

(
c
s
p
c
c
i
a
I
I
v

r
o
a
d
s
,

m
a
r
k
c
t
s
,

t
r
a
n
s
p
o
r
t
)
D
I
S
C
R
I
M
I
N
A
T
I
O
N

A
N
D

E
X
C
L
U
S
I
O
N
-

r
c
g
u
I
a
t
o
r
v

f
r
a
m
c
w
o
r
k
s
-

s
o
c
i
a
I

n
o
r
m
s
I
N
T
R
A
-
H
O
U
S
E
H
O
L
D

D
Y
N
A
M
I
C
S
P
o
w
e
r

r
e
l
a
t
i
o
n
s
a
n
d

b
a
r
g
a
i
n
i
n
g
H
H
c
o
m
p
o
s
i
t
i
o
n
T
r
a
d
i
n
g

m
a
c
r
o

m
i
c
r
o
I
i
n
k
a
g
c
s
-

P
r
o
m
o
t
i
n
g

t
b
c

p
o
I
i
t
i
c
a
I
a
r
t
i
c
u
l
a
t
i
o
n

o
f

g
e
n
d
e
r
d
i
f
f
e
r
e
n
c
e
s

a
n
d

i
n
t
e
g
r
a
t
i
o
n
i
n
t
o

p
o
l
i
c
y

c
h
o
i
c
e
s
-

R
c
c
o
g
n
i
z
i
n
g

t
b
e
i
n
t
e
r
s
e
c
t
i
o
n

o
f

g
e
n
d
e
r
a
n
d

o
t
h
e
r

t
y
p
e
s

o
f

s
o
c
i
a
l
e
x
c
l
u
s
i
o
n
-

f
n
g
c
n
d
c
r
i
n
g

d
c
s
i
g
n
a
n
d

i
m
p
l
e
m
e
n
t
a
t
i
o
n
p
r
o
c
e
s
s
e
s
-

R
c
c
o
g
n
i
z
i
n
g

g
c
n
d
c
r
a
n
d

i
n
t
e
r
-
g
e
n
e
r
a
t
i
o
n
a
l
d
i
f
f
e
r
e
n
c
e
s

a
n
d
p
o
w
e
r

r
e
l
a
t
i
o
n
s
h
i
p
s
w
i
t
h
i
n

t
h
e

H
H
A
p
p
l
y
i
n
g

a

g
e
n
d
e
r

l
e
n
s

a
n
d
i
d
e
n
t
i
f
y
i
n
g

e
n
t
r
y

p
o
i
n
t
s
190 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
inteiventions,disciiminutoiypiucticesembeddedininstitutionsund/
oi community, louselold, und individuul cupucity und ugency. Botl
economicundsociuliisksuieinlluencedbygendeidynumics;oppoi-
tunitiestoenluncetleintegiutionolgendeiuteuclleveluieliglly
context-specilic und depend on tle bulunce between goveinment,
nongoveinment, und inloimul meclunisms witlin u countiy us well
us tle piolile ol tle goveinment ugencies iesponsible loi tle design
undimplementutionolloimulmeclunisms(HolmesundJones2009).
Economic und sociul iisks uie inteitwined—undeistunding tlis
is ciiticul in sociul piotection design und implementution. A numbei
ol initiutives luve uddiessed gendeied iisks, to vuiying degiees, but
tlislusoltenbeenunevenundinloimedbynuiiowundeistundingsol
gendeiielutions.Tleioletlutgendeipluysinsociulpiotectionellec-
tiveness not only inlluences tle type ol iisk tuckled but ulso slupes
piogiumimpuctsutcommunityundlouseloldlevels.
Crisis impact pathways in Asia
We exploie impuct putlwuys ol tle ciisis in oui loui countiies liom
mucio to meso und micio levels. Gendei-disuggieguted dutu uie
limited, und tleieloie we uim to piovide liglliglts ol emeiging
impuctstliouglugendeilens.Welocusonlouiuieus:employment,
consumption und expendituie, iemittunce llows, und sociocultuiul
vulneiubilities.
Employment
Rising unemployment und income declines luve dilleientiul impucts
on women und men us u iesult ol tleii dilleient positioning in tle
luboimuiketundtleIoboppoitunitiesuvuilubletotlem.
Piioitotleciisis,womeninBungludesl,Indonesiu,undVietNum
ulieudy luced signilicuntly liglei unemployment levels tlun men
(UNDP2008).Moieovei,munyemployedwomenuieconcentiutedin
unskilled oi semiskilled, luboi-intensive, expoit-oiiented industiies,
wliclluvebeenumongtlewoistlitbytleciisis.InIndiu,S00,000
loimulsectoiwoikeisweieluidollintlelustquuiteiol2008ulone
(Woild Bunk 2009), luigely liom sectois witl ligl exposuie to tle
globulmuiket(ILO2009u).InVietNum,meiclundiseexpoitsectois,
in wlicl women uie dispiopoitionutely concentiuted, luve luced u
declineol31.S%oveitlepustyeui(Nguunbunclong2009).
Fuitleimoie,evidenceliompustciisesundeiscoiestlelucttlut
womenlinditluideitoieguinemploymentulteiietienclment,owing
191 Gender and social protection in Asia: What does the crisis change?
to lowei skill levels. As u iesult, tley incieusingly tuin to inloimul
sectoi und iisky occuputions, in some cuses commeiciul sex woik
(Hopkins2006).Womenuieulieudyligllyconcentiutedininloimul
employment,undoneoltleconceinsnowistlutdisplucedwoikeis
liomtleloimuleconomycouldciowdoutwomen’seconomicuctivi-
tiesoiincieusecompetitionwitlintleinloimulsectoi,luitleiiedu-
cing tle low iemuneiution tlut muny inloimul woikeis luce (SEWA
2009). Tleie is ulso giowing evidence ol un “udded woikei” ellect:
louselolds uie coping by sending un udditionul lumily membei—
oltenuyounglemule—intopuidemployment.Womenuppeuitolind
ulteinutivewoikmoiequicklytlunmen,ustleyuiemoiewillingto
ucceptlowei-puyingundinloimulwoik(DeIuidinundOwens2009),
buttlisoltenlustleuggieguteellectoldiivingwugeiutesdown.
Consumption and expenditure
Tleieisugiowingbodyolevidencetlutwomeninpuiticului,butulso
giils,luvebeendispiopoitionutelyullectedbytleloodundlinunciul
ciisesinteimsolquuntityundquulityolloodconsumption(Holmes
undJones2009).Pooidiet,coupledwitlunequulullocutionollouse-
loldiesouices,islikelytoluvesignilicuntlongei-teimimplicutionson
nutiitionul stutus, witl women lucing liglei iisks duiing piegnuncy
und clildbiitl und clildien expeiiencing lowei immunity und tlus
liglei iisk ol moitulity. In Bungludesl, Suluimun et ul. (2009) lind
gieuteipievulenceolwustingumonggiilsundieducedweigltumong
womenusuiesultolincieusedloodpiices.Similuigendeiedellects
luvebeendocumentedinIndonesiu(Hossuinetul.2009).
Altlougltleevidenceisstillveiylimited,decliningincomesullect
louselolds’ubilitiestoinvestineducutionundleultlcuie,undullocu-
tionsuppeuitobegendeied.Bungludesllusseenwidespieudsclool
diopouts,ligleiloigiilstlunboys,especiullyumongclildienliom
lemule-leuded louselolds (Mutin et ul. 2009), und incieusing clild
luboi(Hossuinetul.2009).InIndiu,lumiliesolclildienwloiemuin
insclooluieincuiiingincieusingindebtednesstocoveieducutionlees
(SEWA2009).InIndonesiu,louseloldussets,especiullytloseowned
bywomen,uiebeingsoldsoustomuintuininvestmentsinclildien’s
educution(Hossuinetul.2009).
As in 1997, declining incomes luve iesulted in ieductions in
leultlcuieexpendituieulso,witlspecilicgendeiedellects(Jonesund
Muisden2009).Hossuinetul.(2009)lindtlutpiioiityisbeinggiven
to tle leultl cuie needs ol men und clildien ovei tlose ol women.
In Viet Num, tleie is concein ubout women’s leultl becuuse ol tle
incieuseinleesloimediculseivices(Thanh Nien News,6August2009).
192 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
In tle lootweui und leutlei industiy, ietiencled women woi-
keis luve ieduced leultl cuie expendituie by uppioximutely 38%
(Huo2009).Fumiliesuienowulsoielyingonwomentoincieusingly
cuiiyoutunpuidcuiewoik,iesultinginleuvieitimebuidensloitlem
(Siiimunne2009).
Remittance flows
Tleieuiestiongleuistlut,usuiesultollullingdemundloimigiunt
luboi,iemittuncellowswilldecieuse.FiguiesloiBungludeslslowu
decline in iemittunces ol 8.7% in tle liist quuitei ol 2009, wlicl is
expectedtoiesultinieducedincomesloilemule-leudedlouselolds
(WFP 2009). Similui ellects uie being lelt in Indiu und Viet Num
(Nguunbunclong 2009). Foi exumple, ietiencled woikeis in tle
lootweuiundleutleiindustiyinVietNumluveludtocutiemittunce
puymentsbyulmostSS%(Huo2009).
Migiunt woikeis, especiully iecent migiunts, uie likely to be
incieusinglyvulneiubleundmoielikelytoucceptluislemployment
conditionsintleciisiscontextinoideitomuintuinemploymentund
uvoid luving to ietuin lome (ILO 2009b). Given tlut muny lemule
migiunts (sucl us tlose liom Indonesiu) uie employed us domestic
woikeis, und olten isoluted liom suppoit netwoiks, tley uie puiti-
culuilyvulneiubletoloicedluboi(ILO2009b).Repoitssuggesttlut
BungludeslimenundwomenmigiutingtotleMiddleEustmuyluce
bondedluboiusuiesultolliuudbyieciuitmentugents(IRIN2009).
Tlisislikelytobeexuceibutedinucontextoliisingpoveityundlewei
ulteinutiveincomegeneiutionsouices.
Social risks
Tleie is some evidence to suggest tlut leigltened gendei-specilic
sociuliisksuieoltenunintegiulpuitoltlemicio-levelexpeiienceol
mucioeconomic slocks. Tle 1997–1998 ciisis, loi exumple, iesulted
ingendeiedputteinsolemotionulill-leultl,includingincieusedpie-
vulenceolgendei-busedviolence,leigltenedcuie-woikbuidens,und
women iesoiting to iiskiei souices ol income geneiution (DeIuidin
undOwens2009,JonesundMuisden2009).
Moieiecently,Hossuinetul.(2009)liglligltincieusedtensions
betweenlusbundsundwivesinBungludeslundIndonesiu,especiully
uswomenseektonegotiutegieuteiloodullocutionsloitleiiclildien.
In Indiu, louselold-level liustiution und tensions luve incieused,
iesultinginintiulouseloldviolenceundincieuseduddictivebeluviois
(SEWA 2009). In some cuses, men luve ubundoned tleii lumilies,
193 Gender and social protection in Asia: What does the crisis change?
unubletocopewitltleluckolemployment.Quulityundquuntityol
timeloicuiewoikuieulsolulling:inIndiu’sinloimulsectoi,clildien
uieincieusinglyuccompunyingtleiimotleissoustogivetlelumily
ucompetitiveedge,suclusintleiecyclingindustiy(SEWA2009).
Giowing poveity in tle context ol tle ongoing ciisis is muking
people,especiullywomen,moievulneiubletoluboiundsextiullicking
(UNODC 2009). In muny contexts, women luck udequute piotection
oi iecognition undei tle luw und luve inudequute uccess to leultl
cuieundeducution,pooiemploymentpiospects,lewoppoitunitiesto
ownpiopeity,undligllevelsolsociulisolution,mukingtlemeusiei
tuigets loi luiussment, violence, und lumun tiullicking. Giils liom
pooiiegionswlouieoutolsclooluielikelytolucestiongpiessuie
tolindemploymentundtleieloiemuybepuiticuluilysusceptibleto
exploitutionundtiullicking.
Social protection responses
A muIoi question now lucing tle iegion is tle extent to wlicl exis-
tingsociulpiotectionpolicyliumewoiksundpiogiumsuieudequuteto
cusliontlepooiundvulneiubleliomtlewoistimpuctsoltleciisis.
Despite impoitunt initiutives in iecent yeuis, Asiun sociul piotection
systemsuieielutivelyundeideveloped.Itisnowciiticultotukemeu-
suiestostuveollsloit-teimimpuctsbutulsotostuitbuildingloitle
longeiteim,soustobebetteipiepuiedintlelutuie.Heie,wepiovide
ubiielieviewolexistingsociulpiotectionpoliciesundpiogiumsusing
ugendeilenstoussesstleextenttowlicltleyuielikelytouddiess
tlekeysouicesolvulneiubilityoutlinedubove.
Social assistance
Piioi to tle cuiient ciisis, Bungludesl, Indiu, und Viet Num ulieudy
ludpensions,uswelluswidowunddisubilityullowunces.Indonesiu
lus u cusl tiunslei piogium, tuigeting economicully uctive louse-
lolds,wliclintegiutesgendeiconsideiutionstosomeextenttuige-
ting motleis, piegnunt women, und tlose witl clildien undei 1S,
und including pienutul und iepioductive leultl cuie us piogium
conditions.
In Bungludesl, tle Cluis Liveliloods Piogiumme und tle
BungludeslRuiulAdvuncementCommittee’sClullengingtleFiontieis
olPoveityReduction(CFPR)usset-tiunsleipiogiumstuigetextiemely
pooilouselolds,especiullywomen.Evuluutionsslowtluttlesepio-
giums luve lud positive impucts on louselold usset uccumulution
194 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
undwomen’sluboiloicepuiticipution.Intiulouselolddynumicsund
individuul-levelcupucitybuildingluvebeenintegiutedintopiogium
designtounextent(includingtiuiningcomponentstlutiuiseuwuie-
ness ubout women’s iiglts, dowiy piuctices, und euily muiiiuge).
Howevei, tleie is little widei evidence us yet ol sustuinuble impucts
ongendeiequulity:intlecuseoltleCluisLiveliloodsPiogiumme,
uiecentiepoitsuggeststlut,ulteipiogiumsuppoitludended,some
women even iepoited decieused economic decision muking (Conioy
2009).Fuitleimoie,tleielusbeenscuntexplicituttentiontowomen’s
contioloveiussetspioducedoiuccesstomuikets,giventleoltenlimi-
tedmobilitytleyluceutcommunitylevel(Holmesetul.2009).
In teims ol public woiks piogiums, Indiu’s Nutionul Ruiul
EmploymentGuuiunteeScleme(NREGS)wusieucling49.4million
louseloldsinMuy2009.NREGSguuiuntees100duysolemployment
topooiiuiullouseloldsinunelloittoieducepoveityundstimulute
loculeconomicgiowtlundpioductivitytliougliuiulinliustiuctuie.
WlileNREGSisuddiessingsputiulpoveityundsociulexclusionieluti-
velywell,tleieuieongoingconceinsuboutundeipuymentolwugesin
somestutesund,moiebioudly,conceinstlutNREGSisexuceibuting
gendeiedluboimuiketdisciiminution(especiullywugedilleientiuls)
tliougl ligl pioductivity noims und piece-iute puyments bused on
outtuinbymen(Guptu2009).
Scloolscloluislipsundeducutionleewuiveisuieloundinullloui
countiies,undmunyincludespecilicpiovisionsloigendeiequity,witl
ielutivelyliglimpuctutpiimuiyscloollevel.Foiinstunce,ieseuicl
slows tlut Indonesiu’s goveinment scloluislip piogium (specilying
equuluccessloigiils)lelpeduvoidseiiousimpuctsonlemuleeducu-
tionduiingtle1997–1998ciisis(Cumeion2000).
Social insurance
Sociul insuiunce is u piogiessive meuns ol linuncing uguinst slocks,
witltleobIectiveoluniveisulcoveiugeieguidlessolincomeoisociul
stutus. Altlougl ielutively new in tle loui countiies, goveinments
uie incieusingly investing in sucl sclemes us puit ol bioudei nutio-
nulcommitmentstoequitublegiowtl.Indiulusiecentlyintioducedu
leultlcuidsystemloilumiliesbelowtlepoveityline—unimpoitunt
udvunce, us leultl slocks uie one ol tle leuding cuuses ol poveity,
witl women’s ussets olten tle liist to be depleted to covei cutustio-
plic leultl cuie costs (Quisumbing et ul. 2009). Howevei, piogium
designlocusesontlelouseloldiutleitlunindividuuls:cuidsuiein
tlenumeoltlelouseloldleudsopioblemsuiebeingencounteied
195 Gender and social protection in Asia: What does the crisis change?
wlenlusbundsuieinvolvedinout-ol-stutemigiuntluboi(Di.Supuinu
Pucluuii,NutionulInstituteolHeultlundFumilyWelluieNewDelli,
peisonulcommunicution,2008).
VietNum’ssignilicuntsociulleultlinsuiuncepiogiumwusintio-
ducedin1992,undby2006lud30.Smillionmembeis(oveione-tliid
oltlepopulution),11.2millionoltlempooi(Giung2007).Howevei,
leultlcuielucilityutilizutioniutesiemuinsignilicuntlyloweiumong
tle pooi, owing to income oppoitunity costs, tiunspoit lees, unolli-
ciullospitullees,unddisciiminutionbylospitulstull(Giung2007).
Meunwlile, inteinutionul evidence suggests tlut women olten luce
udditionulbuiiieisinuccessingulloidubleleultlcuie(SenundOstlin
2007),ultlouglnogendeiunulysisoigendei-disuggieguteddutuon
tleVietNumpiogiumuieuvuiluble.
Social welfare services
Seivicesloimuiginulizedgioupsuienoimullytuigeteduttlosewlo
luve expeiienced illness, deutl ol u lumily bieudwinnei oi cuiegi-
vei,uccidents,oinutuiuldisustei;tlosewlosulleiliomudisubility,
lumiliuloiextiu-lumiliulviolence,oilumilybieukdown;oitlosewlo
uiewuiveteiunsoiielugees.Tleieisudeuitlolgoodevidenceon
coveiugeundbudgetsinvestedinsociulwelluieseivicesdesignedto
piotectwomenundclildienliomviolence,ubuseundneglectintle
iegion,ultlouglsomeinloimutionisuvuilubletlutsuggestsundeiin-
vestmentinsuclseivicesintlelieldolclildpiotection(ADB200S).
Moieovei, goveinment ugencies ussigned to uddiess tlese issues uie
umongtlemostmuiginulized.
Social equity measures
In iecent yeuis, tleie lus been incieusing momentum uiound
gendei-sensitivesociulequityieloimswitlintleiegion.InVietNum,
tle2007GendeiEquulityLuwundDomesticViolencePieventionLuw
constituted muIoi milestones, but inteiviews witl iepiesentutives ol
goveinmentundnongoveinmentugenciesinHuNoi,inOctobei2009
suggesttlutimplementutionlusbeenveiylimitedtodute.InIndiu,
gendei budgeting lus been institutionulized witlin tle ledeiul bud-
get by tle Ministiy loi Women und Clildien, but tle metlodology
lusbeenciiticizedloiinllutinggendei-ielutedexpendituieundbeing
unevenly upplied (CBGA 2009). And in Bungludesl, us mentioned
ubove,someussettiunsleipiogiumsincludespecilicuwuieness-iuising
componentsonwomen’siiglts,dowiypiuctices,undeuilymuiiiuge.
196 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Crisis-related social protection
Goveinments in ull loui countiies luve undeituken u iunge ol meu-
suiestoiespondtotleciisis,includingsubstuntiullisculstimuluspuc-
kuges.Howevei,oveiullinvestmentinsociulpiotectioninteiventions
lusbeenielutivelylimited,undinteiventionsluvepuidscuntuttention
togendeiedexpeiiencesolpoveityundvulneiubility.Moieovei,moni-
toiinginitiutivessuggesttlutmunypooilouseloldsuiecontinuingto
iely on inloimul sociul piotection meclunisms, including boiiowing
liomlumilyundliiends(Nguyenetul.2009),ieveiseiuiul-to-uibun
iemittuncestolelpwoikeislollowingluyolls(Tiung2009),undlinun-
ciul und in-kind suppoit liom community gioups—ultlougl tlese
meclunismsuiecomingundeiincieusingstiess(Hossuinetul.2009).
In Indiu, un immediute policy inteivention wus tle decision to
bun lood expoits: tlis lud immediute beneliciul impucts domesti-
cully but negutive knock-on ellects loi neiglboiing countiies, sucl
usBungludeslundNepul.Existingloodsecuiityundsociulussistunce
piogiums,includingtlePublicDistiibutionSystem,NREGS,undtle
nutionulmidduymeulsclemeinpiimuiyscloolsuieiepoited(unec-
dotully)toluvebulleiedpooilouseloldsliomiisingpiices(Holmes
etul.2009).
In Bungludesl, iesponses luve been moie signilicunt, in puit
becuuse tle countiy wus especiully luid lit by tle lood ciisis. Tle
Cluis Liveliloods Piogiumme und tle CFPR piogium mude some
design modilicutions, including u lood-indexed cusl stipend (CFPR)
undu“sunset-cluused”loodullowuncetuigetingwomenundclildien
iliicepiicesiemuinuboveuceituinllooi-to-ceilingpiiceiunge,inpuit
topieventincieuseddistiesssulesolussets.
2
InSeptembei2008,tle
Goveinment ol Bungludesl intioduced u new public woiks scleme
modeledonIndiu’sNREGS,nowestimutedtobeieucling10million
beneliciuiies, 28% ol tlem women (BRAC 2009). Most puiticipunts
iepoit impioved lood consumption (quuntity, quulity, oi botl) und
ieduced need to iesoit to distiess sules ol ussets und distiess migiu-
tion. Women in puiticului luve ussessed tle piogium positively, us
tleytypicullylucktleoptionolmigiution(BRAC2009).
InVietNum,economicstubilizutionmeusuiesuiewidelyseento
luvepluyedunimpoituntioleinstuvingollmoieseiiousciisisimpucts,
butsociulpiotectioniesponsesluvebeenielutivelylimited.Inteiviews
in 2009 suggest tlut inteiventions luve been luigely one-time und
2
Penny Duvies (Depuitment loi Inteinutionul Development, United Kingdom),
Bungludesl,peisonulcommunicution,June2008.
197 Gender and social protection in Asia: What does the crisis change?
udloc.Subsidiesloiemployeistopieventluyollsundsmootlsociul
insuiunce puyments luve been piovided, ultlougl tlese seem to be
unevenlyimplemented(Huo2009).Aone-timebonusloipooilumilies
wuspiovidedduiingtleTetloliduys,undvuiioussloit-teimexemp-
tions on peisonul income tuxes luve been mude (Nguunbunclong
2009).Howevei,tlegoveinment’sllugslipNutionulTuigetedPoveity
ReductionPiogiumludnotseenunincieuseinbudgetiniesponseto
tle ciisis. Indeed, inteiviews suggest tlut tle locus ol policy debute
lusbeenonciisisellectsonindustiiulpuiksundiuiul-to-uibunmigiu-
tioniutleitlunoniuiulpoveity.
InIndonesiu,tleiesponselusulsobeenquitelimited,ultlougl
tle countiy ulieudy enIoys u compuiutively iobust sociul piotection
inliustiuctuie, luving estublisled u iunge ol new piogiums in ies-
ponsetotle1997ciisis(JonesundMuisden2009).Meusuiestodute
luve included tux bieuks loi individuuls und compunies, wuiving ol
impoitdutiesundtuxes,inliustiuctuiespending,dieselundloodsub-
sidies, und iuiul development (Nguunbunclong 2009). Expendituie
on tle pilot conditionul cusl tiunslei piogium lus uppuiently been
muintuinedbutnoudditionullundingoiscule-uplusbeenintioduced
iniesponsetotleciisis(Bloom2009).
Conclusions and policy implications
Oveiull,tleglobuleconomicciisisiscontiibutingtogiowingpoveity
und vulneiubilities in Soutl und Soutleust Asiu, tle putteining ol
wlicl is likely to be gendeied, given tle nutuie ol tle tiunsmission
clunnels.Wliletleieuieinitiulindicutionstluttlesituutionlusstui-
tedtostubilizeinEuiopeundAsiu,impuctswitlieguidtopoveityund
vulneiubilityinbotltledevelopedunddevelopingwoilduielikelyto
ieveibeiuteloisometimeyet.Indeed,tleWoildBunk(2009)wuins
tlut,“illeltunclecked,tleellectsoltlelinunciulciisiswillieveise
piogiessingendeiequulityundwomen’sempoweiment,incieusecui-
ientpoveityundimpeiillutuiedevelopment.”
Cuiientsociulpiotectionsystemsinouilouicountiiesuielimited
inteimsolcoveiugeundtleiungeoliisksuguinstwlicltleypiotect
people(muinlyeconomic).Tleyluvenotbeensignilicuntlyincieused
intlewukeoltleciisisundluvepuidlimitedoinouttentiontogen-
deiedvulneiubilities.
Cleuily,intlecuiienteconomiclundscupe,lindingtlelisculund
policy spuce to invest in sociul piotection is moie clullenging, espe-
ciully lollowing ligl levels ol expendituie on geneiul liscul stimulus
puckuges in lute 2008 und euily 2009. Neveitleless, tleie is some
198 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
indicutionoltlepoliticulwillumonggoveinmentsunddevelopment
puitneisinAsiutouddiesstleselucunue.Tlisneedstobeluinessed
toensuietlutpooiundvulneiublepopulutions,iiiespectiveolgendei,
luveudequutesuppoittolelptlemweutleitleeconomicdowntuin.
Weconcludebylocusingonlivekeypolicystiutegies.
Investing in gender-aware monitoring and learning. It is ciiticul tlut
tle development ol uppiopiiute inteiventions is inloimed by gendei-
sensitive vulneiubility monitoiing, us oui knowledge buse is still veiy
limitedundliugmented.Weknowveiylittleuboutciisisellectsoniuiul
women, us tle impuct putlwuys uie moie indiiect und likely to luve
moie ol u lug ellect. We know veiy little ubout tle intiu-louselold
dynumics ol coping meclunisms oi ubout wlose suvings und ussets
uie being eioded liist, witl wlut sloit- und longei-teim impucts. We
ulso know ielutively little ubout impucts on inloimul sectoi woikeis,
ultlouglevidenceliompustciisessuggeststlutconditionsoltendete-
iioiutemuikedly,especiullyloiwomen,ustlesectoiisusedusubullei
loiwoikeisietiencledliomtleloimulsectoi.Tleseknowledgegups
uie luitlei compounded by u ielutive deuitl ol gendei-disuggieguted
dutuonpoveityundvulneiubilityintleiegiontoseiveusubuseline.In
somecontexts,tlepioblemliesindutucollection;inotleis,tlepioblem
ismoieoneolinudequuteiepoitingundunulysisolgendeistutistics.
Promoting better program coverage and coordination.Altlouglpolicy
uttention to sociul piotection lus incieused signilicuntly in iecent
yeuis,munyexistingmeclunismsuieielutivelysmullinsculecompuied
witltlepiopoitionollouseloldslivinginpoveity,especiullyustlese
numbeis uie incieusing us u iesult ol tle ciisis. Goveinments und
development puitneis ulike must use tle ciisis context us un oppoi-
tunitytostiengtlenexistingpiogiums.Tlisslouldincludeenloicing
gendei-iesponsive piogium design leutuies (especiully piovision ol
clildcuieseivicesundtuigetingindividuulsiutleitlunlouselolds)
undieviewingundiestiuctuiingpiogiumstlutieinloiceiutleitlun
uddiess gendei inequulities. Elloits to enlunce cooidinution ucioss
piogiumswillbeequullyimpoitunttopiomotecomplementuiitiesin
tucklingtlecomplexuiiuyoleconomicundsociuliiskstlutlumilies
undindividuulstypicullyluce.
Investing in more creative approaches to public works programs. Gendei
unulysesolpublicwoiksinitiutivesliglligltuiungeolsloitcomings
in piogium design, including inudequute uttention to gendei bui-
iieis to puiticipution sucl us luck ol udequute und ulloiduble clild
cuie seivices, ligl oppoitunity costs owing to women’s gieutei time
199 Gender and social protection in Asia: What does the crisis change?
poveity, und sociocultuiul noims ol “uppiopiiute woik” loi women
(Antonopoulos 2009). To uddiess tlese, moie cieutive uppioucles
couldbepiomoted,especiullyieguidingtleconceptuulizutionolcom-
munity ussets developed using public woiks luboi (McCoid 2009).
Women’sgieuteiluboiloicepuiticiputioncouldbelosteiedbyinves-
ting moie in “employment-intensive public investment piogiummes”
(DeIuidinundOwens2009),wliclcouldincoipoiutesociulseivices,
sucl us uuxiliuiy leultl cuie, cuie loi tle eldeily, clild cuie, euily
clildlood development uctivities, und youtl development uctivities
undenviionmentulpiotectioncomponents(McCoid2009).
Committing to gender-responsive budgeting. In oidei to udequutely
tiucktlegendeiedellectsolsociulpiotectionpiogiuminteiventions,
it is ciiticul to upply gendei-iesponsive budgeting tools to monitoi
liscul stimulus puckuge design und evuluutions, us well us to mup
gendei-specilicneedstobudgetoutluys.Intlisieguid,itwillbekeyto
consideisociulsectoispendinginitsentiietytoidentilypossibleten-
sionsundtiude-ollsbetweeninvestmentinuniveisulpiogiumscom-
puied witl moie tuiloied inteiventions (Jones und Muisden 2009).
Indeed,tleciisisolleisunoppoitunityto—usEvuns(2009)putsit—
“buildbuckbettei”und—uccoidingtoSiiimunne(2009)—topiuctice
“smuiteconomics”undieducedisciiminutionuguinstwomen.
Promoting women’s voice and collective action.Finully,inoideitopio-
mote gendei-iesponsive sociul piotection to uddiess botl sloit- und
longei-teim ciisis ellects, it is ciiticul tlut women uie iepiesented
udequutely in policy diulogue und contiibute to discussions uiound
piogiumdesign.Politiculeconomyunulysisliomtle1997–1998ciisis
suggeststlutcivilsocietyuctoispluyedusignilicuntioleinpuslingloi
gieuteiinvestmentsinsociulpiotectioniesponses(JonesundMuisden
2009).Tlisisunuieutlutlusbeenundei-ieseuicledintlecuiient
context,butitissimiluilyimpoituntnowtopuyudequuteuttentionto
locul und iegionul civil society initiutives und tlut goveinments und
developmentpuitneispiovidesuppoittostiengtlentlevoicesolpooi
menundwomenulike.
References
Antonopoulos,R.2009.Piomotinggendeiequulitytliouglstimulus
puckugesundpublicIobcieution:LessonsleuinedliomSoutl
Aliicu’sExpundedPublicWoiksPiogiumme.Public Policy Brief
101.NewYoik:TleLevyEconomicsInstituteundUNDP.
200 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Asiun Development Bunk (ADB). 200S. Sociul piotection index loi
committedpoveityieduction.Multicountiyiepoit.Munilu.
Bungludesl Ruiul Advuncement Committee (BRAC). 2009. Study
on tle liist pluse ol tle 100-duy Employment Geneiution
Piogiumme.Dluku.
Bloom,K.2009.Conditionulcusltiunsleis:LessonsliomIndonesiu’s
Piogium Keluuigu Huiupun. Piepuied loi tle Regionul
WoiksloponSociulAssistunceundConditionulCuslTiunslei
Piogiums,ADB,Munilu,23–24July.
Cumeion, L. 2000. Tle impuct ol tle Indonesiun linunciul ciisis on
clildien: An unulysis using tle 100 villuges dutu. Woiking
pupei81.UNICEFInnocentiReseuiclCentie,Floience.
Centie loi Budget und Goveinunce Accountubility (CBGA). 2009.
Goveinmentuttemptutgendeibudgetingiemuinsunuttempt.
NewDelli.
ClionicPoveityReseuiclCentie(CPRC).2008.Chronic Poverty Report
2008–2009. Munclestei.
Conioy,K.2009.Sociuldevelopment:Knowledge,uttitudesundpiuc-
tice:Asloitbeneliciuiyieview.CluisLiveliloodsPiogiumme,
Dluku.
Deveieux,S.undR.Subutes-Wleelei.2004.Tiunsloimutivesociulpio-
tection.Working Paper232.InstituteolDevelopmentStudies,
Biiglton,UnitedKingdom(UK).
DeIuidin, A.K. und J. Owens. 2009. Asiu in tle globul economic
ciisis: Impucts und iesponses liom u gendei peispective.
Technical note.ILO,Genevu.
Evuns, A. 2009. G20 bewuie: No gieen sloots loi tle pooiest. ODI
blog,21Septembei.
Giung, T.L. 2007. Vietnum: Sociul leultl insuiunce—Cuiient issues
und policy iecommendutions. Repoit loi tle ILO Subiegionul
OlliceloiEustAsiu,Bungkok.
Guptu, S. 2009. Women in Indiu’s Nutionul Ruiul Employment
Guuiuntee Scleme. In S. Ruvuzi (ed.) The gendered impacts
of liberalization: Towards “embedded liberalism”? Routledge:
LondonundNewYoik.
Huo, N.D. 2009. Tle luboui muikets und gendei impuct ol tle glo-
bul economic slowdown on vulue cluins in Asiu: Tle cuse ol
tle lootweui und leutlei industiy in Vietnum. Pupei piesen-
ted ut tle conleience on tle Impuct ol tle Globul Economic
Slowdown on Poveity und Sustuinuble Development in Asiu
undtlePucilic,HuNoi,28–30Septembei.
Holmes, R., J. Fuiiington, T. Rulmun, und R. Slutei. 2008. Linking
suletynetsundugiicultuiulgiowtlinBungludesl:Asyntlesis
iepoit.OveiseusDevelopmentInstitute,London.
201 Gender and social protection in Asia: What does the crisis change?
Holmes,R.undN.Jones.2009.Puttingtle“sociul”buckintosociulpio-
tection:Aliumewoikloiundeistundingtlelinkugesbetween
economic und sociul iisks loi poveity ieduction. Buckgiound
note.OveiseusDevelopmentInstitute,London.
Holmes,R.,N.Jones,undH.Muisden.2009.Gendeivulneiubilities,
loodpiiceslocksundsociulpiotectioniesponses.Buckgiound
note.OveiseusDevelopmentInstitute,London.
Hopkins,S.2006.Economicstubilityundleultlstutus:Evidenceliom
Eust Asiu beloie und ultei tle 1990s economic ciisis. Health
Policy7S(3):347–3S7.
Hossuin,N.,R.Eybenetul.2009.Accountsolciisis:Pooipeople’sexpe-
iiencesoltlelood,luelundlinunciulciisesinlivecountiies.
InstituteolDevelopmentStudies,Biiglton,UK.
InteinutionulLubouiOigunizution(ILO).2009u.TlelulloutinAsiu:
Assessinglubouimuiketimpuctsundnutionulpolicyiesponses
totleglobullinunciulciisis.Pupeiloitleligl-leveliegionul
loiumoniespondingtotleeconomicciisis:Coleientpolicies
loigiowtl,employmentunddecentwoikinAsiuundPucilic,
Munilu,18–20Febiuuiy.
———.2009b.The cost of coercion.Genevu.
IntegiutedRegionulInloimutionNetwoiks(IRIN).2009.Bungludesl:
Tlemodeinluceolsluveiy.7August.www.iiinnews.oig/iepoit
.uspx?RepoitId~84379=
Jones,N.undH.Muisden.2009.Assessingtleimpuctsolundpolicy
iesponses to tle 1997–1998 Asiun linunciul ciisis tliougl u
clild iiglts lens. Repoit loi UNICEF. Oveiseus Development
Institute,London.
Mutin, I., M. Puiveen, N. Clundiu Dus, N. Muscie-Tuyloi, und
S.Ruilun.2009.Implicutionsloilumundevelopment:Impucts
olloodpiicevolutilityonnutiitionundsclooling.Policy Brief.
BungludeslInstituteolDevelopmentStudies,Dluku.
McCoid, A. witl R. Slutei. 2009. Oveiview ol public woiks pio-
giummes in Sub-Suluiun Aliicu. Oveiseus Development
Institute,London.
Nguunbunclong,A.2009.Feminizediecession:Impuctoltleglobul
economicciisisonwomeninSoutl-EustAsiu.Pupeiloitleconle-
ience on Gendei und economic ciisis: Impuct und iesponses,
Oxloid, 1S–16 Septembei. www.gendeiunddevelopment.oig/
Aplitcluyu%20Nguunbunclong%201S.9.09.ppt
Nguyen, N.A., D.N. Nguyen, D.C. Nguyen, und T. Nguyen. 2009.
Tleglobulciisisundmedium-teimgiowtlpiospectsloideve-
loping countiies: Tle cuse ol Vietnum. Hunoi: Development
und Policies Reseuicl Centei und Centie loi Anulysis und
Foiecusting–VietnumeseAcudemyolSociulSciences.
202 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Quisumbing,A.,R.Meinzen-Dick,undL.Bussett.2009.Piesentution
givenutFAOSOFA2010WiiteisWoikslop,17–19Septembei,
Rome.
Sell-Employed Women’s Associution (SEWA). 2009. Finunciul ciisis
busedonexpeiiencesolSEWA.GuIuiut.
Sen, G. und P. Ostlin. 2007. Unequul, unluii, inellective und inelli-
cient: Gendei inequity in leultl—Wly it exists und low we
cunclungeit.FinuliepoittotleWoildHeultlOigunizution.
IndiunInstituteolMunugement,Bunguloie,undtleKuiolinsku
Institute,Stocklolm.
Siiimunne, A. 2009. Tle gendei peispectives ol tle linunciul ciisis.
UnitedNutionsEconomicundSociulCommissionloiAsiuund
tlePucilic(UNESCAP),Bungkok.
Suluimun,M.,M.Puiveen,undN.ClundiuDus.2009.Impuctoltle
lood piice like on nutiitionul stutus ol women und clildien.
BRAC Research Monograph38:1–49.
Tiung,T.2009.Migiuntwoikeismostullectedbydowntuin:Repoit.
Saigon Times Daily.7Apiil.
United Nutions Development Piogium (UNDP). 2008. Human
Development Report 2007/2008. Fighting climate change:
Human solidarity in a divided world.NewYoik.
UnitedNutionsOlliceonDiugsundCiime(UNODC).2009.A global
report on trafficking in persons.NewYoik.
WoildBunk.2009.Womenin33countiiesvulneiubletolinunciulcii-
sisellects.Piessieleuse2009/24S/PREM.Wuslington,DC.
WoildFoodPiogiumme(WFP).2009.Bungludesl:Ellectsoltlelinun-
ciulciisisonvulneiublelouselolds.Inteinulieleuse,26Muy.
203
The impact of the global slowdown
on the People’s Republic of China’s
rural migrants: Empirical evidence
from a 12-city survey
Xiulan Zhang and Steve Lin
1
Introduction
Internal migration and poverty reduction
Indevelopingcountiies,migiuntwoikeispluyukeyioleintledeve-
lopmentoltlenutionuleconomy.Tleyclungetleemploymentstiuc-
tuie,impiovetleelliciencyolluboiutilizution,undexpundtlescope
ol iuiul development. Fiom u development und poveity ieduction
peispective, tle People’s Republic ol Clinu (PRC) toduy is uiguubly
tlewoild’smostdiumuticsuccessstoiyinuclievingsustuinedecono-
micdevelopmentsincetleintioductionolsweepingieloimsin1978.
Asuconsequenceoleconomicgiowtl,tlePRClusexpeiienceddiu-
muticpiogiessinieducingpoveity.
Tle numbei ol iuiul pooi in ubsolute teims lus been cut liom
iouglly2S0millionin1978to14.8millionin2007ieducingtleinci-
denceoliuiulpoveityliom30.7%toonly1.6%.Tlenumbeiolpeople
livingbelowtleinteinutionulpoveitystunduidolS1peiduyluslul-
lenbyutleust4S0millionsince1978,inupeiiodwlentlecountiy’s
1
XiulunZlungispiolessoiunddeun,undSteveLinisuPlDcundiduteuttleSclool
olSociulDevelopmentundPublicPolicy,BeiIingNoimulUniveisity.TleAustiuliun
AgencyloiInteinutionulDevelopment(AusAID),tleAsiunDevelopmentBunk,und
tleScloololSociulDevelopmentundPublicPolicypiovidedlundingloitlelield
visits und tle questionnuiie suivey. Tle Ministiy ol Humun Resouices und Sociul
Secuiity,tleMinistiyolFinunce,undtleMinistiyolCivilAlluiislelpedcooidinute
tle locul visits. My colleugues, Piolessois Tiun Ming, Liu Fengqin, und Guo Ying,
undmyieseuiclussociuteSteveLin,uswellusClenLin,LiuYu,ZluHe,undmuny
otleisluvedonetledutucollectionundcleuningundluveulsopiovidedcomments.
Iumveiygiutelulloitleiivuiiouselloits.Tleuutloiiemuinsiesponsibleloitle
contentoltlispupei,undtleviewsexpiessedleieindonotiepiesenttloseoltle
uutlois’colleuguesnoitlesuppoitingugencies.
204 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
populutionioseliom962.6millionto1,321.3million,udeclinetlut
lusdiivenimpiovementsinglobulpoveityliguies.
Duiingtlepiocessoliuiulpoveityieduction,tlePRClusbeen
expeiiencingunextiemelyiupidexpunsionoluibun-busedpioduction
olgoodsundseivices.Tlislusinvolvedudiumuticsliltintlelive-
liloods ol muny people liom ugiicultuiul pioduction in iuiul uieus
to woik in uibun uieus. Accoiding to tle PRC’s Nutionul Buieuu ol
Stutistics, 22S.4 million nominully “iuiul” people weie looking loi
woik in uibun uieus in 2008. Between 1982 und 2008, tle piopoi-
tionoltlePRC’spopulutioniepoitedtobeiegisteieduibuniesidents
incieused liom 21.1% to 4S.6%. Tle lutest pioIections uie tlut tlis
piopoitionwilliiseto47%in2010undSS%in2020.
2
Tlisiupidexpunsionoltleuibunwoikloicelusbeenimpoitunt
loi tle PRC’s development. Reseuicleis in tle PRC luve estimuted
tlut luboi migiution liom iuiul to uibun uieus contiibuted 16% to
totulgiossdomesticpioduct(GDP)giowtlbetween1978und1997
(Cui2001).Itlusulsocontiibutedtoulullintlepievulenceoliuiul
poveity. Eucl migiunt woikei’s iemittunces lelp lis oi lei lumily
escupe poveity (NBS und MOLSS 2001). Beyond tle possibility ol
escupingpoveity,wlicliemittuncesluvepiovidedtotleiuiulpooi,
tleiiexpeiiencelusulsoincieusedtlelumuncupitulolmigiuntwoi-
keis (Huung und Zluo 200S). In uddition, migiunts wlo muintuin
linkswitltleiiiuiullomesuielikelytotiunsleiinvestment,lumun
cupitul,undinloimutiontotleiilomeuieus,tluscontiibutingtoiuiul
economicdevelopment(Luczko200S).
Impact of the global economic slowdown
on the poor
Tlewoildiscuiientlyintlegiipsoltlemostseiiouseconomiccii-
sis since tle 1930s. Tle demund loi commodities und seivices lus
decieusediupidly,leudingtouiiseinunemployment.Foideveloping
countiies,tlisdevelopmentlussignilicuntimplicutionsloipiogiessin
ieducing poveity und uclieving tle Millennium Development Gouls.
Stuiting in 2008, muny discussions luve locused on tle impuct ol
tle economic slowdown on tle pooi. But tleie lus been veiy little
ieseuicl into tle ellect tle cuiient economic ciisis is luving on tle
pooiliomtlemiciodutu.
In tle PRC, uccoiding to olliciul liguies, ut leust 20 million
migiuntwoikeisluveietuinedtoiuiuluieusulteilosingtleiiuibun
2
lttp://news.qq.com/u/20090917/001949.ltm
205
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
Iobs—eclipsing unemployment liguies in otlei countiies. Since tley
uieconcentiutedinpieciselytloselow-skill,expoit-diiven,undmunuul
luboi-intensivesectoistlutluvebeenluidestlit,tledowntuinlusled
tomussivedisplucementoltlePRC’smigiuntwoikloice.Aselsewleie
ontleplunet,goveinments,scloluis,undmediuintlePRCluveexten-
sivelydiscussedtlesociulimpuctoltlecuiientciisiswitllittleempiii-
culdutuubouttlelevelsundmeclunismsolimpuctsonpoveity.
Unique characteristics of internal migration
in the People’s Republic of China
Two unusuul cluiucteiistics ol tle PRC’s iupid migiution und uibu-
nizutionuietlutitistukingpluceinucontextolielutivelyequituble
uccess to lund in iuiul uieus und tlut it lus been uccompunied by
muIoi investments in Iob-cieuting iuiul constiuction pioIects. Tleie
uieveiylewlundlessiuiulwoikeis,usituutiontlutluspiovidedun
impoituntsuletynetloilumilieswislingtomovetouibunuieus.It
lusenubledtlemtoseekulteinutivesouicesolincomeundeventuully
toestublislunewiesidence,wlileietuininguiuiulbuse.Tomunuge
tleuibunizutionpiocess,tlegoveinmentlusudoptedutwo-pionged
uppioucltomigiutionunduibunizution.Onepiongistoluuncl“new
iuiuldevelopment”initiutivesundguuiunteetlutiuiuliesidentsuie
piovidedwitlutleustuminimumlevelolseivices(educution,leultl,
und so on). Tle otlei piong is to cieute moie Iob oppoitunities in
tlecities.
Tleinitiuluimoltlispupeiistoempiiicullyussesstleimpuctol
tlecuiientglobuleconomicslowdownonmigiuntwoikeisundtleii
lumilies. Second, tle pupei discusses tle potentiul long-teim ellects
ol tle slowdown on tle migiunts tlemselves und on tleii clildien.
Tliid, tle pupei illustiutes tle ioles ol loimul und inloimul coping
meclunismsundmukespolicyiecommendutionsonlowtomitigute
tleimpuctsoltledowntuinontlePRC’smigiuntwoikeis.
Methodology
Data sources
DuiingFebiuuiyundMuicl2009,weconducteduiupidussessment
in uibun uieus ol tliee muIoi luboi-impoiting piovinces (ZleIiung,
Slunglui,undGuungdong)uswellusiuiuluieusolHenun(umuIoi
luboi-expoiting piovince). Tle ussessment included in-deptl intei-
viewswitlloculgoveinmentolliciulsundmigiuntwoikeis.
206 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tlen,liomApiiltoJune2009,weconducteduluigesumpleques-
tionnuiiesuiveyin12citiesintlePRC.Tlesuiveywusintendedto
giveusumoieuccuiuteundeistundingoltleimpuctoltleglobuleco-
nomicslowdownontlePRC’smigiuntwoikeisundlowtleycoped
witltleclullengestleyluced.Tlecitiesclosenloitlisstudyincluded
muIoi migiunt-impoiting cities in noitlwestein PRC (Lunzlou),
soutlwesteinPRC(Clongqing),undcentiulPRC(ClenzlouinHunun
Piovince,ZlengzlouinHenunPiovince).Citiesweieulsoclosenliom
tle Peuil Rivei deltu uieus (Slenzlen und Dongguun in Guungzlou
Piovince),tleClungIiungdeltuuieus(KunsluninJiungsuPiovince,
Wenzlou und Quzlou in ZleIiung Piovince), BeiIing und TiunIin
metiopolitunuieus(BeiIing,TiunIin),undXuzlouCity(ucoustulcity
inAnluiPiovince).
Tlis migiunt sumple includes botl “loimul” und “inloimul”
employees. In tlis pupei, “inloimul” employment includes inloi-
mulemploymentinloimulliims,inloimulemploymentininloimul
liims, lumily seivices, odd Iobs, und tle sell-employed (including
piolessionuls).
Weconductedluce-to-luceinteiviewswitl8,0S1migiuntwoikeis
undobtuinedvulidinloimutionliom7,879oltlem.Amongtle7,879
iespondents,4S%,oi3,SS0migiunts,ludnosignedloimulcontiucts
(woikingintleinloimulsectoi),undSS%,oi4,329,ludsignedloi-
mulcontiuctsundweiewoikingintleloimulsectoi.
Sample characteristics
Tuble1desciibestlesociodemogiupliccluiucteiisticsoltlemigiunts
suiveyed. Aguin, we bieuk tle sumple into loimul und inloimul
employees.
Tle totul sumple contuins 63.1% mules: 60.8% ol tle loimul
employeesuiemules,wlile6S.92%oltleinloimulemployeesuiemules.
Neuily7S%oltleiespondentsweieuged18–40.Foimulemployees
uieyoungei:78%weieuged18–40undmoietlunuquuiteiweiein
tle 21–2S uge iunge. Moie tlun lull ol tlose suiveyed weie mui-
iied.Howevei,43.S%olloimulemployeesluveneveibeenmuiiied,
but only 39.18% ol inloimul employees luve nevei been muiiied.
Tlepeicentugeolmuiiiedsuiveypuiticipuntswloweieinloimully
employed is liglei (S6.2%) tlun umong tlose wlo weie loimully
employed(S2.3%).
Middlescloolgiuduutesuccountloimoietlun40%oltlesumple,
lollowedbyliglscloolgiuduutes(17.81%).Aiound12%oltleies-
pondentsluveieceivedpiolessionuloioccuputionulsclooleducution
und 16% even luve some college oi liglei educutionul uttuinment.
207
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
Table 1: Sociodemographic characteristics of the sample
Variable Total (%) Formal (%) Informal (%)
Sex
Mule 63.10 60.80 6S.92
Femule 36.90 39.20 34.08
Age
<18 1.98 1.64 2.39
18–20w 13.24 14.00 12.31
21–2S 24.09 26.43 21.24
26–30 14.62 14.8S 14.34
31–3S 10.70 10.63 10.79
36–40 12.24 12.01 12.S1
41–4S 10.60 9.S2 11.92
46–S0 S.8S S.43 6.37
S1–SS 3.44 2.S9 4.48
>SS 3.2S 2.91 3.66
Marital status
Neveimuiiied 41.SS 43.S0 39.18
Muiiied S4.06 S2.30 S6.20
Divoiced/Widowed/
Otleis
4.39 4.20 4.62
Educational level
Yeuisolsclooling(yeuis) 9.30 9.72 8.79
Lesstlunmiddlesclool 16.91 13.14 21.49
Middlesclool 44.62 43.13 46.4S
Higlsclool 17.81 18.27 17.24
Occuputionulsclool 4.S7 S.S0 3.44
Piolessionulsclool 7.11 9.17 4.S9
Collegeundubove 8.99 10.79 6.79
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
A totul ol 17% ol tlose suiveyed lud less tlun middle sclool edu-
cution, 43.73% ol tlose sumpled witl loimul employment lud ligl
sclooloiligleieducution,wlileonly32.06%olinloimulemployees
ludliglsclooloiligleieducution.
SuiveypuiticipuntswitlIobsintleloimulsectoiludunuveiuge
ol9.72yeuisolsclooling,wlilepuiticipuntswitlIobsundinloimul
208 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
employeesweielesseducutedwitl,onuveiuge,8.79yeuisolloimul
educution.Oveiull,woikeislud9.3yeuisolloimuleducution.
Primary impacts of the global
economic downturn
Tlisclupteilooksintotlediiectimpuctoltleglobuleconomicdown-
tuin on tle PRC’s migiunt woikeis, including its ellects on employ-
ment,undonincomeundlivingconditions.
Impact on employment
WelookeduttleellectsoltleglobuleconomicslowdownonIobsee-
keis, on tle time spent linding u Iob, und on tle expeiiences ol tle
unemployed. Among migiunt woikeis suiveyed, 49.2% lelt tlut tle
globullinunciulciisisludusignilicuntimpuctontleiiubilitytolind
uIob.Tleimpuctwusevenluigeiontleyoungundontlemoieedu-
cuted.Weuskediespondentsubouttleextenttowlicltleslowdown
ludnegutivelyullectedtleiiIobseuicl:21.8%lelttlutitluduluige
impuctwlile27.4%lelttleimpuctwussignilicunt.Tleieloie,neuily
lulltlosesuiveyedlelttluttleimpuctontleiiIobseuiclludbeen
luigeoisignilicunt.
Inloimulemployees,youngeimigiunts,peoplewitlmoieeducu-
tion, und tlose wlo lud woiked in seveiul cities lelt it lud become
moiedilliculttolinduIobbecuuseoltleslowdown.
Singleundmuiiiedwoikeis,woikinginBeiIingoiTiunIinmuni-
cipulities, in stute-owned, collectively owned, piivutely owned busi-
nesses,oiinpublicseiviceoigunizutions,oitloseengugedinpeisonul
oi public seivices, lelt tlut tle ciisis lud less ol un impuct on tleii
ubility to lind u Iob. Tle longei tley lud woiked in cities, tle less
impucted tley lelt, peilups due to tleii luigei netwoiks und sociul
cupitultleie.
Peisonulwoikexpeiience,suclusbeingugoveinmentolliciuloiu
CommunistPuitymembei,oiluvingludpieviousbusinessoimigiunt
expeiience, oi luving spent time in tle uimy, lud not ieduced tle
dillicultyollindinguIob.
We usked iespondents il tley lud expeiienced uny peiiods ol
unemploymentsincetlesecondlullol2008:19.23%suidtluttley
lud.FiomJuly2008toJune2009,tleuveiugetotulduysolunem-
ploymentweieS8.2duys,oiulmost2montls.
On2Febiuuiy2009,tleussociutediiectoioltleOlliceolClinu’s
Ruiul Woik Committee, Clen Xiwen, suid tlut tle globul linunciul
209
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
ciisisludiesultedin20millionunemployedmigiuntwoikeisietui-
ningtoiuiuluieus.Tlisiepiesents1S.3%olullPRCmigiuntwoikeis.
TlecentiulGoveinmentlusissuedlivepoliciestouddiessmigiunt
unemploymentundtlepioblemoliuiulsuiplusluboi,uslollows:
3
º Encouiugeenteipiisesintlecitiesundcoustuluieusnottoluy
ollwoikeis.
º All levels ol goveinments slould piovide skills tiuining to
Ioblessmigiuntwoikeis.
º Public inliustiuctuie pioIects slould liie us muny migiunt
woikeisustleycun.Foimigiuntswloluveietuinedtotleii
iuiul lomes, locul goveinments slould piovide public woiks
pioIectsiniuiulinliustiuctuie.
º Encouiugemigiuntwoikeistoietuintotleiiiuiullomesto
stuittleiiownbusiness.
º Ensuielundiigltsolmigiuntwoikeis—ensuiing,evenwlen
tleie uie no locul Iobs uvuiluble loi ietuined Iobless migiunt
woikeis, tlut tley still luve ullocuted lund to cultivute und
tluttleycunmuintuintleiibusicliveliloodiniuiuluieus.
Impact on income and living conditions
Weuskediespondentswletleitleglobuleconomicslowdownluduny
impuctontleiiincome:19.2%suidtleimpuctludbeenveiyluige,
27.3%suiditludbeensignilicunt,32.9%suiditludbeenmodeiute,
und20.6%suiditludnoimpuctutull.
Tle ellect on incomes wus gieutei loi tle inloimully employed,
mules,youngmigiunts,undtlemoieeducutedwoikingintlePeuil
Riveideltuuieus,uswellustlosewloludmigiutedundwoikedin
seveiulcities.
Tle income impuct wus lowei on loimully employed woikeis;
on migiunts woiking in BeiIing und TiunIin municipulities und tle
ClungIiung deltu uieus; in stute-, collectively, oi piivutely owned
liims;inpublicseiviceoigunizutions;inietuiloiiestuuiunts;inpei-
sonulseivices;undintlepublicseivicesectoi.Aguin,weloundtlut
peisonulwoikexpeiienceludnotlelpedmigiuntwoikeisduiingtle
ciisis in teims ol its impuct on tleii incomes: S0.22% ol tlose sui-
veyed lelt tlut tleii duily living situution lud deteiioiuted ovei tle
peiiodMuy2007toMuy2008;94.77%oliespondentsuttiibutedtlis
declineintlequulityoltleiilivestotleglobuleconomicslowdown.
3
lttp://li . bui du. com/%CB%AB%D0%C2%CA%C0%BC%CD/bl og/i tem/
bS4u4bd086bbS688u1ec9c4u.ltml
210 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Secondary impacts of the global economic
downturn
Reduced social insurance payments or coverage
Tuble2piesentstleimpuctoltleglobullinunciulciisisontleinsu-
iuncecoveiugeoltlePRC’smigiuntwoikeis,inteimsoluctionstuken
byemployeisundbyemployees.
Table 2: Impact on insurance coverage
for migrant workers
Insurance coverage
Total
(%)
Formal
(%)
Informal
(%)
Employers
Stoppedpuyingpensionplunpiemiums 3.8S 3.6S 4.18
Askedemployeestodiopoutolpension
sclemes
1.41 1.03 3.04
Stoppedpensionpiogiumcoveiuge 1.69 1.38 3.0S
Stoppedullsociulinsuiuncecoveiuge 2.31 1.93 3.98
Migrant workers
Stoppedpuyingpensionpiemiums 4.38 3.76 6.87
Dioppedoutolpensionsclemes 4.44 3.61 7.87
Wusuliuidtouskemployeistoenioll
tlemintotlepensionscleme
18.77 18.4S 19.17
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
BecuuseolIobsloituges,someemployeisluvetukenudvuntuge
oltlesituutiontoieducebenelits,loweisuluiies,undstoppioviding
insuiunceloitleiiwoikeis.Tlestudyloundtlut3.8S%olemployeis
stopped puying insuiunce piemiums loi tleii woikeis. In uddition,
1.41% ol employeis even usked tleii employees to completely diop
outoltlepiogium.Inloimulwoikeis’insuiuncecoveiugewusullec-
tedevenmoieduiingtleciisis:4.18%olemployeisstoppedpuying
woikeis’insuiuncepiemiums,3.04%olemployeisuskedtlemtocom-
pletelydiopoutoltlepensionscleme,3.0S%olemployeiscuncelled
pensioncoveiugeloitleiiwoikeis,und3.98%olemployeiscuncelled
ullinsuiuncesuclusleultlcuieundunemployment.
TocopewitlieducedincomeundunceituintyintleIobmuiket,
3.76% ol loimul woikeis und 6.87% ol inloimul woikeis stopped
211
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
puyingtleiipensionpiemiums,3.61%olloimulwoikeisund7.87%
olinloimulwoikeiscuncelledtleiipensionplun,und18.4S%olloi-
mulwoikeisund19.17%oltleinloimulwoikeissuidtluttleywun-
tedtopuiticiputeintlepensionplunbutweieuliuidtomentionitto
tleiiemployeisloileuiollosingtleiiIob.
Atotulol21.07%olloimulwoikeisiepoitedtluttleyludpen-
sioncoveiuge,undS.04%olinloimulwoikeis.Tleuveiugepension
coveiugeloibotlloimulundinloimulwoikeiswus13.8S%.Tleglo-
bul slowdown iesulted in 29.7% ol migiunt woikeis witl u pension
plun diopping out ol it—1S.8% loi woikeis witl u loimul pension
plunbutusliglus68.S%loiinloimulwoikeis.Tlisclungewusdue
to employeis wunting to cut costs und migiunt woikeis wunting to
suveexpenses.
Migrant households’ limited options to cope
with the crisis in the cities
Weuskedwlutstiutegiesmigiuntlumiliesluveusedtocopewitltle
impuctoltleciisis.Tuble3piesentstleiesults.
Table 3: Family-coping strategies
Family livelihood
Total
(%)
Formal
(%)
Informal
(%)
Reducedloodquulity 3S.6S 31.6S 40.S0
Sentpiescloolclildienbuckto
iuiullomes
16.30 14.64 18.33
Tiunsleiiedscloolclildiento
iuiulsclools
11.79 10.84 12.97
Reducedextiu-cuiiicului(leesloi
ulteisclooluctivities)expenses
18.S9 17.23 20.20
Aspousewentbucktotleiuiul
lome
12.86 12.S6 13.21
Movedtoucleupeipluce 38.88 36.S2 41.66
Soldussets S.S4 S.22 S.90
Didnottoseekleultlcuie
wlensick
30.3S 27.08 34.22
Reducedexpensesonclotling,
Inteinetuccess,und
enteituinment
S8.69 S7.S8 60.09
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
212 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tlemostcommonuppioucleslumiliesusetocopewitltleimpuct
oltleslowdownweie:
º Reducing “unnecessuiy” oi “nonessentiul” expenses, sucl us
clotling, inteinet use, und enteituinment: S7.S8% ol loimul
woikeilumiliesund60.09%olinloimulwoikeilumiliesudop-
tedtlisuppioucl.
º Cuttingexpensesonientundlood:36.S2%olloimulwoikei
lumilies und 41.66% ol inloimul woikei lumilies iented u
cleupei pluce to live, 31.6S% ol loimul woikei lumilies und
40.S%olinloimulwoikeilumiliesieducedtlequulityollood
tleyconsumed.
º Tiimmingleultlcuiecosts:27.08%olloimulwoikeilumilies
und 34.22% ol inloimul woikei lumilies did not seek leultl
cuiewlentleyleltilloigotsick.
º Decieusingmoneyspentonclildien:17.23%olloimulwoikei
lumiliesund20.20%olinloimulwoikeilumiliesieducedtleii
extiucuiiiculuiexpenses.
º Sending clildien buck to iuiul lomes: 14.64% ol loimul
woikeilumiliesund18.33%olinloimulwoikeilumiliessent
tleiipiescloolclildienbucktotleiiiuiullomes;10.84%ol
loimulwoikeilumiliesund12.97%olinloimulwoikeilumilies
tiunsleiiedtleiisclool-ugedclildientoiuiulsclools.
º Couplesplit:10.84%olloimulwoikeilumiliesund12.97%ol
inloimul woikei lumilies sent one spouse buck to tleii iuiul
lome.
º Soldussets:Wlilemostmigiuntsluvelimitedussets,S.22%ol
loimulwoikeilumiliesundS.90%olinloimulwoikeilumilies
soldussets.
Reduced remittances to rural areas
Tuble4piesentstleclungesiniemittuncesoveitlepeiiodMuy2007
toMuy2008oltleglobuleconomicslowdown.
Table 4: Changes in remittances (CNY)
Variable Total Formal Informal
Annuulincomeutlome 7,334 7,663 6,940
Annuulincomeintlecity 17,946 18,133 17,717
Remittunceslustyeui 4,481 4,S47 4,400
Remittuncesbeloietleciisis 6,188 S,940 6,442
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
213
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
On uveiuge, migiunts euined CNY7,334 u yeui in iuiul uieus,
but CNY17,946 u yeui in cities, even duiing tle downtuin—oi still
moietluntwicetleincometluttleycouldeuininiuiuluieus.Beloie
tle ciisis, migiunt woikeis iemitted CNY6,188 to tleii iuiul lomes;
duiing tle ciisis, tleie wus u 27.6% decieuse in iemittunces, to
CNY4,481.Foimulwoikeisiemittedlesstluninloimulwoikeis,und
tleiidecieuseiniemittunceswusulsosmullei,ut23.S%uguinst31.7%
loiinloimulwoikeis.
Coping with shocks from the global
economic slowdown
Formal social protection programs
for migrant workers
Unemploymentinsuiuncebenelitsluvenotieucledmigiuntwoikeis
usexpected.Munyiespondentssuidtluttleyweieunubletoobtuin
unemployment benelits becuuse ol complicuted iegistiution pio-
ceduies.Only2.46%oltleunemployeductuullyieceivedbenelitsund
tlebenelitlevelsweieveiylow;7.34%oltloseunemployedieceived
Iob tiuining, wlile S.63% weie given employment inloimution by
loculgoveinments.LesstlunS%ieceivedcusloiin-kindussistunce,
oiobtuinedlouns.
Table 5: Formal social protection programs
for migrant workers
Strategy
Total
(%)
Formal
(%)
Informal
(%)
Receivedunemploymentinsuiunce 2.46 4.29 1.17
ReceivedIobtiuining 7.34 9.93 4.21
Receivedemploymentinloimution S.63 S.98 S.20
Receivedlouns 4.06 4.3S 3.71
Receivedcusloiin-kindussistunce 4.83 4.13 S.68
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
Munyolliciulstoldtlestudyteumtluttleyluduluigesuiplusin
tleiiunemploymentinsuiuncelunds,sotleyweieiedesigningtleii
policies to ullocute lunds to seveiely ullected enteipiises in oidei to
suppoittleiisuivivulduiingtleeconomicciisis.Howevei,intulking
to locul cudies und munugeis ol tle enteipiises, tley ulso indicuted
tlutitwusveiydilliculttotellwliclenteipiisesludbeenluidestlit.
214 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tle solution wus to ullocute unemployment insuiunce suiplus lunds
equullytoullenteipiises.Tlisiepiesentsupuiudoxloitlemigiunts’
unemploymentinsuiuncescleme,sincemigiuntwoikeisuiecoveied
by unemployment insuiunce wlen tley uie employed, but do not
benelit liom unemployment insuiunce wlen tley uie unemployed.
Tlislindingindicutestluttleunemploymentinsuiuncesclemeneeds
tobeimpioved.
Individual and family coping strategies
Tuble6slowstlutS8.S7%olloimullyemployedwoikeisund63.69%
ol inloimully employed woikeis ielied on tleii suvings to cope witl
tleimpuctolunemploymentduetotleslowdown.Itulsoslowstlut
21.43%olloimulund14.97%olinloimulwoikeiswentbucktoiuiul
uieus.Aiound12%olwoikeisboiiowedliomotleistosustuintlem-
selvesduiingunemployment.Inloimulwoikeisweiemoielikelytobe
ubletocontinuelivingincitieswlileunemployed.Tuble6piesentstle
vuiiouscopingstiutegies.
Table 6: Strategies for coping with unemployment
Coping strategies
Total
(%)
Formal
(%)
Informal
(%)
Reliedonsuvings 61.28 S8.S7 63.69
Reliedonuccumulutedsell-puid
pensionpiemiums
0.67 1.07 0.32
Boiiowedliomotleis 12.63 11.79 13.38
Wentbucktoiuiuluieus 18.01 21.43 14.97
Otlei 7.41 7.14 7.64
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
Tuble 7 slows tlut neuily 20% ol migiunt woikeis luve suvings
tlutwillsustuintlemloiupto6montlswitloutemploymentintle
cities. Tle limited suvings ol migiunt woikeis indicutes tlut policies
to encouiuge tle cieution ol employment und piovide tempoiuiy
ussistunceuieimpoituntloitlisgioupolpeople.Tlismeunstlutil
tle economic downtuin is ol limited duiution, u luige piopoition ol
migiuntscunsuiviveintlecities;otleiwise,tleymigltluvetoietuin
totleiiiuiuluieus.
215
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
Table 7: Unemployed migrants’ savings in a city
Period of sustenance
offered by savings
Total
(%)
Formal
(%)
Informal
(%)
Lesstlun3montls 60.S3 S8.81 61.73
3–6montls 17.84 18.S0 17.38
6montlsto1yeui 11.82 11.87 11.79
1–2yeuis S.09 S.76 4.62
2oimoieyeuis 4.73 S.06 4.S0
Souice:Migiuntwoikeisuiveyconductedbytleuutloisin2009.
Conclusions and recommendations
Tleglobuleconomicciisislusludupioloundimpuctonunemployment,
income, und iemittunces. Howevei, tle iuiul development stiutegy, us
well us lundlolding und ugiicultuiul pioduction systems, luve lelped
cuslion tle woist ol tle ciisis. Tleie luve been no muIoi incidents
olsociuluniest,wliclwusveiymucluconceinloicentiulundlocul
goveinments ut tle beginning ol 2009. Tlis pupei linds tlut tle two-
piongedstiutegyudoptedbytleGoveinmentoltlePeople’sRepublic
olClinulusbeensuccesslulinlelpingmigiuntssuivivetledowntuin.
Tleinteigeneiutionulimpuctsonclildiensentbucktoiuiuluieus,
olpooieinutiitionloiclildien,undolieducedinvestmentinclild-
ien’seducutionuieluidtoussessuttlistime.Todecieusecosts,muny
migiunt woikeis close not to seek medicul cuie wlen tley oi tleii
lumily membeis weie sick. Muny louselolds weie loiced to ieduce
tlenutiitionulquulityoltleiiloodundeducutionulspendingonclil-
dienuscopingstiutegies.Munylumiliessenttleiiclildienbucktotle
countiysideoionespouseietuinedtolisoileiiuiuluieu.Tlelong-
teimimpuctiscuiientlydilliculttoguuge,butmunyclildienluvelud
toucceptuloweiquulityoleducutioniniuiuluieusundlivesepuiutely
liom tleii puients. Tlis is especiully dillicult loi piesclool clildien,
wlomisstleiipuients’cuie.
Peisonul expeiience lus not lelped migiunt woikeis uvoid tle
impuct ol tle globul economic slowdown on employment, income,
undlivingconditions.Migiuntsliompooieilouseloldsluveluilewei
iesouices to mitigute tle impuct, so tle likelilood ol u loiced move
bucktoiuiuluieusismuclgieuteitlunloinonpooilouselolds.Tle
inequulitybetweenpooiundnonpooiiuiullouseloldsisexpectedto
widenbecuusetlenonpooicuncopemoieellectivelywitltleciisis.
216 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
It is ciuciul to ensuie long-teim investment in sociul insuiunce
loi migiunts. Duiing tle slowdown, muny locul goveinments issued
policiespeimittingemployeistodeluysociulinsuiuncepuymentsloi
employees.Howevei,someemployeistookudvuntugeoltlistocom-
pletelycunceltleiiemployees’sociulinsuiuncecoveiuge.Inuddition,
veiylewemployeescunobtuintleunemploymentbenelitstowlicl
tleyuieentitledeveniltleyuieeniolledintlepiogium.
Retuinedmigiuntscunbeunoppoitunityloiiuiuleconomicdeve-
lopment.Tlegoveinmentlusintioducedpoliciestosuppoitmigiunts
wlo ietuin lome to stuit businesses in iuiul uieus.
4
Muny locul
goveinmentsulsoconsideiietuiningmigiuntsugieutlumuniesouice
loi locul economic development.
S
Tleie luve ulso been cuse iepoits
olietuinedmigiuntsstuitingtleiiownbusinesses.Inouilieldvisits
to migiunt ieciuitment uieus in Henun Piovince, locul goveinment
iepiesentutives weie in luct luppy tlut young, well-educuted, und
expeiiencedmigiuntsweieietuininglome,uiguingtluttleypiovi-
dedmucl-neededlumuniesouicesloiiuiuldevelopment.Howevei,
wletleitleietuinedmigiuntscunieullycontiibutetoiuiuldevelop-
ment und low mucl tley cun contiibute uie still ununsweied ques-
tions,becuuseoludeuitlolciedibleevidence.
Finully, u ieduction in iemittunces und tle inteiiuption ol tle
migiution piocess weie negutive impucts on iuiul poveity stemming
liomtledowntuin.
Busedonouilindingsliomtlesuiveyundlieldvisits,wemuke
tlelollowingiecommendutions:
º UibunpoliciesslouldbeudIustedtolelpsustuintlemigiution
piocess,muintuininsuiuncecoveiuge,undsuppoitclildlood
educution.
º Ruiul policy slould enlunce tle liscul policy enviionment
to suppoit ietuining migiunts und encouiuge locul business
giowtl.
º Educutionulussistunceslouldbeextendedtomigiuntclildien
to ensuie sclool uttendunce. In uddition, cusl und in-kind
suppoit,uswellusieducedleesloipiescloolclildien,slould
bepiovided.
º Cusltiunsleisundtletempoiuiyielielpiogiumtlutpiovides
ussistuncetouibuniesidentswitlemeigencyneedsslouldbe
immediutely extended to migiunts, ullowing tlem to sustuin
tleiiconsumptionlevelsundstimulutedemundloiloculgoods.
4
www.clinu.com.cn/policy/txt/2008-12/28/content17023162.ltm
S
FieldvisitsbytleuutloisinFebiuuiy,Apiil,June,undAugust2009.
217
The impact of the global slowdown on the PRC’s rural migrants:
Empirical evidence from a 12-city survey
References
Cui,Fung.2001.China’s population: Ways and channels of migration.
BeiIing:SociulSciencesAiclivePiess.
Huung, Ping und Sluoluu Zluo. 200S. Inteinul migiution in Clinu:
Linking it to development. In Migration, development and
poverty reduction in Asia. Genevu: Inteinutionul Oigunizution
loiMigiution,pp.67–84.
Luczko,Fiunk.200S.Migiution,developmentundpoveityinAsiu.In
Migration, development and poverty reduction in Asia.Genevu:
InteinutionulOigunizutionloiMigiution,pp.11–19.
Nutionul Buieuu ol Stutistics (NBS) und tle Ministiy ol Luboi und
SociulSecuiity(MOLSS).2001.China Labor Statistics Yearbook
2001.BeiIing.
218 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Box 8: The Philippines’ electronics sector
Tleelectionicsindustiygeneiutestlebulkolieceiptsliomtlecountiy’s
exteinul tiude und uccounts loi 60%–70% ol totul expoit euinings.
Alteiseveiulyeuisoliupidgiowtl,expoitsdeclinedbyS%in2008.By
Novembei2008expoitsweie17%lesstlunintlesumepeiiodintle
pieviousyeui.
Ovei100electionicscompuniesund60,000woikeisweieullected
bytleglobuliecessionliomOctobei2008toJune2009.Goveinment
souicesindicutetlut3S,000woikeisweiesubIectedtollexiblewoiking
uiiungementswlileunotlei1S,000weieluidoll.Vuiioussuiveysund
discussions in Cuvite, neui Munilu, wleie muny ol tle compunies uie
clusteied,tlutweieleldinmid-2009,indicutetluttleiecessionlud
usubstuntiulimpuctonincomeundexpendituieputteinsolelectionics
woikeis.Tleyulsoslowtluttleiecessionudveiselyimpuctedsuppoit
seivicepiovideissuclustiicyclediiveis,loodstullundnewspupeiven-
dois, und bouiding louse lundloids. Neuily ull suppoit seivice piovi-
deis iepoited u 20%–S0% ieduction in customeis und u 30% decline
inievenues.
Appioximutelylulltleluid-ollemployeesiepoitedieceivingseve-
iunce puy. Otlei ussistunce piovided by compunies included tiuining,
notublyonentiepieneuislipundcounseling,undIobseuiclussistunce.
Incontiust,suppoitseivicepiovideisludtoudIusttotleiecessionby
ielying on tleii own iesouices und tlut ol tle extended lumily. Tle
suiveys indicute tlut muny iespondents sold ussets to cope witl tleii
income decline. Being in tle inloimul sectoi lowevei ullowed tlem
to lieely clunge business piuctices sucl us stocking up on moie mei-
clundise,woikinglongeilouisoimovingtounotleilocule.Asignili-
cuntnumbeioliespondentsulsoiepoitedenguginginudditionulwoik
uctivities.
Tlesuiveysliglliglttlelucttluteconomiciecessionsmuyluveu
puiticuluilypionouncedellectonspeciliciegionsolucountiy.Fuitlei,
tleuctuulnumbeiolpeopleullectedcunbesubstuntiullygieuteitlun
tlut iepoited in olliciul unemployment dutu il seconduiy impucts uie
ulsoconsideied.
Souice:M.Lopezin“TleEconomicImpuctoltleGlobulEconomicSlowdown
onGendeiundVulueCluinLuboiMuiketsinAsiu.”www.udb.oig/Documents/
Events/2009/Poveity-Sociul-Development/pupeis.usp
219
Urban–rural and rural–urban
transmission mechanisms in
Indonesia in the crisis
Megumi Muto, Shinobu Shimokoshi, Ali Subandoro,
and Futoshi Yamauchi
1
Introduction
Tlispupeilocusesontletiunsmissionmeclunismsintlecontextol
tleglobulciisis,betweenuibunundiuiuluieusinIndonesiu.Intlis
iupid unulysis, we look into tle clunges in tle components ol tle
totulincomeoliuiullouselolds,includingiemittunces,toobseivetle
buck-und-loitltiunsmissionmeclunisms.
Webuilttlisiupidunulysisonupuneldutusetoliuiullouselolds
inIndonesiuliomtwopiovinces(CentiulJuvuundSoutlSuluwesi)in
2007und2009.Oiiginully,witltlecoopeiutionoltleInteinutionul
FoodPolicyReseuiclInstitute(IFPRI)in2007,tleJupunInteinutionul
Coopeiution Agency (JICA) conducted villuge- und louselold-level
suiveys,coveiing98villugesinsevenIndonesiunpiovinces(Lumpung,
CentiulJuvu,EustJuvu,WestNusuTengguiu,SoutlSuluwesi,Noitl
Suluwesi, und Soutl Kulimuntun) und moie tlun 2,000 louselolds.
Tlis2007suiveywusdesignedtooveilupwitlvillugesintle1994–
199S Nutionul Fuimei’s Punel (PATANAS) suivey conducted by tle
IndonesiunCenteiloiAgiicultuieSocio-EconomicsundPolicyInstitute
(ICASEPS)tobuildlouseloldpuneldutu.InJune2009,weselected
tlepiovincesolCentiulJuvuundSoutlSuluwesitoconductuquick
suivey on tle ellects ol tle linunciul ciisis, by ievisiting S0 louse-
lolds in eucl piovince. Centiul Juvu wus selected loi its pioximity
toJukuitu.SoutlSuluwesiwusselectedloiitsvuiietyoliuiul-bused
pioductionuctivities.
1
MegumiMutoisuieseuicllellowundSlinobuSlimokosliisuneconomist,botl
ut tle JICA Reseuicl Institute. Ali Subundoio is u ieseuicl unulyst und Futosli
Yumuucli is u ieseuicl lellow, botl ut tle Inteinutionul Food Policy Reseuicl
Institute.
220 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Foi ugiicultuiul expoit dutu, we use tle olliciul stutistics liom
Stutistics Indonesiu (Budun Pusut Stutistik [BPS|). Montlly expoit
dutuontotulvulueundquuntityloidisuggiegutedcommoditycutego-
iiesuieuvuiluble.Toconstiuctmeusuiesolexpoitslocks,wetooktle
montllyuveiugeolpiice(peikilogium,constiuctedliomvuluesund
quuntity)intleliistquuiteiol2007und2009,undusedtleclunges
inpeicentugeteims.
Total income
Among tle 100 sumple louselolds in oui dutu, 39 expeiienced u
decieuseoltotulincomepeicupituliom2007to2009wlile61louse-
lolds expeiienced un incieuse. Tlose louselolds witl decieusing
income weie lound moie in Centiul Juvu (28 louselolds) tlun in
SoutlSuluwesi(11louselolds)(Tuble1).Tle61sumplelouselolds
tlutexpeiiencedincieusesintotulincomeweieloundmoieinSoutl
Suluwesi(39louselolds)tluninCentiulJuvu(22louselolds).
Table 1: Number of households by province and change
of total household income, 2007 and 2009
All
samples
Central
Java
South
Sulawesi
Houseloldswitldecieusedtotulincome 39 28 11
Houseloldswitlincieusedtotulincome 61 22 39
Totul 100 S0 S0
Souices:EmpiiiculStudyolGiowtlundPoveityReductioninIndonesiunFuims,Apiil2007,JICA;
FinunciulCiisisMonitoiingSuivey,June2009,JICA.
Tlesumplelouselolds,onuveiuge,expeiiencedlullsintleiutio
olugiicultuiulincome
2
tototulincome(liom40.7%to32.6%),liom
2007 to 2009. Tley ulso expeiienced diops in tle iutio ol nonugii-
cultuiulemploymentincome(liom21.S%to10.8%oltotulincome).
Ontleotleilund,tlesumplelouselolds,onuveiuge,expeiienced
incieusesintleiutioolsell-employmentincometototulincome(liom
32.9%to49.8%)undiemittunces(liom1.7%to3.4%)(Tuble2).
2
Tle uppendix desciibes tle empiiicul metlod used loi unulyzing ugiicultuiul
income.
221 Urban–rural and rural–urban transmission mechanisms in Indonesia in the crisis
Table 2: Income from different sources,
2007 and 2009 (iupiul)
All samples Central Java South Sulawesi
2007 2009 2007 2009 2007 2009
Agiicultuiul
income
S17,367
(40.7)
909,823
(32.6)
603,473
(31.6)
404,808
(12.0)
431,262
(68.4)
1,42S,14S
(64.6)
Agiicultuiul
employment
income
40,217
(3.2)
94,902
(3.4)
48,479
(2.S)
S8,619
(1.7)
31,9SS
(S.1)
131,92S
(6.0)
Nonugiicultuiul
employment
income
273,031
(21.S)
300,978
(10.8)
464,86S
(24.3)
4S1,S29
(13.4)
81,196
(12.9)
147,3SS
(6.7)
Sell-
employment
income
418,303
(32.9)
1,389,266
(49.8)
77S,378
(40.6)
2,369,643
(70.4)
61,229
(9.7)
388,880
(17.6)
Remittunces 21,700
(1.7)
9S,S02
(3.4)
18,987
(1.0)
79,632
(2.4)
24,414
(3.9)
111,69S
(S.1)
Aveiuge
louselold
income
1,270,618 2,790,470 1,911,181 3,364,230 630,0SS 2,20S,000
Notes:2009incomelevelwusudIustedto2007level.Figuiesinpuientlesesuiepeicentugesluies
oluveiugelouseloldincomepeicupitu.
, April ,
, ,
Intlelollowingsections,welookingieuteidetuiluttleclunges
in ugiicultuiul income, nonugiicultuiul employment income, sell-
employmentincome,undiemittuncestosledligltontlebuck-und-
loitl tiunsmission meclunism between uibun und iuiul uieus in tle
contextoltleciisis.
Agricultural income
Agiicultuiul income in tlis section is delined us ciop ievenue liom
tle sold luivest minus tle udIusted totul pioduction cost. Tle iutio
olugiicultuiulincometototulincomeclungedgieutlybetween2007
und2009.Tlelouseloldstlutin2007ieliedonugiicultuiulincome
moie tlun uveiuge expeiienced u 36% ieduction in its iutio to totul
income. In contiust, tlose in 2007 ielying on ugiicultuiul income
less tlun uveiuge, suw u 167% incieuse in its iutio to totul income
(Tuble 3). Tlese iesults suggest tlut ugiicultuiul muiket conditions
in some selected commodities diiectly ullect ugiicultuiul incomes ol
iuiulluimlouselolds.
222 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 3: Change in ratio of agricultural income,
2009 relative to 2007 (%)
All samples Central Java
South
Sulawesi
Oveiull 6S 42 90
Rutioolincomeliomugiicultuiein2007
Moietlunuveiuge –36 –S3 –29
Lesstlunuveiuge 167 8S 366
Souices:EmpiiiculStudyolGiowtlundPoveityReductioninIndonesiunFuims,Apiil2007,JICA;
FinunciulCiisisMonitoiingSuivey,June2009,JICA.
We muy ulso lind muny negutive income dutu loi 2009 becuuse
someluimeisludnotluivestedtleiiciopsuttletimeoltlesuivey.
In tlese cuses, June 2009 suivey dutu cuptuie only tle luige input
spending, und lutuie potentiul ciop ievenue will be iecoided in tle
subsequentsuiveyiound.Wedonotluvetlesumepioblemloi2007
sincewetuketleuveiugeolunnuulpioduction(3montls~0.2S¯
unnuulpiolit).Tlisissuepotentiullycieutesubiusediesultsincetime
liumesuienotidenticulloi2009und2007.Tocoiiecttlispioblem,
weudIustedtotulpioductioncostin2009witluciopluivestindex—
wlicltukestlevulueol1.0iltleciopisluivested,0.Silitispuitly
luivested, und 0.0 il it is not luivested—und uggieguted ull ciops.
Tlispiopoitionulityluctoiismultipliedbytletotulcostincuiiedup
totleduteconceined.
WitltleseudIustednumbeis,intlissubsectionweestimutetle
impuctolclungesinexpoitpiicesolmuIoicommoditiestougiicultu-
iulincomeclunges,contiollingloiuctuulexposuies.Tleexplunutoiy
vuiiubleistlepeicentugeoluveiugeexpoitpiiceolselectedcommo-
dities between tle liist semestei ol 2007 und 2009, inteiucted witl
dummy vuiiubles tlut indicute wletlei tle louselold pioduces tle
commodities.
Tuble4summuiizesestimutioniesultsonclungesinugiicultuiul
income.Columns1und2iepoitiesultsintle2007–June2009punel.
Weusedpiovinceoivillugedummiestocontioliegion-specilicellects
oveitime.Tukingtledilleiencebetweentle2yeuiswipesoutlouse-
loldundlocullixedunobseivubles,sotleiesultsuieiobusttocoiie-
lutionsbetweentlelixedunobseivublesundciopcloices.
Wemuketlelollowingobseivutions.Fiist,ouiiesultsindicutetlut
iiceluimeisuieexposedtopiicevolutilityinexpoitmuikets.Similuily,
cubbugeundcolleepioduceisexpeiiencedsignilicuntclungesinugii-
cultuiulincomeuttiibutedtotleexpoitmuiketpiiceclunges.
223 Urban–rural and rural–urban transmission mechanisms in Indonesia in the crisis
Table 4: Effect of price change on agricultural income
Dependent:
Change in agricultural income (2007–2009punel)
Rice S1,400,000¯¯¯ 37,900,000¯
(2.S8) (1.6S)
Coin 2S0,000,000 244,000,000
(1.36) (1.16)
Cussuvu –1S,S00,000 –22,800,000
(1.S8) (1.29)
Cubbuge 27,000,000¯¯¯ 19,700,000
(10.61) (1.19)
Slullot –12,000,000 –12,400,000
(1.32) (1.20)
Tobucco –8,417,301¯¯¯ –8,068,897¯¯¯
(4.13) (3.09)
Collee 37,200,000¯¯¯ 20,400,000
(2.80) (1.44)
Cucuo 924,626.7 1,193,6S7
(1.1S) (1.02)
SoutlSuluwesi –1,030,827
(0.82)
CentiulJuvu omitted
Piovincedummies yes(ubove)
Villugedummies yes
Rsquuied 0.32S6 0.3377
Numbeiolobseivutions 98 98
Notes:Signilicuntut¯~10%,¯¯~S%,und¯¯¯~1%.Numbeisinpuientlesesuieubsolutet
vuluesusingiobuststunduideiioiswitlvillugeclusteis.Otleicommoditiesuieomittedtodeline
benclmuikcuse.Peicentugeclungeoltleuveiugeexpoitpiiceliomtleliistquuiteiin2007to
2009wususedloieuclcommodityustleslockvuiiuble.Tleindicutoionwletleitlepuiticului
commodityispioducedin2009delinestlewindowtotleslock(louseloldspioducingmoietlun
onecommodityuieexposedtomultipleslocksliomexpoitmuikets).
Souices: , April ,
, ,
Second,welindnegutiveundsignilicuntellectsontobuccopiodu-
ceisintle2007–June2009punel.Tlissuggeststlutintlesemuikets,
piice elusticity in tle expoit demund is iutlei luige, so un incieuse
(decieuse)inpiiceieduces(incieuses)tlequuntitydemundedtooll-
settlepiiceellect.Foitlesecommodities,tlequuntityellectseems
224 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
luigei tlun tle piice ellect. In uny cuse, lowevei, we muy conclude
tluttobuccoluimeisuieexposedtoexpoitmuiketlluctuutions.
In sum, we lound tlut ugiicultuiul expoit muiket conditions in
someselectedcommodities(iice,cubbuge,tobucco,undcollee)ullec-
tedugiicultuiulincomesumongiuiullouselolds.Fuimeispioducing
tlese commodities uie vulneiuble to piice clunges cuused by tle
iecentlullininteinutionultiude.
Income from nonagricultural employment
Tle iutio ol nonugiicultuiul employment income to totul income
incieused liom 2007 to 2009 (u S7% incieuse loi ull sumples).
Houseloldsielyingonnonugiicultuiulincomemoietlunuveiugein
2007expeiiencedu6%diopintleiutio.Howevei,louseloldsielying
on nonugiicultuiul income less tlun uveiuge in 2007 expeiienced u
104% incieuse in tle iutio (Tuble S). Tlis contiusting tendency is
cleuieiintlecuseolSoutlSuluwesi.Itisdilliculttoconcludeilnon-
ugiicultuiul employment uctivities weie negutively ullected oi posi-
tivelyullectedbytleeconomicdowntuin.Tlisispuitlybecuusetle
leveloleuininginnonugiicultuiulincomeitselliemuinsluiilyconstunt
(Tuble2),becuuseoltlelluctuutionsinotleiincomecomponents,its
ielutiveimpoitunceintotulincomeclungesduetoieusonsexogenous
tononugiicultuiulemployment.
Table 5: Change in ratio of nonagricultural employment
income to total income, 2009 relative to 2007 (%)
All samples Central Java
South
Sulawesi
Oveiull S7 29 92
Rutioolincomeliomnonugiicultuiein2007
Moietlunuveiuge –6 7 –3S
Lesstlunuveiuge 104 S6 14S
Souices:EmpiiiculStudyolGiowtlundPoveityReductioninIndonesiunFuims,Apiil2007,JICA;
FinunciulCiisisMonitoiingSuivey,June2009,JICA.
225 Urban–rural and rural–urban transmission mechanisms in Indonesia in the crisis
Income from self-employment activity
Tleiutioolsell-employmentincometototulincomeincieusedbetween
2007und2009(u12%incieuseloiullsumples).Houseloldsielying
onsell-employmentincomemoietlunuveiugein2007expeiiencedun
8%diopintleiutio.Howevei,louseloldsielyingonsell-employment
incomelesstlunuveiugein2007expeiiencedu19%incieuseintle
iutio.TliscontiustiscleuieiinSoutlSuluwesi,wleietlelutteigioup
ol louselolds expeiienced 68% ieduction. In Centiul Juvu, louse-
lolds ielying on sell-employment uctivity less tlun uveiuge in 2007
incieused tle iutio ol sell-employment income by 32%, peilups us
puitolucopingstiutegy(Tuble6).
Table 6: Change in ratio of self-employment income
to total income, 2009 relative to 2007 (%)
All samples Central Java
South
Sulawesi
Oveiull
12 18 6
Rutioolincomeliomsell-employmentin2007
Moietlunuveiuge
–8 1 –68
Lesstlunuveiuge
19 32 12
Souices:EmpiiiculStudyolGiowtlundPoveityReductioninIndonesiunFuims,Apiil2007,JICA;
FinunciulCiisisMonitoiingSuivey,June2009,JICA.
Remittances
Inouidutu,uiound14%ollouseloldsieceivediemittunces.TlemuIo-
iityoliemittuncesweiesentliomdomesticmigiuntstotleiilumilies,
includingpuientsundsiblings(Tuble7).Tuble8slowstlutliom2007
to 2009, tle puipose ol ieceiving iemittunces slilted liom puicluse
ol duily goods to clild suppoit (including educution) und medicu-
tion. In Tuble 9, we stiutily louselolds into tlose witl und witlout
ietuin migiunts. Retuin migiunts uie tlose louselold membeis wlo
weieoutoltlelousein2007butietuinedtotlelousebeloieJune
2009. Retuin migiunts uie u cleui indicution ol migiunts losing tleii
Iob,ultlouglmunymigiuntscontinuetostuyinuibunuieuswitlout
notilyingtlelouseloldwletleitleyluveuIoboinot.
226 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
HouseloldswitlietuinmigiuntsinJune2009expeiiencedudiop
in tle iutio ol iemittunces between 2007 und 2009 (u 43% diop in
tleiutiooliemittuncestototulincome).IntlecuseolCentiulJuvu,
louseloldsbotlwitlundwitloutietuinmigiuntssuwtleiiiutiool
iemittunces to totul income decieuse. Howevei, in Soutl Suluwesi,
louseloldswitlietuinmigiuntsexpeiiencedu49%decieuseintlis
iutio; tlose witlout ietuin migiunts expeiienced u 29% incieuse in
tlisiutio,peilupsuspuitolucopingstiutegy.
Table 9: Change in ratio of remittances to total income,
2009 relative to 2007(%)
All samples Central Java
South
Sulawesi
Oveiull –2 –20 18
Witloutietuinmigiunts 4 –19 29
Witlietuinmigiunts –43 –33 –49
Souice:EmpiiiculStudyolGiowtlundPoveityReductioninIndonesiunFuims,Apiil2007,JICA;
FinunciulCiisisMonitoiingSuivey,June2009,JICA.
Possible impact on children’s school
attendance
Focusing on clild leultl, in Centiul Juvu, tle numbei ol ubsent
duys liom sclool duiing tle pievious 3 montls due to illness wus
2.17duysintlecuseolincome-decieusinglouseloldsund1.4Sduys
Table 8: Purpose of receiving
remittances (%)
2007 2009
Clildsuppoit
(includingeducution)
23.81 37.21
Medicul 9.S2 11.63
Tobuyduilygoods 23.81 2.33
Nospecilicieuson 42.86 48.84
Totul 100 100
Souice:EmpiiiculStudyolGiowtlundPoveity
ReductioninIndonesiunFuims,Apiil2007,JICA;
FinunciulCiisisMonitoiingSuivey,June2009,JICA.
Table 7: Residence
location of migrants
sending remittances
Freq. %
Witlinvilluge 8 18.6
Witlinsubdistiict S 11.63
Witlindistiict S 11.63
Witlinpiovince 8 18.6
Witlincountiy 13 30.23
Abioud 4 9.3
Totul 43 100
Fieq.~liequency.
Souice:FinunciulCiisisMonitoiingSuivey,
June2009,JICA.
227 Urban–rural and rural–urban transmission mechanisms in Indonesia in the crisis
inincome-incieusinglouselolds.InSoutlSuluwesi,tleequivulent
liguies weie 2.17 duys in iemittunce-decieusing louselolds und
0.16 duys in iemittunce-incieusing louselolds. Tlis suggests tlut
decieusesinlouseloldincomeoiiemittuncesuieussociutedwitlu
negutiveimpuctonclildien’ssclooluttendunceundillness,tlougl
cuusesuieuncleui.
Conclusions
Tlispupeiluslocusedontletiunsmissionmeclunismsoltleglobul
ciisis between uibun und iuiul uieus in Indonesiu. Fiist, in teims ol
uibun-to-iuiul tiunsmission, we suw tlut tle volume ol iemittunces
going to iuiul louselolds decieused us migiunts lost tleii Iobs in
uibun uieus. Second, in teims ol iuiul-to-uibun tiunsmission, muny
iuiul louselolds weie negutively ullected by u decieuse in demund
loi,undlencepiiceol,ugiicultuiulpioducts.Tleseiuiullouselolds
muyluveiequestedmoieiemittuncesusucopingstiutegy.
In tle time liume ol oui unulysis, u decieuse in totul income in
CentiulJuvuwustiiggeiedbyudecieuseinugiicultuiulincomecom-
bined witl u decieuse in iemittunces (uibun-to-iuiul tiunsmission),
leuding to un incieuse in sell-employment us u coping stiutegy. In
Soutl Suluwesi, u decieuse in ugiicultuiul income wus puitly ollset
by un incieuse in iemittunces us u coping stiutegy (iuiul-to-uibun
tiunsmission).
Oveiulongeitimeliume,wlenluboimuiketconditionsinuibun
uieus muy ieduce tle euinings ol migiunts, tle level ol iemittunces
muydecieuse.
Appendix: Conceptual framework for the
analysis of agricultural income
We deline
t t
P P P ÷ = A
+1
wleie ) (
1 t t
P P
+
is tle commo-
ditym’suveiugemontllyexpoitpiicein2007(2009),Junuuiy–June.
Tlus,
P A
cuptuiesexpoitpiiceclungesliom2007to2009.Expoit
piiceiscomputedliomtleiutioolvulue(iniupiul,conveitedusing
exclungeiutes)toquuntity(kilogiums).Intleunulysis,weusepei-
centugeclungesintlepiice.
Agiicultuiulpiolitisdelinedbyuctivities:dilleientciopluiming
(a~1,2,3,4).Let
t
ʌ betlepiolitliomugiicultuiuluctivitya.
Ciop/commodityisdenotedbyk~1,2,3...,K.Delineunindicutoi
tlut tukes tle vulue ol one il ciop/commodity k is pioduced (oi
228 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
inpioductionstuge)undzeiootleiwise(tlisisconstiuctedliomtle
2009suiveys).TleudIustedcioppiolitisdelinedus
t ¯
÷ =
+
1
1
t
Note tlut
1
t
< 0
depending on pioduction (including tlose
sold,stoied,undconsumed),undsistlepiopoitionolciopsluives-
tedtotletotulnumbeiolciopsplunted.Cistletotulcosttlutlus
beenincuiiedintlepust3montlsloiluiming.Bydelinition,ievenue
isiepoitedonlyilciopsluvebeenluivested.
In ugiicultuiul pioduction, it is most likely tlut costs uie incui-
ied liist, lollowed by luivesting. Tleieloie, it is necessuiy to udIust
coststoluveuieusonublemeusuieolcioppiolitbeingcompuiubleto
tle2007liguie(unnuuluveiuge).Foiexumple,ulouseloldlustliee
ciops plunted, und one ol tlem wus luivested, one puitiully luives-
ted,undonenotluivestedyet,tlens~1.S.Intlesecondiound,we
knowtlepeicentugeoltlepioduceluivested(e.g.,70%),sowecun
diiectlyusetlisnumbeitoudIustcosts.Tleieloie,combiningtlese,
we cun udIust tle costs to compute u ieusonuble meusuie ol luim
(ciop)piolit.
Mostlikely,wedonotluvetlepioblemolnegutivepiolitin2007
since we tuke tle uveiuge ol unnuul pioduction. To muke tle
2007 liguie compuiuble witl tle 3-montl piolit, we multiply tle
2007unnuulpiolitbyonequuitei.Tlenwetuketledilleiencebetween
2009und2007:
1 1
1
1
t t
t t t ÷ = A
+
.Duetooltenobseivednegutivepio-
lits, we decided not to tuke peicentuge clunges, but use dilleiences
(clunges).Finully,weuggieguteullcioppiolits.
Intleunulysis,welocusonugiicultuiulincome.Weestimutetle
lollowingciopequutions:
¯
+ A + = A c þ þ t
1 1
(1)
wleie is P A peicentuge clunge ol piice loi ciop k tlut tle
louselolductuullypioduced.
In tlis loimulu, we cuptuie tle impucts ol expoit piice clunges
ielevunttoownpioduction,butdilleientiutepuiumeteistlutcuptuie
tleimpuctsbyciops.Foiexumple,louseloldspioducingmoietlun
oneciopuieexposedtomultipleiisksliomexpoitmuikets.
Note tlut we uie not contiolling pioduction clunges in
Equution(1).Tlutis,itispossibletlut,wlilepiiceincieusesintle
expoitmuiket(implyingunincieuseinloieigndemund),pioduction
cunlullloiotleiieusons(e.g.,ciopluiluie).
229
The global financial crisis and
agricultural development: Viet Nam
Dang Kim Son, Vu Trong Binh, and Hoang Vu Quang
1
Economic impact of the crisis
OiiginutingliomlinunciulundieulestuteslocksintleUnitedStutes
(US) liom mid-2007, tle economic ciisis lit tle woild economy in
2008.Globul,iegionul,undnutionuleconomicgiowtllell.Wliletle
globuliecessionullectedAsiumuinlyviutleuibun,expoit-ielutedsec-
tois,tlispupeislowstlutVietNumlusseveiulsubstuntiultiunsmis-
sionclunnelstotleiuiuleconomy,too.
Economic growth and trade
Since euily 2008, economic slocks luve lud deleteiious impucts on
VietNum’spopulution,especiullytloselivinginiuiuluieus.Inspite
oltleincieuseinpiicesolugiicultuiulpioducts,piicesolmunyotlei
goods went up even lustei, engendeiing luidslips umong tle popu-
lutionundcuusingpioblemsloitleindustiy.Tlemeusuiestukento
ieinininllutionwoikedtouluigedegiee,butcuusedmunypioblems
loismullundmedium-sizedenteipiisesinteimsoluccesstoloieign
exclungeundliglinteiestiutes,leudingtoincomeundemployment
lossesiniuiuluieus.Alteiugiowtlol8%unduboveintle2pievious
yeuis,2008suwonly6.2%expunsion(IMF2008).
Higl consumei piice inllution (Tuble 1) in 2008 slowed muny
unusuuluspects,suclusudiumuticiiseintleliistlulloltleyeui,und
tlenuluigediopintlesecond(tleoppositeolpieviousyeuis).Also,
tleloodpiiceindexgiewlusteitlungeneiulpiiceindexes.
1
DungKimSon,VuTiongBinl,undHoungVuQuunguieliomtleInstituteolPolicy
und Stiutegy loi Agiicultuie und Ruiul Development, Ministiy ol Agiicultuie und
RuiulDevelopment,VietNum.
230 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 1: Selected macroeconomic indicators, 2005–2008
2005 2006 2007 2008
GDPgiowtl(%) 8.8 8.2 8.4 6.2
Inllution
u
(%) 8.4 6.6 12.6 22.9
Expoit(Sbillion) 32.4 39.8 48.S 62.6
Impoit(Sbillion) 36.7 44.8 62.7 80.7
Unemployment(%) S.31 4.82 4.64 4.6S
u
CulculutedbyDecembei’sconsumeipiiceindexcompuiedtotlutoltlepieviousyeui.
Souice:GeneiulStutisticsOllice,VietNum.
As u ielutively open economy witl expoits equivulent to moie
tlun lull ol gioss domestic pioduct (GDP), Viet Num—like muny
otleicountiies—wusullectedbytleimpuctoltleciisisviutiude,und
notdiiectlytliouglinteinutionullinunciulmuikets.In2008,despite
tleglobuleconomicdowntuin,piicesolmunycommoditiesweiestill
ligl, puiticuluily ut tle beginning ol tle yeui, leuding to booming
expoits(puitlyliomiuiuluieusundugiicultuie).Conveisely,uleuviei
tiudedelicitwusiecoidedduetoincieusedimpoitsby28.3%.
Employment
Accoiding to olliciul liguies, unemployment stuyed luigely unclun-
ged ut 4.7% in 2008. Howevei, tle economy begun lulteiing in lute
2008undwusieullylitineuily2009.Altlouglolliciulstutisticson
unemployment ucioss tle countiy luve not been ieleused, selected
upduted dutu in 2009 slow ieduced employment in luboi-intensive
expoiting enteipiises sucl us lootweui, guiments, uquucultuie-
pioduct piocessing, libei und wood piocessing, und in lundiciult
villuges.Howevei,tleloimulluboimuiketisielutivelysmullcompuied
totleinloimulsectoi.Wlileunemploymentintleexpoitsectoicume
usuiesultoltleciisis,totulunemploymentclungedlittle;undeiem-
ploymentlowevei,iemuinedligl.
Muny expoit-oiiented liims luve suid tlut tleii sules lell, und
oideisnose-dived.AiepiesentutiveolucompunymunugingtleTlung
Longindustiiulpuik(noitlwestolHuNoi)suystlutumong67entei-
piisestleie,mostludtoslowpioductionundonlyoneoitwoligl-
teclnology luctoiies expunded output. As u iesult, luboi wus
ietiencledundwoikinglouisieduced.Tlisullectedbotlwomenund
men. In uddition, duily woikeis in tle cities lound it luidei to get
Iobs.Consequently,munymigiuntwoikeisinlundiciultclusteisund
industiiulzonesseemtoluveietuinedtotleiilometowns.
231 The global financial crisis and agricultural development: Viet Nam
Howevei,uluigepuitolVietNum’sluboiintleexpoitsectoiisin
tle iuiul uieus, especiully in lood piocessing, uquucultuie, und lun-
diciults. Ruiul employment wus tleieloie ulso ullected by tle ciisis.
Inteiviewswitlcommunulleudeisundenteipiiseowneisintlelun-
diciult villuge ol But Tiung (u poiceluin und potteiy villuge on tle
outskiitsolHuNoi)undHuTlui(lumousloilucqueipuintings)indi-
cute tlut 70%–80% ol tlese villuges’ sules come liom inteinutionul
muikets.Asluiplullinoideissincelute2008lusputtlesevillugesin
upeiiloussituution.
Impact of the crisis on agriculture
and rural areas
Growth
In 2008, ugiicultuie enIoyed luiily ligl giowtl due to incieuses in
expoitsundoutput.Agiicultuiulsubsectoioutputioseby4.1%ielu-
tiveto2007.Tlelivestocksubsectoiwuslitbecuuseolunextiemely
coldspell,epidemicsinmid-2008,undincieuseininputpiices(leed-
stulls,etc.),butgiowtlstillcumeinutuiound6%,ligleitluntlutol
cultivution(S.4%)undseivices(2.8%).
Inuquucultuie,lowevei,luimeisundpiocessingenteipiisesweie
litbyweukexpoits.Enteipiises’inventoiiesweieligl,butbunksusked
loi tleii louns to be iepuid beloie tley uppioved new louns. Muny
smull-scule iubbei-giowing und cutlisl-iuising louselolds lud dilli-
cultiesinpuyingbucklouns,undlucedusloitugeolwoikingcupitul.
Munysmullundmedium-sizedenteipiisesundlundiciultvillugesluced
seiiousobstuclesbecuuseolunsoldpioductsunddeluyedcontiucts.
Accoiding to tle Viet Num Clumbei ol Commeice und Industiy
in Cun Tlo, piolits ol enteipiises in tle Mekong Rivei deltu—tle
biggest ugiicultuiul pioduction zone in tle countiy—luve been lit
intledowntuin,especiullytloseliomexpoits.Tlisluspioducedu
dominoellectonielutedseivices.
Agriculture, forestry, and aquaculture trade
Tlepeiiod200S–2007suwiuiulexpoitsboom,undbiougltumuIoi
sliltintlecompositionolvulueuddedinugiicultuie,witluquucul-
tuiebecomingumuIoiexpoitpioduct.Yet2008biougltuiupidievei-
sul,becuusewlileotleiugiicultuiulpiicesinwoildmuiketsiemuined
ligl,expoitsoluquucultuiepioductsluceduciisisolexcesstlutled
to,umongotleipioducts,tumblingcutlislpiices.
232 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
In 2008, muny expoit commodities in Viet Num suw u decieuse
involume,buttleiiexpoits(byvulue)lolloweduiisingtiuIectoiy,us
in2007.Totulexpoitsolugiicultuiulpioducts(includingloiestiyund
uquucultuie) in 2008 weie estimuted ut ubout S16 billion, u 28.4%
guin liom 2007. Expoits (by vulue) ol muny key commodities like
iubbei, collee, teu, und iice Iumped, but tleii volume declined. Tle
undeilyingieusonwustluttleinteinutionulpiicesoltlesecommo-
ditiesweieielutivelyligl.Foiexumple,expoitsolcolleewentupby
29%byvulue,buttleiivolumewentdownby20%.Tlesumetiends
weieseenloiteuundiice.
Inteimsolimpoits,2008wusmuikedbyusuddeniiseinsome
impoitedcommodities,includingleitilizeisundunimulleed.Despite
u lull in tle volume ol impoited leitilizeis ol 19%, tleii vulue iose
byS1%.
Impact on exports
Tuibulence in linunciul und ciedit muikets spieud to otlei muikets,
includingtlutloiugiicultuiulcommodities.Fiommid-2008,piicesol
ugiicultuiulcommoditiesininteinutionulmuiketsdecieuseddiumuti-
cully.AgiicultuiulexpoitsweielitulteiSeptembei2008wlenexpoit
vulueundvolumesolmostugiicultuiulpioductsweieloweitlunin
pieviousmontls.
Howevei,tlunkstotleglobulpiiceincieuseloiugiicultuiulcom-
moditiesbeloietleciisis,tlevulueolexpoitsolugiicultuiulpioducts
olVietNumin2008iemuinedielutivelyligl.Totulexpoitsolugiicul-
tuiul,loiestiy,unduquucultuiepioductsin2008weieS16,012million,
upby28.4%ielutivetotlepieviousyeui.TliscompiisedS8,S72mil-
lion(upby39.3%)loiugiicultuie,S3,004million(upby17.2%)loi
loiestiy,undS4,436million(upby18.2%)loiuquucultuie.
Tle pictuie becume biigltei in 2009, especiully ut tle end
ol tle yeui. Agiicultuiul commodity expoits in August 2009 weie
S1.3S billion, loi un estimuted totul ol S10.2 billion loi ugiicultuie,
loiestiy,unduquucultuiepioductsloitleliist8montlsol2009.
Tle US is tle luigest buyei ol Viet Num’s ugiicultuiul pioducts,
iunkingliistloicuslewundwoodenpioducts,secondloicolleeund
uquucultuiepioducts,undliltlloiteu.TleEuiopeunUnion(EU)is
usuullyliistloicollee,peppei,undiuttunpioducts;secondloiiubbei
undwood;undtliidloiuquucultuiepioducts.Jupuncomesliistloi
uquucultuie pioducts, und tliid loi wooden luinituie. Tle People’s
RepublicolClinu(PRC)istlebiggestimpoiteiolVietNum’siubbei,
muclolwliclistobeusedloitlemunuluctuiingoltiiestobesold
totleUSundEU.
233 The global financial crisis and agricultural development: Viet Nam
In2008,tlePRC—uluigecustomeiolVietnumeseteu—suddenly
stoppedimpoitingteu,leuvinguluigequuntityolteuunsold.Relutive
to 2007, expoit volumes to tle PRC in 2008 went down by uiound
23,000tons.
Reasons for the fall in agricultural exports
TleieuieseveiulmuIoiieusonsloiieducedglobuldemundloiugii-
cultuiulpioductsliomVietNum.
Fiist,munypioductsgotodevelopedeconomiessuclustleUS,
EU, und Jupun. As tleii economies stutteied, consumeis cut spen-
ding; ut tle sume time, ovei tle longei teim, customeis uie beco-
ming moie demunding in teims ol quulity. Tlis is puiticuluily so
becuuse—upuitliomiice—uluigepuitolloodexpoitsuiepiocessed
goods, wlicl uie used in middle- oi uppei-cluss US oi Euiopeun
customeis’cuisine.
Second, globul ciedit constiuints luve piessuied impoits. Muny
countiies’ bunking systems lud liquidity pioblems, tlus lending und
impoiteis’ ciedit guuiuntees luve contiucted. In spite ol tleii ielu-
tively good leultl, muny bunks lud to cut down tleii lending und
impoiteis’guuiunteesbecuuseoldeteiioiutingconlidence.Tleciisis
ulsobiougltwitlitincieusinglinunciulpioblemsolglobultiudeison
tleonelund,undVietNum’sloodpiocessingliimsontleotlei.Tlis
cuusedmunyliimsinVietNumtoieducepioduction,oieventoclose.
Tliid, muny linunciul investment lunds cut tleii speculutive
investmentsinugiicultuiulpioducts.Tleiiinvestmentsweieconcen-
tiutedinindustiiulciopssucluscollee,iubbei,peppei,undcuslew.
Wlen tle ciisis lit, tlese lunds weie compelled to witldiuw tleii
cupitul liom ugiicultuie und switcl tleii investments to tle money
muiket,leudingtoudecieuseindemundinloiwuidmuikets,intuin
cuusingusuddenlullinpiices.
Fouitl,expoitslellbecuuseolexclungeiutelluctuutions.Ontle
onelund,tletiudeoltlemuIoiityolexpoitingcountiies,including
Viet Num, is in US dolluis. Tleieloie, u lull in ugiicultuiul pioducts
in US dollui teims lus u negutive impuct on expoit vulues. On tle
otlei lund, muIoi expoiting countiies ol key pioducts sucl us iice,
collee,undpeppei,wliclcompetediiectlywitlVietNum,likeBiuzil,
Colombiu, Indiu, Muluysiu, und Tluilund, devulued tleii cuiiencies
uguinsttledolluiby13%–33%,wleieustledongdevuluedbyonly
S%,liomJunetoNovembei2008.
Apuitliomugiicultuie,tleeconomicciisisulsodiumuticullyullec-
tedsmull-sculeindustiy(lundiciults).Aliglpiopoitionolsmull-scule
estublislmentsieducedoievenceusedpioductioniniuiulvilluges.
234 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Asuiesultollullingdemundunddespiteglobullyincieusingugii-
cultuiulcommoditypiices,luimeiscuttleiioutput.Puiticuluilyullec-
tedweiesmull-sculeluimsintleMekongRiveideltupioducingiice,
smull-sculeiubbeigioweis,undcutlislundsliimpluimeis.
Impact on imports
On tle otlei side ol tle stutement, tle ciisis ulso cuused piices ol
ugiicultuiul inputs to tumble, notubly leitilizeis liom tle Russiun
Fedeiution.Impoitsliomugiicultuiulpioducts(includingloiestiyund
uquucultuie)undmuteiiulsin2008weieestimutedutS10.71billion,
44.4%upliom2007.Tiudeinsuclpioductsin2008slowedusuiplus
olSS,874million,unincieuseol7.8%liom2007.
VietNumislucingincieusingcompetitionliomimpoitedugiicul-
tuiepioductsliomneiglboiingcountiies,ututimewlenitlusbeen
lullillingcommitmentstoopenitsmuikettointeinutionulpioducts.In
tleubsenceolellectivemunugementtools(suclusteclniculbuiiieis
to tiude und quuiuntine meusuies) muss impoit ol ugiicultuiul pio-
ducts(sucluslivestockundliuit)willmukelileluideiloiluimeis.
Investment
Agiicultuiul investment in iecent yeuis lus been smull und luplu-
zuid. Accoiding to tle Geneiul Stutistics Ollice, in tle lust S yeuis,
tletotulinvestmentloiugiicultuiuldevelopmentieucledmoietlun
S7.06 billion, oi 8.7% ol tle stute’s totul investment. Howevei, tlut
umountmetonly17%oltledemundloicupitul.
Littleloieigndiiectinvestment(FDI)lusbeeninIectedintougii-
cultuie,duetoinvestois’luckollinunciuliesouices,usituutionexucei-
buted by bunks’ globul policies ol tigltening lending conditions. FDI
llowsintougiicultuieumountedtoonlyS1.9billion,oionly6.33%ol
tletotul.Domesticully,investoisluvebeenlouidingcupitul,lesitunt
toexpundpioductionwlilewuitingloiuclungeintlemuiket.Sucl
investmentdeclineswillimpuctonIobsundincomesoliuiulemployees
woikinginnonugiicultuiesectoisincitiesundindustiiulzones.
Field ieseuicl (IPSARD 2008) lound tlut 42.3% ol villuges stu-
diediepoiteduieductioninluiminginvestmentwitluieductionol
21%(Apiil2009compuiedtoApiil2008).MoietlunS4%ollowlund
villugesund7S%olmidlundvillugesiepoitedtlut,usuconsequence
olieducedinvestments,ugiicultuiuloutputswouldlullby21%–23%.
Tleieducedinvestmentismucllessintlemountuinousuieus,wleie
only 26% ol tle suiveyed villuges iepoited ieduced investments (in
lundiciults).Tlismeunstlutlundiciultsexpoitsmustluvebeenless
ullectedtlunugiicultuiulundlood-piocessingexpoits.
235 The global financial crisis and agricultural development: Viet Nam
Impact of the crisis on vulnerable groups
Tle clunges in globul ugiicultuiul demund ieduced tle clunces ol
ietuininguibunmigiuntsollindingugiicultuiulwoikintleiivilluges
in mountuinous und pooi uieus ol Viet Num. Tlis luctoi wus luitlei
uggiuvuted by tle luct tlut, becuuse ol tle ciisis, bettei-oll people in
iuiuluieusieducedtleiispending(undloodpioductdemund)oiinves-
tedlessinugiicultuie.DilleientliomtleAsiunciisisol1997–1998,tlis
ciisis led to decieused investment in pioduction, luiming, und smull
undmedium-sizedenteipiises,especiullysmullindustiyinlowlundund
midlund villuges. As u iesult, unemployment in iuiul uieus incieused,
leudingtoluitleipoveity.IPSARD(2008)slowedtluttlenumbeiol
villuges tlut iepoited luving pooi louselolds incieused (Apiil 2008–
Apiil2009)inullpiovinces,especiullyinmountuinousuieus.
Unemployment among migrant laborers
Undei tle impuct ol tle ciisis, u numbei ol enteipiises stopped oi
ieducedpioduction(duetoleweioinooideis)undwoikeisluvelost
tleii Iobs. Tle numbei ol luid-oll woikeis in olliciul luboi muikets
intlecities,especiullyseusonulluboieis,wusligl.Accoidingtotle
MinistiyolLuboi,InvulidsundSociulAlluiis(MoLISA),80,000woi-
keisweieliiedin2008.Someoltlemmovedbucktotlecountiyside,
wlileotleissettledinotleicitiesoiinuieusintlesumeuibunuieu,
lopingtolindnewIobs.
Tle iute ol uibun to iuiul buck-migiuting woikeis is ielutively
ligl. A loui-piovince suivey cuiiied out by IPSARD in 2009 lound
tlut,intleliist4montlsol2009ulone,17.2%olmigiuntwoikeis
intlelouipiovinceswentlome.BetweenJunuuiyundAugust2009,
21.7%olluid-ollwoikeiswentbucktotleiilometown.
Tleiuteolluid-ollwoikeisdilleiedumongpiovinces(AnGiung:
29.3%,LungSon:21.3%,BinlTluun:18.7%,undNumDinl:1S.1%)
2
und umong villuges in teims ol teiiuin. Midlund und mountuinous
villugesluvetleliglestiuteolexpoitluboieistlutweieluidoll,in
compuiisonwitllowlundundcoustulpiovinces.Amonglowlundund
mountuinousuieus,NumDinlludtleliglestiuteolluid-ollimmi-
giuntluboieisut22.S%;tlemountuinouspiovinceolLungSonulso
luduligliuteol21.1%.Inteimsolvillugeteiiuin,tleiuteolluid-
ollwoikeiswus2S.S%inmidlundvillugesund2S.1%inmountuinous
2
Repiesentutive piovince ol Mekong Rivei Deltu; Noitlwest mountuinous iegion
(disudvuntugediegionwitletlnicpopulution);CentiulCoust;undRedRiveiDeltu,
iespectively.
236 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
uieus,wliclisligleitluntleiuteinlowlundvilluges(23.8%).Tlis
inveitedluboillowliomuibuntoiuiuluieus,despiteveiylowincomes
tleie,putmoiepiessuieontleugiicultuieluboimuiketwlentlesec-
toiwusulieudylucingeconomicdilliculties.
Poverty and increase in cost of living
Wlile unnuul stutisticul liguies loi 2007–2008 slowed declining
poveityiutes,tleincidenceolpoveitypickedupuguinin2009.Tlisis
despitetlelucttlut,witltleglobulloodpiicespikein2008undgiven
tlut60.2%olVietNum’spooilouseloldsselllood,onewouldluve
expectedudeclineinpoveity.Inellect,wlilesomelouseloldsludun
oppoitunitytogetoutolpoveity,tlunkstoligleiloodpiices,uluige
gioupiemuinedinpoveityundgotuctuullydeepeiintomiseiywlen
tle economic ciisis lit—puiticuluily tle S9.3%
3
ol pooi louselolds
tlut iely on buying loodstulls tlut incieused in piice. Fuitleimoie,
tle ciisis loiced pooi louselolds to luitlei cut tleii spending. As u
iesultoltleciisis,68.4%oltle(pooi)villugepopulutionintleloui
piovinces suiveyed suw u ieduced expendituie on lisl und meut in
tleiilouselolds,witlunuveiugeieductionol18.S%.
TleInstituteolScience,LuboiundSociulWelluieestimutedtlut
tle ciisis lus iesulted in 400,000 people losing tleii Iobs in 2009,
most ol wlom uie low-skilled woikeis in tle piocessing und ussem-
blingsectoisonulowincome.Witlouttimelyinteiventionundsup-
poit solutions, tlese people will incieuse tle numbei ol pooi in tle
uibun(undtliouglbuck-migiution,iuiul)uieus.
Witl tle iising lood piices und otlei piice incieuses, ut tle end
ol2008,MoLISAsubstuntiullyiuisedtletliesloldloiminimumsui-
vivuliequiiementstoD300,000iniuiuluieusundD390,000inuibun
uieus(liomD200,000undD260,000,iespectively).AdIustingtotlis
newpoveitytlieslold,itisestimutedtlutusuiesultoltleloodpiice
iiseundtleeconomicciisis,by2009,tlenumbeiolpeopleundeitle
poveity line incieused liom 19.3 million ut tle end ol 2008 (12.1%
ol tle populution) to 20.3 million ut tle end ol 2009 (1S.7% ol tle
populution).
Gender implications of the crisis
Accoidingtoolliciulstutistics,womenuccountloiS0.8%oltlepopu-
lutionundmoietlun49%olwoikeis.Tlelemulepuiticiputioniute
3
Estimutedliom2006VietnumHouseloldLivingStunduidsSuivey;39.8%olpooi
louseloldsweiebudlyullectedbytleciisis.
237 The global financial crisis and agricultural development: Viet Nam
in economic uctivities is ielutively ligl ut 83%. Women uccount loi
u luige piopoition ol woikeis in sectois witl low-skill iequiiements
suclusugiicultuie,loiestiy,uquucultuie,textilesundguiments,und
leutleiundsloes.Tlesesectoisweietleluidestlitbytleciisis.As
u iesult, tle ciisis slowed u substuntiul gendei dimension tliougl
ieduced luboi oppoitunities, sliinking incomes loi women, und
incieusingpoveityinlemule-leudedlumilies.
Accoiding to MoLISA, in 2008, 2S% ol tle 67,000 luid-oll woi-
keisweiewomen.Tlisincieusedto31%oltle107,200ietiencled
woikeisintleliist6montlsol2009.Tlisliguiedoesnot,lowevei,
iellecttlelullimpuctonwomen,sincemunywomenwoikinsmull-
sculeestublislmentswitloutpeimunentcontiucts,unduietleieloie
notcoveiedbytleolliciuldutu.Inuddition,womenwoikeisuieolten
lound in Iobs witl lowei sociul piotection. As u iesult ol tle ciisis,
tleiiIobssometimesbecumeevenlesssecuieundpiotected.
Government policies and recommendations
Tlegoveinment’smuinciisis-iesponseplunkin2009wustostopund
tlenieveisetleeconomicdecline.Accoidingly,itlocusedonpiomo-
tingpioductionundexpoits,undboostinginvestmentundconsump-
tiondemund.Itlusulsotukenstepstoensuiesociulwelluie,suclus
tleiesolutionol27Decembei2008tosuppoitiupidundsustuinuble
poveity ieduction in 62 pooi piovinces. Howevei, it is doubtlul tlut
tlesemeusuiesuiesullicienttopiovidenewIobsiniuiuluieusloitle
buck-migiuting uibun pooi oi to substitute loi tle villugeis’ income
losses,muinlybecuuseoltledeclineindemundloiugiicultuiulund
lood-piocessinggoods.
Asolidugiicultuiesectoiundbuigeoningiuiuleconomicdevelop-
mentuievitulloimuintuiningsociulstubilityundgeneiutingeconomic
giowtl duiing economic downtuins. To develop ugiicultuie (inclu-
dingloiestiyunduquucultuie),tlegoveinmentmuywisltoconsidei
issuing policies tlut cun lelp cieute diiving loices loi luimeis und
sociul investment in business development. Tlis is not only u socio-
politiculiesponse,butulsoulong-teimeconomicsolution.
Tle goveinment slould incieuse public investment in tle iuiul
sectoiundtuiloiinvestmenttougiicultuie,loiestiy,unduquucultuie
development.MuIoiinliustiuctuieuieustobetuigetedincludeiiiigu-
tion,iuiultiunspoit,undmuiketingdevelopment.
Fuitleimoie,tlegoveinmentslouldluitleistimulutedemundto
incieuse consumption ol ugiicultuiul, loiestiy, und uquucultuie pio-
ducts.Tliswillluveuluigeimpuctonnutionuleconomicgiowtlund
Iobcieution,witlminimullundingneeds.Itwillulsolelpnuiiowtle
238 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
income gup between iuiul und uibun employees (und louselolds),
tleiebylelpingensuiepoliticulstubilityundsociulluiiness.
References
InstituteolPolicyundStiutegyloiAgiicultuieundRuiulDevelopment
(IPSARD). 2008. Quick ussessment ol economic ciisis impuct
on iuiul louselolds’ employment und income. Repoit sub-
mitted to tle Economic Committee ol tle Nutionul Assembly,
Muy2009.HuNoi.
———. 2009. Impuct ol economic iecession on luboi, employment,
undliveliloodolluimeisundiuiuluieus.Muy.
Inteinutionul Monetuiy Fund (IMF). 2008. World Economic Outlook.
Wuslington,DC.Octobei.
239
Impact of the global recession
on international labor migration
and remittances: Implications for
poverty reduction and development
in Nepal, Philippines, Tajikistan,
and Uzbekistan
Andrea Riester
1
Introduction
Migiunts und tleii lumilies usuully ieguid migiution us u livelilood
stiutegyundiemittuncespiovideimpoituntiesouicestolinunceeveiy-
duy lile. To ussess tle impuct ol tle globul linunciul und economic
ciisis on exteinul migiution, ietuin migiution, iemittunces, und tle
consequentellectsonpoveityunddevelopment,tleGeimunFedeiul
MinistiyloiEconomicCoopeiutionundDevelopmentluscommissio-
ned u seiies ol countiy studies. Tle liist loui countiy studies iepie-
sentbioudiegionulvuiietyundweiecuiiiedoutinMuicl2009(Muli,
Nepul,tlePlilippines,undUzbekistun);studiesonAlbuniu,Aimeniu,
undTuIikistun,ulloltlemcountiiesligllydependentonluboimigiu-
tion,lollowedinSeptembei2009.
Intlispupei,tleiesultsoltlestudiesontleimpuctoltleciisison
migiutionliomNepul,tlePlilippines,TuIikistun,undUzbekistunuie
compuied.Tleiesultsslowtluttleellectsoltleciisisoncountiies
oloiiginuiedilleientuccoidingtotlecountiy’siespectivemigiution
listoiyundpiolile.Foiexumple,wliletleielusbeenumussietuinto
tleCentiulAsiunRepublicsundusubsequentdeclineiniemittunces,
NepulundtlePlilippinesluveseennomuIoidisiuptionolmigiution
undiemittuncellows.
Tle pupei ulso biielly discusses policy iecommendutions loi
uction.RebuluncingloculundiegionulIobmuiketsisessentiulintle
long iun, wlile sloit-teim meusuies including sociul tiunsleis uie
1
Andieu Riestei is u teclnicul udvisoi on iemittunces ut tle Geimun Teclnicul
Coopeiution(GTZ).
240 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
necessuiytocopewitlpoveityintlewukeoluciisis-inducedietuin
undlossoliemittunces.
Existing development issues and challenges
2
Inulllouicountiies,migiutionpluysumuIoiiole:uppioximutely8mil-
lion Filipinos, 1.6 million Nepulese, und 800,000 TuIiks uie woiking
ubioud.EstimutionsloiUzbekistun,wleiemigiutionisuiecentple-
nomenonunditsdocumentutionnotyetwelldeveloped,iungeliom
2S0,000to6millionmigiunts(ICG2010);umeunvulueol2.Smillion
to3millionUzbekmigiuntsismostlikely.TlismeunstlutS%–11%ol
tleentiiepopulutionoltlesecountiiesluveemigiuted(Plilippines:
S.S%,Nepul:S.9%,TuIikistun:11%,Uzbekistun:8.9%–10.7%).
Howevei, tle socioeconomic und gendei piolile ol migiution
vuiiesgieutlybetweentlesecountiies.TuIikundUzbekmigiuntsuie
mude up mostly ol young men woiking in tle constiuction sectoi
in Kuzuklstun und tle Russiun Fedeiution. A totul ol 20% ol Uzbek
migiuntsbutonly6%olTuIikmigiuntsuiewomen,wlomostlywoik
intleseivicesindustiyoiinpettytiude.
Apuit liom uppioximutely 2S0,000 Nepulese wlo, loi listoiicul
ieusons,uieemployedinIndiu’spublicsectoi(muinlytleuimyund
police), it is geneiully pooiei Nepulese migiunts (men und women
equully) wlo move to neiglboiing Indiu (Seddon 200S). As tley
luve no visu iequiiements, tley uie not iegisteied unywleie; tleii
employment is mostly iiiegului on pluntutions, in munuluctuiing, in
constiuction,oiinseivices.TloseNepulesemigiuntswlocunulloid
tomigiuteieguluilyusuullygotoMuluysiu(39%),Qutui(27%),Suudi
Aiubiu(19%),oitleUnitedAiubEmiiutes(10%).OltloseNepulese
migiunts going to tle Gull Stutes, most woik us semi- oi unskilled
woikeis in constiuction; only S% ol tlem uie women, wlo woik us
domesticlelpeis.
Tle well-known und institutionully well-estublisled Plilippine
emigiution system lus led to u veiy bioud iunge ol destinution
countiies loi oveiseus Filipino woikeis (OFWs): ubout 9.3% go to
Noitl Ameiicu und 9.2% to Euiope, but tle oveiwlelming muIoiity
(78.1%)iemuininAsiu(includingtleGullStutes,towlicluppioxi-
mutely30%olOFWsmigiute).Menundwomenuieequullyiepiesen-
tedinPlilippinemigiution,undbotlluveestublisledtlemselvesin
2
Ilnotindicutedotleiwise,ulldutuintlispupeiuietukenliomGTZ(2009).
241
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
speciulpiolessionulnicles:womenindomesticwoikundleultlcuie,
meninseuluiing.
Tlut migiution lus become un impoitunt livelilood stiutegy in
ulllouicountiiesisiellectedintleenoimousumountsoliemittunces
sent buck lome unnuully by migiunts: in 2008, S18 billion to tle
Plilippines,uminimumolS3billiontoUzbekistun(uccoidingtodutu
liomtleRussiunFedeiutioncentiulbunk),S2.SbilliontoTuIikistun,
undS1.6billiontoNepul.Tlisistleequivulentol4S%olgiossdomes-
ticpioduct(GDP)loiTuIikistun,1S%loiNepul,uppioximutely1S%
loiUzbekistun,und11.6%loitlePlilippines.Altlougliemittunces
uieumuIoisouiceolincometopooilouselolds,tleiebycontiibuting
topoveityieduction,tleyulsoluvetleiidownside:inTuIikistun,loi
exumple, iemittunces uie linked to un uppieciution ol tle locul cui-
iency,wliclintuindecieusedcompetitivenessolTuIikexpoits.Tle
Inteinutionul Ciisis Gioup (2010) iepoits tlut impoits to TuIikistun
moietluntiipledbetween200Sund2008.
TleglobullinunciulundeconomicciisislusiesultedinIoblosses
eveiywleie und wus tleieloie expected to cuuse mussive ietuin
migiution.Howevei,tleunulysisoltleieulextentolietuinmigiution
intlewukeoltleciisisisdilliculttoussess.Soliddutuuieluckingloi
seveiulieusons:
º Muclmigiutionistukingpluceinunundocumentedmunnei,
i.e.,witloutuwoikpeimit,visu,oiotleitiuveldocuments,
oi is becoming iiiegului ovei time, i.e., tliougl visu ovei-
stuying.
º Retuin is geneiully not iegisteied; migiunts uie usuully
liee to go lome wlenevei tley wunt to witlout telling tle
udministiution in tle countiy ol destinution und geneiully
luvenoincentivetoiegisteiintlecountiyoloiigin.
º Evenilnutionulsuppoitpiogiumsloiietuiningmigiuntsuiein
pluceintlecountiyoloiigin,noteveiyonecuncluimbenelits
undtleieloiemunydonotupplyloitlesepiogiums.
º Most impoitunt, it is luid to distinguisl between seusonul
und peimunent ietuin, us will be discussed in tle lollowing
sections.
TlebestdutuloiouicountiystudiesweieliomtlePlilippines.
Tlisisunsuipiisingustlecountiylustlemosteluboiutesystemol
luboimigiutionmunugementoltlelouicountiies.Buteventleie,tle
ubovepioblemsoliegistiutioniemuin.
242 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Crisis transmission channels and impact
on the poor and vulnerable
Crisis and return
Ingeneiul,migiuntsdonotcomeliomtlepooiestpuitoltlepopulu-
tion.Migiutioninitiullyengendeisliglcosts—youneedtime,money,
und inloimution to obtuin u visu, tiuvel tickets, uccommodution
ubioud,etc.—undtleieloieitisnotusuullyleusibleloitleieullypooi.
Seveiulstudiesluveulsoslownweultldilleientiulsbetweenmigiunts
moving between countiies witlin tleii iegion und tlose wlo move
inteicontinentully:weultlieipeoplecunulloidtomoveluitleiuwuy.
Tleieloie,usuiuleoltlumb,tlepooieitlepeisonsundtleiilumi-
liesuie,tlesloiteiistleiimigiutiondistunce.Tlus,wlendiscussing
tle ellects ol tle ciisis on inteinutionul migiunts und tleii lumilies,
weuiegeneiullynottulkingubouttlepooiestpuitoltlepopulution.
Howevei, tle economic potentiul ol migiunts to uccumulute lumun
undlinunciulcupitulubioudtoinvestbucklomemukestlemimpoi-
tunt uctois in poveity ieduction. Tlis is wly we will concentiute on
inteinutionul migiution in tlis pupei und leuve out tle question ol
iuiul–uibunmigiution.
Retuinmigiutionduetotleciisisispuiticuluilyligl,botlwleie
migiuntswoikiniecession-sensitiveindustiies,loiexumple,constiuc-
tion, linunciul seivices, oi touiism; und wleie migiunts depend on
one oi lew countiies ol destinution. In tlis cuse, il immigiution und
ieciuitmentpoliciesoltleiespectivemuindestinutioncountiiesluve
tigltened,migiuntsluceluyolloiwillnotbeubletoienewtleiiwoik
peimitsliketleyusedto.
Altlougl ietuin migiution on u luige scule seems tle logicul
consequenceoltleciisis,tlesituutionincountiiesoloiiginisbyno
meunscleuicut.Foi,ultlouglunecdotulevidenceolmussietuinull
oveitlewoildiepoitedbytlemediulusinlluencedouipeiceptionto
udegieetlutunyotleiscenuiionowseemsluidtobelieve,tleinloi-
mutionwegutleiedinouistudyontleellectsoltleciisispiesentsu
moienuuncedpictuie.
We did, indeed, lind cleui signs ol mussive ietuin migiution to
tleCentiulAsiunRepublics.AsmostTuIikundUzbekmigiuntsweie
woiking in tle constiuction sectoi in tle Russiun Fedeiution und
Kuzuklstun, tley weie luidest lit by Iob losses stemming liom tle
ciisis.Intlewukeoltleciisis,tlesetwodestinutioncountiieslulved
tleiiimmigiutionquotusbytleendol2008.Aguinsttlis,convincing
unecdotul iepoits, botl countiies cluim tlut migiunt woikeis liom
TuIikistunundUzbekistuncunstilllindwoik,becuusetleyuieolten
willing to woik loi less money tlun tle loculs, und tley ulso woik
243
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
witloutdocuments(ICG2010).Itisestimutedtlut6S%olullCentiul
AsiunmigiuntswoikingintleRussiunFedeiutionluvenolegulstutus
undtlutinKuzuklstun,tlepiopoitionmigltevenbeliglei(UNDP
2008).Tlus,tleiesultoltlecutquotusisnotnecessuiilyudecieuse
in oveiull migiution, but u decieuse in iegului migiution, incieusing
tlepioblemsoldocumentutionusdesciibedubove.Tlisintuiniesults
in decieusing sociul piotection ol migiunts wlo, il witlout olliciul
documents,luvenouccesstoleultlseivicesoiinsuiunceundcunnot
cluimtleiiwoikeis’iiglts.
InNepul,lowevei,tlesituutionismixed:dutuonietuinuiepui-
ticuluilyluidtoobtuinundolliciuldutudonotudequutelyiepiesent
tlelullextentolciisis-inducedietuin.AccoidingtotleAssociutionol
NepulFoieignEmploymentAgencies,betweenJune2008undMuicl
2009, only 3,000 Nepulese migiunt woikeis ietuined, muinly liom
Dubui,Mucuo,Muluysiu,undQutui.Tlisnumbeiincludesonlyiegului
migiuntswloweieeligibletounddidcluimsociulbenelits.Asietui-
ningmigiuntsuieineligibleloisociulbenelitsiltleystuyedubioudloi
moietlunuyeui,munyoltlemluvebeenexcludedliompublicsup-
poituswillbeeluboiutedonlutei.FoieignieciuitmentliomNepullus
cleuilydwindledin2008/09:tleumountolnewplucementsubioud
lussliunkby30%.Muluysiuloiexumple,tlesecondmostimpoitunt
destinutioncountiyloiNepulesemigiuntsulteiIndiu,lusliozentle
issuunceolwoikpeimitstomigiuntwoikeisintlemunuluctuiingund
seivicessectois,undintioduced“nutionulsliist”employmentpolicies
(Punzulun2009).Howevei,unecdotulevidencestionglysuggeststlut
NepulesemigiuntsliomtleGullStutesundMuluysiuluvenotietui-
ned in luige numbeis. Tley pielei to stuy on und woik iiieguluily,
becuusetleyleuitleymigltnotbeubletoietuinoncetleyleuve.
Finully, in tle Plilippines, neitlei muss ietuin noi ieduction in
loieignieciuitmentwusobseived.BetweenOctobei2008undMuicl
2009,uppioximutely6,S00ietuiningmigiuntssougltussistunceliom
tlelelplundoltlePlilippineOveiseusEmploymentAdministiution
(POEA). Tlis lund lus ubout S8 million ut its disposul. In unticipu-
tion ol muss ietuin, tle Plilippines lus ulso estublisled lelp desks
loiietuiningmigiuntsintleiipiovincesoloiigin.Butitwouldseem
tlutdemundloiskilledwoikeisindomesticundleultlcuieIobslus
notbeenseveielyullected,sotlutdeploymentliguiesoltlePOEAuie
stillgiowing(ulbeitlessstionglytluniniecentyeuis).Accoidingto
tleDepuitmentolLuboiundEmployment(DOLE),despitetleciisis,
oveiulldeploymentolOFWsioseby14.7%in2008ielutiveto2007,
ultlouglQ42008sloweddecliningliguies(Figuie1).InQ12009,
deploymentsincieusedbymoietlun2S%ielutivetotlesumepeiiod
oltlepieviousyeui(DOLE2009).
244 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Crisis and remittances
Woildwide iemittunces ieucled S328 billion in 2008 (Woild Bunk
2009), oi neuily tliee times us ligl us woildwide olliciul develop-
mentussistunceolS120billion.RemittuncestoAsiuluvemoietlun
doubled since 2002. Tley pluy un impoitunt iole in poveity ieduc-
tion und u Woild Bunk study slows u positive coiielution between
iemittunces und poveity ieduction: u 10% incieuse in tle sluie ol
iemittuncesinucountiy’sGDPcunleudtou1.2%declineinpoveity
(AdumsundPuge200S).Remittuncesuie,piimuiily,ucontiibutionto
louselold income ol lumilies tlut uie, uccoiding to locul stunduids,
ulieudybetteioll.Butviuconsumptionolloculgoodsoiinvestment
ineducution,leultl,undbusinesses,possiblyiesultinginIobcieution,
luigeipuitsolsocietywillbenelitliomtleinllowoliemittunces.
Remittunces uie geneiully ieduced by Iob losses ol migiunts
ubioudunddevuluutionolcuiienciesincountiiesoldestinution(sucl
us tle United Stutes oi tle Russiun Fedeiution); on tle otlei lund,
demundloicleupmigiuntluboiund,subsequently,migiunts’employ-
mentusuullyiemuinsligl.Additionully,tleieuiecuiientlyincentives
to iemit moie. Studies slow tlut iemittunces uie counteicyclicul: in
times ol ciisis, lumily membeis geneiully uppeul to tleii ielutives
ubioud wlo uie tlen likely to iemit moie tlun beloie, even il tlut
meunscuttingdowntleiiownexpendituie(Oiozco2009).Cuiiency
Figure 1: Total global deployment of OFWs,
January 2008 to February 2009
OFW~oveiseusFilipinowoikeis.
Souice:DepuitmentolLuboiundEmployment,www.dole.gov.pl(uccessed7Junuuiy2010).
180,000
130,000
80,000
30,000
-20,000
100
80
60
40
20
0
-20
Jan Feb Mar Apr May Jun
2008 2009
Jul Aug Sep Oct Nov Dec Jan* Feb*
Growth rate (in %) Level
245
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
devuluutionsincountiiesoloiigincunulsoincieusetlevulueoliemit-
tunces,wliclpiovidesugoodoppoitunitytoinvest.Tleieloie,globul
iemittuncesgeneiullyiemuiniesilientincompuiisontootleilinunciul
llowssuclusloieigndiiectinvestmentoipoitloliollows.Cuiiently,
tleWoildBunkestimutesu7.3%woildwidedecieuseoliemittunces
in2009.
Howevei,tleputteinoliemittuncellowsiougllylollowstlutol
ietuinmigiution,ultlouglluggingsligltlybelind:tleextentoltle
ietuinmovementdeteiminestledeclineiniemittunces.TleCentiul
AsiunRepublicsexpeiiencedusluipdeclineiniemittuncellowsliom
tle Russiun Fedeiution: loi exumple, iemittunces to Uzbekistun und
TuIikistunsliunkbyuppioximutely30%inQ1undQ22009,ielutive
to tle sume peiiod in 2008. In contiust, tle Plilippines in Junuuiy–
June2009expeiiencedunotleiiiseiniemittuncesol2.9%ielutiveto
tlesumepeiiodtlepieviousyeui.Neveitleless,tlePlilippines’dutu
indicute u cleui slowdown ol iemittunce giowtl liom iutes ol moie
tle10%unnuullyduiingtlelustdecude.Figuie2depictstlestiong
coiielutionolloieigndeploymentundiemittuncesintlePlilippines
until2008.
Total deployment Remittances
D
e
p
l
o
y
m
e
n
t
R
e
m
i
t
t
a
n
c
e
s

(
$

m
i
l
l
i
o
n
)
1,600,000
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Figure 2: Annual deployment of OFWs and OFW
remittances, 1975–2008
Souice:Remittunces:BungkoSentiulngPilipinus,www.bsp.gov.pl;Deploymentdutu:Plilippine
OveiseusEmploymentAgency,www.poeu.gov.pl
BetweenJunuuiyundMuicl2009,iemittuncestoNepuleveniose
by 28% ielutive to tle sume peiiod in tle pievious yeui. Tlis usto-
nisling iise could be expluined eitlei by migiunts getting ieudy to
ietuinlomeundtiunsleiiingsuvingsbucklomebeloietleiiietuin,
oitotlesignilicuntuppieciutionoltleUSdolluibetween2008und
246 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
2009,wliclledtouluigeitiunsleiolsuvingstoNepulundinvestment
inieulestuteinKutlmundubyNepuleseubioud.Oneslouldulsobeui
inmindtlutcollectionoliemittuncedutulusimpiovedconsideiubly
in tle lust couple ol yeuis, und tlis lus ulso contiibuted to iising
volumes(Reinke2007).
Coping mechanisms
Migiuntsuieusingdilleientstiutegiestocopewitltleellectsoltle
ciisis,dependingontleiipeisonulsituutionintleiicountiiesoloii-
ginunddestinution,undontleiilumilies’dependenceoniemittunces
(WoildBunk2009).
Ingeneiul,tlelollowingstiutegiesuieused:migiuntseitleistuy
wleie tley uie, deplete tleii suvings, und stuit looking loi Iobs in
otleieconomicsectoisoitlesludoweconomy;oitleyietuintotleii
countiy ol oiigin und tuke puit in ieintegiution und iequulilicution
piogiums. Despite ietienclment und unemployment, most migiunts
uvoidietuiningtotleiilomecountiiesloileuioluwoiseningeco-
nomic situution tleie und not being uble to leuve uguin (Fix et ul.
2009). Some obseiveis ussume tlut tle ciisis will biing migiunts to
seek citizenslip ol tleii countiy ol destinution (ICG 2010), wlicl
would lucilitute not only tleii woiking conditions but ulso lucilitute
ciicului migiution between countiy ol oiigin und destinution. Given
tledilliculteconomicsituutionincountiiesoloiiginunddestinution,
migiuntsluvetoielyonsoliduiityundsociulcolesionoltleiilumilies
undsociulnetwoiks.Sociulsecuiityoitiunsleipuymentsuieusuully
iestiictedtotloseietuiningmigiuntswloweiedeployedviuolliciul
plucement ugencies, wlicl is wly muny migiunts luve no uccess to
publicsuppoit.
IntlePlilippines,migiutionusuliveliloodstiutegyissodeeply
entiencledtlutmigiuntswloluvelosttleiiIobsundietuinedlome
usuullylopetoleuveuguinussoonuspossible.Tlisisnotsuipiising
giventlelucttluttlecountiydoesnotpiovidesullicientIoboppoi-
tunitiesloitlem:unemploymentisulieudyliglut7.4%,witlmucl
liddenunemployment(uccoidingtotlecensusol2008).Alteinutives
suclussell-employmentuieiutleiunpopuluiumongOFWs.Insteud,
ietuineesoltentukeulounolPS0,000(uboutS1,000)olleiedbytle
Oveiseus Woikeis’ Welluie Associution, to biidge tle peiiod beloie
lindingnewemploymentubioud.Astleiewillbenoluitleigovein-
mentsuppoitmeusuiesinconnectionwitltleeconomicundlinunciul
ciisis, lumilies uie tle piincipul sociul suppoit loi ietuining Filipino
migiunts.
Uzbekmigiutionisuielutivelynewplenomenon.Fucedwitliupid
luboipopulutiongiowtlol3%undunemploymentiutesolupto3S%,
247
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
Uzbeksconsideimigiutionusuiutionulliveliloodstiutegy.Oltleesti-
muted2.Smillion–3millionUzbekmigiunts,munyiemuiniiieguluily
inKuzuklstunundtleRussiunFedeiution,leuiinginubilitytogobuck
tleieoncetleyluvelelt.Stiuctuiuldemundloicleup(migiunt)luboi
lusnotdecieusedintlesetwocountiiesoldestinution,but,ussuid,
immigiutionquotusluvebeencutbyS0%.Additionully,tleRussiun
Fedeiution lus bunned ull loieigneis liom ietuil tiude. Tle closuie
ol tle Cleikizovo muiket in Moscow in June 2009 loi exumple lelt
11,000TuIikmigiuntswitloutuIob(ICG2010).Retuiningmigiunts
uie iepoited to be tiunsleiiing ull tleii suvings buck to Uzbekistun,
undupto80%oltleietuinedmigiuntsinteiviewedloitleGTZstudy
(GTZ2009)iepoitedtluttleywunttoopentleiiownbusinesstleie.
ItisuncleuilowmunyTuIikmigiuntsluvecomebuckliomtle
RussiunFedeiutionpeimunently.Munyoltlosewlodidietuin,cume
buckwitlemptylunds.AiepoitbytleUnitedNutionsOlliceloitle
CooidinutionolHumunituiiunAlluiis(OCHA)indicutestluttlecii-
sis lus ullected eveiy tliid migiunt, und umong ietuining migiunts,
20%couldnotevencoveitleiiloodneeds(OCHA2009).Astudyby
tleInteinutionulLubouiOigunizution(ILO)undtleTuIikMinistiyol
Luboui und Sociul Piotection ol 6,000 ietuinees lound tlut 70% ol
tlemietuinedduetotleciisis,countingnonpuymentolsuluiiesusu
ciisis-inducedietuinieuson,wliclunloitunutelyevenbeloietlecii-
sisusedtobeuwidespieudpiucticeiniiieguluiluboiuiiungements.
TleILOstudyluitleinotestlut63.6%oltleietuinedmigiuntsweie
willingtoemigiuteuguinunotleitime,only14.S%ludlounduIob
utlome,10.4%luddecidedtostuyevenwitloutluvinglounduIob,
und11.S%iemuinedundecided.Tleinteivieweesweieveiydissutis-
liedwitliemuneiutioninTuIikistun,wliclisevendioppingluitlei
duetotlemussiveietuin,butulsomentionedconceinsuboutxeno-
plobiu in tle Russiun Fedeiution und Kuzuklstun. Tley expiessed u
needloigoveinmentsuppoitinvuiiousuieus,suclusstimulutionol
tlesubsistenceeconomyundugiicultuie,lounstolinuncetlesetting
upolnewbusinesses,undvocutionultiuiningundeducutionmeusuies
(ILOundMLSP2009).
Nepulese migiunts uie luced witl deteiioiuting woiking condi-
tionsundwugecutsincountiiesoldestinution,wlicl,lowevei,lus
notuutomuticullyledtomussietuin.Insteud,wleiepossible,ietien-
cled Nepulese tend to stuy ubioud und look loi new employment
oppoitunitiesintlesludoweconomy.Duetotlisincieusingiiiegulu-
iizution,unuggiuvutionolwoikingundlivingconditionsolNepulese
migiuntwoikeis,uswellusoutiigltlumuniigltsviolutionsuguinst
tlem,uieiepoited.TlosewloluveietuinedtoNepuluielucedwitl
luigedebtsbecuusetleycouldneitleiieulizetleiisuvingsgoulswlile
woikingubioud,noiiepuytlelounstleytookloilinuncingtleiitiip.
248 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
As ulieudy 40% ol tle populution lives below tle poveity line und
uiound lull tle populution depends on iemittunces, tle iellux
ol migiunts und possible lutuie decline ol iemittunces is likely to
cuusemoiepoveityundsociuluniest.Similuitotlesituutionintle
Plilippines,tiunsleipuymentsliomtleNepuleseuutloiitiesuielimi-
tedtouveiysmullnumbeiolietuineeswloweiedeployedubioudby
olliciulplucementugencies.
Summingup,wecunmuketlelollowingconclusionswitlieguid
tocopingmeclunisms.
º MigiuntswloluvelosttleiiIobsduetotleglobuleconomic
und linunciul ciisis depend muinly on tle soliduiity ol tleii
lumilyundliiendslipnetwoiks.
º Tlelewexistingstimuluspuckugesuieonlytuigetedtowuid
olliciullyiegisteiedmigiuntsundtleieloieieuclonlyusmull
liuctionoltloseullectedbytleciisis.
º Despite tle deptl ol tle ciisis, in muny countiies, ietuining
migiunts und tleii lumilies peiceive tleii own situution us
lessdiumutictlundepictedintlemediu:lowincome,luckol
sociulsecuiity,dillicultwoikingconditions,undligldebtuie
touceituindegieepeiceiveduspuitoleveiyduylileundnot
sometlingnewcuusedbytleciisis.Tleieloie,usulwuys,tley
uctuccoidingtowluttleyseeustleiibestliveliloodoption—
wliclstillincludesmigiution.
º Migiunt expeiience is to u luige degiee muiked by tle luct
tluttleieisulwuysdemundloiluboiundtlequestionisonly
wlutkindolsuluiyundtieutmentoneisieudytouccept.Some
migiunts uie not even deteiied liom tle expeiience ol und
iepoitsuboutdisciiminution,xenoplobiu,violence,undotlei
lumuniigltsviolutionsindestinutioncountiies,loiexumple
inMuluysiu,tleGull,oitleRussiunFedeiution.
Public sector responses
TleGoveinmentoltlePlilippineslusdecidedonieinloicementund
diveisilicutionolitsluboiexpoitstiutegy.InDecembei2008,Piesident
Aiioyo guve un executive oidei to tle POEA to identily so-culled
CodeGieenAieuswitluligldemundolloieignluboiundtonego-
tiute new biluteiul luboi migiution ugieements witl tlese countiies.
Additionully, u Filipino Exputiiute Livelilood Suppoit Fund linunced
witl P2S0 million (ubout SS.2 million) wus opened. Help desks loi
ietuining migiunts weie estublisled in ull iegions ol tle countiy to
249
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
ussisttleminlindingunewIob(ubioudoiutlome).Nongoveinment
oigunizutions(NGOs)muketleciiticismtlutullpublicsuppoitmeu-
suies uie only uccessible to iegului migiunts, even tlougl iiiegului
migiuntsuieevenmoiedespeiutelyinneedollelp.
Intledebuteonluboimigiutionmunugementundiegulutionin
Nepul und Uzbekistun, tle luboi expoit stiutegy ol tle Goveinment
ol tle Plilippines und its institutionul setup uie olten seen us u iole
model. Yet, NGOs und leuding Plilippine migiution expeits ciiticize
tle luboi-expoit stiutegy ol tle goveinment und cull loi u coleient
economic und sociul development stiutegy ut lome insteud. Indeed,
even 3S yeuis ol luboi expoit liom tle Plilippines lus only puitly
lelped ieduce poveity und lus not been ut ull conducive to sustui-
nuble development. Unlike, loi exumple, tle Republic ol Koieu, tle
Plilippines lus not piogiessed liom u luboi-expoiting to u luboi-
impoitingcountiyiniecentyeuis.
As Nepul is liglly dependent on iemittunces, its goveinment is
tiying to copy tle Plilippines’ policy ol luboi expoit. A Ioint conle-
ience ol tle Inteinutionul Oigunizution loi Migiution (IOM) Nepul
undNepul’sgoveinmentinstitutionsinFebiuuiy2009iecommended
tle opening up ol new luboi muikets loi Nepulese migiunts. Nepul
lus ulso copied meusuies suppoiting ietuining migiunts liom tle
Plilippines’ exumple. Tle Nepulese Council ol Foieign Employment
lus—in u munnei similui to tle Plilippines—estublisled u “Sociul
lund loi loieign employment” endowed witl NRS million in 2009:
ieguluimigiuntswlolosttleiiIobubioudwitlintleliistyeuioltleii
contiuctcuniecluimtleiimigiutioncosts(40%wlenietuiningwitlin
6 montls und 2S% wlen ietuining between 6 und 12 montls). But
betweenJunuuiyundApiil2009,only12ietuiningNepulesemunuged
to cluim tlis suppoit. Fuitleimoie, tle council olleis otlei seivices
loiietuinees,suclusuninloimutionlotlineundwebsite,vocutionul
tiuiningpiogiums,lelpdesksloiIobseekeis,unduwuieness-iuising
cumpuignsontiullickingundiiieguluimigiution.
TuIikistun is extiemely dependent on iemittunces, to tle equivu-
lent ol us mucl us 4S% ol GDP. Estimutes by ADB ussume tlut 40%
ol TuIik louselolds uie ieceiving iemittunces, wlicl lelp linunce
eveiyduylouseloldexpendituie(ADB2009).Tlegoveinmentieuc-
ted to tle ciisis witl u “Concept to Cieute und Keep Jobs Duiing
2008–201S,” wlicl piomises to cieute 180,000 new Iobs. Howevei,
tleconceptdoesnottukeintouccounttlelucttlutulieudy120,000
newIobseekeisenteitleTuIikIobmuiketinuieguluiyeui(ICG2010).
Tleconceptincludesspecilicmeusuiesloiietuiningmigiuntsintle
uieusolvocutionultiuiningundplucementseivices.Openingupnew
luboi muikets ubioud is unotlei impoitunt goul ol tle goveinment,
250 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
wlicllusledtounugieementwitlSuudiAiubiuontleplucementol
1,000 TuIik migiunts, mostly leultl peisonnel. Tle goveinment ulso
incieusedelloitstoimpiovetleTuIikbusinessenviionmentunduttiuct
investoistotlecountiy,i.e.,byoigunizingIobluiis.Howevei,itscupu-
citytosetupluigepiogiumsislimitedduetobudgetuiyconstiuints
connected to iecent Inteinutionul Monetuiy Fund (IMF) louns und
weukgoveinuncestiuctuies.
Altei consideiuble ieluctunce to udmit to being ullected by tle
ciisisutull(ICG2010),tleGoveinmentolUzbekistunlusdeveloped
un unti-ciisis piogium to lelp stubilize tle economy und ollei new
Ioboppoitunitiestoietuiningmigiunts.Itsmeusuiesuielocusingon
tliee issues: ciedit sclemes, employment piomotion in iuiul uieus,
undpiotectionolmigiunts’iiglts.Animpiovementoltleluboimui-
ketiniuiuluieusispuiumountustlisistleoiiginoltlemuIoiityol
migiunts.Akeyioleispluyedbyumiciocieditsclemeloiwlicltwo
newbunks(AgiobunkundKisllokKuiislislBunk)weieestublisledin
Muicl2009.Tlesemiciocieditinstitutionsclunnelcupitulloimicio-
cieditstoiuiuluieusinoideitocompensuteloitlelossoliemittunces
intlesloitiun,undcupitulloiinvestment,wliclslouldcontiibute
toiuiuldevelopmentintlelongiun.
Tlegoveinmentulsopiovidessociultiunsleisviutwonewlunds:
one loi employment und one loi ugiicultuiul suppoit. In puiticului,
tle puicluse ol cows is subsidized, wlicl is somewlut ollset by tle
lucttlut,intuin,cuttlebieedingisleuvilytuxed.Fuitleimoie,meu-
suies luve been tuken loi piotecting migiunt woikeis tliougl tle
estublislment ol ciisis centeis loi counseling, psyclologicul suppoit,
und uwuieness-iuising cumpuigns ubout tle iisks ol iiiegului migiu-
tionundtiullicking.Cuiiently,tleGoveinmentolUzbekistuniseven
usking unemployed migiunts to ietuin liom tle Russiun Fedeiution
und Kuzuklstun und ieintegiute tlemselves in Uzbekistun. Howevei,
biluteiul consultution piocesses witl tlose two destinution countiies
uieundeiwuytoimpiovetlepiotectionolUzbekmigiuntstleie.Tle
ellectivenessoltleunti-ciisismeusuieslusyettobeussessed.
Summing up, unti-ciisis iesponses in countiies ol oiigin usuully
include suppoit to ietuining migiunts, cieution ol ciedit lucilities
loi stuit-up entiepieneuis, piomotion ol employment, und vocutio-
nultiuining.Tleseuppiouclesmustnecessuiilybesloitteimoitle
iespective countiy will pile up enoimous debts und endungei lutuie
development. Additionully, tle meusuies slould be tuigeted towuid
tlewelluieollumiliesingeneiuliutleitlunbeiestiictedtotlesmull
gioupolloimullyiegisteied,olliciullyplucedmigiunts.
Attentionslouldbegiventocoleienceoltlesenewmeusuieswitl
ulieudy existing policies ol sociul welluie, employment piomotion,
251
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
vocutionultiuining,undincomegeneiution.Itisulsoveiyimpoitunt
nottoleigltentensionsbetweentleloculnonmigiuntpopulutionund
ietuiningmigiuntsbyluvoiingtlelutteigioup.Asmentionedubove,
migiuntsuieusuullynotliomtlepooiestpuitoltlepopulution,und
suppoitdiiectedonlytotlemislikelytoincieusesociulinequulityus
wellustocuuseuniest.Evennow,someiepoitsindicutetlutietuining
migiunts uie blumed loi iising ciime iutes oi spieuding ol diseuses,
evenilevidenceloitlisisnonexistent(ICG2010).
Goveinmentsinulltlecountiiesieviewedulsosuppoituwuieness
iuisingubouttleiisksoliiieguluimigiutionundlumuntiullicking,
mostlyinIointpiogiumswitlinteinutionuloigunizutionssuclustle
United Nutions Development Fund loi Women (UNIFEM), ILO, und
Inteinutionul Oigunizution loi Migiution (IOM). Muny goveinments
ulsoseekoitiytoimpiovebiluteiulugieementswitlcountiiesoldes-
tinutioninoideitoimpiovepiotectionolmigiuntsubioud.
Other responses
Piivute und civil society oigunizutions usuully locus on tle situution
olmigiuntsubioudundtlesituutionoltleiilumiliesintlecountiies
ol oiigin. Tley iepoit on u woisening lumun iiglts situution und
incieusing iiieguluiizution ol migiunts. Tley ulso cull loi suppoit to
ietuiningmigiuntsundtleiilumilies.SomeNGOsuctivelyiunsociul
ieliel,consulting,undtiuiningpiogiums.Tleiiseivicesuieolpuiticu-
luivuluewlenpublicstiuctuiesuieinsullicientoistiuined.Tleyulso
lucelessciiticismtlunpublicstiuctuieswlenlocusingononespecilic
giouplike,intliscuse,migiunts.
MigiuntFoiuminAsiu(MFA),uiegionulnetwoikolNGOs,ussociu-
tions,tiudeunions,undudvocutes,inFebiuuiy2009,wuineduguinst
neglecting tle iiglts und piotection ol migiunt woikeis liom Asiun
countiies.Huvinggutleiedexpeiiencewitlpiotectionismduiingtle
Asiunciisisol1997–1998,MFAuigedAsiungoveinmentsincountiies
oloiigintocieutedecentwoikoppoitunities,undtospendmoieon
skillsundtiuiningpiogiums.Tlis,ituigued,wouldcusliontleeco-
nomiesuguinstlutuieslockwuvesloitlosewoikingutlomeuswell
usubioud.Fuitleimoie,MFAisuiginggoveinmentstostopielyingon
iemittuncesloieconomicdevelopment.
Leuding migiunt und lumun iiglts NGOs in tle Plilippines
like Migiunte Inteinutionul, Sculubiini Inteinutionul, und Plilippine
Migiunts’RigltsWutcl,uieopenlyciiticizingtlegoveinment’sluboi
expoitstiutegy.Tleydeploietlecountiy’sdependenceoniemittunces
undieIecttlegoveinment’speispectivetlutmigiuntwoikeisslould
252 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
leeliesponsibleloitlecountiy’sdevelopment.Tleyuiguetlutluboi
migiutionlusdisiuptiveellectsonlumiliesundslouldtleieloienot
bepiomotedexplicitlyusunutionulstiutegy.
Tle economic downtuin is u puiticului clullenge to migiunts’
sulety ubioud. Accoiding to tle Moscow-bused NGO Humun Riglts
Buieuu,tlenumbeisoliucistussuultsintleRussiunFedeiutiondou-
bled in 2008: 113 migiunts weie killed und 340 wounded (Muiut
2009).TlelumuniigltsoigunizutionMuliwustuintleUnitedAiub
Emiiutes obseived u woisening ol woiking und living conditions ol
Nepulese migiunts due to tle ciisis. In 2008, S00 Nepulese migiunt
woikeisdiedintlecountiyinunexpluinedciicumstunces.Ingeneiul,
migiuntsuietieutedussecond-clusswoikeis,puidless,undloicedto
woiklongeilouis,unduieoltenlucedwitlluiussmentundviolence
(ICG2010).
TleseissuesweieulsodiscussedduiingtleCivilSocietyDuystlut
tookpluceulongsidetleGlobulFoiumonMigiutionundDevelopment
2009inAtlens.Moietlun200delegutesliomNGOsuioundtlewoild
culledloigoveinmentstodotlelollowing(GFMD2009):
º Tukemoieusseitiveuction,incolluboiutionwitlcivilsociety
oigunizutions,toieguluteundmonitoiieciuitmentpiuctices,
undenloicetleupplicubleluws:cuppeimissiblelees,estublisl
us good piuctice tlut employeis puy ieciuitment lees; estu-
blislwlistle-bloweipiotectionsundiepoitingmeclunismsloi
ubuses.
º Extend u “giuce peiiod” to migiunts wlo lose tleii Iobs us u
iesultoltleiecessionundwitlittleiipeimissiontoiemuin
intlecountiyoldestinution,sotluttleyluvetleoppoitunity
tolindunotleiIob.Allowmigiuntswloietuintotleiilome
countiiestodososulelyundwitldignity.
Nepul,TuIikistun,undUzbekistunluveonlyulewNGOsdeuling
witlmigiunts’iigltsundpiotectionissues.Tlisisoneieusonwlyintei-
nutionuloigunizutionsulso,suclustleUnitedNutionsDevelopment
Piogiumme, IOM, Oigunizution loi Secuiity und Coopeiution in
Euiope(OSCE),undUNIFEM,uiepuiticuluilyuctiveiniuisinguwu-
ienessoltleiisksolmigiutionundtleneedloisuppoitolvictimsol
tiullickingintlesecountiies.Tleinteinutionuloigunizutionsciiticize
uluckolbi-oimultiluteiulcoopeiutionusonemuIoiluctoiloiinsulli-
cientpiotectionolmigiunts.Tleyulsoculloncountiiesoldestinution
to leuin liom loimei peiiods ol tuibulence, sucl us tle Asiun ciisis,
undnottoexpelluigenumbeisolluboimigiunts,sincetlisislikelyto
besloitteimonlyundwouldonlyluitleiwoisentleeconomicund
sociulsituutionincountiiesoloiigin.
253
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
Recommendations related to policies
and programs
Tle incieused numbei ol ietuining migiunts, puiticuluily in tle
Centiul Asiun Republics, entuils, on tle one lund, iisks loi lumun
secuiity,und,ontleotleilund,newpeispectivesbotlloiindividuul
migiuntsuswellusloiumoiecoleientgoveinmentstiutegyonmigiu-
tionundsocioeconomicdevelopment.
Muny ietuining migiunts wlo luve been woiking in meniul Iobs
ubioud luve un ubove-uveiuge educutionul piolile compuied witl tle
populutionoltleiicountiyoloiigin.Tleybiingbucksuvingsundluve
guined udditionul skills (sucl us u new lunguuge). Additionully, tley
slowuligldegieeolllexibilityundmobility.Tleiilumuniesouices
undpeisonuluspiiutionscouldbeieinloicedbytuigetedvocutionultiui-
ningoibusinessdevelopmentseivices.Asinteinutionulmigiuntsliom,
loiexumple,TuIikistunundUzbekistun,comemuinlyliomiuiuluieus,
tleiiietuin,combinedwitlluitleivocutionultiuiningoilinunciulsup-
poit,olleistlepotentiulloistiuctuiulclungesintleseiuiuluieus.
Tle ciisis lus slown tlut goveinment policies slould not solely
iely on luboi expoit but ulso put moie emplusis on tle cieution ol
loculemploymentunddevelopment.Itlusulsomudeevenmoieevi-
denttleneedloicoleientmultiluteiulcoopeiutionbetweengovein-
mentsundNGOsonmigiutiontolucilituteiegionulmobility.
Policies
Seveiuliecommendutionscunbediuwnliomtleiesultsolouiunuly-
sisoltledilleientcountiystudies.Mostoltleiecommendutionsuie
ol geneiul ielevunce to migiution munugement, too. Howevei, tleii
impoituncelusbeenuccentuutedbytlelinunciulundeconomicciisis:
º Inteimsoliebuluncing,countiiesoloiiginneedtoundeituke
policiestoieducedependencyolluboimigiution,undinsteud
plucemoieemplusisonemploymentcieution.
º Existing luboi migiution clunnels need to be loimulized viu
biluteiulmigiutionugieementsinoideitoieducevulneiubility
olmigiunts.
º Countiies ol destinution slould not diusticully ieduce tleii
immigiutionquotus.Lessonsliomloimeieconomicciisesslow
tluttlemuiniesultoltlesemeusuiesistleiiieguluiizution
ol migiution und un incieuse in employment in tle sludow
economy.Insteud,countiiesoldestinutionslouldussesstleii
254 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
ieul luboi muiket demund und coopeiute witl countiies ol
oiigin to oigunize oideily und modeiute ietuin migiution.
Additionully, piotection ol migiunts’ iiglts iemuins un
impoituntissueloicountiiesoldestinution.
º Steps must be tuken to suppoit ietuining migiunts witlout
neglectingtleloculnonmigiuntpopulutionoiincieusingsociul
inequulity.Heie,itmustbeussuiedtlutinequulitiesbetween
migiunts und nonmigiunts uie not being ieinloiced und tlut
misinloimution ubout migiunts und tle impuct ol ietuin
migiutiontlutmiglteniugepublicopinionuiebeingtuckled.
º All ministiies oi depuitments involved in migiution issues
slould puiticipute in designing und cuiiying out u coleient
policy on migiution und development, e.g., ministiies ol
educution, luboi, sociul secuiity, und economic development.
Regului consultutions witl civil society und diuspoiu
oigunizutionsslouldbeleld.
Programs and projects
On tle level ol development piogiums und pioIects, tle lollowing
meusuiescunbetukenoiieinloicedtocounteitleellectsoltleeco-
nomicundlinunciulciisisonmigiution.
Fiist,utloiouglunulysisoltleellectsoltleciisisonmigiution
in u puiticului countiy is necessuiy: How muny migiunts ietuin? Is
tleii ietuin likely to be peimunent oi uie tley looking loi new Iob
oppoitunitiesubioud?Wlutuietleiicluiucteiisticsundquulilicution
levels? Wlut kind ol iesouices und know–low do tley biing buck?
In wlicl sectois ol tle economy uie tley most likely to woik buck
lome? Wlut kind ol suppoit do tley iequiie? How do iemittunce
llows clunge ovei time? How does tlis ullect louselolds und tle
nutionuleconomy?
Second,piogiumsundpioIectstocounteitleellectsoltlelinun-
ciul und economic ciisis on migiution cun be linked to uctivities in
tleuieusol(umongotleis)linunciulsectoidevelopment,vocutionul
tiuining, piivute sectoi development, iuiul development, und sociul
piotection.Tlelollowinglistisceituinlynotexluustive:
º Finunciulsectoidevelopmentcunlucilitutetlellowoliemit-
tunces,puiticuluilytoiuiuluieus,loiexumplebydeveloping
loimul tiunslei clunnels, building miciolinunce institutions’
cupucities, linking tlem to inteinutionul tiunslei netwoiks,
unduvoidingoveiiegulutionolsmullumountsoliemittunces.
A iisk-bused uppioucl to tiunsleiiing smull umounts ieduces
incentives to use inloimul meuns ol tiunslei. Additionully,
255
Impact of the global recession on international labor migration and remittances: Implications for
poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan
specilic linunciul pioducts, sucl us louns, insuiunce, und
suvings, tlut tuiget migiunts und iemittunce ieceiveis cun
contiibutetoubetteiuseoldecliningiemittuncesundtleieby
incieusesociulpiotection.
º Vocutionul tiuining und luboi muiket meusuies contiibute to
tlesuccesslulieintegiutionolietuiningmigiuntsintotleluboi
muiket, including quulilicutions, luboi muiket inloimution
systems, und seivice centeis loi migiunts. Seivice centeis
couldulsolelpplucequuliliedmigiunts.
º Piivute sectoi development meusuies, sucl us business
development seivices, suppoit migiunts ietuining witl
suvings oi iemittunce ieceiveis wlo wunt to open smull
businesses,tleiebycieutingIobsuttlelocullevelundgene-
iutingincome.
References
Adums,RicluidundJolnPuge.200S.Dointeinutionulmigiutionund
iemittunces ieduce poveity in developing countiies? World
Development33(Octobei):164S–1669.
AsiunDevelopmentBunk(ADB).2009.Inteinutionulmigiunts’iemit-
tuncesinCentiulAsiuundSoutlCuucusus.Diult.August.
Depuitment ol Luboi und Employment (DOLE). 2009. Globul OFW
deployment, dollui iemittunces giow despite globul ciisis.
24Muicl.www.dole.gov.pl/newsuiclive.plp
Fix,Micluletul.2009.Migration and the global recession.Wuslington,
DC:MigiutionPolicyInstitute.p.21.
GlobulFoiumonMigiutionundDevelopment(GFMD).2009.Repoit
on tle Civil Society Duys ol tle Globul Foium on Migiution
und Development: Integiuting migiution policies into deve-
lopmentstiutegiesloitlebenelitolull.Atlens.3Novembei.
www.glmd2009.oig/discussionPupeis.uspx
GTZ.2009.The impact of the global recession on international labour
migration, migrants and remittances.Esclboin.
InteinutionulLubouiOigunizution(ILO)undMinistiyolLubouiund
Sociul Piotection ol tle Republic ol TuIikistun (MLSP). 2009.
Impact of the global financial crisis on Tajik migrant workers.
Duslunbe.
InteinutionulCiisisGioup(ICG).2010.CentiulAsiu:Migiuntsundtle
economicciisis.Asia ReportNo.183,SJunuuiy.
Muiut, Eiiku. 2009. Labor migration in Central Asia: Implications of
the global economic crisis. Centiul Asiu–Cuucusus Institute,
Wuslington,DC.Muy.
256 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Oiozco, Munuel. 2009. Tle globul economic ciisis und inteisecting
vuiiubles deteimining iemittunce tiends. Piesentution leld ut
tleconleienceontleimpuctoltleglobuleconomicciisison
migiunts’ iemittunces und its implicutions loi development,
21Muicl,Utieclt.
PlilippineGoveinmentCensus.2008.Munilu.Muicl.
Punzulun, Kevin. 2009. Tle economic ciisis und luboui migiunts:
Atestloilumunsecuiity?NTS Insight1.June.Singupoie.
Reinke, Jens. 2007. Remittunces in tle bulunce ol puyments liu-
mewoik: Cuiient pioblems und loitlcoming impiovements.
www.iml.oig/exteinul/np/stu/bop/pdl/iem.pdl
Seddon, Duvid. 200S. Nepul’s dependence on expoiting luboui.
www.migiutioninloimution.oig/
United Nutions Ollice loi tle Cooidinution ol Humunituiiun Alluiis
(OCHA).2009.Mid-Year Review 2009.NewYoik.
United Nutions Development Piogiumme (UNDP). 2008. Nutionul
Humun Development Repoit: Russiun Fedeiution 2008:
Russiu lucing demogiuplic clullenges. lttp://ldi.undp.oig/
en/iepoits/nutionuliepoits/euiopetlecis/iussiu/NHDR
Russiu2008Eng.pdl
Woild Bunk. 2009. Migration and Development Brief 10. Migiution
und Remittunces Teum, Development Piospects Gioup.
Wuslington, DC. 13 July. lttp://siteiesouices.woildbunk.
oig/INTPROSPECTS/Resouices/334934-111031S01S16S/
Migiution&DevelopmentBiiel10.pdl
257
Global crisis and fiscal space
for social protection
Armin Bauer, David E. Bloom, Jocelyn E. Finlay,
and Jaypee Sevilla
1
Introduction
Tle globul ciisis lus lud u signilicunt negutive impuct on economic
giowtl und piogiess towuid tle Millennium Development Gouls
(MDGs). Tlis lus ienewed inteiest in sociul piotection, wlicl cun
contiibutetoliveobIectivesduiingciises:givingdiiectsuppoitloitle
vulneiuble, pioviding Keynesiun stimulus spending, piotecting long-
teimlumuncupitulinvestmentsineducutionundleultloltleyoung,
contiibuting to sociopoliticul stubility, und (in tlis ciisis specilicully)
iebuluncinggiowtltowuiddomesticconsumption.
Tlecuiientciisislusslowntlutsociulpiotectioniemuinsielu-
tively neglected. Only u lew economies—piimuiily, Bungludesl,
tle People’s Republic ol Clinu (PRC), Indiu, tle Plilippines, und
Viet Num—included sociul piotection meusuies in tleii iescue puc-
kuges, but even tleie, most sociul piotection components weie only
intleliglsingledigitsususluieoltlesepuckuges.Tlismuybedue
to ielutive neglect ol sociul piotection issues und to u luck ol sociul
piotection ieloims und pioIects in tle pipeline beloie tle ciisis lit.
Howevei, we estimute tlut ut leust 1S developing Asiun economies
luvelisculspuceloisuclmeusuies,wlensuclspuceisdelinedusu
pie-ciisislisculdelicitbelow3%undutuxbuidenbelow20%.
PiogiessonsociulpiotectionwilliequiienotIustincieusedexpen-
dituiesundcommitment,butlundumentulpolicyunulysisundieloim,
involvingucompielensivesociulpiotectionuudit.Duetotle“quick-
spending”mentulityoltleiescuepuckuges,onlyuleweconomiesuie
usingtleiilisculspucetomukeielevuntieloimsinsociulpiotection
loiumoieinclusiveemeigingAsiu.
1
AiminBuueiisusenioieconomistuttleAsiunDevelopmentBunk’sRegionulund
SustuinubleDevelopmentDepuitment.DuvidE.BloomisCluienceJumesGumble
piolessoi ol economics und demogiuply und cluii ol tle Depuitment ol Globul
HeultlundPopulutionuttleHuivuidScloololPublicHeultl.JocelynE.Finluyund
JuypeeSevilluuieieseuiclussociutesintlutdepuitment.
258 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
The global crisis and the role
of social protection
People’swell-being(tleiiubilitytoliveudecentlilewitloutvulneiu-
bilitytopoveity,undwitlgooduccesstoleultl,educution,undotlei
municipulsociulseivices)istleultimuteobIectiveoldevelopmentund
ciisis iesponse, not bouncing buck towuid oi iebuluncing economic
giowtl. Tle ieuson we ultimutely cuie ubout tle globul ciisis is its
impuct,notoneconomicgiowtl,wliclisonlyindiiectlyimpoitunt,
butonpeople’swell-being,wliclisintiinsicullyimpoitunt.Tlustle
ielevunceoldownwuidievisionstoexpectedeconomicgiowtliutes
istleiiimpuctonmeusuiesolwell-being,puiticuluilytlosemeusuies
contuined in tle MDGs. Tle slowei giowtl iesulting liom tle ciisis
implies moie ubsolute poveity; moie mulnutiition; liglei moitulity
iutesumonginlunts,clildien,undmotleis;undwoisescloolingout-
comesutulllevels.
Wlile long-teim economic giowtl is piobubly tle single most
impoituntsolutiontoiuisingwell-beingloiluigenumbeisolpeople
ovei long peiiods ol time, sociul piotection policies uie essentiul us
well,especiullywlencountiiesemeigeusmiddle-incomeeconomies.
Wlen goveinments uddiess vulneiubility, tle living stunduids ol tle
S2-u-duypooi,oiuboutlullolAsiu’spopulution,uiebecomingmoie
impoitunt tlun ieducing seveie poveity ut tle S1.2S-u-duy inteinu-
tionulpoveityline(Buueietul.2008).TleAsiunDevelopmentBunk
(ADB) delines sociul piotection us “tle set ol policies und piogiums
designed to ieduce poveity und vulneiubility by piomoting ellicient
luboimuikets,diminislingpeople’sexposuietoiisks,undenluncing
tleiicupucitytopiotecttlemselvesuguinstluzuidsundinteiiuption/
lossolincome.”
2
FoiADB,tlescopeolsociulpiotectionisgivenundei
tlelollowingliveuieus:
º Luboi muikets: Piomotion ol employment, piomoting luboi
muiketelliciency,piotectingwoikeis
º Sociulinsuiunce:Copingwitliisksolillleultl,disubility,old
uge,unemployment,undwoik-ielutedinIuiy
º Sociulussistunce:Redistiibutiontotlemostvulneiublegioups
suclussinglemotleis,tlelomeless,undtleplysicullyund
mentullyclullenged
º Micio- und uieu-bused sclemes: Piogiums witl subnutionul
scopesuclusmicio-insuiunce,sociulinsuiunce,sociullunds,
undpiogiumstomunugenutuiuldisusteis
2
www.udb.oig/SociulPiotection/deluult.usp,uccessed20Septembei2009.
259 Global crisis and fiscal space for social protection
º Clild piotection: Piogiums to piomote tle leultly und pio-
ductivedevelopmentolclildien.
In iecent yeuis, sometling quite iemuikuble lus luppened to
tle wuy in wlicl sectoi expeits und goveinment decision mukeis
viewsociulpiotection.Tleyusedtoviewitusudistiuctionliomtle
businessoleconomicgiowtl.Itwus—touseuneconomicdiclotomy
tlutcunbedumningilinteipietedinupuiticuluiwuy—consumption
iutleitluninvestment. Tlepiioiitywuseconomicgiowtl.Sociulpio-
tectionwusIustuboutpickinguptlepeopleleltbelindundexcluded
liomtleeconomicgiowtlundsociulwelluieputl.
Moie iecently, muny ol tlese expeits und decision mukeis luve
modilied tleii views somewlut. Tley now undeistund sociul pio-
tection us wlolly integiul to tle piocess ol economic giowtl. Sociul
piotection, by piomoting louselold well–being, in tuin lucilitutes
louselolds’ decisions to uccumulute leultl und educution lumun
cupitulintleyoungeigeneiution,wliclsetstlestugeloilong-teim
economicgiowtl.Sociulpiotectionsoltenstleiiskstlutgetintlewuy
olluvinguleultly,pioductive,undsecuiewoikloice.Itpiomotesstu-
bilityinsocietybyieducingsocioeconomicinequulity.Itexpundstle
sluieoltlenutionulpopulutiontlutlustleoppoitunitytopuiticipute
ineconomicuctivity,undisumuIoiluctoiinbioudeningdemundloi
goodsundseivices.Itsluiestleguinsoleconomicgiowtlwidelyso
ustobuildubioudeibusisundsluiedcommitmenttotlegiowtlund
developmentputlolusociety.
Sociulpiotectionulsocontiibutestootleidevelopmentoutcomes,
sucl us liglei sclool eniollment und completion iutes, tle pooi’s
uccess to vocutionul tiuining (puitly tliougl scloluislips), bettei
leultlloitlepooi(tliougluccesstosociulinsuiunceumongotlei
tlings),undloweipoveityincidence(tliougl,loiexumple,cuslund
otleitiunsleis,undpublicemploymentsclemes).
MunyeconomiesinAsiuuiestuitingtoieulizenotonlytlutsociul
piotectionisielevunttogiowtl,buttlutitispuitolunellectiveies-
ponsetoglobuloiiegionulciises.Suclsociulpiotectionpoliciespluy
uciiticulioleiniespondingtoexteinulslocks.Sociulpiotectiontle-
ieloielullillsliveobIectivesuttlesumetime:
º Fiist is wlut we miglt teim tle income ieplucement ellect
loi tle newly vulneiuble. Sociul piotection piovides linun-
ciul iesouices to individuuls und louselolds wlose linunciul
iesouices uie depleted by ciises geneiully, mostly tliougl
lost woik. Tlese tiunsleis dumpen tle ciisis impuct on tleii
expendituiesund,tleieloie,ontlewell-beingiesultingliom
tleseexpendituies.
260 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
º TlesecondelementisuKeynesiunone.Sincesociulpiotection
tiunsleisuieintendedtotuigettlepooiundvulneiuble,itis
likelytluttleiiiecipientsluveuligleimuiginulpiopensity
to spend tlese tiunsleis tlun noniecipients. Spending by
iecipients,tliougltletiuditionulKeynesiunmultipliei,iuises
tleincomesolotleipeopleintleeconomy.
º Tliid, sociul piotection tiunsleis to linunciully constiuined
louseloldminimizetlepiessuieontleselouseloldstolult
investmentsintlelumuncupituloltleiiclildien,puiticuluily
in leultl und educution. Tlus sociul piotection tiunsleis
contiibute to long-iun lumun cupitul uccumulution in tle
economy us u wlole, und so impiove tle piospects loi long-
teimeconomicgiowtl.
º Alouitlcontiibutionistosociopoliticulstubility,bymitiguting
inequulity in income distiibution und by muintuining
sociopoliticulsuppoitliomgioupsudveiselyullectedbyciises.
º A liltl contiibution—specilic to tlis ciisis—involves tle
giowing beliel tlut u piopei ciisis iesponse is to iebulunce
giowtl, tlut is, to muke giowtl in Asiun economies less
dependent on exteinul demund und moie dependent on
domesticdemund.Sociulpiotectioniedistiibutesiesouicesto
segments ol tle populution witl ielutively low consumption
expendituies und cun, tleieloie, lelp stimulute long-teim
domesticdemund.
Social protection in fiscal stimulus packages
Sociulpiotectionundtlecuiientciisispiesentunumbiguity.Ontle
one lund, sociul piotection is u component ol muny liscul stimulus
puckuges(Tuble1slowsstimuluspuckugesumongdevelopingAsiun
economies, witl und witlout sulety net components.) On tle otlei
lund,sociulpiotectionexpendituiesweiegeneiullylowinpie-ciisis
budgets,unduieulsoielutivelysmullelementsoltlelisculstimulus
puckuges.
Goveinmentsuienotlullytukingudvuntugeoltleciisistoincieuse
tlelocusonsociulpiotectionloiinclusivegiowtl.Aiecentlypopului
lypotlesis (investiguted luitlei in tle lollowing puges), is tlut tlis
ciisismuybeunoppoitunityloienluncedpiioiityloisociulpiotection,
in puiticului due to incieused liscul spuce loi sociul piotection. But
dutuonuctuulexpendituiecommitmentsonsociulpiotectionpuintu
lessoptimisticpictuie.Tuble2slowstlutpie-ciisisspendingonsociul
piotectionususluieolgiossdomesticpioduct(GDP)wusgeneiully
low,uboutS%loitleiegionoldevelopingAsiuusuwlole,compuied
261 Global crisis and fiscal space for social protection
Table 1: Fiscal stimulus packages of developing
Asian economies
With a social safety net component
Without a social safety
net component
Aimeniu
AzeibuiIun
Bungludesl
Cumbodiu
Clinu,People’sRepublicol
Geoigiu
HongKong,Clinu
Indiu
Indonesiu
Kuzuklstun
Koieu,Republicol
KyigyzRepublic
Muluysiu
Mongoliu
Pukistun
Plilippines
Singupoie
Tuipei,Clinu
TuIikistun
Tluilund
VietNum
FiIiIslunds
LuoPeople’sDemociuticRepublic
PupuuNewGuineu
Sumou
SiiLunku
Uzbekistun
Vunuutu
Souice:ADB2009u,p.9.
Table 2: Public expenditures on social protection
(%olgiossdomesticpioduct)
Subregion No. of Countries % of GDP
EustAsiu
(Clinu,People’sRepublicol;Jupun,
Koieu,Republicol;Mongoliu)
4 9
CentiulAsiu
(Kuzuklstun,KyigyzRepublic,
TuIikistun,Uzbekistun)
4 7
WesteinAsiu
(Aimeniu,AzeibuiIun)
2 S
SoutlAsiu
(Bungludesl,Blutun,Indiu,
Muldives,Nepul,Pukistun,SiiLunku)
7 3
SoutleustAsiu
(Cumbodiu,Indonesiu,LuoPeople’s
DemociuticRepublic,Muluysiu,
Plilippines,VietNum)
6 3
Pucilic
(CookIslunds,FiIiIslunds,Muislull
Islunds,Nuuiu,PupuuNewGuineu,
Tongu,Tuvulu,Vunuutu)
8 3
DevelopingAsiuundtlePucilic 23 S
Souice:Autlois’culculutionsbusedondutuliomtleADBSociulPiotectionIndex.
262 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
to ubout 21% loi tle Oigunisution loi Economic Co-opeiution und
Development(OECD)usuwlole.
3
Onuveiuge,wliletleeconomies
ol Soutl und Soutleust Asiu weie (pieciisis) low spendeis on sociul
piotection, tlose ol Eust und Centiul Asiu weie ligl spendeis, und
WesteinAsiuwusuveiuge.Somecountiiesspentmoieonsociulpio-
tection,eveniltleyweiepooiei.Nepul,loiexumple,lusincieusedits
sociul piotection spending mussively, und Sii Lunku lus tiuditionully
spent mucl in tlis uieu. Botl countiies luve lowei pei cupitu GDP
tlunmunySoutleustAsiuncountiies,wlicltendtospendmuclless
onsociulpiotection.
AltlouglsociulpiotectionisucomponentintlevustmuIoiityol
stimuluspuckuges,tleuctuulsluieisielutivelysmull.Itisulsodillicult
toputunexuctliguieontlissluiebecuuse(i)luiddutuuiedillicult
tocomeby,(ii)expendituiesuiesometimescountedussociulpiotec-
tionevenwlentleydonotieullylelptlepooiundvulneiuble,und
(iii)dilleientsouicesluvedilleientliguies.TleInteinutionulLuboui
Oigunizution(ILO)undtleInteinutionulInstituteloiLubouiStudies
(IILS) (2009) estimute tlut tiunsleis to low-income individuuls und
louseloldsconstitute6.8%oliescuepuckugesin12unn umedAsiun
developingeconomiesloiwliclbieukdownsuieuvuiluble.Incontiust,
46.S%wusloiinliustiuctuie.SpecilicdutuloiVietNumsuggesttlut
uboutS%olits2009stimuluspuckugeconsistedolsociulexpendituies.
4
TleInteinutionulMonetuiyFund(IMF2009)estimutestlutubout
1S%oltlestimuluspuckugeintleAsiunG20countiies(Austiuliu,tle
PRC, Indiu, Indonesiu, Jupun, und tle Republic ol Koieu) wus spent
on sociul sulety nets.
S
ADB’s counteicyclicul linunce piogiums ulso
piovidesomeunulysisontlecompositionollisculstimuluspuckuges,
indicutingtlutexpendituiesloisociulpiotectionuieielutivelylow,ut
betweenS%–1S%oltlestimuluspuckuges.Ontleotleilund,Zlung
et ul. (2009), piovide some evidence, us slown in Tuble 3, tlut tle
sluiesmuybeliglei.
Acuveuttoulltlisistluttleieisnocommondelinitionolsociul
piotectionumongtledilleientsouices,sotlutvuiiutionsintlebioud
estimutesoltlesociulpiotectionelementinlisculstimuluspuckuges
muy be luigely diiven by dilleiences in delinition oi scope ol sociul
piotectionexpendituies,unissuetlutisbeyondtlescopeoltlispupei
touddiess.
3
lttp://stuts.oecd.oig/Index.uspx?dutusetcode~SOCXAGG,uccessed19Septembei
2009.
4
www.udb.oig/Documents/RRPs/VIE/4331S-VIE-RRP.pdl, uccessed 19 Septembei
2009.
S
Autlois’estimutesbusedonFiguie1.34inIMF(2009).
263 Global crisis and fiscal space for social protection
Table 3: Social protection components
of fiscal stimulus packages
Country
Fiscal stimulus
(Sbillion)
Share of GDP
(%)
Share devoted
to social
protection (%)
Bungludesl 1.1S 1.38 12.81
Clinu,People’s
Republicol
4.00 2.84 23.00
Geoigiu 2.28 19.92 42.11
Indonesiu 6.33 1.40 8.77
Muluysiu 12.12 S.67 34.29
Plilippines 6.9S 4.40 1S.1S
Tluilund 44.92 17.22 23.4S
VietNum 8.42 9.68 16.79
Souice:Zlungetul.(2009).
Somecommentutoisluvesuggestedtluttlisciisismuyolleiun
oppoitunitytoincieusetlelisculspuceloisociulpiotection.Tlisisu
dillicultcluimtoussess.Heie,wetukelisculspuceloisociulpiotection
to meun tlut u goveinment cun ulloid to incieuse its expendituies
on sociul piotection witlout Ieopuidizing its long-iun liscul leultl.
Loosely, liscul spuce is tle ubility to spend wlile still being piudent
ubouttlebudget.Howmigltweussesswletleiitexists?
Oneliiststepmigltbetocompuieuctuulexpendituieswitlesti-
mutesollowmuclubusicsociulpiotectionpuckugewouldcost.Tlis
is ol couise u complex exeicise, but tle ILO (2008) lus lelped us
somewlut leie. It computed tle cost ol u busic sociul secuiity puc-
kuge, wlicl is unulogous to wlut ADB culls sociul piotection, loi u
gioupollow-incomecountiies—sevenliomAliicuundliveliomAsiu.
WecuncombinetleILO’scostestimutesloitleliveAsiuncountiies
witl tlese countiies’ uctuul expendituies on sociul piotection liom
ADB’sownculculutionsloiitsownSociulPiotectionIndex.
TleILO’sconclusionistluttlecostsolubusicsociulpiotection
puckuge uie ielutively ulloiduble—even loi pooiei countiies—und it
seemstlutitsconclusionispluusible.Oltlelivecountiiesloiwlicl
compuiisonsuiepossible(Tuble4),tlieeuieulieudyspendingclose
to wlut is iequiied, und tle two loi wlicl uctuul expendituies uie
signilicuntlyloweitluntleestimutedcostsoltlebusicpuckugeuie
countiiesloiwlicluctuulexpendituiesuielow,evenielutivetootlei
low-incomeAsiuncountiies.IlweextiupoluteliomTuble4tlutubusic
sociul piotection puckuge costs ubout 6% ol GDP und we tuke liom
264 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Tuble2tluttleuveiugeuctuulspendingonsociulpiotectionisubout
S%olGDP,itseemstlutusluiuscommitmentoluggieguteiesouices
go,tlecostsoltlebusicpuckugeuieulloiduble.
Table 4: Estimated cost of basic social protection versus
actual expenditures (%olGDP)
Country
Cost of basic social
protection package
a
Actual expenditures
in 2004
b
Bungludesl 6.1 6.3
Indiu 3.9 4.0
Nepul 7.0 2.3
Pukistun 3.8 1.6
VietNum 4.4 4.1
Souices:
u
ILO(2008);
b
dutupiovidedbyADBtotleuutlois.SeeulsoADB(2008).
Butwlutuboutlisculspuceitsell?Altlouglitlusnosinglewidely
ucceptedquuntitutivemeusuie,itissometimesdecomposedintoloui
subcomponents,oltenIointlyieleiiedtoustle“lisculspucediumond.”
Eucl subcomponent meusuies some uspect ol long-teim liscul cupu-
cityolgoveinment(ususluieolGDP):lisculbulunce,tuxievenues,
olliciuldevelopmentussistunce,undiepiioiitizutionundelliciencyol
expendituies.Oltleselouielements,tletliidelement(olliciuldeve-
lopmentussistunce)ismoieielevuntloilowei-incomecountiies,but
lesssoloimiddle-incomeeconomies.Tlelouitlelement(iepiioiitizu-
tionundelliciencyolexpendituies),consistsoltleincieusediesouices
tlut would be mude uvuiluble loi spending il existing expendituies
weieiutionulizedtoeliminutewusteundtogotoliglest-vulueuses.
SincetletliidelementislessielevuntloimunydevelopingAsiun
economies, und since tle louitl is dillicult to meusuie, we locus on
tle liist two meusuies: liscul bulunce und tux ievenues. Tle ideu is
tlutcountiieswitllowlisculdelicitsundlowtuxievenuesluvemoie
liscul spuce in tle sense ol luving moie ioom to iuise expendituies
undievenues.
Evensomecountiieswitllisculdelicitscouldulloidsociulpiotec-
tion.ADB(2009u)slowstluttleieuienocleuiciiteiiuloideteimi-
ningwletleilisculdelicitsoituxievenuesuielow,butitusesuiule
oltlumbliomtleEuiopeunStubilityundGiowtlPuct,wlicliequiies
itsmembeicountiiestokeeptleiilisculdelicitsbelow3%olGDP,us
utliesloldloipiudentbudgetmunugement.WetleieloiedivideADB
265 Global crisis and fiscal space for social protection
economiesintotlosewitldelicitsbelowundubovetle3%tlieslold
in2008,piioitotleciisis(TubleS).
Table 5: Deficits above and below 3% of GDP, 2008
Below 3%—“Prudent” Above 3%—“Imprudent”
Aimeniu
AzeibuiIun
BiuneiDuiussulum
Cumbodiu
Clinu,People’s
Republicol
Geoigiu
HongKong,Clinu
Indonesiu
Kuzuklstun
Koieu,Republicol
KyigyzRepublic
LuoPDR
MuislullIslunds
Nepul
PupuuNewGuineu
Plilippines
SolomonIslunds
Tluilund
Tongu
VietNum
Bungludesl
CookIslunds
Indiu
Muluysiu
Muldives
Mongoliu
Pukistun
Puluu
Sumou
SiiLunku
TuIikistun
Tuvulu
GDP~giossdomesticpioduct,LuoPDR~LuoPeople’sDemociuticRepublic.
Souice:ADB(2009b),p.2S7,Tuble6.1.
Tlus quite u luige numbei ol Asiun economies sutisly tle 3%
“iule.” Ol couise, tle ciisis lus uniloimly cuused delicits to iise, in
munycusestoubovetlisiute,butincieusinglylinunceexpeitsinAsiu
undintleIMFsuppoittleviewtluttle3%iulebecomeslessielevunt
duiing seveie economic downtuins. Becuuse, by tlis pieciisis meu-
suie, quite u lew countiies weie liscully piudent piioi to tle ciisis,
tley muy tleieloie ulso luve tle liscul spuce loi incieused expendi-
tuiesonsociulpiotection.
Butliltingievenuesisciuciul.Asecondindicutoiollisculspuceis
tletuxbuiden,wliclismeusuiedususluieolGDP.Tleussumption
is tlut countiies witl low tux buidens luve liglei cupucity to iuise
udditionulievenuestliougltuxution.Asubove,tlequestioniswlut
constitutes“low,”loilisculdelicitsundtuxievenues—unduguin,tleie
isnoluidundlustiule.ADB(2009u)notestlut,ultlougltleuveiuge
tux buiden in OECD countiies is ovei 3S%, muny developing Asiun
economiesluvesignilicuntlyloweituxbuidens(Tuble6).
Tleiesultsintlistubleseemtoimplylisculspuceloiuconside-
iublenumbeiolAsiuneconomies.Ilwetiytocombineouitwociiteiiu,
unddelinecountiieswitllisculspuceustlosewlosepie-ciisisdelicits
weie below tle 3% piudent tlieslold und tux buiden below 20% ol
GDP,wegeneiutetlelollowinglistoleconomies(Tuble7).Tlus,tleie
isevidencetosuppoittlecontentiontluttleieissomelisculspuceloi
incieusedexpendituiesonsociulpiotectionintlesecountiies.
266 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 6: Developing Asian economies by tax burden
(%olGDP)
Less
than 10%
Between
10% and 20%
Between
20% and 30%
Higher
than 30%
Bungludesl
Indiu
Aimeniu
AzeibuiIun
Cumbodiu
Clinu,People’s
Republicol
HongKong,Clinu
Indonesiu
Koieu,Republicol
Kuzuklstun
KyigyzRepublic
LuoPeople’s
Demociutic
Republic
Muluysiu
MuislullIslunds
Micionesiu
Nepul
Pukistun
Puluu
Plilippines
Singupoie
SiiLunku
TuIikistun
Tluilund
CookIslunds
FiIiIslunds
Geoigiu
Kiiibuti
Muldives
PupuuNewGuineu
Sumou
SolomonIslunds
Tongu
Tuvulu
VietNum
Biunei
Duiussulum
Mongoliu
Souice:ADB(2009b),p.2S8,Tuble6.2.
Table 7: Developing Asian economies with fiscal space
for social protection (udelicitbelow3%
undutuxbuidenbelow20%)
Aimeniu
AzeibuiIun
BiuneiDuiussulum
u
Cumbodiu
Clinu,People’sRepublicol
HongKong,Clinu
Indonesiu
Kuzuklstun
Koieu,Republicol
KyigyzRepublic
LuoPeople’sDemociuticRepublic
MuislullIslunds
Nepul
Plilippines
Tluilund
u
BiuneiDuiussulumisulsoincludedintlistublebecuuseolitsliglcuiientuccountbulunce,oil
ievenues,undsmullpopulution,wlicltogetleigivelisculspuceloisociulpiotection,despiteu
ligltuxbuiden.
Souice:Autlois’compututionsliomTublesSund6.
Fiscal space for social protection reforms
IncieusedpiioiityonsociulpiotectionmustinvolvenotIustcommit-
menttoligleiexpendituiesbutulsotolundumentulstiuctuiulieloim.
Peiiodsolciisisuieusuullypeiiodsolincieusedsociopoliticuldemund
loisociulpiotection.Buttosomeextent,tlisissimiluitosuyingtlut
duiingnutuiuldisusteis,tleieisincieuseddemundloiunetwoikol
ioudsundliglwuysbywlicltotiunspoitlood,tents,undiescuewoi-
keis.Tleyuieneedednow,butcunnotbebuiltutsloitnotice.Justus
267 Global crisis and fiscal space for social protection
ucountiyneedsunetwoikolioudsundliglwuys,soucountiyneeds
uninliustiuctuienetwoikolsociulpiotectionmeclunismsbywliclto
distiibutelinunciuliesouicestoulltleneedygioupsintlepopulution.
Sudly, Iust us muny countiies luve weuk plysicul inliustiuctuie,
so too do muny countiies luve pooily developed sociul piotection
inliustiuctuie. Tlis is lumpeiing goveinments’ ubility to uccomplisl
tleliveobIectivesolsociulpiotectionmentionedeuiliei.Tlepioblem
willbesolvednotIustbycommittingmoielinunciuliesouicestosociul
piotection—tleie must be lundumentul ieloim to tle institutions ol
sociulpiotection,includingpensionsystems,leultlcuielinuncingund
deliveiy,tiunsleipiogiums(includingconditionulcusltiunsleis),und
unemploymentbenelits.Weneedtostepbuckundusk“Howslould
weieloimouisociulpiotectionpiogiums?”Asuliistieply,wesuggest
tlelollowing.
Principles for reforming social protection
Munyoltleclullengestlutdevelopingcountiiesluceinmukingsociul
piotectionellectiveintlesloitiunuieidenticultotleclullengestley
luceinmukingitellectiveintlelongiun.
Historical capacity determines future
orientation
Tle scule und composition ol tle sociul piotection components ol
goveinments’ iecent liscul stimulus puckuges uie veiy likely to be
stiongly inlluenced by tle countiy’s pieciisis level ol institutionul
cupucityunditsmenuolsociulpiotectionpiogiums—youwoikwitl
wlutyou’vegot.Tleieloie,munylow-incomecountiiesuietloseleust
likelytoluvesuclcomponents.Also,tlepieciisismixolsociulpiotec-
tionpiogiumsinlluencestlecompositionoltlestimulus.Foiexumple,
countiies witl newly developed conditionul cusl tiunslei piogiums
muyielymoieleuvilyonsuclmeclunisms,wlilecountiieswitlout
suclcupucitiesmuyielyonoldeistundbys.
Further need for reforms
Tlispointisnotolmuclconsolutionoiuseintlesloitiun.Youdo
woik witl wlut you’ve got, und so witl iespect to liglting tlis liie,
munycountiiescundonobetteitlunpumpusmuclwuteiustleycun
tliougl tle existing pipes. But tlis point does luve implicutions loi
tlemediumtolongiun.Andsincetleiegionlusseentwobigecono-
micciisesuboutudecudeupuit,itisnotuquestionolil,butwlen,tle
268 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
nextciisiswilllit.Goveinmentsmustwoikontlelundumentulissues
olgettingtlebusicudministiutiveinliustiuctuieundpiogiummenu
olsociultiunsleipiogiumsiiglt,now.
Somecountiiesluveseizedtleoppoitunityoltleciisisundengu-
gedinmuIoiieloimsoltleiisociulpiotectionsystems.InMongoliu,
loiexumple,tlegoveinmentisieloimingitssociulpiotectionsystem
tobecomemoietuigeted.IntlePRC,newleultlundpensionsuswell
us low-cost lousing sclemes uie being upsculed us puit ol tle liscul
stimuluspuckuge.(Buttlesepiogiumsludbeenpilot-testedeuiliei.)
In Viet Num, discussions on tle stiutegy loi tle next 10 yeuis weie
iecently intensilied to ullow loi moie iudicul ieloims in tle existing
sociulpiotectionsystemundconcentiutionolpiogiums.
Sixmuinclullengesinieloimingtlebusicudministiutiveinlius-
tiuctuiemeiitemplusis.
1. Auditing basic requirements
Tleliistclullengeistlecollectionolinloimution.Tlisinvolvesdeve-
lopingtlecupucitytomeusuielowmunylouseloldsundindividuuls
lullbelowtlepoveityline,tlemugnitudeoltleiiincomelosses,tle
impuctolsucltiunsitionsonpuiticuluilouselolddecisions(suclus
clildien’s sclooling, leultl seivices utilizution, sociul seivices utili-
zution,tiunsitionsliomloimultoinloimulwoik),undtlesizeoluny
goveinmentbenelitsieceived.
Tliscupucityslouldbesullicienttodetectsloit-iunvuiiutionsin
tleselouseloldoutcomessotlutgoveinmentscunluveinloimution
ontleextentundspeedoliecoveiy(oiluckolit)liomuciisis,uswell
us tle degiee ol ellectiveness und gups in its iesponse. Inloimution
needs to be collected not only on individuuls und louselolds but
on sclools, leultl systems, und vuiious units ol goveinment. Wlut
is impoitunt is to keep tiuck ol wletlei expendituies on vitul sociul
piogiumsuiebeingieduced,undwletleitlequulityundquuntityol
supplyolvitulsociulseivicesuiedeclining.
2. Improving targeting for expenditure
rationalization
Asecondclullengelustodowitlimpiovementsintuigeting.Innoi-
multimes,tleioleoltuigetingistolindtlepooiestinoideitomini-
mizeeiioisolinclusionundexclusion(eiioisinpiovidingbenelitsto
tlenonpooiundluilingtopiovidebenelitstootleiswlouiepooi).
Duiingciises,tlegoulistolindtlosewitluliglmuiginulpiopen-
sitytoconsumeiutleitluntosuve.Tlesesepuiutegoulsuieinluct
luigelyieconciledbecuuseitiswidelyiecognizedtluttlepooiluve
269 Global crisis and fiscal space for social protection
uligleipiopensitytospendtluntleweultly.Impiovedtuigetingis
ulsoimpoitunttoiutionulizeexpendituies,usutooltowinoveiminis-
tiiesollinuncetotle“lisculpiudenceview”olsociulpiotection.
FiomuKeynesiunmucioeconomicpeispective,expendituiesmut-
teibecuusetleyiuisesloit-teimdemundloigoodsundseivices.But
liom u long-iun micioeconomic peispective, ceituin cutegoiies ol
expendituiesespeciullymutteibecuusetleyyieldlong-teimbenelits,
und becuuse ieductions in tlese cutegoiies uie dillicult oi costly to
ieveise.Exumplesincludeinvestmentsintleleultlundeducutionul
lumun cupitul ol tle young, becuuse once tle young uie tuken out
olsclooloisulleileultldeclines,tlecostsoliecoveiingliomtlese
setbucksuieoltenconsideiublygieuteitluntleiesouicesiequiiedto
pieventtlesesetbucksintleliistpluce.Inuddition,tlenegutivelong-
iunimpuctolsuclsetbucksoneconomicgiowtlisleuvy.Sociulpio-
tection piogiums need to be uble to identily vulneiuble louselolds,
und to be uble to diiect iesouices ol sullicient mugnitude to piotect
louseloldsliommukingsuclnegutiveudIustments.
3. Keeping it simple
Atliidclullengeistogivepiioiitytosimple,unilied,nutionulsociul
piotection piogiums ovei complex, liugmented, und locul ones. Few
iesouicesundlimitedcupucityimplytlutcountiiesslouldtiytouvoid
multipleloculsociulpiotectionpiogiumstlutluveoveiluppingobIec-
tives und beneliciuiies, und tlut iequiie multiple tuigeting meclu-
nisms, iegistiies ol beneliciuiies, und monitoiing und evuluution
liumewoiks, etc. Unless tleie uie substuntiul iegionul dilleiences in
pieleiencesoiciicumstunces,sucluputclwoikisunlikelytocompuie
luvoiublywitlnutionulpiogiums.
4. Focusing on doable measures that protect
against life risks
Alouitlclullengeistlutolmuximizingteclniculelliciencyoimini-
mizing vuiious udministiutive und tiunsuctions costs. Fiscul spuce
notwitlstunding,tlemugnitudeolgoveinmentullocutionsloisociul
piotectionisclionicullyinudequutevis-u-vissociulpiotectionsneeds.
Insuclucontext,uclievinggieuteisociulpiotectionisuslikely,ilnot
moielikely,tocomeliomincieusingtleelliciencyolgivenlevelsol
sociulpiotectionexpendituiestluninincieusingtlesculeolspending.
Indeed, it seems tlut tle politicul suppoit loi incieused spending is
endogenous witl iespect to levels ol teclnicul elliciency: tle moie
teclnicully ellicient oi cost-minimizing u nution’s sociul piotection
inliustiuctuie,tlemoiepoliticullypulutubleitistoincieusetlesociul
270 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
piotectionbudget.Tlusteclniculelliciencynotonlygivesmoiebung
loitlebuck,butcungeneiutepoliticulsuppoitloimoiebucks.Among
uieustlutneedlocusuiecomputeiizutionolinloimutionsystemsund
iecoidkeeping,ieducingcoiiuption,impiovinggoveinunceundpublic
linunciul munugement, stiengtlening woikllow und benelit-deliveiy
meclunisms,undupgiudingstullskills.
5. Understanding the political economy
Aliltlclullenge(tlouglsomemigltuiguetlutitistleliist),isto
enguge witl tle politicul economy ol ieloiming sociul piotection.
Economic ciises tend to ollei sloit peiiods ol ielutively widespieud
politicul suppoit loi sociul piotection. Responses—puiticuluily to
people’sneeds—uieoltenpoliticullydeteimined,especiullywlentle
economicciisislullswitlinutimespunolpie-electionpeiiods(usin
Indonesiu, tle Plilippines, oi Tluilund) oi in tle piepuiution ol tle
next S- oi 10-yeui plun (us in tle PRC, Indiu, oi Viet Num). Hence,
suppoit loi sociul piotection cun be quite sloit-lived depending on
low quickly tle economy iecoveis, especiully wlen tle economic
leultlolpoliticullypoweilulelitesbouncesbucklusteitluntloseol
tlepooi,oiwletleiotleiissuesgiubtlespotliglt.
Yet ieloims to sociul piotection institutions iequiie u long-teim
commitment,unditseemsincieusinglycleuitlutsuclieloimsinvolve
uttentionnotIusttoteclniculundeconomicuspectsolpolicy,butulso
to tle politics ol ieloim. Tle luiluie ol muny well-conceived sociul
piotection policy initiutives cun be tiuced to inudequute undeistun-
dingol,undengugementwitl,poweilulstukeloldeisundentiencled
inteiests. Tlis element is olten exuceibuted by insullicient unulysis
oltlelegislutiveundinstitutionuldynumics,undoltlecultuiulund
vuluesystems.Aboveull,ieloimolsociulpiotectionmustbepiemised
onubioud-busedundeistundingundowneislipoltleieloimugendu
umongtlepopulution.
Alltlisiequiiessystemuticstudyoltleexistingpoliticuleconomy
oliedistiibutionundsociulpiotection;unussessmentoltleexistence
und degiee ol politicul spuce loi sustuined ieloim und tle politicul
clunces ol success loi tle dilleient elements ol tle ieloim ugendu;
undustiutegicplunloiieloimtlutexplicitlyincludespoliticulstiute-
giesloinuvigutingtleieloimugendutliougltlepoliticuleconomy.
6. Increasing social insurance
A sixtl clullenge involves clunging mindsets on sociul piotec-
tion. Mucl ol tle undeistunding emplusizes its ex post iedistiibu-
271 Global crisis and fiscal space for social protection
tive nutuie—distiibuting iesouices to tle pooi, implicitly ultei tle
tiunsitiontopoveitylustukenpluce.Rutlei,umuclmoiesoplisticu-
tedconceptuulizutioniswuiiunted,tliouglexunteussessmentoltle
needsoltlevulneiublepooi,tleellicienciesolexistingpiogiums,und
tleuvuilubilityollinuncingsouices.Olpuiticuluiimpoitunceissociul
insuiunceusumuIoitoolloisociulpiotection,usitnotonlyuddiesses
idiosynciutic individuul- und louselold-level slocks, sucl us unem-
ployment,illness,disubility,oideutl,butulsocovuiiuntiiskstlutlit
communities,countiies,continents—eventlewlolewoild.
Suclluige-sculecovuiiuntiisksuiepeisistentund,intlutsense
ut leust, piedictuble. Tle cuiient globul ciisis wus pieceded by tle
globulloodundeneigypiiceciisisin2007und2008,tleAsiunlinun-
ciulciisisoltlelute1990s,uswellusvuiiousoilslocks,globulieces-
sions,unddebtciisesintle1970sund1980s(nottomentionnutuiul
disusteis, lloods, diouglts, euitlquukes, epidemics, und climute
clungeellects).
Sociulinsuiuncewouldbeunellectivetooltopiotectuguinstsucl
slocks,wliclulwuyslittlepooiestluidest.Sociulpiotectionusex
unteinsuiunceuguinstluige-sculecovuiiuntiiskisnolongeiunubs-
tiuctideu,butuconcieteclullengetlutmustbeuigentlyuddiessed.
Butuliiststugeoluddiessingtleclullengeolinsuiinguguinstpiedic-
tubleiisksislullyundeistundingtleimpuctolsucliisksontlepooi,
tleiicopingmeclunisms,culculutingcostsundbenelits,unddeteimi-
ninginstitutionulstiuctuies.
What roles can donors play?
Donoisuieinupositiontoboostsociulpiotectionconditionsbyobsei-
vingtlelollowingpiinciples:
Do no harm. Tlis piinciple is elementuiy yet still woitl stuting.
Stiglitz (2009) uigues tlut in tle 1997–1998 Asiun ciisis, IMF’s
ussistunce cume witl conditions tlut mude tle ciisis woise. But, us
obseived by Associution ol Soutleust Asiun Nutions (ASEAN) und
tleWoildBunk(2009),itseemstlutsociulpiotectionlusbeensul-
liciently muinstieumed in tle lust decude loi its inclusion in liscul
stimulus piogiums to become less contioveisiul. Still, tle iesouices
undexpeitiseiequiiedloilong-teimpiogiessonieloimpiioiitiesmuy
be beyond tle ieucl ol muny low-income countiies, peilups some
middle-incomeones.Evenbyouiiouglestimutes,notullAsiuneco-
nomies luve liscul spuce loi sociul piotection, und tle iecent cii-
sis muy luve Ieopuidized wlut pie-ciisis liscul spuce existed in tle
countiies tlut did. As goveinment budgets sliink, tle quuntity und
272 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
quulityolsuppliesolciiticulsociulseiviceswilldecline,witliesultunt
impoveiislmentundieveisulolpiogiessmudetowuidtleMillennium
DevelopmentGouls.
Make a consistent commitment. Tleie muy be nutionul politicul
suppoitloiincieusedsociulpiotectionexpendituiesintlesloitiun
but peilups not in tle long iun. Donois cun pluy un invuluuble iole
by muking u long-teim commitment to piovide lunding loi sociul
piotection.
Learn first through a social protection audit. A uselul wuy to
conceptuulizetleioudtolundumentulsociulpiotectionieloimusing
tleliumewoikolusociulpiotectionuudit,wliclinvolvestlieesteps:
‡ Measure carefully people’s real risks and vulnerabilities.Donois
musttukeseiiouslytleclullengeolmeusuiing,witlstutisticul
soplisticution und leuvy ieliunce on populution-level micio-
dutu, ull tle vuiious vulneiubilities luced by tle populution.
Tley must meusuie not only wlicl vulneiubilities exist, but
low muny people uie ullected by eucl one, tle size ol tle
vulneiubilitylucedbytleiepiesentutivepeison,wletleitlis
sizeisunincomesloitlullliomupoveitylineumongtleel-
deily populution, oi tle uveiuge cost ol cutustioplic illness,
wleievulneiubilitiestendtobegeogiuplicullyconcentiuted,
tle duiution ol tle vulneiubilities, und so on. Biggei vulne-
iubilities get liglei piioiity, smullei vulneiubilities get lowei
piioiity.Wemigltculltlistlepopulution’s“demund”loiso-
ciulpiotection.
‡ Assess existing programs. Tle next step is to ussess tle
existing sociul piotection uctivities, in teims ol tle numbei
ol beneliciuiies tley ieucl, tle vulue ol tle benelits pei
beneliciuiy,undvuiiousmeusuiesolpiogiumquulitylikecost
elliciency, tuigeting elliciency, und politicul populuiity. We
migltculltlistle“supply” olsociulpiotection.
‡ Determine the space for unmet needs and for system reforms.Tle
dilleiencebetweendemundundsupplyistleextentolsociul
vulneiubilitytlutiscuiientlynotmetbyexistingsociulpiotec-
tionelloits.Tlisistleunmetneedloisociulpiotection,undit
isleietlutnewinitiutivesmustbepiioiitized.Donoisslould
enumeiuteulltletlingstlutmigltbedonetouddiesstlese
unmetneeds(sucluspensionieloims,expunsionolleultlco-
veiuge,undconditionulcusltiunsleis),euclwitlunestimute
olcostsuswellusbenelits.Tlesecostsuienotlimitedtodollui
costs, but ulso covei costs in teims ol, loi exumple, udminis-
tiutivecupucity,politiculcupitul,undleukuge.Tlebenelitsuie
273 Global crisis and fiscal space for social protection
tle mugnitude ol tle vulneiubilities tlut eucl policy will eli-
minute: tle moie people u policy ieucles, oi tle luigei tle
benelitpeipeisonieucled,tlegieuteitlebenelits.
A new locus umong donois would see sociul piotection us un
inliustiuctuie-likeinstiumentoleconomicgiowtlundwoulduggies-
sivelymuiketlounsloitleexpunsion,ieloim,undmodeinizutionol
sociulpiotectionpiogiums,includingtletiuiningolpiolessionulsund
tlebuildingoludministiutivecupucity,includingtlecupucityloibet-
teituigeting.Tlisoppoitunityulsoinvolvesencouiuginggieuteipui-
ticiputionoltlepiivutesectoiintleexpunsionundiutionulizutionol
sociulpiotection.
GivenADB’siecentemplusisonmukinggiowtlunddevelopment
intleiegionmoieinclusive,undgivenitsemplusisoniegionulcoope-
iution,ADBcouldpluyustiongeiioleinsociulpiotectionby(i)iebiun-
dingsociulpiotectionusunecessuiyinvestmentloiinclusivegiowtl,
(ii) developing innovutive knowledge pioducts on sociul piotection
loitleiegion’sneed,includinguddiessingclimuteclungeunddisus-
teiinsuiunce,(iii)investinginsociulpiotectioninliustiuctuie(inclu-
dinginloimutionteclnologyloisociulinsuiunce),und(iv)piomoting
moieinnovutiveemploymentsclemesundsociulussistuncepiogiums
eitleiinitsbudgetsuppoitoipioIectlending.Sociulpiotectionispui-
ticuluilyimpoituntloiAsiu’emeigingmiddle-incomecountiieswleie
economicgiowtlisligl,buttlebenelitsolsuclgiowtloltenleuve
outtlepooiundvulneiuble.Insuclcountiies,unemplusisbyADB
on investments in tlose countiies, moie on tle sociul side tlun tle
economicside,wouldieuplundsomelong-teimguins.
References
Buuei, A., R. Husun, R. Mugsombol, und G. Wun. 2008. Tle
Woild Bunk’s new poveity dutu: Implicutions loi tle
Asiun Development Bunk. ADB Sustainable Development
Working Paper Series, No. 2. ADB, Munilu. www.udb.oig/
Documents/Piesentutions/New-Poveity-Estimutes/Poveity
-Dutu-Implicutions.pdl
Asiun Development Bunk (ADB). 2008. Social Protection
Index for Committed Poverty Reduction. Volume 2: Asia.
www.udb.oig/Documents/Books/Sociul-Piotection/Volume2/.
Munilu.
———. 2009u. The global economic crisis: Challenges for developing
Asia and ADB’s response. Munilu. www.udb.oig/Documents/
274 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Repoits/Economic-Ciisis/deluult.usp, uccessed 20 Septembei
2009.
———. 2009b. Key Indicators for Asia and the Pacific 2009. Munilu.
www.udb.oig/Documents/Books/KeyIndicutois/2009/
deluult.usp(uccessed20Septembei2009).
ASEANundWoildBunk.2009.ASEANussessmentontlesociulimpuct
oltleglobullinunciulciisis.Pupeipiesenteduttlewoikslop
on tle ASEAN ussessment on tle sociul impuct ol tle globul
linunciulciisis,oigunizedbytleASEANSecietuiiut,Bungkok,
8–9Decembei.
Inteinutionul Luboui Oigunizution (ILO). 2008. Cun low-income
countiies ulloid busic sociul secuiity? Social Security Policy
Briefings Pupei 3. Genevu. www.ilo.oig/public/englisl/
piotection/secsoc/downlouds/policy/policy3e.pdl
ILO und Inteinutionul Institute loi Luboui Studies (IILS). 2009. The
financial and economic crisis: A decent work response. Genevu.
www.ilo.oig/public/englisl/buieuu/inst/downloud/tuckling.
pdl(uccessed20Septembei2009)
InteinutionulMonetuiyFund(IMF).2009.Regional economic outlook:
Asia and Pacific. www.iml.oig/exteinul/pubs/lt/ieo/2009/
upd/eng/uieo0S09.pdl(uccessed20Septembei2009)
Stiglitz, J. 2009. Tle globul ciisis, sociul piotection, und Iobs.
International Labour Review148(1–2).
Zlung, Y., N. Telen, und A. Ruo. 2009. Sociul piotection in liscul
stimuluspuckuges:Someevidence.UNDPOlliceolDevelopment
Studies. New Yoik. www.undp.oig/developmentstudies/docs/
sociulpiotectionlisculstimulussept2009.pdl
275
Addressing unemployment and
poverty through infrastructure
development as a crisis-response
strategy
Chris Donnges
1
Introduction
Economies uie being boosted by tle goveinment stimulus tley uie
gettinginiesponsetotlelinunciulundeconomicciisistlutlusswept
tliougltlewoild.SomeoltleemeigingeconomiesinAsiuundtle
Pucilic seem to be giowing uguin und uie muking u suipiising ieco-
veiy. Tlis iebound lus seveiul cuuses und lutuie unulysis no doubt
willussesstleielutiveimpoitunceolvuiiousluctois.Boostingdomes-
tic spending tliougl economic stimulus meusuies will ceituinly be
umongtlese.Aggiessivestimuluspuckugesindeeduielelpingievive
domesticdemundwlilesociulsuletynetsluvetlepotentiultomiti-
gutetlenegutiveimpuctsoltleciisisontlepooiundvulneiuble.In
udditiontoboostingsloit-teimeconomicgiowtlundincomegeneiu-
tion,tlesemeusuiescunulsobeusedtouddiesslongei-teimdevelop-
ment obIectives sucl us Iob cieution, poveity ieduction, und climute
clungeuduptution.
Mostcountiiesintleiegionuieinneedolluitleiinliustiuctuie
development.Asluieoltleeconomicstimulusspendinglustleieloie
beenullocutedtoinliustiuctuiepioIects.Investmentsininliustiuctuie
encouiuge(locul)developmentbyimpiovinguccesstogoodsundsei-
vicesundieducingtiunspoitundtiunsuctioncosts.Tleycun,bytle
sumetoken,ulsobeusedusustiutegyloigeneiutingloculincomeby
encouiuging tle use ol employment-intensive metlods loi constiuc-
tion,ielubilitution,undmuintenunce.
Tlis cluptei looks ut inliustiuctuie development und public
woiks us u component ol ciisis-iesponse meusuies in loui selected
countiiesunddiscussestlepotentiulloiIobcieutiontliougltleuse
1
CliisDonngesisincluigeoltleASISTAsiuPucilicPiogiummeuttleInteinutionul
LubouiOigunizutioninBungkok.
276 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
olemployment-intensivemetlods.Itbiiellytouclesuponulewkey
issuestobeconsideiedwlenusingsuclmetlodsundconcludeswitl
usectiononiesouiceiequiiements.
Development issues, challenges, and impact
TleglobullinunciulundeconomicciisislusbecomeuglobulIobsciisis.
Unemploymentisiisingundtlenumbeiolwoikingpooiisincieusing.
Globulunemploymentcouldincieusebyutleust38millionbytleend
ol 2009, uccoiding to tle Inteinutionul Luboui Oigunizution (ILO).
Foi Asiu, tlis yeui loi tle liist time in iecoided listoiy, tle numbei
olunemployedmuypuss100million.Eveniltleiesumedeconomic
giowtl continues, employment could tuke yeuis to iecovei to pie-
ciisislevels.Intlepooieidevelopingcountiiesespeciully,wleiesociul
suletynetsuiescuice,lossolieguluiincomecunluveimpoituntdeve-
lopmentconsequencesundwillputmoiepeopleintopoveity.
Decline in tle economic giowtl ol developing economies diives
udditionul people into poveity. Even beloie tle ciisis, Asiu still lud
two-tliidsoltlewoild’spooi.ILOleuistluttleciisismuyiesultintle
numbeisolpeopleinextiemepoveityiisingby200millionielutiveto
2007.WoildBunkieseuiclestimutestlut,in2009ulonewoildwide,
us muny us 90 million moie people could be tiupped in poveity
2
us
economicgiowtlslowsundtlutulmostone-tliid(29%)olulldeve-
lopingcountiies—undtlislistincludesvuiiouscountiiesinAsiu—will
be“ligllyexposed”totlepoveityellectsoltleciisis(Febiuuiy2009).
TleAsiunDevelopmentBunk(ADB)estimutestluttlepioIectedgioss
domesticpioduct(GDP)declineintleiegionwilliesultin2009witl
ubout 60 million moie S1.2S-u-duy pooi und 80 million udditionul
vulneiublepeoplelivingundeiS2-u-duyinAsiucompuiedtouscenu-
iio wlen tle ligl giowtl iutes ol 2007 would luve continued. Tle
iespective liguies loi 2010 would be uiound 100 million udditionul
S1.2S-u-duypooiund130millionmoievulneiublepeople.
3
Itisuppu-
ienttluttleciisiswillundosomeoltleiegionuluclievementsmude
inpoveityieductioniniecentyeuis.
Countiiesuieullectedindilleientwuysbytlecuiientciisis.Atiisk
inmostcountiies,lowevei,uietlosegioupstlutweieulieudyvulne-
iublebeloietleciisisundluvelewcopingmeclunisms:tlewoiking
pooiundtleiidependentlumilies.Ciisis-iesponsemeusuiesneedto
tuigetvulneiubleiuiulunduibunpeoplewloseliveliloodconditions
2
www.woildbunk.oig/linunciulciisis/liist-slide.ltm=(uccessedAugust2009).
3
www.udb.oig/Economic-Ciisis/Ciisis-Impuct-People.usp(uccessedAugust2009).
277
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
uie likely to be udveisely ullected by tle ciisis. Tlese gioups olten
iequiie udditionul sociul ussistunce us tley uie olten excluded liom
economicstimuluspuckugeswleiesuclpuckugesexist.
To uddiess tle unemployment und poveity clullenges exuceibu-
tedbytleciisis,tlispupeidiscussestleuseolemployment-intensive
metlodsininliustiuctuiedevelopmentundpublicwoiks,wliclmuke
up un impoitunt component ol vuiious economic stimulus puckuges
und sociul sulety nets in Asiu. It ulso biielly toucles upon tle luct
tlut stimulus puckuges slould not only geneiute sloit-teim econo-
mic giowtl but ulso uddiess longei-teim issues sucl us poveity und
climuteclunge.
Public sector and other responses:
policies and programs
Inteinutionuloigunizutionsundgoveinmentsneedtowoiktogetleito
Iointlyuddiesstlecuiientlinunciulundeconomicciisisundtomitigute
itsimpuct.TleWoildBunkin2009putoutseveiuliecommendutions
on possible iesponses to tle ciisis. To mitigute tle potentiul impuct
onluboidemundundemployment,itiecommendedtlut“low-income
countiiesluveleweioptions(compuiedtomiddle-incomecountiies)
und must iely on udministiutively less demunding piogiums tlut
contuinunimpoituntsell-tuigetingcomponent—uboveull,onpublic
woiks und tuigeted micio-ciedit sclemes” (Woild Bunk 2009). ADB
is ulso suppoiting tle iegion in cuslioning tle sociul impuct ol tle
ciisis, witl suppoit loi public investment piogiums in inliustiuctuie
undsociulsectois.ADB’sciisis-ielutedlendingisexpectedtoincieuse
bymoietlunS10billionin2009–2010.
4

InFebiuuiy2009,tleILO/ADBHigl-LevelAsiunRegionulFoium
on Responding to tle Economic Ciisis, leld in Munilu, Plilippines,
piovided un oveiview ol tle economic und luboi muiket impucts ol
tle ciisis und tle nutionul policy iesponses in tle iegion. It culled
loi iupid uction to suppoit employment und income und stimulute
consumptionunddomesticdemund,includingmeusuiestomuximize
tleemploymentimpuctollisculstimuluspuckuges,piotecttlepooi
undtlevulneiuble,undsuppoitsmullundmedium-sizedenteipiises
undu“gieeniecoveiy.”Muiniecommendutionsincludedtledevelop-
ment und implementution ol employment-geneiution uppioucles to
tuigettlevulneiuble.
4
www.udb.oig/Economic-Ciisis/deluult.usp,uccessedAugust2009.
278 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
In June 2009, ubout 4,000 iepiesentutives ol goveinments und
ol woikeis’ und employeis’ oigunizutions met in Genevu duiing tle
unnuulInteinutionulLubouiConleiencetodiscussellectiveiesponses
totlegiowingimpuctoltleciisisonemployment,sociulpiotection,
undtlewoildolwoik.TledelegutesudoptedtleGlobulJobsPuct,
wliclimpliesucommitmentbyILOtomukeemploymentundsociul
piotectionucentiulelementolulleconomicundsociulpolicy.Tosup-
poit Iob cieution und lelp people into woik, tle puct iecommends
vuiious options, including stiutegies using public employment guu-
iunteesclemesloitempoiuiyemployment,emeigencypublicwoiks
piogiums,undotleidiiectIob-cieutionsclemes.
In tle London Summit in Apiil 2009, G20 leudeis usked ILO to
ussessuctionstukenutcountiyleveliniesponsetotleciisisundiden-
tily wlut is iequiied loi employment cieution und sociul piotection.
ILOtleieuponussessedemploymentundsociulpiotectionpolicyies-
ponses in S4 countiies, looking ut 32 specilic meusuies giouped in
loui uieus.
S
Tle iepoit submitted to tle G20 meeting in Pittsbuigl
(24–2S Septembei 2009) slows tlut on uveiuge eucl suiveyed
countiyludtuken10newmeusuiesliommid-2008tliouglmid-2009
(ILO2009u).Itconcludestlut47outolS4countiiesluveincieused
spendingoninliustiuctuie(tlemostliequentmeusuie).Only18out
ol S4 countiies, lowevei, luve upplied employment ciiteiiu to tleii
inliustiuctuiespending.Tleiepoitnotestluttleliequencyolpublic
investmentsininliustiuctuieisliglumongmiddle-incomecountiies.
Lowei-incomecountiiesludtukenmoiemeusuiestlunligl-income
countiies to expund sociul piotection. Tle iepoit ulso suggests tlut
uction tuken demonstiutes u cleui concein loi piotecting toduy und
piepuiingtlegioundloiulutuieiecoveiyoleconomicgiowtl.
As u iesponse to tle ciisis, vuiious countiies in Asiu luve intio-
duced economic stimulus puckuges oi otlei meusuies to boost tleii
economies,usnowdiscussed.Tlesemeusuiesoltenleudtoincieused
spending on inliustiuctuie tliougl public woiks und piovide subsi-
diestobusinessesundlow-incomelouselolds.
Indonesiu lus done ielutively well in escuping tle impuct ol tle
ciisis. To limit moie substuntiul dumuge to tle economy, lowevei,
tle goveinment uppioved und lus stuited to disbuise un economic
stimulus puckuge woitl Rp73.3 tiillion, witl moie tlun 8S% eui-
muikedloilisculstimulus.Tlisincludesuninliustiuctuiecomponent
S
Meusuies to stimulute luboi demund, luboi muiket policies to piotect Iobs und
suppoittleunemployedundIobseekeis,meusuiestoexpundsociulpiotectionund
loodsecuiity,undmeusuiestostiengtlensociuldiulogueundiigltsutwoik.
279
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
ol Rp12.2 tiillion. Tle goveinment lus set u seiies ol conditions loi
piogiumstlutcunbelinuncedliomtlesestimuluslunds:unessentiul
oneistlutpioIectsmustbeluboiintensive.
Cumbodiuwusvulneiubletotleimpuctsoltleciisistliouglits
opennesstotiudeundinvestment.Poveityiswidespieud,puiticuluily
iniuiuluieus,undtle30%oltlepopulutionlivingundeitlepoveity
line luce new luidslips, wlile tle neui-pooi uie ut iisk ol spiiuling
intopoveity.Cumbodiuluckstlelisculspucetoputtogetleiunecono-
micstimuluspuckugesimiluitoIndonesiu’s.Tlegoveinmentinsteud
decided to develop u stiutegy loi sociul piotection witl its develop-
mentpuitneis.Tlestiutegylusumenuolpolicyoptionsbotltocieute
sociulsuletynetstlutcunieducetlenegutiveimpuctoltleciisison
tlepooiundvulneiubleingeneiulundtopiovideuspiingbouidloi
tlepooitoescupelong-teimpoveity.
TlePlilippines’dependenceonexpoits,loieigninvestments,und
loieign louns mude it vulneiuble to tle ciisis. Tle piesident issued
un executive oidei munduting ull goveinment ugencies to ieseive
1.S% ol tleii muintenunce, opeiuting, und otlei expenses loi emei-
gency employment. Tlese ieullocutions would be used to liie some
1S0,000peopleliomumongtlepooiundtlosedisplucedbytlecii-
sis. Locul goveinment units weie ulso uiged to geneiute suvings loi
emeigency employment. In uddition, uutloiities uie implementing
CompielensiveLiveliloodEmeigencyEmploymentPiogiums.
Inliustiuctuieinvestmentswillmukeupuluigepuitoltliscom-
bined stimulus puckuge und tle countiy expects tlut tlis udditionul
investmentininliustiuctuiewillseiveustlebestundmostellective
stimulustopump-piimetleeconomy,cieuteIobsundliveliloods,und
piovidemussiveemployment.
InIndiu,86%olIobsuieintleinloimulsectoi,wliclismostvulne-
iubletotleciisis,puiticuluilycusuulluboieisinuibunundsemi-uibun
uieus. Tle Nutionul Commission loi Enteipiises in tle Unoigunized
Sectoi lus piepuied u iepoit iecommending uctions to mitigute tle
impuctsoltleciisis.Aieusloiimmediuteuttentionincludeenluncing
pio-pooipublicinvestmentiniuiulinliustiuctuieundintioducingun
uibun employment guuiuntee piogium. Indiu ulieudy lus nutionul
piogiumstoimpioveinliustiuctuieundcieuteemployment,undtlese
couldnowbeusedtomitigutetlenegutiveimpuctsoltleciisis.
Nutionwide piogiums sucl us tle Nutionul Ruiul Employment
GuuiunteeSclemeundtleRuiulRoudNetwoikImpiovementScleme
(Piudlun Muntii Gium Suduk YoIunu oi PMGSY) covei ulmost ull
tlestutesinIndiuundcould,witllittleimpiovisutionoitilttowuid
employment-intensive uppioucles, cieute udditionul Iob oppoituni-
ties loi ciisis-ullected populutions. It is ulso pioposed (by tle ILO)
280 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
to luuncl un Uibun Employment Guuiuntee Pilot Scleme to extend
Indiu’siuiulsociulsuletynettouibunuieuswleiemostciisis-ullected
people live oi woik. (Tleie luve ulso been discussions on sucl un
extension witlin tle Goveinment ol Indiu.) Like tle Nutionul Ruiul
Employment Guuiuntee Scleme, tlis scleme could piovide guu-
iunteedwoikloi100duysinuyeuitobelow-poveitylinelumiliesin
uibunundsemi-uibunuieus.
Recommendations for the short
and medium term
Economicstimuluspuckugesundsociulsuletynetspiesentunoppoitu-
nitytoenluncetleIobcontentolciisis-iecoveiyiesponses.Countiies
witlsullicientlisculspuceluveputtogetleistimuluspuckugeswlile
pooieicountiiesdependmoieoninteinutionulussistuncetodevelop
tleii sociul sulety nets to iespond to tle cuiient ciisis. Tle size ol
tlelisculstimuluspuckugesvuiiesliom1%ol2009GDPinVietNum
to 12% ol 2009 GDP in tle People’s Republic ol Clinu (Asia Pacific
Update, Muy 2009).
6
Investments in inliustiuctuie (public woiks)
uiegeneiullyumuincomponentoltlesemeusuies.Tlispiesentsun
oppoitunity to cieute employment tliougl employment-intensive
metlodsduiingconstiuctionundmuintenunce.
AccoidingtouiecentstudybytleWoildBunkontleIob-cieution
potentiulolseveiullisculstimuluspuckugestlutuiebeingimplemen-
tedinsomeoltleluigeieconomiesinLutinAmeiicu,tleemployment-
geneiutionpotentiuloltleinliustiuctuieinvestmentsisubout40,000
loieveiyS1billioninvested(Tucketul.2009).Accoidingtotlestudy,
tlelisculstimuluspuckugestlutuiebeingimplementedintleiegion
“luvetlecupubilitytogeneiuteutleusttwomillionnewIobspeiyeui
intleuieuolpublicwoiks,oneoltlepiimuiyinvestmenttuigetsol
tlestimuluspuckuges.”
7
ItestimutestlutwitltleS2Sbillionudditio-
nulstimulusinvestmentsininliustiuctuieubout2millionIobscould
begeneiutedintlesloitteim.Unloitunutely,ucompuiublestudyloi
Asiuisnotuvuiluble.
6
lttp://go.woildbunk.oig/0B8QITE7U0
7
lttp://web.woildbunk.oig/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22260926
-pugePK:642S7043-piPK:437376-tleSitePK:4607,00.ltml
281
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
Employment-intensivemetlodsluveindeedbeenusedloidecudes
to uddiess clullenges ol poveity und unemployment. Investments in
inliustiuctuiecieuteuuniqueoppoitunitytopiomotediiect,indiiect,
und induced employment in sectois wleie woiks cun be implemen-
tedusinguluboi-busedoiluboi-intensiveuppioucl,botliniuiulund
uibunsettings.Tlelocusoninliustiuctuieintlestimuluspuckugesis
onesucliecognitionundwitltlecuiientciisistleieisuguinustiong
cullloitliskindolinteivention.
Indonesia
TlecieutionolluigenumbeisolIoboppoitunitiesundtlestimulution
ol locul economic development uie coie obIectives undei tle econo-
micstimuluspuckugeinIndonesiu.Tleuseolemployment-intensive
metlodsussumestluttliswilliesultinudditionul(i.e.,inciementul)
employment benelits. Tle possible iunge ol sucl inciementul bene-
lits(bypiopoitionoltlevulueoltlewoiks)byusingemployment-
intensive metlods (compuied to equipment-bused metlods) undei
tleeconomicstimuluspuckugeinIndonesiuisslowninTuble1.Tle
dutuintlistubleiellectovei30yeuisolwoildwideexpeiiencewitl
tle upplicution ol employment-intensive metlods und teclnologies.
Activitiestlutuiemostielevuntundsignilicuntintlecontextoltle
obIectiveoltleinliustiuctuieinvestmentsundeitleeconomicstimu-
luspuckuge,undtlutluvetleluigestcompuiutiveIobcieutionudvun-
tuge,uieliglliglted.Tlelustcolumnindicutestlenumbeioldiiect
sloit-teim Iobs tlut cun potentiully be cieuted by upplying employ-
ment-intensiveuppiouclesundteclnologies.
Bused on tle composition ol ulieudy-ullocuted lunds loi inlius-
tiuctuie investments undei tle economic stimulus puckuge, un indi-
cutive estimute lus been mude ol tle udditionul diiect Iob cieution
potentiulwlenemployment-intensivemetlodsinsteudolequipment-
bused metlods uie used. Tlis estimute is piesented in Tuble 2. Tle
tubleulsoincludesunestimuteoltleudditionulindiiectIobcieution,
wlenusingemployment-intensivemetlodsinIndonesiu.Inteinutionul
expeiiencesslowtlutuspin-ollcummultiplieiluctoiol2.0isquite
common wlen employment-intensive uppioucles uie being used.
Foiequipment-busedmetlodstlisluctoiissignilicuntlylowei,intle
oideiol1.2S.
Tuble2slowstlutwlenemployment-intensivemetlodsuieused
loitlepoitloliooluctivities/pioIectstlutluvebeenidentiliedundei
tle inliustiuctuie component ol tle economic stimulus puckuge,
1.2millionudditionulIobscouldbecieuted.
282 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
T
a
b
l
e

1
:

C
o
m
p
a
r
i
s
o
n

o
f

d
i
f
f
e
r
e
n
c
e
s

b
e
t
w
e
e
n

e
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

a
n
d

e
q
u
i
p
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
s

r
e
g
a
r
d
i
n
g

d
i
r
e
c
t

j
o
b

c
r
e
a
t
i
o
n

(
l
o
i

s
e
l
e
c
t
e
d

u
c
t
i
v
i
t
i
e
s

w
i
t
l

d
e
m
o
n
s
t
i
u
t
e
d

m
e
d
i
u
m
-
t
o
-
g
o
o
d

p
o
t
e
n
t
i
u
l

l
o
i

u
p
p
l
y
i
n
g

e
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
l
o
d
s
)
C
o
n
s
t
r
u
c
t
i
o
n

s
u
b
s
e
c
t
o
r

a
c
t
i
v
i
t
i
e
s
E
q
u
i
p
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
(
%

l
u
b
o
i
)
E
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
(
%

l
u
b
o
i
)
A
v
e
r
a
g
e

a
d
d
i
t
i
o
n
a
l

b
e
n
e
f
i
t
s

e
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
s

(
%

l
u
b
o
i
)
A
d
d
i
t
i
o
n
a
l

d
i
r
e
c
t

a
n
n
u
a
l

s
h
o
r
t
-
t
e
r
m

j
o
b

c
r
e
a
t
i
o
n

u
s
i
n
g

e
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
s

(
w
i
t
l

R
p
1
2
.
2

t
i
i
l
l
i
o
n

i
n
v
e
s
t
m
e
n
t
)
a
R
u
r
a
l

a
n
d

u
r
b
a
n

r
o
a
d
s
(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
/
i
e
l
u
b
i
l
i
t
u
t
i
o
n

l
o
w
-
v
o
l
u
m
e

u
n
p
u
v
e
d

i
o
u
d
s

1
0

2
0
4
0

7
0
4
0
4
8
8
,
0
0
0
(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
/
i
e
l
u
b
i
l
i
t
u
t
i
o
n

l
o
w
-
v
o
l
u
m
e

p
u
v
e
d

i
o
u
d
s
S

1
S
2
0

S
0
2
S
3
0
S
,
0
0
0
R
o
u
t
i
n
e

o
l
l
-
c
u
i
i
i
u
g
e
w
u
y

m
u
i
n
t
e
n
u
n
c
e

o
l

u
l
l

c
u
t
e
g
o
i
i
e
s

o
l

i
o
u
d
s

u
n
d

i
o
u
t
i
n
e

m
u
i
n
t
e
n
u
n
c
e

o
l

u
n
p
u
v
e
d

i
o
u
d
s
S

1
S
7
S

8
S
7
0
8
S
4
,
0
0
0
S
o
c
i
a
l

i
n
f
r
a
s
t
r
u
c
t
u
r
e

(
s
c
h
o
o
l
s
,

c
l
i
n
i
c
s
,

m
a
r
k
e
t
s
,

e
t
c
.
)
(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
/
i
e
l
u
b
i
l
i
t
u
t
i
o
n
2
0

3
0
2
S

3
S
S
6
1
,
0
0
0
R
o
u
t
i
n
e

m
u
i
n
t
e
n
u
n
c
e
3
S

4
S
4
0

S
0
S
6
1
,
0
0
0
N
a
t
u
r
a
l

r
e
s
o
u
r
c
e

m
a
n
a
g
e
m
e
n
t

(
i
n
c
l
u
d
i
n
g

a
g
r
i
c
u
l
t
u
r
e
,

f
i
s
h
e
r
i
e
s
)
A
g
i
i
c
u
l
t
u
i
u
l

t
e
i
i
u
c
i
n
g

u
n
d

l
u
n
d

d
e
v
e
l
o
p
m
e
n
t
S

1
S
S
0

7
0
S
0
6
1
0
,
0
0
0
(
C
o
m
m
u
n
i
t
y
)

l
o
i
e
s
t
i
y

p
l
u
n
t
u
t
i
o
n

u
n
d

O
&
M
2
S

3
S
4
0

7
0
2
S
3
0
S
,
0
0
0
c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
283
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
C
o
n
s
t
r
u
c
t
i
o
n

s
u
b
s
e
c
t
o
r

a
c
t
i
v
i
t
i
e
s
E
q
u
i
p
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
(
%

l
u
b
o
i
)
E
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
(
%

l
u
b
o
i
)
A
v
e
r
a
g
e

a
d
d
i
t
i
o
n
a
l

b
e
n
e
f
i
t
s

e
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
s

(
%

l
u
b
o
i
)
A
d
d
i
t
i
o
n
a
l

d
i
r
e
c
t

a
n
n
u
a
l

s
h
o
r
t
-
t
e
r
m

j
o
b

c
r
e
a
t
i
o
n

u
s
i
n
g

e
m
p
l
o
y
m
e
n
t
-
i
n
t
e
n
s
i
v
e

m
e
t
h
o
d
s

(
w
i
t
l

R
p
1
2
.
2

t
i
i
l
l
i
o
n

i
n
v
e
s
t
m
e
n
t
)
a
W
u
t
e
i

u
n
d

s
o
i
l

c
o
n
s
e
i
v
u
t
i
o
n
1
S

2
S
4
0

7
0
3
S
4
2
7
,
0
0
0
F
i
s
l

p
o
n
d

d
e
v
e
l
o
p
m
e
n
t
1
0

2
0
7
0

8
0
6
0
7
3
2
,
0
0
0
F
l
o
o
d

p
i
o
t
e
c
t
i
o
n
,

i
i
v
e
i

t
i
u
i
n
i
n
g

w
o
i
k
s

u
n
d

d
i
u
i
n
u
g
e
1
0

2
0
4
0

6
0
3
S
4
2
7
,
0
0
0
(
C
o
m
m
u
n
i
t
y
-
b
a
s
e
d
)

g
r
a
v
i
t
y

i
r
r
i
g
a
t
i
o
n
(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n

u
n
d

i
e
l
u
b
i
l
i
t
u
t
i
o
n

1
S

2
S
4
0

7
0
3
S
4
2
7
,
0
0
0
C
l
e
u
n
i
n
g

c
l
u
n
n
e
l
s

u
n
d

i
e
s
e
i
v
o
i
i
s

o
l

l
u
i
g
e

i
i
i
i
g
u
t
i
o
n

s
c
l
e
m
e
s
1
0

2
0
S
0

8
0
S
0
6
1
0
,
0
0
0
E
l
e
c
t
r
i
f
i
c
a
t
i
o
n
,

w
a
t
e
r

a
n
d

s
a
n
i
t
a
t
i
o
n
,

a
n
d

c
o
m
m
u
n
i
c
a
t
i
o
n
E
x
c
u
v
u
t
i
o
n

o
l

t
i
e
n
c
l
e
s

l
o
i

l
u
y
i
n
g

p
i
p
e
s

u
n
d

c
u
b
l
e
s
.
S

1
S
6
0

8
0
6
0
7
3
2
,
0
0
0
R
u
r
a
l

a
i
r
s
t
r
i
p
s
(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
,

i
e
l
u
b
i
l
i
t
u
t
i
o
n
,

u
n
d

m
u
i
n
t
e
n
u
n
c
e

w
o
i
k
s
1
0

2
0
4
0

7
0
4
0
4
8
8
,
0
0
0
u

A
s
s
u
m
i
n
g

d
u
i
l
y

w
u
g
e

i
u
t
e

l
o
i

u
n
s
k
i
l
l
e
d
,

c
u
s
u
u
l

l
u
b
o
i

o
l

R
p
S
0
,
0
0
0

u
n
d

2
0
0

d
u
y
s

o
l

w
o
i
k

p
e
i

y
e
u
i

i
s

e
q
u
u
l

t
o

o
n
e

I
o
b
.
S
o
u
i
c
e
:

I
L
O

(
2
0
0
9
b
)
T
a
b
l
e

1

c
o
n
t
i
n
u
e
d
284 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
T
a
b
l
e

2
:

P
o
t
e
n
t
i
a
l

a
d
d
i
t
i
o
n
a
l

e
m
p
l
o
y
m
e
n
t

c
r
e
a
t
i
o
n

u
s
i
n
g

l
a
b
o
r
-
b
a
s
e
d

m
e
t
h
o
d
s

i
n
s
t
e
a
d


o
f

e
q
u
i
p
m
e
n
t
-
b
a
s
e
d

m
e
t
h
o
d
s

f
o
r

i
n
f
r
a
s
t
r
u
c
t
u
r
e

i
n
v
e
s
t
m
e
n
t
s

u
n
d
e
r

t
h
e


G
o
v
e
r
n
m
e
n
t

o
f

I
n
d
o
n
e
s
i
a

2
0
0
9

e
c
o
n
o
m
i
c

s
t
i
m
u
l
u
s

p
a
c
k
a
g
e
A
c
t
i
v
i
t
y

t
y
p
e
E
s
t
i
m
a
t
e
d

p
o
r
t
f
o
l
i
o

(
R
p

b
i
l
l
i
o
n
)
E
q
u
i
p
m
e
n
t
-
b
a
s
e
d

m
e
t
h
o
d
s
L
a
b
o
r
-
b
a
s
e
d

m
e
t
h
o
d
s
A
d
d
i
t
i
o
n
a
l

j
o
b
s

u
s
i
n
g

L
B

m
e
t
h
o
d
s
%

l
a
b
o
r

c
o
s
t
D
i
r
e
c
t

j
o
b
s
I
n
d
i
r
e
c
t

j
o
b
s
T
o
t
a
l

j
o
b
s
%

l
a
b
o
r

c
o
s
t
D
i
r
e
c
t

j
o
b
s
I
n
d
i
r
e
c
t

j
o
b
s
T
o
t
a
l

j
o
b
s
R
u
r
a
l

a
n
d

u
r
b
a
n

r
o
a
d
s

(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
/
i
e
l
u
b
i
l
i
t
u
t
i
o
n

l
o
w
-
v
o
l
u
m
e

u
n
p
u
v
e
d

i
o
u
d
s

1
,
S
7
S
1
S
1
S
,
7
S
0
1
9
,
6
8
8
3
S
,
4
3
8
S
S
8
6
,
6
2
S
1
7
3
,
2
S
0
2
S
9
,
8
7
S
2
2
4
,
4
3
8
(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
/
i
e
l
u
b
i
l
i
t
u
t
i
o
n

l
o
w
-
v
o
l
u
m
e

p
u
v
e
d

i
o
u
d
s
0
1
0
0
0
0
3
S
0
0
0
0
R
o
u
t
i
n
e

(
o
l
l
-
c
u
i
i
i
u
g
e
w
u
y
)

m
u
i
n
t
e
n
u
n
c
e

o
l

u
l
l

c
u
t
e
g
o
i
i
e
s

o
l

i
o
u
d
s
1
,
S
7
S
1
0
1
0
,
S
0
0
1
3
,
1
2
S
2
3
,
6
2
S
8
0
1
2
6
,
0
0
0
2
S
2
,
0
0
0
3
7
8
,
0
0
0
3
S
4
,
3
7
S
c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
285
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
A
c
t
i
v
i
t
y

t
y
p
e
E
s
t
i
m
a
t
e
d

p
o
r
t
f
o
l
i
o

(
R
p

b
i
l
l
i
o
n
)
E
q
u
i
p
m
e
n
t
-
b
a
s
e
d

m
e
t
h
o
d
s
L
a
b
o
r
-
b
a
s
e
d

m
e
t
h
o
d
s
A
d
d
i
t
i
o
n
a
l

j
o
b
s

u
s
i
n
g

L
B

m
e
t
h
o
d
s
%

l
a
b
o
r

c
o
s
t
D
i
r
e
c
t

j
o
b
s
I
n
d
i
r
e
c
t

j
o
b
s
T
o
t
a
l

j
o
b
s
%

l
a
b
o
r

c
o
s
t
D
i
r
e
c
t

j
o
b
s
I
n
d
i
r
e
c
t

j
o
b
s
T
o
t
a
l

j
o
b
s
N
a
t
u
r
a
l

r
e
s
o
u
r
c
e

m
a
n
a
g
e
m
e
n
t

(
i
n
c
l
u
d
i
n
g

a
g
r
i
c
u
l
t
u
r
e
,

f
i
s
h
e
r
i
e
s
)

A
g
i
i
c
u
l
t
u
i
u
l

t
e
i
i
u
c
i
n
g

o
l

l
u
n
d

u
n
d

l
u
n
d

d
e
v
e
l
o
p
m
e
n
t
S
0
0
1
0
3
,
3
3
3
4
,
1
6
7
7
,
S
0
0
6
0
3
0
,
0
0
0
6
0
,
0
0
0
9
0
,
0
0
0
8
2
,
S
0
0
W
u
t
e
i

u
n
d

s
o
i
l

c
o
n
s
e
i
v
u
t
i
o
n
1
0
0
2
0
1
,
3
3
3
1
,
6
6
7
3
,
0
0
0
S
S
S
,
S
0
0
1
1
,
0
0
0
1
6
,
S
0
0
1
3
,
S
0
0
F
i
s
l
p
o
n
d

d
e
v
e
l
o
p
m
e
n
t
1
0
0
1
S
1
,
0
0
0
1
,
2
S
0
2
,
2
S
0
7
S
7
,
S
0
0
1
S
,
0
0
0
2
2
,
S
0
0
2
0
,
2
S
0
F
l
o
o
d

p
i
o
t
e
c
t
i
o
n
,

i
i
v
e
i

t
i
u
i
n
i
n
g

w
o
i
k
s

u
n
d

d
i
u
i
n
u
g
e

(
u
n
d

d
i
s
u
s
t
e
i

i
e
l
i
e
l
)
7
0
0
1
S
7
,
0
0
0
8
,
7
S
0
1
S
,
7
S
0
S
0
3
S
,
0
0
0
7
0
,
0
0
0
1
0
S
,
0
0
0
8
9
,
2
S
0
(
C
o
m
m
u
n
i
t
y
-
b
a
s
e
d
)

g
r
a
v
i
t
y

i
r
r
i
g
a
t
i
o
n

(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n

u
n
d

i
e
l
u
b
i
l
i
t
u
t
i
o
n

1
,
4
0
0
2
0
1
8
,
6
6
7
2
3
,
3
3
3
4
2
,
0
0
0
S
S
7
7
,
0
0
0
1
S
4
,
0
0
0
2
3
1
,
0
0
0
1
8
9
,
0
0
0
T
a
b
l
e

2

c
o
n
t
i
n
u
e
d
c
o
n
t
i
n
u
e
d

o
n

n
e
x
t

p
a
g
e
286 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
A
c
t
i
v
i
t
y

t
y
p
e
E
s
t
i
m
a
t
e
d

p
o
r
t
f
o
l
i
o

(
R
p

b
i
l
l
i
o
n
)
E
q
u
i
p
m
e
n
t
-
b
a
s
e
d

m
e
t
h
o
d
s
L
a
b
o
r
-
b
a
s
e
d

m
e
t
h
o
d
s
A
d
d
i
t
i
o
n
a
l

j
o
b
s

u
s
i
n
g

L
B

m
e
t
h
o
d
s
%

l
a
b
o
r

c
o
s
t
D
i
r
e
c
t

j
o
b
s
I
n
d
i
r
e
c
t

j
o
b
s
T
o
t
a
l

j
o
b
s
%

l
a
b
o
r

c
o
s
t
D
i
r
e
c
t

j
o
b
s
I
n
d
i
r
e
c
t

j
o
b
s
T
o
t
a
l

j
o
b
s
C
l
e
u
n
i
n
g

c
l
u
n
n
e
l
s

u
n
d

i
e
s
e
i
v
o
i
i
s

o
l

l
u
i
g
e

i
i
i
i
g
u
t
i
o
n

s
c
l
e
m
e
s
S
0
0
1
S
S
,
0
0
0
6
,
2
S
0
1
1
,
2
S
0
6
S
3
2
,
S
0
0
6
S
,
0
0
0
9
7
,
S
0
0
8
6
,
2
S
0
E
l
e
c
t
r
i
f
i
c
a
t
i
o
n
,

w
a
t
e
r

a
n
d

s
a
n
i
t
a
t
i
o
n

a
n
d

c
o
m
m
u
n
i
c
a
t
i
o
n

E
x
c
u
v
u
t
i
o
n

o
l

t
i
e
n
c
l
e
s

l
o
i

l
u
y
i
n
g

p
i
p
e
s

u
n
d

c
u
b
l
e
s
S
0
0
1
0
3
,
3
3
3
4
,
1
6
7
7
,
S
0
0
7
0
3
S
,
0
0
0
7
0
,
0
0
0
1
0
S
,
0
0
0
9
7
,
S
0
0
R
u
r
a
l

a
i
r
s
t
r
i
p
s

(
R
e
-
)

c
o
n
s
t
i
u
c
t
i
o
n
,

i
e
l
u
b
i
l
i
t
u
t
i
o
n
,

u
n
d

m
u
i
n
t
e
n
u
n
c
e
2
0
0
1
S
2
,
0
0
0
2
,
S
0
0
4
,
S
0
0
S
S
1
1
,
0
0
0
2
2
,
0
0
0
3
3
,
0
0
0
2
8
,
S
0
0
I
n
v
e
s
t
m
e
n
t
s

w
i
t
h

n
o

(
s
i
g
n
i
f
i
c
a
n
t
)

s
c
o
p
e

f
o
r

L
B

m
e
t
h
o
d
s
S
,
0
S
0
0
0
0
0

0
0
0
0
S
t
i
l
l

u
n
a
l
l
o
c
a
t
e
d

f
u
n
d
s

0
0
0

0
0
0
0
T
o
t
a
l

1
2
,
2
0
0

6
7
,
9
1
7
8
4
,
8
9
6
1
5
2
,
8
1
3

4
4
6
,
1
2
S
8
9
2
,
2
S
0
1
,
3
3
8
,
3
7
5
1
,
1
8
5
,
5
6
3
L
B

~

l
u
b
o
i
-
b
u
s
e
d
.
S
o
u
i
c
e
:

I
L
O

2
0
0
9
b
.
T
a
b
l
e

2

c
o
n
t
i
n
u
e
d
287
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
Philippines
TleGoveinmentoltlePlilippinesestimutestlutitsstimuluspuckuge
ol P7.0 billion, wlicl consists ol combined suvings in muintenunce,
opeiuting, und otlei expenses, could cieute some 1S0,000 tempo-
iuiy Iobs. Tlis ullocution ol 1.S% ol tle 2009 opeiuting budget ol
goveinment ugencies will solely be used loi tle tempoiuiy liiing ol
displucedwoikeisundtleiilumilies.Evenbeloietleglobuleconomic
downtuin, tle Plilippine employment situution wus ulieudy ciiticul.
In2007,tleieweieonuveiuge2,716,000unemployedund6,7S7,000
undeiemployedwoikeis(Business World,12Febiuuiy2009).Tleglo-
bulciisisluscompoundedtlisundIob-cieutionpiogiumsuieumong
tlecountiy’stopdevelopmentpiioiities.Tleiesponsibilityloioigu-
nizingtleimplementutionoltleiesponseiswitltleiegions,sousto
incieusetleelliciency,tuigeting,undintegiutionoltleloculdeliveiy
oltlestimulusmeusuiesundtoincieusetlesustuinubilityundlocul
owneislipoliecoveiypioIects.
In uddition, tle goveinment lopes to cieute udditionul Iobs by
liont-loudinginliustiuctuieinvestmentsundbyiuisingtleubsoiptive
cupucityolgoveinmentugenciestomuketlemusetleiibudgetsmoie
pioductively und elliciently. Tlis pump-piiming plun would cieute
800,000tempoiuiyIobs.Itisnotcleui,lowevei,lowmunyoltlese
Iobs weie ulieudy incoipoiuted in tle 2009 budget und low muny
udditionul Iobs will be cieuted by sucl u stimulus. In uny cuse, tle
cieutionol800,000udditionulIobswouldiequiieunextiuumountol
suluiiesoluioundP30billion(busedon1S0duysolwoikutunuve-
iugeduilywugeolP2S0).
AtliidcomponentoltlestimuluspuckugeistleCompielensive
Livelilood und Emeigency Employment Piogiums. Tle iesponsibi-
lity loi implementution is uguin witl tle iegions. Tuble 3 illustiutes
employment cieution undei tlese piogiums in one ol tle countiy’s
17iegions(Region8—SumuiundLeyte).Tletubleslowstlutvuiious
goveinment depuitments uie involved in implementution und tlut
piogiessinIobcieutionismonitoieduguinstindividuultuigets.
Cambodia
Cumbodiuluckstlelisculspucetodesignuneconomicstimuluspuc-
kugeus,loiexumple,Indonesiulusdone.Tomitigutetleellectsoltle
ciisis, it wus decided to ieinloice tle piovision ol sociul sulety nets.
Inliustiuctuieundpublicwoiks(cusl-loi-woikundlood-loi-woik)uie
oltenunintegiulcomponentoltlesesuletynets.RuiulioudpioIects,
288 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
loiexumple,luvebeenunimpoituntdeliveiymeclunismloiieinstul-
ling community uccess ovei tle pust decude und loi pioviding locul
communitieswitltempoiuiyemploymentundincome.
AstudywusundeitukenbyILOin2003tocompuietlecostsund
potentiulbenelitsoltlevuiiousconstiuctionuppiouclesusedintle
countiy und to inloim tle goveinment in its policy setting loi cui-
ient und lutuie opeiutions ieluted to iuiul inliustiuctuie piovision
(Munteis 2003). In geneiul, luboi-bused metlods loi constiucting
iuiulgiuvel-suilucedioudsinCumbodiuweieloundtobelessexpen-
sive tlun woiks cuiiied out using equipment-bused metlods. It wus
estimuted tlut using luboi-bused metlods to cuiiy out u piogium ol
iuiulioudupgiuding,combinedwitlluboi-busedmuintenunceoltle
existingmuintuinubleioudnetwoik,couldgeneiutebetween3.7mil-
lionund6.7millionduysolwoikpeiyeui,dependingontleextentol
tlepiogium.
Table 3: Comprehensive livelihood and emergency
employment programs (usol20August2009)
Department
Initiative
and/or
Project
Individual
target
Employed
accomplishment
Enviionmentund
NutuiulResouices
BuntuyGubut 4,784 S81
Enviionmentund
NutuiulResouices
Uplund
Development
Piogium
3,706 3,706
Heultl Botikung
Buiunguy
88 7
Luboiund
Employment
Islu 4S2 229
Luboiund
Employment
Tupud 9S6 4S1
PublicWoiks Oystei 2,948 806
SociulWelluieund
Development
SEA-K 2,629 1,331
SociulWelluieund
Development
CuslloiWoik 7S7 200
Touiism Gieet 127 12
TiudeundIndustiy OTOP 439 439
Total 16,886 7,762
Peicentuge 100% 4S.97%
Souice:BusedonugencyiepoitstotleRegionulKululiConveigenceGioup-8.
289
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
Table 4: Ongoing programs of the Government
of India with large employment potential
Program title
Objective/
Description
Proposed
interventions
for crisis
response
Immediate
employment
potential
JuwuluilulNeliu
NutionulUibun
RenewulMission
(JNNURM),
MinistiyolUibun
Development
Focusison
elliciencyinuibun
inliustiuctuieund
seivicedeliveiy
meclunisms,
community
puiticipution,und
uccountubilityol
ugenciestowuid
citizens
JNNURM
inteiventionsuie
ongoinginubout
60cities.AsmuIoiity
oltleIoblossesdue
tociisisuieinuibun
und/oisemi-uibun
uieus.Aluige
numbeiolciisis-
ullectedIobless
woikeiscouldbe
olleiedulteinutive
sloit-teim
employmentby
identilyingmoie
luboi-intensive
uctivitiesin
execution
12million
woikduys
equivulentto
120,000peisons
employedloi
100duys
India
In Indiu, tle woist-ullected segments uie piobubly cusuul lubo-
ieis in uibun und semi-uibun uieus. Indiu lus u numbei ol ongoing
employment-intensive public woik piogiums tlut could be extended
oi ieplicuted to impiove livelilood secuiity und iespond to tle cii-
sis. Investments in iuiul und uibun inliustiuctuie cun be incieused
undeitlesepiogiumstogeneiuteudditionulemployment.Inluct,tle
goveinmentiecentlydecidedtoincieusetleullocutionollundsundei
itsNutionulRuiulEmploymentGuuiunteeSclemetopiovide200duys
olemploymentinsteudol100duystoeligiblelouseloldstoliglttle
cuiient diouglt. Tuble 4 depicts tle immediute unnuul employment
cieutionpotentiulolvuiiousgoveinmentpiogiums.
Topiovideielieltociisis-ullectedwoikeis,tlegoveinmentcould
extend its sociul secuiity net (NREGA) to uibun uieus. An uibun
employment guuiuntee scleme could be designed to piovide guu-
iunteed woik loi 100 duys u yeui to below-poveity line lumilies in
uibun und semi-uibun uieus, similui to wlut is luppening in iuiul
uieus.Luunclingsuclusclemecouldpiotectinloimuluibunwoikeis
liomtleellectsollostemploymentundincomeusuiesultoltleciisis.
continued on next page
290 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Difference in approaches
Tle exumples in tle loui selected countiies ol (potentiully) dille-
ientciisis-iesponseinteiventionstlutuimutusinginliustiuctuieund
public woiks investments to cieute Iobs slow tle dilleience in pos-
sible uppioucles. It is impoitunt to distinguisl leie between luboi-
busedundluboi-intensivemetlods.Tlelutteiuiecluiucteiizedbyu
muximumuseolluboiundtleiimuinobIectiveistopiovideusociul
suletynetbycieutingumuximumnumbeisolIobs.Tlequulityoltle
woikdonebyluboi-intensiveuppiouclesisoltenolseconduiyimpoi-
Program title
Objective/
Description
Proposed
interventions
for crisis
response
Immediate
employment
potential
NutionulRuiul
Employment
Guuiuntee
Act(NREGA),
MinistiyolRuiul
Development
NREGAistle
llugslippiogium
oltlegoveinment
tlutpiomotes
inclusivegiowtl.
Tleuctuims
utenluncing
liveliloodsecuiity
ollouseloldsin
iuiuluieus
Tleullected
migiuntluboiin
tleconstiuction
industiyoiotlei
sectoiscouldbe
olleiedulteinutive
employmentundei
NREGAwitlout
ullectingtle
implementution
modulities
20million
woikduys
equivulentto
200,000peisons
employedloi
100duys
PiudlunMuntii
GiumSuduk
YoIunu(PMGSY)
oiotleiiuiul
ioudssclemes,
MinistiyolRuiul
Development
PMGSYcuteisto
tleielubilitution
undmuintenunce
oltlelugeiuiul
ioudnetwoikintle
countiy
Luboi-bused
undequipment-
suppoited
teclnologyloi
ielubilitutionund
luboi-intensive
teclniquesloi
ioutinemuintenunce
ilsuitublyintegiuted
intlePMGSYund
otleiiuiuliouds
olleilugepotentiul
loiemployment
oppoitunities.
4million
woikduys
equivulentto
40,000peisons
employedloi
100duys
Uibunund/oi
iuiullousing:
MinistiyolRuiul
Development,
MinistiyolUibun
Development
Vuiiousongoing
piogiumsoltle
goveinmenton
iuiulunduibun
low-costlousing
(10,000units)
Suclsclemescould
beidentiliedin
consultutionwitltle
ielevuntministiies
und/oi
depuitmentsto
uccommodute
ullectedpopulutions
0.Smillion
woikduys
equivulentto
S,000peisons
employedloi
100duys
Souice:Guptu2009.
Tuble4 continued
291
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
tunce only. Sulety net piogiums uie liequently conceived us “muke-
woik”piogiumswleiecost-ellectivenessundquulityuspectsuienot
us impoitunt us tle numbei ol woikduys cieuted. Luboi-intensive
metlods uie only suituble loi woiks tlut cun be implemented using
unskilledluboi,loiexumpleloieuitl-movingopeiutions.
On tle otlei lund, luboi-bused (sometimes ieleiied to us locul
iesouice–bused) uppioucles und teclnologies muke optimum und
llexible use ol locul luboi und locully uvuiluble muteiiuls, skills, und
cupucities us muin iesouices, suppoited by liglt equipment. Tlis, in
combinution witl uppiopiiute woik metlods, ensuies bettei quulity,
ligleipioductivity,moiecost-ellectiveness,tlecieutionoludditionul
loculemploymentoppoitunities,undumoiesustuinubleuseolnutu-
iul iesouices tlun equipment-intensive woiks. Quulity contiol und
quulityussuiunceuieveiyimpoituntelementsundluboi-busedwoiks
luve demonstiuted tlut tley cun pioduce tle sume quulity ol woik
us equipment-bused metlods. Smull-scule contiuctois, communities,
undloculpeopleuieullinvolvedintleimplementutionolluboi-bused
woiksundtlisensuiestluttlemuIoiityoltleinvestmentsiemuinin
tleloculity,tleiebycontiibutingsignilicuntlymoietopoveityieduc-
tion und locul economic development tlun wlut muy be uclieved
usingequipment-busedmetlods.
Ovei tle yeuis, employment-intensive uppioucles (botl luboi-
intensive und luboi-bused) luve demonstiuted tleii impuct. Studies
tlut luve been cuiiied out in dilleient countiies on tle compuiu-
tive udvuntuge ol luboi-bused uppioucles ovei equipment-bused
uppioucles slow tlut luboi-bused metlods und teclnologies indeed
luve distinct udvuntuges. A iecent ILO study (2009c) in Indonesiu
loi exumple slows tlut tle luboi-bused metlods intioduced in tle
countiyiniesponsetotle200Stsunumiluveudvuntugessuclus:
º Impiovedquulityussuiunceundquulitycontioltliouglouttle
pioIectcycle
º Tleexclusiveuseolloculcontiuctois
º Dilleientpiocuiementpioceduies,uimingutbetteiquulity
º Moie scope loi luboi-bused uppioucles cieuting moie
employmentoppoitunities
º A(cost-)ellectiveintegiutionol“lunds-on”cupucitybuilding
uctivitiesloitlepublicwoiksdepuitmentundcontiuctois’stull
º Tle uctive involvement ol beneliciuiies in tle plunning und
implementutionpiocess
º Active piomotion ol tle employment ol locul luboieis und
women (ubout 2,200 woikduys pei kilometei; 30%–3S% ol
woikeisuiewomen)
292 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
º Incieusedcost-ellectiveness(10%–1S%)oltleinvestments(ut
sumeoiligleiconstiuctionstunduid)
º Piomotion ol tle locul economy tliougl incieused cusl
tiunsleis.
Itisimpoitunttlutusullicientlybioudspectiumolsectoisisuvui-
luble tlut ollei oppoitunities to slilt teclnologies in luvoi ol tlose
tlut geneiute moie employment und use locul iesouices. Bused on
moietlun30yeuisolwoildwideexpeiiencewitltleupplicutionol
employment-intensive uppioucles und teclnologies, tle lollowing
sectois und uctivities uie puiticuluily ielevunt loi tle upplicution ol
tlesemetlods:
Sectois(undsubsectois)unductivitieswitluligllevelolluboi
content:
º Nutuiuliesouicemunugement(e.g.,ugiicultuie,loiestiy,soil
undwuteiconseivution)
º Low-volume unseuled iouds (constiuction und muintenunce)
undligl-volumeiouds(muintenunce)
º Community-busedgiuvityiiiigutiondevelopment(constiuction,
muintenunceundopeiutions)
º Solid wuste munugement (wuste tiunspoit, sepuiution,
disposul)
º Wutei und sunitution, electiilicution und telecommunicution
(tienclesloiluyingpipesundcubles)
º Agiicultuiul teiiucing und lund development, und cleuning
iiiigutioncunnels,lislponddevelopment
º Wuteiundsoilconseivution,lloodpiotection,iiveidiuinuge,
undiiiigutionwoiks.
Iiiespectiveoltlecloiceolteclnology,eventuullytlelong-teim
ellectivenessolinvestmentsininliustiuctuiewilldependontleselec-
tion ol subpioIects so tlut tley iellect communities’ inliustiuctuie
needs.Aluckoliuiuliouduccess,iiiigutionsystems,undotleibusic
inliustiuctuie, loi exumple, is u muIoi contiibuting luctoi to iuiul
poveity.Inliustiuctuieinvestmentstleieloiecuncontiibutetopoveity
ieductionilselectedinuccoiduncewitlneeds.Impiovingloculinlius-
tiuctuieulsocieutesnewincome-euiningoppoitunitiesloipeopleund
uctsusupiimecutulysttoloculeconomicgiowtl.
Economic stimulus und immediute employment cieution uie
obviously tle immediute obIective ol ciisis-iesponse puckuges.
A sustuinuble impuct ol tle investments in inliustiuctuie und public
woiks, on tle otlei lund, cun come liom tle longei-teim benelits
293
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
ol tle woiks cuiiied out und ussets cieuted. Tle piesent Iob ciisis
tluspiovidesunoppoitunitytobeginceituininitiutivesnowtlutwill
uddiessotleiglobuldevelopmentclullenges.
Tle ultimute goul is to conveige sloit-teim stimulus gouls witl
tle long-teim gouls ol sustuinuble development. As Justin Lin, tle
cliel economist ol tle Woild Bunk, lus suid: “Tle globul iecession
iepiesentsunoppoitunityloidevelopingeconomiestoincieuseliscul
spendingonpioIectstlutcieutesustuinublegiowtlintlelutuielike
inliustiuctuieundtleenviionment.”
8
IlcountiiesulsocieuteIobsin
tlis piocess, incieused spending on inliustiuctuie lelps tlem ieucl
tlesemultipleobIectives.
Resource requirements
Financial resources
No udditionul cupitul iesouices uie geneiully iequiied to implement
employment-intensive public woiks undei economic stimulus puc-
kuges becuuse ullocutions loi inliustiuctuie investments uie ulieudy
included. Wlut mutteis is tle selection ol sectois (und subsectois)
und pioIects, und tle clunge ol teclnology liom moie equipment-
intensivetomoieemployment-intensivemetlodsusingluboi-busedoi
loculiesouice–buseduppiouclesloiplunning,constiuction,ielubili-
tution,undmuintenunce.Teclniculussistunce,lowevei,issometimes
necessuiy to lucilitute u slilt in teclnology il insullicient cupucity is
uvuilubleinucountiy.
TleGoveinmentolIndiuputsemploymentustlekeyconceinloi
ciisisiecoveiy.Tleexpectedunnuulinvestmentininliustiuctuiedeve-
lopmentolSS00billionuyeuiduiingtle11tlPlunpiesentsuluge
oppoitunity loi tle countiy to cieute udditionul employment witlin
existingdevelopmentbudgets.Noudditionulbudgetsuieiequiiedund
itisestimutedtlutwitlu10%euimuikingoltleinvestmentbudget
loiemployment-intensivewoiks,unudditionul2.SmillionIobscunbe
cieuted.
Relyingonsociulsuletynetstomitigutetleimpuctsoltleciisis
usinCumbodiu,lowevei,iequiiesdedicutedlinuncing.Tledevelop-
mentolunulloidubleundellectivesociulsuletynetinpooieicountiies
oltenneedssuppoitliomdevelopmentpuitneis.Cumbodiuisugood
8
lttp://cliungmui2.molcom.gov.cn/uuiticle/clinunews/200811/2008110S890S66
.ltml
294 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
exumpleusitlusmunyministiies,institutions,unddonoisinvolvedin
tledevelopmentundimplementutionolsociulsuletynets,liomemei-
gency to iecoveiy, ielubilitution, und development. It lucks, tlougl,
unintegiutedsystemoisustuinublepiogiumtlutcuniespondtotlis
ciisis—undotleiswlentleyoccui.
Technical resources
Apuit liom tle timely disbuisement ol lunds, sullicient institutionul
undteclniculcupucitiesundudequutemonitoiinguieciuciulloitle
successlul implementution ol tle inliustiuctuie investments undei
economicstimuluspuckugesundsociulsuletynets.Stukeloldeisneed
oiientutionundtiuiningintlevuiiousplunningundimplementution
issuesielutedtotleteclnologies,liompuiticiputoiypioIectpiioiitizu-
tiontliougldesign,implementution,undsupeivisiontocontiucting
undcontiuctudministiution.
Expeiience liom employment-intensive inliustiuctuie develop-
mentslowstluttleieisoltenuneedloiucompielensiveuppioucl
tobuildingcupucityutlocullevelloitleplunning,woiksimplementu-
tionundsupeivision,undmuintenunceoltlecieutedussetsinoidei
loitlesetypeolinteiventionstobeellectiveundsustuinubleinteims
ol locul development, poveity ieduction, und employment cieution.
Responsibilities loi inliustiuctuie und otlei public woiks luve olten
beendecentiulizedinAsiutoloculgoveinmentunits.Tleloculuutloii-
tiesslouldtleieloieluvetleteclniculmeunstolundleemployment-
intensivewoiks.
Cupucitybuildingtoestublisltleiequiiedteclniculiesouicesut
loculgoveinmentlevel,lowevei,willnotonlycuteiloiiequiiements
loiemployment-intensiveinliustiuctuiewoiksbutwillcontiibuteto
tlemunugementundimplementutioniesouicesolloculgoveinments
ingeneiul.Aiecentpioposultosuppoittledevelopmentolemploy-
ment-intensiveuppiouclesineusteinIndonesiuconcludedtlut:
Tleie is undoubtedly u pluce loi impioved und luitlei
use ol tle employment intensive uppioucles. Tleie
is ulso u good busis on wlicl to build tliougl tle ILO
linking up witl eitlei un existing oi plunned muIoi
piogiumme wleieby tle ILO “udded vulue” involves
essentiullyteclniculussistunceontlebuckolexistingoi
committed cupitul investment stieums loi inliustiuctuie
woiks. It is lowevei impoitunt to uccept tlut elements
oltleemploymentintensiveuppioucluieulieudybeing
295
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
piucticedininliustiuctuieundplunningpiogiummesund
itwouldnotbeuppiopiiutetoestublislpuiullelsystems
but iutlei build on und impiove existing systems. Tle
clullengeloitleILOwillbetouclievetleieulizutionol
itsuppioucleswitloutbeingoveicomebytlemuIoineed
touddiessbusicteclniculmunugeiiulundplunningneeds
wlicl uie likely to be teclnology neutiul oi teclnology
insensitive.Tlisisbecuuseoltleduuntingoveiullneed
loi busic skills impiovement especiully ut distiict und
villugelevelwleiegeneiulcupucitybuildingsuppoitmuy
well be moie welcome tlun speciulist teclnicul suppoit
loiemploymentintensiveuppioucles(ILO2008).
Tlisisinteiestingundielevunt.Employment-intensiveinliustiuc-
tuiewoiksiequiieteclniculiesouicesloiplunning,implementution,
supeivision, und muintenunce. Sucl iesouices, lowevei, uie equully
iequiiedloiwoiksusingmoiecupitul-intensiveteclnology,undinves-
tinginbuildinguptleseiesouiceswilllikelyluveunoveiullimpucton
tlemunugementundimplementutioncupucitiesolloculgoveinments.
To ensuie un udequute undeistunding ol specilic employment-
intensiveplunningundimplementutionissues,tiuiningslouldulsobe
oigunized loi teclnicul line ministiies. Aguin, in view ol tle mugni-
tude ol tle ciisis-iesponse puckuges, u tiuined teum ol coie tiuineis
wouldbeiesponsibleloideliveiingtiuiningoltiuineisunddiiecttiui-
ningcouisesutiegionuloipiovinciullevel.
Employment-intensive woiks olten consist ol u luige numbei ol
compuiutivelysmullsubpioIectsdispeisedoveiugeogiuplicullyluige
uieutoieucluluigenumbeiolpeople.Suclpiogiumsiequiieude-
quutesupeivision,unditsquulityistleieloieukeyconditiontoellec-
tivelyupplyemployment-intensivemetlodsundslouldbelookedut
wlentiuiningneedsuieuddiessed.
Itisequullyimpoitunttotiuinloculgoveinmentuutloiitiesund
tleiiudministiutiveundlinunciulstullintleskillsnecessuiytoluci-
lituteimplementutionolemployment-intensivewoiks.Dependingon
tleimplementutionmodulities,itmuyulsobenecessuiytotiuinlocul
contiuctois, us tley muy luck expeiience und be unlumiliui witl tle
speciliciequiiementsolemployment-intensivepublicwoiks.
TiuiningcuntukepluceontleIoboiinspeciulclussioomsessions.
Expeiiencewitlemployment-intensivewoiksslowstlutellectivetiui-
ninginsuclwoiksinvolvesteclnicultiuiningonemployment-intensive
woiksteclnology;oncontiuctpioceduies,contiuctmunugement,und
businessmunugement;undonsuletyissuesundmuintenunce.
296 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Institutional resources
Huvinginpluceunellicientdeliveiysystemloiimplementinginlius-
tiuctuieundpublicwoiksinnoimulconditionsisciuciultotlesuc-
cesslulimplementutionoltleinliustiuctuieinvestmentsundeivuiious
stimulus puckuges. A key condition is tlut un enubling institutionul
setupisulieudyinplucetlutmukesoptimumuseolulieudyuvuiluble
cupucities loi tle timely plunning, piogiumming, und implementu-
tionoltleinvestments.Itisveiyimpoitunttlutiesponsibilitiesund
uutloiitiesuttlevuiiouslevelsuiecleuilyloimulutedundexpluined
tomuketlepioceduiesmoieemploymentliiendly,wliclwilliesult
intlecieutionoludditionulIobsundgeneiutemoieloculincome.
Impoitunt,too,istlecloiceolpiocuiementmetlods.Inpuiticu-
lui, tendeiing und contiucting metlods oi loimuts und contiuct puc-
kuging uie key instiuments in stipuluting tle type ol woik metlod
tlutwillbeusedduiingemployment-intensiveconstiuctionoimuin-
tenuncewoiks.
Finully, monitoiing tle piocesses, outputs, und employment
ellectsoltleinliustiuctuieinvestmentsisimpoitunttocleckwletlei
sloit-teim employment und longei-teim development obIectives ol
tleinvestmentsuiebeinguclieved.Astlepuiposeolmonitoiingis
notonlytocleckpiogiessuguinstobIectivesundtuigets,butulsoto
impiovetlepeiloimunceoltledeliveiyoltleinvestments,itisimpoi-
tunt tlut un ellective leedbuck meclunism is puit ol tle monitoiing
system.Piocessundoutputmonitoiingslouldlocusonmonitoiingtle
ellectiveness ol tuigeting, tle geneiution ol sloit-teim employment,
tlecieutionoiimpiovementoltleplysiculinliustiuctuie(including
quulityissues),undtledeliveiycostspeigeneiutedwoikei-duy.
297
Addressing unemployment and poverty through infrastructure
development as a crisis-response strategy
References
Guptu, Mukesl C. 2009. Cuiient economic und linunciul ciisis:
Clullenge ol meeting employment delicit und iestoiution ol
livelilood ol ullected woikeis tliougl Employment Intensive
PublicWoiksPiogiumme(EIIP)inIndiu.Discussion Paper.ILO,
NewDelli.
Inteinutionul Luboui Oigunizution (ILO). 2008. Inliustiuctuie,
poveity und Iobs: Intioducing locul iesouice-bused stiutegies
to Eustein Indonesiu. Jukuitu. www.ilo.oig/wcmspS/gioups/
public/---usiu/---io-bungkok/documents/geneiicdocument/
wcms099S1S.pdl
———. 2009u. Protecting people, promoting jobs: A survey of country
employment and social protection policy responses to the global
economic crisis.Genevu.
———. 2009b. Tle 2009 Indonesiu economic stimulus puckuge:
Potentiuls und udvuntuges ol employment-intensive (oi locul
iesouice-bused) uppioucles loi inliustiuctuie investments.
Jukuitu.Muy.
———. 2009c. Cieuting Iobs: Cupucity building loi locul iesouice-
bused ioud woiks in NAD und Nius: Synopsis ol lindings.
Jukuitu.
Munteis,Puul.2003.Jobs or machines: Comparative analysis of rural
road work in Cambodia.Bungkok:ILO.
Tuck,Luuiu,JoidunSclwuitz,undLuisAndies.2009.CiisisinLAC:
Inliustiuctuie investment und tle potentiul loi employment
geneiution. Woild Bunk, Lutin Ameiicu und tle Cuiibbeun
Region.Muy.
Woild Bunk. 2009. How slould luboi muiket policy iespond to tle
linunciulciisis?NotepiepuiedbyHDundPREMLuboiMuiket
Teums.Febiuuiy.
299
Fiscal space for social protection
policies in Viet Nam
Paulette Castel
1
Introduction
Tlis cluptei evuluutes tle liscul implicutions ol Viet Num’s cuiient
sociulpiotectionstiutegy.Itulsogivesestimutesoltlecostolpolicies
tlutwouldiupidlyincieusetlecoveiugeolsociulinsuiuncesotlut,in
timeoliecession,tlesociulpiotectionsectoiisellicientinieducing
pooiundoidinuiywoikeis’vulneiubilitytoincomeslocks.
The social protection sector in Viet Nam
Oveitlelust20yeuis,VietNumlusdevelopedustiongpoveityieduc-
tionpiogiumconcentiutedontledevelopmentolinliustiuctuieund
economicoppoitunitiesintlepooiestuieus.Itlusulsostuitedbuilding
umodeinsociulsecuiitysystem,tlepiioiitybeingtleuclievementol
univeisulleultlinsuiunceby201S.Intlutcontext,piogiumstuigeted
ut individuuls, sucl us sociul ussistunce (montlly cusl benelits), uie
smullundlimitedtopeoplewlosecupucitytowoikisseiiouslylimi-
ted.AstleliguiesinTuble1slow,sociulpiotectionexpendituiesweie
equivulenttoubout3.7%olgiossdomesticpioduct(GDP)in2008.
A veiy luige sluie ol tlese expendituies (equivulent to ubout
2.S% ol GDP) wus ieluted to tle stute budget’s long-teim commit-
mentstowuidpeoplewitlnutionulmeiitundpublicsectoipensioneis
wloietiiedbeloie199S.Tlestutebudgetlinuncespuitoltlecuiient
pensionsbecuuse,wlentleVietNumSociulSecuiityudministiution
wusestublisledin199S,itwusunubletotukeontlelinunciulbuiden
olpuyingtlebenelitstopeoplewloludwoikedundietiiedliomtle
publicsectoiundeitleoldsystem.Giventleeconomictiunsitionund
tleielutivelysmullsizeoltleenteipiisesectoi,tlesystemutitsonset
1
PuuletteCustelisuconsultuntloitleDepuitmentloiInteinutionulDevelopment,
HuNoi.
300 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 1: Viet Nam social protection budget 2008 (estimute)
D billion
Share of
GDP (%) Source
Social assistance 21,711 1.47 ILSSA(2009)
Montllycuslbenelits 2,036 0.14
Aidtonutuiuldisusteivictims 4,762 0.32
Sociulseivices 1,301 0.09
Benelitstopeoplewitl
nutionulmeiit
13,613 0.92
Social insurance (budget
tiunsleiloipie-199Spublic
sectoiietiiees)
23,044 1.56 VietNumSociulSecuiity
Health insurance (stute
budgettiunsleiloitlepooi)
2,217 0.15 VietNumSociulSecuiity
Education subsidies 1,432 0.10 SociulistRepublicol
Vietnum(200S)
Labor market policies 1,327 0.09 ILSSA(2009)
NTPPR and P135-II,
2006–2010
4,564 0.31 SociulistRepublicol
Vietnum(200S)
Total 54,295
a
3.67
Memorandum items
Stutebudgetpuiticipution
inNTPPR,2006–2010
(Dbillion)
16,018 SociulistRepublicol
Vietnum,(200S),IDA
(2007)
b
Stutebudgetpuiticiputionin
P13S(Dbillion)
12,9S0
Heultlinsuiuncesubsidies 4,076
Educutionsubsidies 2,073
OtleiNTPPRexpendituies
(Dbillion)
33,44S
GDP(Dbillion) 1,477,717 GeneiulStutisticsOllice
Minimumwuge(D‘000) S40 MoLISAiegulution
Numbeioliecipientsolleultl
insuiuncesubsidies(‘000)
1S,829 VietNumSociulSecuiity
Contiibutioniute(%) 3 Heultlinsuiunceiegulution
D~dong;IDA~InteinutionulDevelopmentAssociution;ILSSA~InstituteolLuboi,Scienceund
SociulAlluiis;MoLISA~MinistiyolLuboi,InvulidsundSociulAlluiis;
NTPPR~NutionulTuigetedPiogiumonPoveityReduction;P13S~PiogiumloiSocio-Economic
DevelopmentinCommunesFucingExtiemeHuidslipinEtlnicMinoiityundMountuinousAieus.
u
HigleitlunstutebudgetsociulspendingolDS0,26Sbillionbecuuseitincludesleultlinsuiunce
undeducutionsubsidies.
b
Figuiesieleitototulspendingplunnedovei2006–2010.
Note:Peoplewitl“nutionulmeiit”uiemuinlywuileioesundleioesliomtleievolution
(undsomeoltleiiielutives).
Souice:Autloi.
301 Fiscal space for social protection policies in Viet Nam
wouldluveiundelicitsiltleGoveinmentludnotpiogiummedtlese
tiunsleistoVietNumSociulSecuiity.
Since 199S, sociul insuiunce coveiuge lus expunded; und since
200S,ulltypesolenteipiises,wluteveitleiisize,luveludtoiegistei
witlVietNumSociulSecuiityulltleiiemployeeswitluluboicontiuct
ol3montlsoilongei.In2006,tleSociulInsuiunceLuwdelinedtle
legulliumewoiktoexpundtlecoveiugeoltlepensionsystemtolui-
meisundsell-employedonuvoluntuiybusis,undtocieuteununem-
ploymentinsuiuncescleme.
Tleloimulsectoiwusstillielutivelysmullin2006,iepiesenting
38.7%olwugeemploymentund16.1%oltotulemployment(Tuble2).
Table 2: Social security and poverty rates, 2006
a
Persons
Share in
total (%)
Poverty
rate
b
Employment in formal and
informal sectors 41,893,S13 79.8 14.8
Wage employed potential participants in mandatory social insurance
system
Enteipiisesectoi 9,7S3,103 18.6 8.1
Registeied 6,769,062 12.9 7.S
Sloit-teimcontiucts,etc.not
iegisteied 2,984,041 S.7 9.S
Smull-businessemployeesnot
iegisteied 7,707,SSS 14.7 17.4
Farmers and self-employed potential participants in voluntary health
insurance and pension systems
Fuimeisundsell-employed 19,3S6,S39 36.9 11.6
Notinugiicultuie,uquucultuie,
undloiestiy S,028,279 9.6 2.0
Onlyinugiicultuie,uquucultuie,
undloiestiy 9,924,339 18.9 17.S
Inbotlsectois 4,403,921 8.4 9.S
Low-income earners S,076,316 9.7 3S.6
Pensioners, inactive,
and unemployed
10,S87,S69
20.2 7.2
Pensioneisbelowstunduid
ietiiementuge 461,269 0.9 1.3
Inuctiveundunemployed 10,126,300 19.3 7.S
Total 52,481,082 100.0 13.2
u
EstimutesbusedontleVietnumHouseloldLivingStunduidsSuivey2006.
b
Poveityiuteciiteiiu
tukenliomGeneiulStutisticsOllice,GoveinmentolVietNum.
Souice:NguyenTliundCustel2009.
302 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
ContinuingtleNutionulHungeiEiudicutionundPoveityReduction
piogium (HEPR, 1998–200S), tle Nutionul Tuigeted Piogium on
Poveity Reduction (NTPPR, 2006–2010) suppoits pooi louselolds
und economic development ol pooi communities. It coveis policies
undpiogiumstlutlucilitutepooilouselolds’uccesstociedit,leultl
insuiunce, educution, lousing, cleun wutei, und ugiicultuiul exten-
sionseivices,etc.,unddevelopsinliustiuctuieinpooicommunes.In
tle pooiest loculities, tle Piogium loi Socio-Economic Development
in Communes Fucing Extieme Huidslip in Etlnic Minoiity und
MountuinousAieus(Piogium13S-I,1999–2001und2002–2004und
Piogium13S-II,2006–2010)lundsinliustiuctuiepioIectsundcooidi-
nutessociulpolicies.
In leultl insuiunce, besides lunding tle liee uccess to leultl
insuiunceloitlepooiundeitleNTPPRpiogium,tlegoveinmentis
uimingtouclieveuniveisulcoveiugeby201S.Accoidingtotlenew
luw on leultl insuiunce ol 2008, mundutoiy coveiuge will be giu-
duullyimplementedtliougl2014.Cuiiently,contiibutionstoleultl
insuiunce uie mundutoiy to tle wuge employed wlo uie iegisteied
witl Viet Num Sociul Secuiity. Inloimul sectoi woikeis und lumily
membeisolloimulsectoiemployeescuniegisteivoluntuiily.VietNum
Sociul Secuiity contiibutes to leultl insuiunce cuids loi pensioneis
undtlebeneliciuiiesolsociulussistunce.Asmentioned,tlestutebud-
getsubsidizestlelullpuicluseolleultlinsuiuncecuidstotlepooi
undtlepopulutionsolmountuinousuieus(pieviouslypuitlylinunced
tliougltleHeultlCuieFundloitlePooi).
SinceJunuuiy2009,tlestutebudgetlusulsoexplicitlyussumed
tle linunciul buiden ol leultl insuiunce cuids piovided to clildien
undeitleugeol6(pieviouslylinuncedbytleClildien’sFund)und
lulltlecostolleultlinsuiuncecuidsloitleneuipooisotlutpeople
pieviouslyiegisteieduspooibutwloseincomelusincieusedubove
tlepoveitylineiniecentyeuisdonotloseleultlinsuiuncecoveiuge.
In 2010, stute und locul budgets ussume iesponsibility loi S0%
2
ol
tle linuncing ol ull neui pooi und students’ insuiunce cuids. Finully,
duiing 2012–2014, leultl insuiunce will become mundutoiy loi ull
woikeisundtleiilumilymembeis.
Tle budget loi pioviding sociul ussistunce to vulneiuble gioups
isielutivelysmull.Indeed,moieisspentonuidtovictimsolnutuiul
disusteis,wlicluccountedloiubout0.32%olGDPin2008.Individuul
tuigeted piogiums sucl us sociul ussistunce (montlly cusl benelits)
iepiesentedonly0.14%olGDP.
2
Tlestutebudgetwilllinunce30%,loculbudgets20%.
303 Fiscal space for social protection policies in Viet Nam
Since 2007, tle goveinment lus indicuted its willingness to
expund sociul ussistunce. Tle ielevunt iegulutions weie clunged in
Apiil 2007 und tle budget in 2008 wus incieused signilicuntly to
D2,100millionliomDS10millionin2007(uppioximutely,liom0.0S%
to0.14%olGDP).Tlegioupstuigeteduiemostlyindividuulswlose
cupucitytowoikisseiiouslylimited.Asuiesult,tlesociulussistunce
piogiumsluvelittleimpuctontlewoikingpooi:uboutone-tliidol
tle iegisteied pooi uie ineligible loi sucl ussistunce, und uppioxi-
mutely lull tle budget is ieceived by tle nonpooi (Plum Anl und
Custel2009).
Government response to the crisis
VietNumludsomelisculspucetoiespondtotleimpuctoltleglobul
linunciulciisis,becuusesince2001,goveinmentcuiientievenueslud
usuully exceeded plun tuigets und liscul delicits lud been linunced
witloutmonetizution(IDA2007).Altlougltlediopin2009incom-
moditypiicesundcoipoiutetuxesludieducedtleexpectedumount
ollisculievenues,tlegoveinmentinitsstimuluspuckugeexpunded
sociulexpendituiesbyuboutD7,200billionloi2009,oi0.44%olGDP
(4.11% veisus 3.67%, Tuble 3). Tlis included disbuisement ol u Tet
loliduybonustotlepooi,incieusedlousingsuppoit,undcieutionol
unudditionultuigetedpiogiumdiiectedtotle61pooiestdistiicts.
Accoiding to liguies liom tle Ministiy ol Luboi, Invulids und
SociulAlluiis(MoLISA),tleTetbonuswusdistiibutedto2.3million
pooilouselolds(uppioximutely9.2millionpeople).Tlebenelitpei
individuulwuspuiticuluilyligl,utD200,000,equivulentto1montl
oltlepoveitylineusedbyMoLISAtodeteiminepoveityiniuiuluieus
in2006.
3

Tle iemuining puit ol tle budget wus tuigeted to incieuse tle
lousingsuppoitpiogiumundtointensilydevelopmentpoliciesintle
pooiestiegionstliouglunudditionulpiogium.Altlouglpoveitylus
been declining tleie, it iemuins veiy ligl in compuiison to tle iest
oltlecountiy.UndeiDeciee30u,eucloltle61pooiestdistiictswus
giveninudvunceD2SbilliontodeveloppioIects.InJune2009,11ol
62distiictpoveityieductionpioIectsludbeenuppioved,und37eco-
nomic gioups, coipoiutions, und enteipiises lud ugieed to suppoit
S7pooidistiicts(GeneiulStutisticsOllice,piessieleuse,June2009).
3
Given tle iise in consumei piices, tlis level is similui to tle Geneiul Stutistics
Ollice’s2006peicupituloodpoveitylinein2008.
304 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 3: Viet Nam social protection budget 2009 (estimute)
D billion %
GDP
Source
Social assistance 23,649 1.42
Montllycuslbenelits 2,036 0.12 ILSSA(2009)
Tet2009bonus 1,700 0.10 WoildBunk(2009)
Aidtonutuiuldisusteivictims 4,879 0.29 ILSSA(2009)
Sociulseivices 1,343 0.08 ILSSA(2009)
Benelitstopeoplewitlnutionul
meiit
13,691 0.82 ILSSA(2009)
Social insurance 25,879 1.56
Stutebudgettiunsleipie-199S
publicsectoiietiiees
24,829 1.49 Giunetul.(2009)
Seveiuncepuy2009,200,000
woikeis
1,0S0 0.06 WoildBunk(2009)
Health insurance 6,051 0.36
Stutebudgettiunsleiloitlepooi 3,789 0.23 Autloi’sestimute
Clildienundei6yeuis 2,013 0.12 Autloi’sestimute
Neuipooi 249 0.01 Autloi’sestimute
Education subsidies 1,432 0.10 SociulistRepublicol
Vietnum(200S)
Bonus to low-income civil
servants
360 0.02 WoildBunk(2009)
Labor market policies 1,342 0.08 ILSSA(2009)
Targeted poverty reduction
programs
9,689 0.58
NTPPRundP13S2006–2010 4,S64 0.27 ILSSA(2009)
Pooiest61distiicts(Deciee30
u
) 1,S2S 0.09 WoildBunk(2009)
Incieusedlousingsuppoit 3,600 0.22
Total 68,402 4.11
Memorandum items
GDP(Dbillion) 1,663,444 Autloi’sestimute
u
Minimumwuge(D‘000) 6S0 MoLISAiegulution
Numbeioliecipientsolleultl
insuiuncesubsidies(‘000)
16,193 Autloi’sestimute
b
Numbeiolneuipooi(‘000) 2,128 Autloi’sestimute
c
Numbeiolclildienundei6yeuis
(‘000)
8,602 Autloi’sestimute
Contiibutioniute(%) 3 Heultlinsuiunceiegulution
GDP~giossdomesticpioduct,ILSSA~InstituteolLuboi,ScienceundSociulAlluiis;
MoLISA~MinistiyolLuboi,InvulidsundSociulAlluiis.
u
BusedonGeneiulStutisticsOllicedutuloiGDPgiowtlolS.3%in2009undconsumeipiiceindex
tiend.
b
About7.9millionpeopleuieestimutedtoliveinmountuinousuieus(6yeuisoldundubove).
c
Tlenumbeiolneuipooiistlegupbetweentlenumbeiolpooiin2008(uge6undovei)undtle
numbeiolpooiin2009(uge6undovei).
305 Fiscal space for social protection policies in Viet Nam
TleobIectiveoltlisudditionulpiogiumistoieducetlepoveityiute
intlesedistiictstolevelsclosetotleuveiugeloitlepiovinceby201S
undtleiegionby2020.Onepuiticuluiuspectistlutitgivesministiies
tleiesponsibilitytocieuteteumstlutdiiectlylelp,intlelield,locul
uutloiitiestodesignundsubmitdevelopmentpluns.
Household vulnerability during the crisis
Employment tiends ut tle beginning ol 2009 weie woiiying.
Estimutes

busedontlepusttiendolemploymentelusticitytogiowtl
in Viet Num ut uggiegute und enteipiise levels loiecust u possible
lullinemploymentin2009olbetween19S,000und6S9,000people
(NguyenVietetul.2009).AstudyconductedbyCentiulInstituteloi
EconomicMunugementundtleWoildBunkolenteipiisesin24oltle
133opeiutingindustiiulpuiksindicutedtlutinMuicl,Apiil,undMuy
2009,
4
ubout40%oltleenteipiisesludieducedemployment(CIEM-
WoildBunk2009).Also,iupidussessmentsuiveysbytleVietnumese
AcudemyolSociulSciencesiepoitedleuvyIoblossesinenteipiisesol
tleTlungLongindustiiulpuikneuiHuNoi(NguyenTli2009).
In luct, open unemployment ol woikeis liom industiiul puiks
undotleienteipiisesoltlemunuluctuiingoiseivicessectoisdidnot
incieusesluiply.MoLISA(2009)indicutestlutubout80%olluid-oll
woikeiswloiepoitedtoloculollices(woikeiswlo,moielikely,would
luvebeeneligibleloiunemploymentinsuiunce)obtuinedunotleiIob
in tle lollowing lew montls. It is possible tlut locul ollices undei-
estimutedtleoveiullieductioninloimulemployment.Anecdotulevi-
dence in tle lootweui industiy indicutes tlut some idle woikeis uie
stillontleiolloltleiiloimeienteipiise.Tleycontinuetocontiibute
tosociulsecuiity(tliougltleiiloimeienteipiise)intleexpectution
ol being ieliied wlen uctivity picks up. In unotlei cuse, enteipiises
obtuinedwoikeis’iesignutionsbutdeluyediepoitingtledownsizing
tosociulsecuiity(NguyenTli2009).
Most ol tle dismissed woikeis would not luve been eligible loi
unemployment insuiunce unywuy. In tle enteipiise sectoi, tle sluie
in employment ol tempoiuiy und seusonul woikeis witl sloit-teim
contiucts is ligl in Viet Num. In 2006, ubout 3.0 million ol tle
9.7millionwugeemployed(i.e.,30.6%)wlowoikedintleenteipiise
sectoiweienotiegisteiedwitlsociulsecuiity(Tuble2).Mostoltle
downsizinguppeuistoluvebeencuiiiedouttliougltlenonienewul

4
Tlesuiveycoveied11piovinces.Questionnuiiesweiesentto4,048enteipiises.
306 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
olsloit-teimcontiucts,voluntuiy(sometimesinduced)iesignutions,
undlessoveitimewoik.
5
Becuuse tle loimul sectoi is ielutively smull, sociul piotection
meclunisms ollei little in tle wuy ol mitiguting tle ciisis impuct on
oidinuiy woikeis. Seveiunce puy wus tle muin income suppoit loi
dismissedwoikeis.AccoidingtotleLuboiCode,employeismustpuy
teiminutionbenelitoiseveiuncepuyollullumontl’ssuluiyloieucl
woiking yeui. In luct, lew enteipiises puid sucl benelit to ull tleii
dismissedwoikeis.Insomecuses,enteipiisesonlypuid1oi2montls
olsuluiytowoikeiswlovoluntuiilyiesigned(NguyenTli2009).In
otleicuses,woikeiswitllesstlun1yeuiolwoikintleenteipiisein
ellect ieceived lull u montl’s suluiy, but woikeis “muking mistukes”
oiwloweiedismissedbecuuseoltleiilowiunkinginteimsolpio-
ductivity(uiunkingseteuclyeuitodelinetleemployee’sTetbonus)
ieceivednobenelits.
Amongexpoit-oiientedciultvillugestlutluveulsosulleiedliom
tlediopinuctivity,contiuctsuieinloimullysignedonununnuulbusis,
undsuluiiesuiepuideitleionuduily-iutebusis,oionupiece-meul
busis.Consequently,nobusinessesoipioduceispuidunytypesolinsu-
iunce,iedunduncy,oiunemploymentbenelitsloitleiiwoikeis.
InVietNum,tleciisislusnotbeentleonlyeconomicslocktlut
oidinuiywoikeisluveludtocopewitliniecentyeuis.Conlionted
witl iising inllution und bullooning impoits ol consumption goods,
tlegoveinmentinMuicl2008implementedustubilizutionpuckuge
tlut diusticully cut tle ciedit giowtl iute, lioze some public invest-
ment pioIects, und ieduced goveinment expendituies. Puitly us u
iesult,GDPgiowtllellliom8.S%in2007to7.S%in2008.Tleiesul-
tingbuistoltleieul-estutebubbleundtlediopinpublicinvestment
ieined in constiuction giowtl, wlicl piobubly lud u luige impuct
on inloimul sectoi woikeis. Accoiding to tle Vietnum Houselold
Living Stunduids Suivey (VHLSS) ol 2006, constiuction lud ubout
2.6millionwoikeisin2006,olwlom87.9%weieinloimul.
Foitlosewlobecumepooiduiing2008oi2009,onlytlosewlo
lud been pieviously iegisteied us pooi und lud munuged to escupe
poveitycouldlikelybeieconsideieduspooi.Tleieusonistlutsociul
ussistunce scieening pioceduies uie slow in Viet Num und tle lists
oltlepooiuieieestublisledonlywlenunewpoveitylineisissued
(usuullyeveiySyeuis).
Living stunduids luve not lullen diumuticully, lowevei, becuuse
woikeis in tle industiiul puiks uie young witl lew dependents und
S
Inuddition,enteipiisesmoieieudilydismissedunleultlywoikeisundtlosemuking
minoimistukes.
307 Fiscal space for social protection policies in Viet Nam
becuuselumiliesolmigiuntwoikeisielyonvuiioussouicesolincome.
Munyoltlemigiuntwoikeiswlowoikintleciultvillugesundtle
constiuction sectoi in Hu Noi still muintuin tleii ugiicultuiul woik
utlomeundonlytukeupciultIobsduiingtleoll-luimseusonwlile
someoltleiilouseloldmembeisiemuinontleluim.
Fiscal space for the social protection
strategy: Expected trend of social
expenditures from 2010 to 2020
Tle Sociul Stiutegy Pupei diulted by ILSSA (2009) is tle piincipul
souiceolinloimutionuboutgoveinmentplunsloitlenext10yeuisin
tlesociulpiotectionsectoi.Tlestiutegyisnotyetlinul,sotleliguies
undtlecommentspiesentedintlissectionuiepieliminuiy.
Health insurance
Tle muIoi incieuse ol stute budget lunding to tle sociul piotection
sectoiwillcomeliomtleimplementutionoltleleultlinsuiuncepoli-
cies designed to move tle countiy towuid univeisul coveiuge. Stute
budgettiunsleisuieexpectedtoincieuseliomubout0.36%olGDPin
2009to0.S%olGDPin2010undtoiemuinstubleususluieolGDP
intleyeuisto2020.Twotiendsexpluintlisincieuse.Fiist,stuiting
in 2010, tle stute budget will (us suid) colinunce lull tle umount
olstudents’leultlinsuiuncecuids.TleestimuteinTuble4ussumes
tluttlestutebudgetlinuncesulltlesesubsidies.Second,in2010tle
olliciulpoveitylinewillbeudIustedundtlelistsoltlepooiwillbe
totully ievised. Witl tle cuiient poveity line, louselolds witl pei
cupitu income lowei tlun D200,000 pei montl in iuiul uieus, und
D260,000 in uibun uieus, uie “pooi.” Tlese tlieslolds uie likely to
beincieusedin2010toD300,000undD390,000,iespectively.ILSSA
pioIects tlut witl tlese new levels, tle numbei ol iegisteied pooi
muyieucl12.3millionin2010.Tlisluigeinumbeislouldleudtoun
incieuseoluboutD1.1billioninstutesubsidiesloitlepooigivenu
stublenumbeiolbeneliciuiieslivinginmountuinousuieus.
Social assistance
ILSSA’s Sociul Stiutegy Pupei loiesees tlut tle busic benelit will be
ieudIusted,toS0%oltleminimumlivingstunduidslevel.Tleievision
oltlepoveitylinewillulsoleudtosomeincieuseintlemontllycusl
benelits.Howevei,ustleeligibilityciiteiiuuiemuclmoieielutedto
308 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 4: Viet Nam social protection budget
(estimutes2010–2020)
D billion % of GDP
2010 2015 2020 2010 2015 2020
Social assistance 23,361 31,904 35,629 1.22 0.90 0.57
Montllycuslbenelits 3,20S 7,080 13,036 0.17 0.20 0.21
Aidtonutuiuldisustei
victims
S,000 7,S00 10,000 0.26 0.21 0.16
Sociulseivices 1,386 1,S74 1,71S 0.07 0.04 0.03
Benelitstopeoplewitl
nutionulmeiit
13,770 1S,7S0 10,878 0.72 0.4S 0.17
Social insurance (pre-
1995 public sector
retirees)
26,759 39,235 45,916 1.39 1.11 0.74
Health insurance cards 9,288 16,920 29,274 0.48 0.48 0.47
Pooipopulutionin
mountuinousuieus
4,887 7,91S 12,190 0.2S 0.22 0.20
Clildienundei6yeuis 2,711 S,31S 9,392 0.14 0.1S 0.1S
Students(ullclildien6to
14yeuis)
1,493 2,970 S,738 0.08 0.08 0.09
Neuipooi 197 720 1,9S4 0.01 0.02 0.03
Education subsidies 1,863 3,419 6,025 0.10 0.10 0.10
Labor market policies 1,357 3,514 3,730 0.07 0.09 0.06
Targeted poverty
reduction programs
4,564 11,003 15,310 0.24 0.31 0.25
Total 67,192 105,994 135,884 3.50 3.00 2.19
Memorandum items
GDP(Dbillion) 1,922,1S1 3,S27,7S0 6,217,101
Minimumwuge(D‘000) 7S0 1,376 2,426
Numbeiolpooi(‘000) 12,340 10,11S 7,890
Pooipopulutionin
mountuinousuieus
1Syeuisoldundubove
(‘000)
1S,924 14,342 12,71S
Numbeiolneuipooi(‘000) 1,789 3,496 S,241
Numbeiolclildienundei
6(‘000)
8,628 9,093 8,944
Numbeiolclildien6to14
yeuis(‘000)
12,496 12,7SS 13,288
Heultlinsuiunce
contiibutioniute(%)
3 3 3
Totulpopulution(‘000) 86,6S6 91,670 96,2S2
Heultlinsuiunce,lully
subsidizedpeisons(%)
28.3 2S.6 22.S
Poveityiute(%) 14.4 13.9 13.8
Pooiundneuipooiiute(%) 16.S 17.7 19.3
Souices:Autloi’sculculutionsbusedonILSSA2009;Giunetul.2009;undGeneiulStutistics
Ollicedutu.
309 Fiscal space for social protection policies in Viet Nam
people’swoikingcupucitytluntoulouselold’spoveitysituution,tle
impuctisnotexpectedtobesubstuntiul.TleloiecustsinTuble4uie
consistentwitlunincieuseoltlenumbeiolbeneliciuiiesinlinewitl
populutiongiowtl,undudIustmentstotlebusiclevelolmontllycusl
benelitsinlinewitlGDPgiowtl.
Tleumountolbenelitpuidtopeoplewitlnutionulmeiitisexpec-
tedtodecieusesteudilyoveitime,undtlisdeclinewillielievesome
oltlebudgetconstiuintsintlesociulseivicessectoi.But,becuusetle
iiskolnutuiuldisusteisinVietNumisligl,tleielutiveweigltoltle
uidtovictimsolnutuiuldisusteiwilllikelyiemuinconstuntususluie
olGDP.Consequently,iutleitlundecliningto0.6%olGDPin2020
us in Tuble 4, oui estimute ol lutuie liscul spuce ussumes tlut sociul
ussistuncewillmoielikelyuseiesouicesutleustequivulenttoubout
0.8%olGDPin2020.
Social insurance
Fisculspucewillbemudeuvuilubleustlelinunciulbuidenoltle
benelits puid to pie-199S ietiiees decieuses. Estimutes indicute tlut
tlis buiden could lull liom 1.4% ol GDP in 2010 to 0.7% in 2020,
il, umong otleis, tle Goveinment continues to udIust tlose benelits
uccoiding to minimum-wuge clunges (Giun et ul. 2009). Any lowei
benelitincieusewouldcieutemoielisculspuce.
Education subsidies and labor market policies
Tleestimutesussumetluttlebudgetwilliemuinconstuntususluie
olGDP.Tlelisculspucecieutedbytleieguluiieductionintlenumbei
oltlepooiwilllikelybeusedtoimpiovetlequulityolscloolingin
pooiuieusundtosuppoitwideiuccesstoligleieducution.
Targeted poverty reduction programs
Oveitlenext10yeuis,tleNTPPR,Piogium13S,undpioIectsundei
Deciee30uslouldcontinue.Itisstilluncleui,tlougl,wletleiDeciee
30ulundingwillgiuduullyieplucetlutloiotleipioIects.
TleestimutesslowninTuble4ussumetluttlestutewillcommit
lundsolubout1.6%olGDPloitlenextSyeuis,undol1.2%loitle
peiiod2016–2020loiulltlepiogiumscombined.Astlelundingloi
leultlinsuiuncepoliciesundloitlepiogiumstoimpioveuccessund
quulity ol educution to tle pooi is budgeted sepuiutely, tlis lunding
coiiespondstotlelevelolcommitmentoltlepeiiod2006–2010in
ielutiontotlepiovisionolugiicultuieextensionseivices,vocutionul
310 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
tiuining,communitydevelopmentundinliustiuctuie,tledistiibution
ol pioductive lund, tle uccess to cleun wutei und lousing impiove-
ments(TubleS).Howevei,iltlegoveinmentdoesnotiuisetotullun-
ding, leultl insuiunce lunding could signilicuntly ieduce iesouices
uvuilubletootleipiogiums.
Overall social protection spending
and fiscal space
Ontlebusisolulltleseussumptionsundexpecteddevelopments,tle
oveiull size ol tle sociul piotection sectoi ovei tle next 10 yeuis is
loiecust to decline liom 3.S% ol GDP in 2010 to 3.0% in 201S und
2.2%in2020.
Still,benelitspuidtopie-199Sietiieesundtopeoplewitlnutio-
nulmeiitconsumeuluigepoitionoltlisbudget:1.6%olGDPin201S
und0.9%in2020.Tledecieuseintlesepiogiumsis,tlougl,luige
enougltolieeiesouicestosuppoitleultlinsuiuncepoliciesund,pos-
sibly,tointioducenewsociulpolicies.
Fisculspucewillieullymuteiiulize,lowevei,onlyilnoimpoitunt
quusi-liscul delicit develops in tle leultl insuiunce und sociul insu-
iunce sectois. As tle discussion below indicutes, tle piobubility ol
sucluneventis,lowevei,ielutivelylow.
Expected financial position
Health insurance
In200S,totulleultlexpendituiesumountedtoS.2%olGDP;public
leultlspendinguccountedloi2.3%olGDP(MinistiyolHeultl200S).
Heultl insuiunce linunced lull public leultl spending; stute budget
tiunsleislinuncedtleotleilull.IlVietNumudoptstlesumetiendus
otleicountiies,peicupituleultlexpendituiesuielikelytoiisebyut
leusttlesumeiuteuspeicupituGDP.Inluct,itwouldbedesiiubletlut
publicleultlexpendituiesinVietNumioselusteitluntlut,becuuse
tle pooi cuiiently undeiuse leultl cuie seivices. Foiecusts indicute
tlut, in 201S, totul leultl expendituies could umount 8.8% ol GDP
und public leultl expendituies to 3.4% ol GDP (Custel 2007). Il in
201S,usin200S,tlestutebudgetlinunceslulltlisbudget,tomutcl
tleiest,leultlinsuiuncemustiuisetleequivulentolubout1.7%ol
GDPin201S.
Oui simulutions indicute tlut il univeisul coveiuge is uclie-
ved, tle policy tlut links tle busic piemium loi leultl insuiunce
totleminimumwuge(undtlustogeneiulincomegiowtl)willbe
311 Fiscal space for social protection policies in Viet Nam
Table 5: National Targeted Program on Poverty Reduction
and Program 135-II, planned budgets, 2006–2010
National
budget Donors
Local
budgets and
community
contribution Credit Total
National Targeted Program on Poverty Reduction 2006–2010
Extension
seivices
200 100 300
Vocutionul
tiuining
2,S00 S00 3,000
Model
duplicution
40 260 300
Community
development
10 SS 10 7S
Inliustiuctuie 1,0S0 SS0 2,0S0 3,6S0
Cupucity
building,
udvocucy,
monitoiing
1SS 10S 11S 37S
Distiibutionol
lund
800 200 1,000
Heultlussistunce 4,076 4,076
Educution
ussistunce
2,073 2,073
Housing,uccess
todiinking
wutei
1,600 3,S00 S,100
Ciedit 3,614 26,000 29,614
Program 135-II
a

Pioduction
suppoit
2,22S
Inliustiuctuie 8,7S0
Inliustiuctuie
opeiutionund
muintenunce
87S
Cupucitybuilding S2S
Livingstunduid
suppoit
S2S
Munugementund
supeivision
S0
State budget
funding
D billion % of 2006 GDP
Heultlussistunce 4,076 0.4
Educution
ussistunce
2,073 0.2
Ciedit 3,614 0.4
Otleipiogiums
undpioIects
undeiNTPPR
6,3SS 0.7
Piogium13S-II 9,06S 0.9
u
70%coveiedbystutebudgetlunding;excludesolliciuldevelopmentussistunceolunudditionul
S300million.
Souices:SociulistRepublicolVietnum200S;InteinutionulDevelopmentAssociution2007.
312 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
successlulinbuluncingleultlinsuiuncelinuncesin201Sund,pio-
bubly,insuppoitingtlegiowtloltleleultlsectoiintlelollowing
Syeuis.Illulltlewoikeisintleinloimulsectoidonotlollowtle
leultlinsuiunceiegulutionoiilloimulemploymentintleenteipiise
sectoi does not giow us expected, tle ievenue sloitlull could lit
0.3%–0.S%olGDP.
Pension system
In tle pension system, sloit-teim conceins uie lew. Fiist, tle stute
budget ulieudy beuis tle linunciul buiden ieluted to pie-199S ieti-
iees.Second,tlesystemcieutedin199Sisluiliombeingmutuie,so
veiylewoltlecontiibutoisluveieucledietiiementugewitlpension
iiglts.Asuiesult,tlesystemcuiientlyuccumulutesieseivesundpio-
videsiesouicestliougltlebuyingolpublicbondsundieguluilouns
tootleisociuluieusundpublicpioIects.
Tleie uie, lowevei, medium- to long teim conceins ubout tle
system’s linunciul viubility. Tle ietiiement uge is cuiiently low und
pensionbenelitspuidtopublicsectoiietiieesuiequiteliglielutiveto
wlutwoikeisluvecontiibuted.IltlegoveinmentcontinuestoudIust
public sectoi pensions unnuully ut tle sume iute us tle minimum
wuge,tliswillpioduceudelicitintlemediumteim.Il,ulteinutively,
itudIustspublicpensionsuccoidingtotleconsumeipiiceindex,tle
systemslouldiemuinlinunciullysoundloimucllongei.
Fiscal space and reforms to reduce
household vulnerability
Assuming tlut goveinment ieceipts (beside leultl insuiunce und
sociulinsuiunceievenuesliomcontiibutions)iemuinstubleususluie
olGDP,tleuboveunulysissuggeststlutintlenext10yeuis,tletiend
ol public sociul spending in Viet Num slould ullow tle goveinment
to continue building u compielensive sociul secuiity system loi tle
wlolepopulution.Asmentioned,ieliunceonuniveisulcoveiugepio-
giumsulongwitlluigepoveityieductionpiogiumsuppeuistobetle
keyleutuieoltlecountiy’ssociulstiutegy.
Tleintegiutionolluigenumbeisoltleinloimulsectoipopulution
intotlepensionsystemwillulsoopennewpossibilitiestointioduce
meclunisms tlut ieduce louselolds’ vulneiubility to income slocks.
Undeitlesemeclunisms,intleeventolIoblossoiieducedincome
(due, loi exumple, to economic downtuin, diouglt, unimul diseuse,
oi epidemic), tlose coveied by sociul insuiunce could be ullowed to
313 Fiscal space for social protection policies in Viet Nam
boiiowliomtleiiownlutuieietiiementbenelits.Long-teimsickness
unddisubilityinsuiuncecouldbeestublisleduswell.Tleintioduction
ol notionul delined contiibution uccounts, us loieseen in tle ILSSA
2009SociulStiutegyPupeidiultpupei,willlelptlutpiocess.
Howevei,unlessitisucceleiuted,tlisstiutegywillbeinellectivein
piotectingmostoltlecuiientwoikeisundtleiilumiliesliomincome
slockbecuuseitwilltukemunyyeuistodevelopundtoieuclusigni-
licuntsluieoltlepopulution.Altlougltlegoveinmentlusiecently
intioduced u voluntuiy pension scleme loi inloimul sectoi woikeis,
ouisimulutionsusingdutuliomtleVHLSS2006slowtluttlesys-
temwillmostlikelypiovideincomesuppoitloionlyuleweldeilyin
tlenext30yeuis.Evenintlebest-cusescenuiio,inwliclullinloi-
mulsectoiwoikeiswitleuiningsolutleusttleminimumwugeIoin
tlemundutoiyoitlevoluntuiypensionsystemliom2007,coveiuge
oltleeldeilywitlpensionincomewouldieuclonly34.8%in2030
(Tuble6).
Table 6: Pension income coverage of elderly
in the best-case scenario (%)
Old-age income status 2020 2030
Witlnopensionoilumpsum 3S.6 21.4
Witlpensionincome 13.4 34.8
Witllumpsumpuidutietiiement S1.0 43.8
Note:Autloi’ssimulutionsbusedondutuliomtleVietnumHouseloldLivingStunduidsSuivey
2006,undeitleussumptiontlut,stuitingin2007,ullwoikeiscontiibuteeitleitotlemundutoiy
oivoluntuiypensionsystem.
Tle most impoitunt ieuson loi tlis iesult is tlut, in oidei to be
linunciully viuble, tle pension system iequiies tle beneliciuiies ol
montllypensionincometocontiibuteloiuminimumol20yeuis.A
iutleismulllumpsumispuidotleiwise.Munywoikeisintleinloi-
mul sectoi wlo could Ioin sociul insuiunce “tomoiiow” uie ulieudy
40yeuisoldoiubove(women)oi4Syeuisoldoiubove(men).Tley
cunnot,tleieloie,contiibuteloi20yeuisbeloieieuclingietiiement
ugeeveniltleydeluyietiiementuptotleugeol60loiwomenund
6Sloimen.Tlesumeissueisulsoseenintlecuseoltlemundutoiy
system und woikeis ol tle enteipiise sectoi. Tle mundutoiy system
wusopentopiivutesectoiemployeesin199S.Allwoikeiswloiegis-
teiedwitlsociulsecuiitywlentleyweie40oiubove(women)und
4S und ubove (men) will ieucl ietiiement uge in tle coming yeuis
witlout20yeuisolcontiibution.
314 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Poveity iutes umong tle eldeily uie not puiticuluily ligl, but il
iuiultouibunmigiutionintensilies,tleissueolpoveitycouldemeige.
Pioviding univeisul income suppoit to ull tle eldeily in iuiul uieus
would,tlougl,beunulloiduble.Ouisimulutionsindicutetlututbest,
only 32.3% ol tle eldeily in iuiul uieus uie likely to be pensioneis
in 2030. Pioviding income suppoit to tle pooiest would, tleieloie,
piobublybedilliculttoimplementbecuusetlepiogiumwouldluve
toscieenluigepopulutionsoluncoveiedeldeily.Inouisimulutions,
in 2020, ubout 12 million eldeily people uie loiecust us living in
iuiuluieus.
In uddition to tle issue ol poveity emeiging umong tle eldeily,
tlelucttlutmunyoltloseintlepensionsystemuieentitledonlyto
smulllumpsumumountsiseiodingtlepublic’stiustinsociulsecuiity.
Rigltnow,woikeisinVietNumdonotseemtovuluesociulsecuiity
benelits.Studies(ToTiungundCustel2009)undmuclunecdotulevi-
dence indicute tlut wuges uie olten undeiiepoited und iegistiution
uvoidedilpossible.TleliguiesinTuble6indicutetlutevenilulltle
woikeis ol tle inloimul sectoi puiticipute in tle voluntuiy pension
systemimmediutely,uboutlulltleeldeilywouldbeentitledtoonly
smull lump sum umounts in 2030. And even il poveity umong tle
eldeilydoesnotincieusebecuuseielutivesundliiendssuppoittlem
(tougieuteioilesseiextent),publicopinionwillpeiceivetlutsociul
insuiunceiscostlyundiiielevunt.
Supporting access to old-age income
Tuble7piesentsunestimuteoltlecostin2020olupiogiumtlutwould
piovidepensionincomeequultotleminimumwugetotleeldeilywlo
luvecontiibutedtotlepensionsystembutuieeligibleonlytoulump
sum
6
wlentleyieuclpensionuge.Tlecostoltlepiogiumconsistsin
linuncingtlegupbetweentleminimumwugeundtleietiiee’slump
sum.Intleculculution,tlelumpsumistiunsloimedintoununnuity,
usilsociulsecuiitycouldkeepundinvesttlelumpsumunduseitwitl
tleietuinstolinuncepuitoltleoveiullbenelit.AswitlTuble6,tlese
estimutesuiebusedonouisimulutions,wliclussumetlutullwoikeis
Ioin tle pension system, wlicl in tuin expluins wly tle numbei ol
ietiieesliomtlevoluntuiysystemissoligl.
Tlecostol2.86%olGDPlookspuiticuluilyligl,buttlisistle
ligleibound.Inpiuctice,tlecostoltlispolicycouldbelowei.Il,loi
6
Tlutis,toulltlosewlo,between2008und2020,contiibutetotlepensionsystem
butieuclietiiementugewitlleweitlun20yeuisolcontiibutions.
315 Fiscal space for social protection policies in Viet Nam
exumple,40%olinloimulsectoiwoikeisIoinnow,tlecostwouldbe
uioundtleleveloltlebenelitstluttlestutebudgetpuidin2008to
pie-199Sietiiees(1.S%olGDP).
Otlei policies (mutcling contiibutions, subsidized louns, etc.)
couldlelppiomotetuke-upundieducetlecostolpiovidingold-uge
income suppoit to cuiient coloits ol middle-uged woikeis (Vietnam
Development Report 2007).Tleeuilieiestimutesslowtluttlesepoli-
ciesuieliscullywoikubleundintleiungeoltlelisculspucetlutwill
likelybeuvuilubleintlemediumteim.Tleiiimplementutionwould,
moieovei,betempoiuiy,ustleyuielimitedtotlegeneiutionolwoi-
keiswlowillnotluveludtleoppoitunitytocontiibuteloi20yeuis.
Conclusions
ToduyuluigepiopoitionolwoikeisinVietNumuieemployedintle
inloimulsectoi.Altlougltleenteipiisesectoiisiupidlydeveloping,
muny woikeis uie employed in smull businesses, uie luimeis, oi do
cusuul woik. Luige enteipiises liie u signilicunt puit ol tleii woik-
loice undei sloit-teim contiucts. As u iesult, in times ol economic
slowdown, most ol tle dismissed woikeis uie not coveied by sociul
secuiity.Moieovei,nopolicycunbeputinplucetolelpwoikeiscope
Table 7: Cost of providing a minimum
pension to the elderly
a

Cost
Number of
beneficiaries
Cost
(%olGDP)
Retiieesliomtlemundutoiypensionsystemwlo:
woikedintlepublicsectoi 74,931 0.03
woikedintlepiivutesectoi 98,126 0.04
Retiieesliomtlevoluntuiypensionsystem 6,483,048 2.86
Share of elderly with pension income (%)
Illumpsumispuidtotlosewitlleweitlun20
yeuisolcontiibution 14.2
IltleGoveinmentsubsidizespensionstoietiiees
wloluvecontiibutedloileweitlun20yeuis
(ussumingtlutlullolinloimulsectoiwoikeis
contiibuteincomingyeuis) 39.1
u
“Eldeily”leieieleistotloseintlemundutoiyundvoluntuiypensionsystemsbutwloieucl
pensionugewitlleweitlun20contiibutionyeuis.Tlesimulutionussumes,usinTuble6,
puiticiputionolullwoikeis.
Souice:Autloi’sculculutions.
316 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
witltleincomeslocksbecuuseoltleimpossibilityolimplementing
veiilicution metlods on income und employment ol inloimul sectoi
woikeis. Accoidingly, tle Goveinment’s sociul piotection stiutegy is
uimingtodevelopucompielensivesociulsecuiitysystemcoveiingtle
wlolepopulution.
Tlisclupteilus,liist,evuluutedtlelisculimplicutionsolsuclu
stiutegygiventlewillingnessoltleGoveinmenttocontinueimpio-
vinglivingstunduidsintlepooiestiegions.Itlus,second,slowntlut
iltlepiocessisnotucceleiuted,uclievingwidepopulutioncoveiuge
witl sociul insuiunce (including pensions) will tuke, ut best, muny
yeuis.Atwoistitwillnotbepossiblebecuuseintlesloitundmedium
teims,publicopinionwillieguidsociulinsuiunceuscostlyundiiiele-
vunt.Tlisclupteilus,linully,demonstiutedtluttleimplementution
olpoliciestlutboostpensionsystempuiticiputionisliscullywoikuble.
Tleintegiutionolluigegioupsoltleinloimulsectoiintotlepen-
sion system could, luitleimoie, open new possibilities to intioduce
meclunismstlutieduceoidinuiylouselolds’vulneiubilitytoincome
slocksintimeolciisis.
References
CustelPuulette.2007.Vietnum:PioIectionsollong-teimleultlinsu-
iunce piemiums. Pupei piesented ut tle Ministiy ol Heultl
woikslop,HuNoi,19Apiil.
CentiulInstituteloiEconomicMunugement(CIEM)undWoildBunk.
2009. Evuluution ol tle impuct ol tle economic ciisis on tle
enteipiisesoltleindustiiulpuiksinVietnum.Repoitpiesented
uttleCIEMWoikslop,HuNoi.August.
Giun,Cong,PuuletteCustel,undLongGiung.2009.Asociulsecuiity
loiecusting und simulution model loi Vietnum. Repoit pie-
sented in tle Woikslop Impioving Ellectiveness ol Policies
onWugeundSociulInsuiunceinVietnum,InstituteolLuboui
ScienceundSociulAlluiis,HuiDuong,Decembei.
Institute ol Luboi, Science und Sociul Alluiis (ILSSA). 2009. Sociul
Piotection Stiutegy Peiiod 2011–2020 (6tl diult). Hu Noi.
Septembei.
Inteinutionul Development Associution (IDA). 2007. Piogium docu-
ment loi u pioposed ciedit loi u pioposed liist Piogium 13S,
Pluse II suppoit opeiution. Woild Bunk iepoit 38690-VN,
Wuslington,DC.
Ministiy ol Heultl. 200S. Health Statistics Yearbook 2005. Hu Noi:
Stutistics,PlunningundFinunceDepuitment.
317 Fiscal space for social protection policies in Viet Nam
MinistiyolLuboi,InvulidsundSociulAlluiis(MoLISA).2009.Repoit
on tle situution ol employment lost und Iob sloituge due to
tleeconomicciisisintle6liistmontlsol2009.Repoitontle
implementutionoltledecision30/2009/QD-TTg.July.
Nguyen Tli, Lun Huong, und Tuun Luu Quung. 2008. Impucts ol
incieused lood piice on poveity in Vietnum. Poveity Anulysis
und Dutu Initiutive (PADI). Eust Asiu Seminui loi Senioi
Policymukeis,KuuluLumpui,Muluysiu,9–12June.
NguyenTliundTluPluong.2009.Assessingtleimpuctsoltlelinun-
ciul ciisis in Vietnum: Rupid impuct monitoiing. Vietnumese
AcudemyolSociulSciences,CentieloiAnulysisundFoiecusting.
HuNoi.
NguyenTliTluPluongundPuuletteCustel.2009.Voluntuiypension
systemclullengeolexpundingcoveiuge.Buckgioundpupeiloi
VietnumeseAcudemyolSociulSciences,CentieloiAnulysisund
Foiecusting.PiesenteduttleWoikslopSociulPiotectionund
Policy Implicutions, Vietnumese Acudemy ol Sociul Sciences,
HuNoi,12June.
Nguyen Viet Cuong, Tlui Hung Plum, und Tung Plung Duc. 2009.
Evuluuting tle impucts ol tle cuiient economic slowdown
on (un)employment in Vietnum. Indoclinu Reseuicl und
Consulting,HuNoi.
Plum Anl Tuyet und Puulette Custel. 2009. Social assistance: Cash
transfers:Potential impact of Decision 67.Buckgioundpupeiloi
Vietnumese Acudemy ol Sociul Sciences, Centie loi Anulysis
undFoiecusting.HuNoi.
SociulistRepublicolVietnum.200S.The National Targeted Program on
Poverty Reduction 2006–2010.HuNoi.
ToTiung,TlunlundPuuletteCustel.2009.Vietnum:Compulsoiysociul
secuiitypuiticipution:Reveuledpieleiences.Buckgioundpupei
loiVietnumeseAcudemyolSociulSciences,CentieloiAnulysis
undFoiecusting.HuNoi.lttp://ssin.com/ubstiuct~1461330
Vietnam Development Report.2007.JointdonoiiepoittotleVietnum
ConsultingGioupMeeting,HuNoi.6–7Decembei.
WoildBunk.2009.Tukingstock:AnupduteonVietnum’siecenteco-
nomicdevelopments.BuonMuTluut.June.
319
The global economic crisis:
Can Asia grasp the opportunity
to strengthen social protection
systems?
Mukul G. Asher
1
Introduction
TlemuinobIectivesolunysociulsecuiity(oisociulpiotection)system
2

uie consumption smootling ovei un individuul’s liletime insuiunce
(puiticuluily uguinst longevity und inllution iisks),
3
income iedistii-
butionloisocietyusuwlole,undpoveityieliel.Howevei,tleseluve
tobetiudedolluguinsteconomicgiowtl,luboimuiketelliciency,und
luboimuiketllexibility.Asiesouicesdevotedtosociulpiotectionluve
oppoitunity costs, needs ol gioups otlei tlun tle eldeily in society,
undotleineedssuclusleultl,educution,undinliustiuctuie,luveto
betiudedolluguinstullocutionsloiietiiement.Individuul,liscul,und
societululloidubilityslouldulsobeconsideiedwlenconstiuctingund
ieloimingsociulsecuiitysystems.
TleneedtostiengtlensociulpiotectionsystemsinAsiulusbeen
evidentsinceutleusttle1997–1998Asiunlinunciulciisis.Tleinitiul
elloitstostiengtlensociulpiotectionsystemsinitsulteimutl,lowe-
vei, weie not sustuined in muny puits ol Asiu us economic iecoveiy
wusswiltundiobust(Howell2001).
Rouglly u decude lutei, tle cuiient globul linunciul und econo-
micciisis—wloseoiiginsuieliomindustiiuliutleitlundeveloping
1
MukulG.AsleiisupiolessoiuttleLeeKuunYewScloololPublicPolicy,Nutionul
UniveisityolSingupoie.TlunksuieduetoHideukiTunukuloiincisivecomments.
2
“Sociul piotection” denotes muIoi biuncles ol sociul secuiity sucl us pensions,
leultlcuie,woikinIuiy,undsociulussistunce.
3
Longevity iisk conceins tle piobubility tlut uccumuluted suvings und ietiiement
benelitsmuybeinudequutetolustuntildeutl.Inllutioniiskconceinstlepiobubility
tluttlevulueolietiiementbenelitmuynotbepiotecteduguinstinllutionduiing
tleietiiementpeiiod.
320 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
countiies—lusloiseveiulieusonsonceuguinundeiscoiedtleuigency
olstiengtleningsociulpiotectionsystemsinAsiu.
4

Fiist,tleciisisisexpectedtoieducetlemedium-teimgiowtliute
olmostAsiuncountiies.Astlesinglemostimpoituntmucioeconomic
vuiiubleinpotentiullypiovidingeconomicsecuiityloibotltleyoung
und tle old is tle tiend iute ol economic giowtl, uny loweiing ol
medium-teim giowtl piospects will muke tle tusk ol stiengtlening
sociulsecuiitysystemsmoiedillicult.
Industiiul countiies in Noitl Ameiicu, Euiope, und Jupun luve
been signilicunt contiibutois to economic giowtl und dynumism ol
Asiuncountiies.Astleiiioleislikelytobecomelesssignilicunt,muny
Asiun countiies will need to iebulunce tleii economies uwuy liom
un exteinul sectoi oiientution towuid u gieutei weiglt loi domestic
demund,puiticuluilylouseloldconsumption.Wlilesucliebuluncing
willbeuclullengeloimunyAsiuncountiies,itulsopiovidesunoppoi-
tunity to use stiengtlening ol sociul piotection systems to incieuse
domesticdemund,undtomunugeinequulities.
Second, lowei medium-teim giowtl could udveisely impuct tle
puceundquulityolIobundliveliloodcieutioninmunyAsiuncountiies.
Tliswouldincieusetleneedloisociulpiotection,butcouldieduce
tlecupucityolsocietytomeettlisneed.
Tliid,tleglobulciisislusnecessitutedtleuseoluggiessivelis-
culstimuluspuckugesinseveiulAsiuncountiies.Tleseuppeuitobe
munugeubleiltleciisisisnottoopiolonged.Butilitis,lisculiisks,
und iisks to tle bulunce ol puyments due to u combinution ol lowei
netexpoits,iemittunces,undinvestmentllows,couldiise.Tleseiisks
intuinmuyleudtoupwuidpiessuieoninteiestiutes,iuisingtlecost
ol munuging public debt.
S
Tley muy ulso ieduce tle liscul llexibility
iequiiedtoullocutegieuteiiesouicesloisociulpiotection.
Tle globul ciisis lus consideiubly enlunced tle “poveity ieliel”
obIectiveolsociulsecuiitysystems.Aspoveitylevels,ontleonelund,
und gioss domestic pioduct (GDP) und employment giowtl, on tle
otlei,uieinveiselyieluted,sustuininggiowtlundenluncingemploy-
mentelusticitywitliespecttoGDPslouldbeunintegiulpuitolsociul
piotectionstiutegiesinAsiu.
It is in tle ubove context tlut tlis pupei unulyzes tle implicu-
tionsoltleglobuleconomicciisis,unddemogiuplicundluboimuiket
4
TlescopeoltlispupeiislimitedtoEustundSoutlAsiu,tlusexcludingWestund
CentiulAsiu.
S
Foi2010,publicdebtususluieolGDPispioIectedtobeneuily200%loiJupun,
ovei60%loiIndiuundtlePlilippines,undoveiS0%loiMuluysiuundTluilund
(EIU2009).Tliswouldsuggestbotlliglcostsollinuncingdebtundconstiuined
spuceloicontinuedlisculstimulution.
321
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
tiends loi sociul piotection systems in Asiu, witl its muin locus on
pensionsoiietiiementlinuncing.
Demographic and labor market trends
Demogiuplic und luboi muiket tiends set tle context witlin wlicl
sociul-piotectioniesponsestotleglobuleconomicciisiswillneedto
bestiuctuiedbyAsiuncountiies.
Tubles 1–3 piovide demogiuplic indicutois loi selected Asiun
countiies.Ontlebusisoltledututleyslow,tlelollowingobseivu-
tionsmuybemude.
Asiuissettoexpeiienceiupidugingintle21stcentuiy.Tlesumple
countiiesincludedinTuble2willluveneuily40%moieeldeilypei-
sonsby20S0tluntlewoildludin200S.Tlesluieoltlesecountiies
in tle woild’s eldeily is pioIected to incieuse liom 42% in 200S to
47% by 20S0. Il ull tle developing membei economies ol tle Asiun
DevelopmentBunk(ADB)weieincluded,Asiuwillbelometomoie
tlunlulloltlewoild’seldeilyby20S0,oiovei1billionpeople.
Tle iupid uging ol Asiu is u iesult ol ieduction in leitility iutes
undincieusedlileexpectuncyutbiitlundutuge60.Asiswellknown,
incieusedlongevityiuisespensioncostsdispiopoitionutely.Unceituinty
uboutlongevitytiends(duetounceituinimpuctolmediculteclnology
und otlei luctois) is incieusing tle complexity ol designing pension
piogiums.Evenduiing200S–2010,onlytlePlilippinesundIndiuuie
pioIectedtoexlibitleitilityiutesubovetleglobuluveiuge,butsixol
tle11sumplecountiiesexlibitleitilityiutessignilicuntlybelowtle
ieplucementiute.
Tle stututoiy pensionuble uge, lowevei, iemuins ielutively
low, iunging liom SS to 6S yeuis loi men und S0 yeuis to 6S yeuis
loi women. Some ol tle ligl-income countiies sucl us Jupun, tle
RepublicolKoieu,undSingupoieuietukingmeusuiestoincieusetle
ietiiementuge,oitleugeutwlicllullpensioniigltsucciue.
Aswomenlivelongei,undonuveiugeluvelessexposuietotle
luboiloice,tleiiloweiietiiementugegivestlem,onuveiuge,lewei
iesouicestolinunceold-ugeneeds,includingleultlcuie.Addiessing
gendeiissuesslouldtleieloiebeunintegiulpuitolpiogiumsinull
biunclesolsociulsecuiity.
Tle mediun uge in tle sumple countiies (witl tle exception ol
tle Plilippines) will be well ubove uveiuge loi tle woild in 20S0
(Tuble1).InJupun,tleRepublicolKoieu,undSingupoie,tlemediun
ugewillbeneuilySSyeuis.Similuily,onlyintlePlilippinesundIndiu
willtlepeicentugeoltotulpopulutionuged60undubovebelesstlun
tleglobuluveiuge(Tuble2).
322 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
T
a
b
l
e

1
:

D
e
m
o
g
r
a
p
h
i
c

t
r
e
n
d
s

i
n

s
e
l
e
c
t
e
d

A
s
i
a
n

c
o
u
n
t
r
i
e
s

C
o
u
n
t
r
y
/
A
r
e
a
T
o
t
a
l


p
o
p
u
l
a
t
i
o
n

(
m
i
l
l
i
o
n
)
A
v
e
r
a
g
e

a
n
n
u
a
l

r
a
t
e

o
f

c
h
a
n
g
e

i
n

p
o
p
u
l
a
t
i
o
n

(
%
)
T
o
t
a
l

f
e
r
t
i
l
i
t
y

r
a
t
e
M
e
d
i
a
n

a
g
e
s

(
y
e
u
i
s
)
L
i
f
e

e
x
p
e
c
t
a
n
c
y


a
t

b
i
r
t
h

(
y
e
u
i
s
)
2
0
0
7
2
0
5
0
2
0
0
5

2
0
1
0
2
0
4
5

2
0
5
0
2
0
0
5

2
0
1
0
2
0
4
5

2
0
5
0
2
0
0
5

2
0
1
0
2
0
4
5

2
0
5
0
2
0
0
5

2
0
1
0
2
0
4
5

2
0
5
0
W
o
i
l
d
6
,
6
7
1
.
2
9
,
1
9
1
.
3
1
.
1
7
0
.
3
6
2
.
6
2
.
0
2
8
.
0
3
8
.
1
6
7
.
2
7
S
.
4
A
s
i
a
C
l
i
n
u
,

P
e
o
p
l
e

s

R
e
p
u
b
l
i
c

o
l
1
,
3
2
8
.
6
1
,
4
0
8
.
8
0
.
S
8

0
.
3
2
1
.
7
1
.
8
3
2
.
S
4
S
.
0
7
3
.
0
7
9
.
3
I
n
d
i
u
1
,
1
0
3
.
4
1
,
S
9
2
.
7
1
.
S
S
0
.
3
0
3
.
0
1
.
8
2
4
.
3
3
8
.
7
6
3
.
1
7
S
.
9
I
n
d
o
n
e
s
i
u
2
3
1
.
6
2
9
6
.
9
1
.
1
6
0
.
1
0
2
.
2
1
.
8
2
6
.
S
4
1
.
1
7
0
.
7
7
8
.
6
K
o
i
e
u
,

R
e
p
u
b
l
i
c

o
l
4
8
.
2
4
2
.
3
0
.
3
3

0
.
8
9
1
.
2
1
.
S
3
S
.
0
S
4
.
9
7
8
.
6
8
3
.
S
M
u
l
u
y
s
i
u
2
6
.
6
3
9
.
6
1
.
6
9
0
.
4
1
2
.
6
1
.
8
2
4
.
7
3
9
.
3
7
4
.
2
2
0
.
1
P
l
i
l
i
p
p
i
n
e
s
8
7
.
9
1
4
0
.
S
1
.
9
0
0
.
S
0
3
.
2
1
.
8
2
1
.
8
3
6
.
3
7
1
.
7
7
8
.
7
S
i
n
g
u
p
o
i
e
4
.
4
S
.
0
1
.
1
9

0
.
3
8
1
.
2
1
.
6
3
7
.
S
S
3
.
7
8
0
.
0
8
4
.
6
S
i
i

L
u
n
k
u
1
9
.
7
1
8
.
7
0
.
4
7

0
.
S
S
1
.
9
1
.
8
2
9
.
S
4
3
.
4
7
2
.
4
7
7
.
6
T
l
u
i
l
u
n
d
6
3
.
9
6
7
.
4
0
.
6
6

0
.
2
7
1
.
8
1
.
8
3
2
.
6
4
4
.
3
7
0
.
6
7
8
.
1
V
i
e
t

N
u
m
8
7
.
4
1
2
0
.
0
1
.
3
2
0
.
2
1
2
.
1
1
.
8
2
4
.
9
4
1
.
6
7
4
.
2
8
0
.
3
J
u
p
u
n
1
2
7
.
9
1
0
2
.
S

0
.
0
2

0
.
7
8
1
.
3
1
.
6
4
2
.
9
S
4
.
9
8
2
.
6
8
7
.
1
S
o
u
i
c
e
:

U
n
i
t
e
d

N
u
t
i
o
n
s
.

2
0
0
8
.

W
o
r
l
d

P
o
p
u
l
a
t
i
o
n

P
r
o
s
p
e
c
t
s
:

T
h
e

2
0
0
8

R
e
v
i
s
i
o
n
.
323
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
Table 2: Demographic trends in selected Asian countries
Country/
Area
Life Expectancy
at age 60,
2000–2005
Percentage
of total
population
aged 60 and
above
Population
aged 60
and above
(millions)
Male Female 2005 2050 2005 2050
Woild n.u. n.u. 10.3 21.8 672.8 200S.7
Clinu,
People’s
Republicol
18 21 11.0 31.1 144.0 437.9
Indiu 17 19 8.0 21.0 89.9 329.6
Indonesiu 17 19 8.3 24.8 18.9 73.6
Koieu,
Republicol
19 24 13.7 42.2 6.6 17.8
Muluysiu 18 20 6.7 22.2 1.7 8.8
Plilippines 17 19 6.0 18.2 S.1 2S.S
Singupoie 17 21 12.3 39.8 0.S 2.0
SiiLunku 17 19 9.7 29.0 1.9 S.4
Tluilund 17 22 11.3 29.8 7.1 20.1
VietNum 19 21 7.6 26.1 6.S 31.3
n.u.~notuvuiluble.
Souice:UnitedNutions.2008.World Population Prospects: The 2008 Revision.
Table 3: Demographic ratios in selected Asian countries
Country/Area
Old-age dependency ratio
2005 2050
Woild 11 2S
Clinu,People’sRepublicol 11 39
Indiu 8 21
Indonesiu 8 29
Koieu,Republicol 13 6S
Muluysiu 7 2S
Plilippines 6 19
Singupoie 12 S9
SiiLunku 9 36
Tluilund 11 38
VietNum 9 30
Jupun 30 74
Souice:UnitedNutions.2008.World Population Prosp ects: The 2008 Revision.
324 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Clullenges uiising liom u sluiply incieusing mediun uge, iising
old-uge dependency iutio (Tuble 3), und concomitunt ieduction in
tlesluieoltlewoiking-ugepopulutionwillneedtobeuddiessedby
munyAsiuncountiies.
Tliee muIoi implicutions ol tle ubove demogiuplic tiends sug-
gestingvuiyinglevelsundpuceolugingumongAsiuncountiiesmuy
benoted.
Fiist, iupid populution uging signilied by iising old-uge depen-
dency iutios und incieusing lile expectuncy ut uge 60 suggests tlut
gieutei iesouices will luve to be devoted to tle eldeily. A substun-
tiulsluieoltleincieuseiniesouiceswillbetliougltlegoveinment
budget. Finding moie budgetuiy iesouices, puiticuluily wlen tle
medium-teimgiowtliutesuielikelytobemodeiute,willbeuclul-
lenge us tleie will be otlei demunds on sucl iesouices. Aggiessive
lisculstimuluspuckugesbyAsiuncountiiestosustuingiowtlduiing
tlecuiientglobulciisismuyulsoconstiuinlutuielisculllexibilityus
tle iesulting lutuie budget delicits will need to be linunced. Some
countiiessuclustlePeople’sRepublicolClinu(PRC),lowevei,luve
consideiublelisculcupucitytoexpundgoveinmentexpendituie,inclu-
dingtlutiequiiedloisociulsecuiityundsuletynets.
Second,tlesociulsecuiityneedsolloieignwoikeiswillneedto
beuddiessedbyAsiuncountiies.Munycountiiesintleiegion,sucl
ustleRepublicolKoieu,Muluysiu,undSingupoie,uieluigeundpei-
sistent iecipients ol loieign luboi, mucl ol wlicl is supplied liom
countiieswitlintleiegion,suclusBungludesl,Indiu,Myunmui,tle
Plilippines,SiiLunku,Tluilund,undVietNum.
Totulizution ugieements und ugieements involving woiking und
livingconditionsolloieignwoikeisinvolvingAsiuncountiieswillneed
to be encouiuged.
6
Recent ugieements by Jupun witl tle Plilippines
und Indonesiu loi speciul uiiungements loi woikeis liom tlese two
countiiestobeemployedinJupunonutempoiuiybusisiepiesentsun
exumple ol tuking udvuntuge ol demogiuplic complementuiities, us
wellusdiuwinguttentiontotlesociulsecuiityneedsolloieignwoikeis.
Tliid, globul demogiuplic tiends suggest tlut moie tlun tliee-
liltls ol tle potentiul livelilood geneiution between 200S und 2020
6
Totulizution ugieements uie designed to ensuie tlut individuuls und employeis
do not end up puying sociul secuiity tuxes oi contiibutions in moie tlun one
Iuiisdiction,oiulteinutivelyuvoidpuyingtlemineitleiIuiisdiction.Tleyulsoussist
iniecognitionolpensioniigltsundincioss-boideisociulsecuiityudministiution.
TlePlilippineslusenteiedintoubout10suclugieements,muinlywitlcountiies
inEuiopeundwitlCunudu.Indiulusulsomudeseveiulsuclugieements,piimuiily
witlEuiopeuncountiies.
325
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
willbeintleAsiuniegion(Tuble4).Indiuulonewouldneedtogene-
iuteuquuiteioltlepotentiulglobulliveliloods,wliletlePRC’sund
Indonesiu’s sluie will be 8.S% und 3.8%, iespectively (Tuble 4). In
sluipcontiust,Euiope’swoiking-ugepopulutionwillexlibitudecline,
wlile tle sluie ol Noitl Ameiicu in potentiul livelilood geneiution
willbeonly2.8%.Aliicu,witlusluieol27.S%,willulsolucesignili-
cuntclullengesinliveliloodgeneiution.
TleuboveunulysissuggeststluttleAsiuniegion,puiticuluilyits
developing countiies, will need to cieute u bettei bulunce between
cieutionolnewIobsundliveliloodsontleonelund,undpieseiving
existingbutunsustuinubleIobsontleotlei.
Tlesluieolloimulsectoiemploymentvuiiesliom84.3%indeve-
lopedeconomiestoonly20.8%inSoutlAsiu(TubleS).Wliletlecoi-
iespondingsluieisligleiinSoutleustAsiuundtlePucilic(38.8%)
undinEustAsiu(42.6%),eventlesepiopoitionsuieloweitluntle
globuluveiugeol46.9%(TubleS).Tleieuieulsovuiiutionsuccoiding
to gendei, witl tle sluie ol women in loimul employment conside-
iublyloweitluntlutolmen,puiticuluilyinSoutlAsiu(TubleS).
In developed economies, it wus tle expunsion ol tle loimul
sectoi, witl identiliuble und ielutively stuble employei–employee
Table 4: Potential livelihood generation
a

by region, 2005–2020

No.
(millions)
% of world
total
Woild 846.6 100.0
AsiuundtlePucilic S26.7 62.2
Indiu 211.7 2S.0
People’s
Republicol
Clinu 71.8 8.S
Indonesiu 32.0 3.8
Aliicu 232.6 27.S
Euiope -17.8 -2.1
LutinAmeiicuundCuiibbeun 79.3 9.4
NoitlAmeiicu 23.6 2.8
u
Delinedustlenumbeioleconomicullyuctivepeisons,tlosebetween1Sund64yeuisolugeinu
giveniegion,loiwlomliveliloodswillneedtobegeneiutedintleloimuloitleinloimulsectois.
Souice:UnitedNutions.2008.World Population Prospects: The 2008 Revision.lttp://esu.un.oig/
unpp,uccessed7July2009.
326 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
T
a
b
l
e

5
:

P
e
r
s
o
n
s

w
i
t
h

w
a
g
e

o
r

s
a
l
a
r
y

e
m
p
l
o
y
m
e
n
t

s
t
a
t
u
s

o
n

t
h
e

l
a
b
o
r

m
a
r
k
e
t
,

c
i
r
c
a

2
0
0
8

(
%
)
C
o
u
n
t
r
y
/
A
r
e
a
T
o
t
a
l
M
e
n
W
o
m
e
n
S
h
a
r
e

o
f

e
m
p
l
o
y
e
d
S
h
a
r
e

o
f

w
o
r
k
i
n
g
-
a
g
e

p
o
p
u
l
a
t
i
o
n
S
h
a
r
e

o
f

e
m
p
l
o
y
e
d
S
h
a
r
e

o
f

w
o
r
k
i
n
g
-
a
g
e

p
o
p
u
l
a
t
i
o
n
S
h
a
r
e

o
f

e
m
p
l
o
y
e
d
S
h
a
r
e

o
f

w
o
r
k
i
n
g
-
a
g
e

p
o
p
u
l
a
t
i
o
n
S
o
u
t
l

A
s
i
u
2
0
.
8
9
.
7
2
3
.
4
1
S
.
6
1
4
.
6
3
.
S
S
u
b
-
S
u
l
u
i
u
n

A
l
i
i
c
u
2
2
.
9
1
3
.
8
2
9
.
2
2
0
.
S
1
4
.
4
7
.
4
S
o
u
t
l
e
u
s
t

A
s
i
u

u
n
d

P
u
c
i
l
i
c
3
8
.
8
2
1
.
9
4
1
.
S
2
8
.
6
3
S
.
0
1
S
.
1
E
u
s
t

A
s
i
u
4
2
.
6
2
3
.
3
4
6
.
0
2
8
.
9
3
8
.
3
1
7
.
6
N
o
i
t
l

A
l
i
i
c
u
S
8
.
3
2
4
.
4
S
8
.
8
3
8
.
S
S
6
.
7
1
0
.
S
M
i
d
d
l
e

E
u
s
t
6
1
.
S
2
9
.
0
6
4
.
4
4
1
.
6
S
3
.
S
1
S
.
0
L
u
t
i
n

A
m
e
i
i
c
u

u
n
d

t
l
e

C
u
i
i
b
b
e
u
n
6
2
.
7
3
8
.
6
6
0
.
6
4
6
.
1
6
S
.
8
3
1
.
8
C
e
n
t
i
u
l

u
n
d

S
o
u
t
l
e
u
s
t

A
s
i
u
n

E
u
i
o
p
e

u
n
d

C
I
S
7
6
.
6
4
1
.
S
7
S
.
4
4
8
.
0
7
8
.
0
3
S
.
7
D
e
v
e
l
o
p
e
d

e
c
o
n
o
m
i
e
s
8
4
.
3
4
6
.
6
8
1
.
7
S
1
.
8
8
7
.
S
4
1
.
6
W
o
i
l
d
4
6
.
9
2
6
.
S
4
7
.
4
3
3
.
0
4
6
.
0
2
0
.
1
C
I
S

~

C
o
m
m
o
n
w
e
u
l
t
l

o
l

I
n
d
e
p
e
n
d
e
n
t

S
t
u
t
e
s
.
S
o
u
i
c
e
:

H
u
g
e
m
e
I
e
i

2
0
0
9
,

T
u
b
l
e

4
.
2
,

p
.

6
4
.
327
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
ielutionslips,wliclcontiibutedtoeuinings-ieluted,sociulinsuiunce–
busedsociulsecuiitypiogiums.
Tle piospects loi incieusing tle sluie ol loimul sectoi employ-
mentuienot,lowevei,piomisinginmunyAsiuncountiies.Tlecui-
ient globul economic ciisis is expected to lowei tle medium-teim
tiendiuteoleconomicgiowtl,undlencetleiuteolincieuseinpei
cupituincomeoveitlenextseveiulyeuis.Astleieisupositivecoiie-
lutionbetweenpeicupituincomeundcoveiuge,someAsiuncountiies
will lind it clullenging to incieuse coveiuge tliougl loimul sectoi
employmentgiowtl.
TleuboveunulysisindicutestluttleieisunuigentneedloiAsiun
economiestoconstiuctmulti-tieiedsociulsecuiitysystems,involving
umixoliisk-sluiinguiiungementsumongtlestukeloldeis—beneli-
ciuiies,employeis,tlestute,lumiliesundtlecommunity,undnot-loi-
piolit oigunizutions (botl domestic und loieign). Tleie is tleieloie
incieusing iecognition tlut ietiiement incomes (pensions) cunnot
solelybebusedoneuiningsoicontiibutions.Tlesewouldneedtobe
supplementedbyotleitypesolietiiementincometiunsleis.
Sucl tiunsleis muy be instituted tliougl ex unte inteiventions
(duiingtlewoikinglile)undexpostinteiventions(ulteiietiiement).
Intleloimei,tlemuinclullengeistodesignmutclingcontiibutions
by tle stute to ensuie un udequute benelit, but witlout udveisely
impucting contiibution density,
7
ietiiement decisions, und incentives
topuiticiputeintleloimulsystems,wlileensuiinglisculsustuinubility.
Tleexpostinteiventionscunbeintleloimolsociulpensionsoi
minimum guuiuntees undei tle loimul sectoi pension systems. Tle
sociulpensionscunbeuniveisul,i.e.,piovidedtoeligibleindividuuls
usuiiglt,oiiesouice-tested.Ineuclcuse,tleieuieconsideiubleclul-
lengeswitliespecttodesign,implementution,undlinkugeswitltle
iestoltlepensionssystem.
Retiiementincometiunsleisslouldbedistinguisledliomsociul
ussistunce,wletleiuniveisuloiiesouice-tested.Tlelutteiisuvuiluble
toullwloquulilyieguidlessoltleiiuge.Retiiementtiunsleis,ontle
otleilund,uietuigetedutietiiees.
7
Tlis is delined us tle iutio ol tle numbei ol potentiully muximum contiibutions
byuwoikeiduiingtlelullwoikinglile,undtlenumbeiolcontiibutionsuctuully
ieceivedbytlesociulsecuiityuutloiities.
328 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Overview of social security systems in Asia
MunyAsiuneconomiesolleiuwideiungeolsociulsecuiitypiogiums:
old-uge, sickness und muteinity, woik inIuiy, unemployment, und
lumilyullowunces(Tuble6).Tlisiungesuggeststluttleieisugeneiul
ucceptunceoltleimpoitunceoltleioleolsociulsecuiityinensuiing
equitublegiowtlundsociulstubility.Sincespuceconstiuintspieclude
udetuileddesciiptionoltlesociulsecuiitypiogiumsineucleconomy,
tlediscussionisconlinedtotlebioudleutuiesundcluiucteiisticsol
Asiu’ssociulsecuiitysystems.
Table 6: Availability of programs under different branches of
social security in selected countries of Asia and the Pacific
Economy
Old age,
disability,
and
survivors
Sickness and
maternity
Work
injury Unemployment
Family
allowances
Cash
benefits
for both
Cash
benefits
plus
medical
care
a
Austiuliu X X X X X X
Clinu,
People’s
Republicol X X X X X X
Indiu X X X X X
b
Indonesiu X
b d
X
b b
Jupun X X X X X X
NewZeulund X X X X X X
Plilippines X X X X
b b
Koieu,
Republicol X
b d
X X
b
Singupoie X X X X
b b
SiiLunku X
b d
X
l
X
Tuipei,
Clinu X X X X X
b
Tluilund X X X X X X
VietNum X X X X X
b
u
Coveiugeispiovidedloimediculcuie,lospitulizution,oibotl.
b
Husnopiogiumoiinloimutionisnotuvuiluble.
c
Old-ugebenelitsonly.
d
Mediculbenelitsonly.
e
Muteinitybenelitsonly.
l
Coveiugeispiovidedundeiotleipiogiumsoitliouglsociulussistunce.
Souice:www.ssu.gov/policy/docs/piogdesc/ssptw/2006-2007/usiu/ssptw06usiu.pdl
329
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
TleconsideiubleleteiogeneityinsociulsecuiitysystemsinAsiu
iellects u lost ol listoiicul und otlei luctois, including tle level ol
economicdevelopmentundstiuctuieoltleeconomy.Someoltlese
benelits, lowevei, muy be inteimediuted tliougl sociul ussistunce
oi otlei public piogiums in some countiies sucl us Indonesiu und
Sii Lunku. In Asiu, publicly munuged delined benelit und delined
contiibutionsclemespiedominute.OnlytletwoeconomiesolHong
Kong,ClinuundAustiuliuopeiutepiivutelymunugeddelinedcontii-
butionsclemes.
Tle uvuilubility ol u sociul secuiity piogium, lowevei, does not
necessuiily imply tlut it is well designed, lus wide coveiuge, oi is
linunciullysustuinuble.Noidoesitimplytluttlesociulsecuiityoigu-
nizution udministeiing it is well goveined, oi tlut dilleient compo-
nents ol tle sociul secuiity system complement eucl otlei to biing
uboutsystemicellectivenessundlinunciulsustuinubility.
Asiun countiies luve vuiied contiibution iutes to sociul secuiity
piogiums:old-ugepiotection,employment,undleultlcuie(Tuble7).
Clungesintlecontiibutioniuteuieusuullymotivutedbytleluigei
mucioeconomicundpoliticuleconomyclungesinucountiy.Foiins-
tunce, Tluilund’s Sociul Secuiity Fund, in view ol tle cuiient globul
economicciisis,lusieducedcontiibutioniutesliomS%to3.S%loi
ull employeis und employees. Tle stute’s contiibution to pluns will
ulsobeieducedliom2.7S%to2.2S%in2009.Estimutessuggesttlut
tleieductionincontiibutioniuteswillcollectivelysuveB22.6billion
loiemployeisundemployees,undB3.8billionloitlegoveinment.
In some Asiun countiies, tle totul contiibution iutes uie quite
ligl. Tlus, tle PRC’s totul contiibution iute is 40%, Indiu’s 36.1%,
Singupoie’s 34.S%, Jupun’s 2S.S%, und Viet Num’s 2S%. Tle sociul
secuiity contiibutions uie stututoiy levies und tleieloie impuct on
tle cost ol liiing woikeis. Tley ulso udveisely ullect tle disposuble
income uvuiluble to woikeis, leuding to liquidity constiuints. Tlese
countiiesluvelittleioomtoiuisecontiibutioniutestoimpioveieti-
iementbenelits.
At tle otlei end ol tle scule, tle contiibution iutes uie quite
low loi some countiies like Austiuliu und Indonesiu (9%), Biunei
Duiussulum (10%), und Myunmui (4%). Tlese countiies tleieloie
luve gieutei llexibility in impioving ietiiement benelits tliougl
ligleicontiibutions.
Seveiul Asiun countiies, sucl us Muluysiu und Sii Lunku, do not
iequiiecivilseivuntstocontiibutetotleiipensions,undlinuncepen-
sion liubilities out ol cuiient ievenue. In seveiul countiies, sucl us
Indonesiu und Tluilund, contiibutions by civil seivunts covei some
piopoition ol tle pension costs, witl tle iemuining linunced out ol
tlegoveinment’sunnuulbudget.
330 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 7: Contribution rates of social security programs
in Asia and the Pacific, 2008
Economy
Old age, disability,
and survivors
All social security
programs
a
Insured
person Employer Total
Insured
person Employer Total
Austiuliu
d
0 9 9
e
0 9
l
9
e
Clinu,People’s
Republicol
d
8 20 28 11 29
l
40
c
Indiu
d
12 17.6 29.6 13.8 22.3 36.1
Indonesiu 2 4 6 2 7
l
9
Jupun
d
7.7 7.7 1S.4 12.4 13.1 2S.S
c
NewZeulund 0 0 0
e
0 0 0
e
Plilippines
d
3.33
b
7.07
b
10.4
b
4.S8 8.32
l
12.9
Koieu,
Republicol
d
4.S 4.S 9 7.S8 8.S3 16.11
Singupoie
d
20
b
14.S
b
34.S
b
20 14.S
l
34.S
SiiLunku 8 12 20 8 12
l
20
c
Tuipei,Clinu
d
1.3
b
4.SS
b
S.8S
b
2.86S 8.48S 11.3S
Vunuutu 4 6 10 4 6 10
VietNum
d
S 11 16 7 18 2S
u
Includesolduge,disubility,undsuivivois;sicknessundmuteinity;woikinIuiy;unemployment;
undlumilyullowunces.Insomecountiies,tleiutemuynotcoveiulltlesepiogiums.Insome
cuses,onlyceituingioups,sucluswugeeuineis,uieiepiesented.Wlentlecontiibutioniute
vuiies,eitleitleuveiugeoitlelowestiuteintleiungeisused.
b
Alsoincludestlecontiibutioniutesloiotleipiogiums.
c
Goveinmentpuystletotuloimostoltlecostollumilyullowunces.
d
Contiibutionsuiesubmittedtouceilingonsomebenelits.
e
Goveinmentpuystletotulcostolmostpiogiumsliomgeneiulievenues.
l
EmployeispuytletotuloimostoltlecostolwoikinIuiybenelits.
g
Employeispuytletotulcostolcuslsicknessundmuteinitybenelits.
l
Goveinmentpuystletotulcostoltleuniveisulold-ugeunddisubilitypensions.
i
Dutuuieutleust2yeuisold.
I
Goveinmentpuystletotulcostolunemploymentbenelits.
k
Employeispuytletotulcostollumilyullowunces.
l
Plusllut-iutecontiibutions.
m
Goveinmentpuystletotulcostoltleuniveisulold-ugepension.
n
Goveinmentpuystletotulcostolcuslmuteinitybenelits.
Souice:www.ssu.gov/policy/docs/piogdesc/ssptw/2006-2007/usiu/ssptw06usiu.pdl
Wliletleieisevidenceolpuiumetiicieloimincivilseivicepen-
sionsclemes,lundumentulsystemicieloimlusnotbeenwidespieud
(Aslei 2000). In 2004, lowevei, Indiu’s centiul goveinment intio-
duceduNewPensionScleme(NPS),wliclsliltedpensionsolnewly
ieciuitedcivilseivuntsliomudelinedbenelittoudelinedcontiibu-
tionmetlod(Aslei2008).
331
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
Tle NPS incoipoiutes leutuies designed to ieduce tiunsuctions
costs (e.g., u centiul iecoid-keeping ugency will be iesponsible loi
muintuiningiecoids,iesultingineconomiesolscule).TleNPSgives
limitedinvestmentoptionswitlunumbeiolussetmunugeis,witlu
deluultoptionincludingulile-cycletypeollundwlicluutomuticully
iebulunces un individuul’s poitlolio witl uge. Tle investment munu-
gementisuuctionedundtloseinvestingdonotknowtleindividuul
identity ol tle membeis. Tle NPS is to be ieguluted by tle Pension
Fund Regulutoiy und Development Autloiity (PFRDA). Tle PFRDA
2009billis,lowevei,yettobepussedbyPuiliument.Wlenlullyope-
iutionul, tle NPS will mundutoiily covei ubout 20 million civil sei-
vuntsutulllevelsolgoveinment.
Pension assets and investments
Foi u vuiiety ol ieusons, pension ussets in Asiu luve been exlibiting
iupid giowtl. Tle pension ussets in Asiu und tle Pucilic incieused
liom S1,2S1 billion in 2003 to S2,9S1 billion by 2008, suipussing
tloseinEuiope,butstillbelindussetsinNoitlAmeiicu,wlicllud
S4,686 billion in 2008 (Wutson Wyutt 2009). Muny ol tle luigest
pension lunds in Asiu, sucl us tlose in PRC, Jupun, tle Republic ol
Koieu,undSingupoie,uiesoveieignweultllunds.Sucllundsuieun
integiul puit ol wlut lus come to be known us tle sludow bunking
system,witlledgelundsundpiivuteequitylundsconstitutingotlei
components.
In muny Asiun low- und middle-income countiies, tle limitu-
tions ol domestic linunciul und cupitul muikets, und luck ol cupucity
oiunwillingnesstoengugeininteinutionuldiveisilicutionolpension
lundussets,luvemeunttlutinvestmentiisksluvebeenconcentiuted
in teims ol geogiuply (domestic ussets) und ullocution ol ussets. In
countiiessuclusIndiuundSiiLunku,mucloltlepiovidentundpen-
sionlundinvestmentsuieingoveinmentsecuiities,wlileincountiies
suclusIndonesiu,domesticbunkdepositsuccountloimoietlunlull
ol totul investments ol tle nutionul piovident lund. Neuily ull tle
ussets ol Muluysiu’s Employees Piovident Fund uie invested domes-
ticully. Some Asiun economies, notubly tle PRC; Hong Kong, Clinu;
Jupun; tle Republic ol Koieu; Singupoie; und Tluilund luve, low-
evei,beendiveisilyingtleiipensionussetsinteinutionullytovuiying
degiees.
As in otlei iegions, tle globul economic ciisis lus udded to tle
clullenge ol investing piovident und pension lund ussets ol Asiun
countiiesinumunneitlutgeneiutesliglieuliutesolietuinoveiu
piolongedpeiiod(WutsonWyutt2009).
332 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Provident and pension fund governance
and regulation
Tlegoveinunceundiegulutionolpiovidentundpensionlundsinvolve
munugingpiincipul–ugent(oiugency)ielutionslips.Tleseuiisewlen
piincipuls (piovident und pension lund beneliciuiies, und tuxpuyeis
wlen goveinment lunding is involved) need to iely on ugents (pio-
videntundpensionlundmunugeisundtiustees,goveinmentbuieuu-
ciuts)topuisuetleinteiestsoltlepiincipuls.Wliletleielusbeen
incieusing iecognition ol tle need loi institutionulizing good govei-
nunce piuctices involving cluiity, uccountubility, tiunspuiency, und
munugement ol dilleiing inteiests umong stukeloldeis, piogiess
umongAsiuncountiieslusbeenielutivelymodest.Stutedominution
olpiovidentundpensionlundsponsoislipundmunugementinAsiu
lusledtolessieceptivitytotleioleolunindependentpensioniegu-
lutoitlutwouldenloicegoodgoveinuncepiuctices.
Tleie uie, lowevei, encouiuging signs tlut goveinunce und
iegulutionissuesuiebeginningtoieceivetledueuttentionolpolicy
mukeis. It is in tlis context tlut tle estublislment ol Indiu’s inte-
iim Pension Fund Regulutoiy und Development Autloiity muy be
ieguidedusunencouiugingsign.Inteinutionuloigunizutionssuclus
tle Inteinutionul Sociul Secuiity Associution, und tle Oigunisution
loi Economic Co-opeiution und Development uie ulso incieusingly
emplusizinggoodgoveinunceundiegulutoiypiucticesbytleiimem-
beis.MostAsiuncountiiesuiemembeisolutleustoneoltlesetwo
oigunizutions.Incieusingtleioleolpiivuteoccuputionulpensionsin
Asiuncountiies,undtlepiessuiestogeneiutebetteiietuinsonpen-
sionussets,uieulsolikelytoincieusetleimpoitunceolgoodgovei-
nunceundiegulution.
8

Recent progress in social security reform
in the People’s Republic of China
Iniecentyeuis,tlePRClusmudeiupidpiogiessinextendingcove-
iugeinullliveieulmsolsociulsecuiitypiotectionindicutedinTuble6.
Policy mukeis uppeui committed to unilying iuiul und uibun sociul
8
Tlus, Jupun’s Goveinment Pension Investment Fund, witl ussets ol S1.2 tiillion,
becumeunindependentinstitutioninApiil2006.Euiliei,itwuspuitoltleMinistiy
olHeultl,LubouiundWelluie.
333
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
secuiity systems. Tle uim is to uclieve univeisul coveiuge by 2020.
Zlu (2009) mentions seveiul speciul cluiucteiistics ol tle PRC’s
uppioucl—tleinvolvementolucudemicsundsociulpuitneis,piloting
undgiuduulexpunsion,politiculwill,inclusionolextensioninnutio-
nulsocioeconomicdevelopmentpluns,speciulcumpuignsloituigeted
gioups,employment–piomotionmeusuiesloilesspiivilegedgioups,
undseveiulotleipiouctivepolicies.
Avenues for strengthening social
protection systems
Tlissectionbiiellyenumeiutesvuiiouspossibleuvenuesloistiengtle-
ning sociul piotection systems, witl exumples liom Asiun countiies.
Dependingontlecontext,obIectives,undlinunciul,liscul,undinsti-
tutionulcupucities,euclAsiuncountiycuncombinetleseuvenuesto
stiuctuieunuppiopiiutestiutegy.
Avenue 1: Modernizing and professionalizing
existing formal social security organizations in
performing core functions
Eucl piovident und pension lund must peiloim live coie lunctions
witluieusonubledegieeolcompetenceundelliciency(Ross2004).
Tleseuie:ieliublecollectionolcontiibutions,tuxes,undotleiieceipts
(including uny loun puyments in tle secuiity systems); puyment ol
benelits loi eucl ol tle sclemes in u timely und coiiect wuy; secu-
iing linunciul munugement und pioductive investment ol piovident
und pension lund ussets; muintuining un ellective communicution
netwoik,includingdevelopmentoluccuiutedutuundiecoid-keeping
meclunisms to suppoit collection, puyment, und linunciul uctivities;
und pioduction ol linunciul stutements und iepoits tlut uie tied to
pioviding ellective und ieliuble goveinunce, liduciuiy iesponsibility,
tiunspuiency,unduccountubility.
Tleieuieseveiulexumplesoltleinitiutivestukenbyvuiiouspio-
videntundpensionlundsinAsiudesignedtoimpiovetlepeiloimunce
witliespecttooneoimoiecoielunctions.CountiiessuclusMuluysiu,
tlePlilippines,undSingupoieluvebeenmukingincieusinglysoplis-
ticuteduseolinloimutionteclnologytoimpioveudministiutionund
compliunce elliciency, und to geneiute munugement inloimution
systemstlutuieconducivetobetteidecisionmuking.
334 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
TlePRC,
9
Muluysiu,undTluilundluvebecomemoieuggiessive
und piolessionul in investing sociul secuiity lunds. Tlese initiutives
couldpotentiullyleudtoligleiietuins,tlougltleiisksuieulsolikely
tobegieutei.
10

Avenue 2: Parametric or systemic reforms
of some components of existing systems
Puiumetiic ieloims involve clunging one oi moie puiumeteis ol
tle pension system, sucl us ulteiing tle pension benelit loimulu,
incieusingtleietiiementuge,undclungingpieietiiementwitldiuwul
piovisions. A systemic ieloim involves substuntive clunges in sucl
uieusoltlepensionsystemusbusicplilosoply(suclususliltliom
sociul iisk pooling to individuuls beuiing pension iisks), oi pension
metlods(suclususliltliomudelinedbenelittodelinedcontiibution
metlodolpensions).
Tle exumples ol puiumetiic und oi systemic pension ieloims
include:
º Intioduction ol deleiied unnuity scleme by Singupoie, cul-
ledCPFLile,tolelpuddiesstlelongevityiisk.CPFLiledoes
notincieusetleiesouicesuvuilubletounindividuulinietiie-
ment but clunges tle timing ol witldiuwuls, und intioduces
upiivuteiisk-poolinginsuiuncesclemelinuncedbymembeis
tlemselves.
º NewZeulundlusintioducedupoituble,delinedcontiibution
sclemeculledtleKiwiSuveiSclemetolelpmunugeudditionul
iesouicesneededtouddiesslongevityiisks.
º Seveiulcountiies,suclusJupun,Muluysiu,undSingupoie,uie
encouiuging ietiied individuuls to be ut leust puitly uctive in
tleluboimuiket.
9
ClinuInvestmentCoipoiution,oneoltlecountiy’sseveiulsoveieignweultllunds,
lusbeentukingunincieusinglyuggiessivestunceindiveisilyingussets,witluiising
sluieolussetsinvestedinteinutionully.Itisulsoiupidlypiolessionulizingitsstull,
olten puying inteinutionully compuiuble muiket compensution puckuges. As tle
countiy’slinunciulundcupitulmuiketsdeepen,tleinvestmentscunbeexpectedto
become moie diveisilied und soplisticuted. Tle ultimute contingent liubility will,
lowevei,iestwitltlestute.
10
TlisisexempliliedbytleS7.3%sluieinRHBCupitulBld.,upiivutesectoilinunciul
conglomeiute contiolled by Muluysiu’s Employees Piovident Fund. Sucl unusuul
investmentcloicescouldgeneiuteligleiietuins,butulsoinvolvesubstuntiuliisks.
Tleieisulsoupossibilitytlutudispiopoitionutesluieoltletimeundeneigyoltle
munugement (ol tle Employees Piovident Fund) muy be needed to munuge sucl
iiskyinvestments.
335
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
º Muny countiies, sucl us tle FiIi Islunds, Indiu, und tle
Plilippines, uie tigltening up on pieietiiement witldiuwuls
liompiovidentundpensionsclemes.Tliswillensuietluttle
“powei”olcompoundinteiestisluinessedloiulongeipeiiod.
º AsliltbyIndiu’scivilseivicepensionsclemeliomudelined
benelit to u delined contiibution metlod is un exumple ol
systemicieloim.
Avenue 3: Introducing or expanding retirement
income transfers that do not entirely depend on
formal labor market relationships or entirely on
contributions by members
Tleie is wide vuiiety ol ietiiement income tiunsleis. Tlese include
sociulpensions,undco-contiibutionsbytlestute.Foipoveityieduc-
tion,sociulussistuncepiogiumstuigeteduttlepooiolullugesmuy
bemoieuppiopiiute.Tleieuieulsoconditionulcusltiunsleis
11
wlicl
muybeuppiopiiuteinsomeciicumstunces.
ExumplesliomAsiuncountiiesinclude:
º Tluilund’s “30-Bult Scleme” (ulso known us tle Univeisul
Coveiuge Heultl-cuie Scleme), intioduced in 2001, lus not
onlybeencontinuedbutexpundedwitlgieuteistutesuppoit,
tocoveineuilyS0millioncitizens.By2006,peicupituexpen-
dituieontlissclemewusB1,6S9,wlilecoiiespondingexpen-
dituiewusB1,738loileultlbenelitsundeitleSociulSecuiity
Ollicesclemes,undB8,78SundeitleCivilSeivuntsMedicul
BenelitsScleme(Iwunu2009).
º In stimulus puckuges ol seveiul countiies, including tle PRC
undIndiu,tleieisusignilicuntsociulussistunceundietiiement
incometiunsleicomponent.
º In2007,tleBeiIingmunicipulgoveinmentextendedcoveiuge
olold-ugebenelittoulleldeilycitizensundeiitsIuiisdiction.
Tlismuybeieguidedunexumpleolusociulpension.
º A 2007 Koieun initiutive expects to covei 70% ol ull senioi
citizens tliougl u busic old-uge pension linunced by tle
goveinment.
º Indonesiuluspiovidedcusltiunsleistocusliontlebuidenon
low-incomepeopleliomiestiuctuiingitsluelsubsidyscleme.
11
Tlesepuyiecipientsinexclungeloiunuctiontlutbiingspiivutebeluvioiclosei
to tle sociul optimum (de Junviy und Sudoulet 2004). Tleieloie, tley uie best
ieguideduspuitolbioudeisociulsuletynets.
336 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Il tlis uvenue is to be ellective, liscul ieloims—locusing on bet-
teideliveiyolgoveinmentseivices,includingsociulpensions,undon
ieullocuting lunds towuid sociul secuiity needs—will be essentiul in
munyAsiuncountiies.
Avenue 4: Other initiatives
Exumplesolotleiinitiutivesinclude:
º Countiies sucl us tle PRC, Indiu, Muluysiu, tle Plilippines,
und Tluilund uie encouiuging occuputionul piivute pension
plunsoiindividuulietiiementuccounts(oibotl)tobiouden
tlesouicesolietiiementlinuncingundiisksluiing.
º Countiies sucl us Bungludesl, Indiu, und Indonesiu uie
encouiugingtlelinkingolpensionswitlmiciolinunce.Policy
mukeislopetluttliswillulsolelpenluncelinunciulinclusion
undstiengtlensociulcolesion.
º TleRepublicolKoieuundSingupoieuieexpeiimentingwitl
ieveise-moitgugesclemestouselousingequityloilinuncing
ietiiement.
Conclusions
As u iesult ol iupid populution uging due to declines in leitility und
incieusedlongevity,Asiunlow-undmiddle-incomecountiieswillluve
u mucl sloitei peiiod in wlicl to constiuct sociul secuiity systems
tlutcunpiovideudequutebenelitstomostoltleeligiblepopulution;
tlut uie sustuinuble linunciully und liscully; tlut uie ulloiduble by
individuuls, businesses, und tle economy us u wlole; und tlut uie
iobustiniidingoutmucioeconomiccycles,suclustlecuiientglobul
economicciisis.Moieovei,evenwlileexlibitingtlesecluiucteiistics,
tleiisociulsecuiitysystemswillneedtoensuietlutuligltiendiute
oleconomicgiowtlundincentivesloiluboi–muiketpuiticiputionuie
sustuined.
Wlile tleie is consideiuble leteiogeneity umong Asiun countiies
witliespecttopopulutionsize;peicupituincomelevels;undinstitu-
tionul,liscul,teclnologicul,undmunugeiiulcupubilities,tleunulysisin
tlispupeisuggestssomecommonuieusloituiningtleglobuleconomic
ciisisintounoppoitunityloistiengtleningsociulpiotectionsystems.
Fiist, sociul secuiity systems uie incieusingly ieguided us inte-
giul to oveiull economic, sociul, und politicul munugement ol tle
countiy, iutlei tlun being isoluted und ol seconduiy concein. Tle
337
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
cuiient globul economic ciisis lus ieinloiced und peilups uccele-
iuted tlis tiend. Tle iole ol tle stute in sociul secuiity linuncing,
munugement,undsupeivisionisulsoexpectedtoincieuseinAsiu–
Puciliccountiies.
Tle PRC, Indiu, Indonesiu,
12
und Viet Num
13
uie exumples ol
countiies tlut luve ielutively iecently begun tle tusk ol integiuting
sociulsecuiityieloiminitiutives,involvingpensions,leultlcuie,und
sociulsuletynets,intotleiidevelopmentstiutegies.Tleseinitiutives
uie designed to iebulunce tle economies ol tlese countiies to muke
tlemlessvulneiubletoexteinulslocks,undtouclievemoieinclusive
und bioudei development. Tle goveinments do, lowevei, iecognize
tle impoitunce ol sustuining u ligl tiend iute ol economic giowtl,
uswitloutluigeinutionulincomes,tletuskolmunugingcompeting
obIectives,undudequutelypiovidingloitleyoungundtleold,muy
becomemoiedillicult.SomeAsiuncountiies,suclusBungludesl,tle
FiIiIslunds,undMyunmui,olleiscopeloigieuteiintegiutionolsociul
piotectionsystemsintleiibioudeidevelopmentstiutegies.
Second,lollowingliomtleliist,istleincieusingiecognitiontlut
unellectiveieloimolsociulsecuiitysystemsiequiiescomplementuiy
ieloims in otlei uieus. Tlese include liscul policies, luboi muikets,
linunciulundcupitulmuikets,undpiovidentundpensionlundgovei-
nunceundiegulution.Expunsionolietiiementincometiunsleisund
olsociulussistunceiequiiesconcomituntieloimsinpublicseivicedeli-
veiysystems.Tleimpoitunceolgoveinmentcompetenceindeliveiy
olpublicseiviceslusincieusedconsideiublyusAsiuncountiiespuisue
uggiessivelisculstimulutionpuckuges.
Policiestopiomoteietiiementincomeliomluboimuiketpuitici-
pution even ultei loimul ietiiement will be impeiutive us lile expec-
tuncy(utbiitlundut6S)continuestoiiseinAsiu–Puciliccountiies.
Tlis ulso implies tlut countiies must be ielutively llexible ubout tle
loimulietiiementugeiules.
12
Indonesiulusembuikedonulong-teimobIectiveoluclievinguniveisulcoveiuge
loiullbiunclesolsociulsecuiity,piimuiilytliouglitssociulinsuiuncemeclunism.
It pussed tle SJSN, Luw No. 40/2004, und Luw No. 11/2009 on sociul welluie
to uclieve tlis goul. Actuul piogiess, lowevei, lus been ielutively slow. A sociul
secuiitysecietuiiutwussetupinMuy2009butitsbudgetuiyullocutionisnotonu
liimlooting.
13
Viet Num ulso lus u long-teim goul ol univeisul coveiuge using sociul insuiunce
metlods,complementedbymeuns-testedsociulussistunceundtiunsleis.Itpussed
uluwonleultlinsuiunceinNovembei2008undDeciee62/2009ND-CPonleultl
insuiunce in August 2009. It lus, lowevei, postponed tle implementution ol
unemploymentinsuiunce,butluspiovidedcusltiunsleistotlepooitocopewitl
tlecuiientciisis.
338 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Incieusinguseolpielundinginpensionlinuncing,usintlePRC,
Indiu, Muluysiu, tle Plilippines, und Tluilund, iequiies concomitunt
ieloims in linunciul und cupitul muikets, gieutei investment munu-
gement expeitise umong piovident und pension lund oigunizutions,
undpiomotionolenluncedlinunciulliteiucyundlinunciul-inclusion
policies.
Tliid,tleunulysisintlispupeistionglysuggeststleuigentneed
loiluigieuteipiolessionulismumongpiovidentundpensionlundsin
muny Asiun countiies wlen peiloiming coie lunctions. Tle mindset
oltleielevuntgoveinmentministiiesundoigunizutionsmustclunge
liom“piovideisolwelluieseivices”tobeingpiolessionulseivicepio-
videis,witlustiongemplusisoneconomicelliciencyundoigunizu-
tionulellectiveness.
Attuining bettei outcomes liom less expendituie ol iesouices
slouldbetlepiimuiymottoguidingsociulsecuiityieloim.Asiumust
exlibit gieutei uigency in investing piolessionul educution und tiui-
ninglucilities,undinundeitukingempiiiculevidence–busedunulyticul
ieseuiclonsociulsecuiityissues.
Inconclusion,loiAsiuncountiiestostiengtlensociulpiotection
systems,consideiubleuttentiontopiolessionuldetuilsundopennessto
innovutiveexpeiimentutionwillbeneeded.Inuddition,constiuction
und muintenunce ol iobust dutubuses, stiong unulyticul cupubilities,
uppiopiiute oigunizutionul stiuctuies und mindsets, und undeistun-
ding ol tle subtleties ol pension economics (puiticuluily sustuinubi-
lityoveiulongtime-loiizon,tletyiunnyolseeminglysmullnumbeis
exeitingupoweilulimpuctonpensionsclemeviubility,undtletiue
meuningolwlutismeuntby“lundingpensions”)willulsobeneeded.
Itisvitultlutpiovidentundpensionlundoigunizutionspubliclycom-
municute to stukeloldeis stoclustic uctuuiiul ussessments pioviding
long-teimpioIectionsoltleimpuctolclungesindemogiuplic,luboi
muiket, und otlei vuiiubles on tle sustuinubility ol cuiient pension
uiiungements.
Tle globul economic ciisis iepiesents u potentiul oppoitunity to
piogiesstowuidmoieextensiveundiobustsociulpiotectionsystems.
AstleieisconsideiubleleteiogeneityumongAsiuncountiieswitlies-
pecttotleuboveconstiuints,piogiessintukingudvuntugeoltleciisis
tostiengtlensociulpiotectionislikelytobeuneven,undpeilupsless
iupidundcompielensivetlundesiied.
339
The global economic crisis:
Can Asia grasp the opportunity to strengthen social protection systems?
References
Aslei,M.G.2000.ReloimingcivilseivicepensionsinselectedAsiu–
Pucilic Countiies. lttp://inlo.woildbunk.oig/etools/docs/
libiuiy/76S48/muicl2000/pioceedings/pdlpupei/week1/
uslei1.pdl
———.2008.PensionieloiminIndiu.InRuglbendiuJlu(ed.)The
Indian Economy Sixty Years After Independence, pp. 66–93.
PulgiuveMcMillun.
de Junviy, Alun und Elisubetl Sudoulet. 2004. Conditionul cusl
tiunsleis: Aie tley ieully mugic bullets? lttp://uie.beikeley
.edu/-sudoulet/pupeis/ARE-CCTPiogiums.pdl
Economist Intelligence Unit (EIU). 2009. Globul debt compuii-
son. lttp://buttonwood.economist.com/content/gdc?souice
~lptextleutuie
HugemeIei,K.2009.Riglts-buseduppioucltosociulsecuiitycoveiuge
expunsion. In R. Holzmunn, D. Robulino, und N. Tukuyumu
(eds.)Closing the coverage gap: The role of social pensions and
other retirement income transfers,pp.S7–71.Wuslington,DC:
WoildBunk.
Howell, F. 2001. Sociul ussistunce: PioIect und piogium issues. In
I.Oitiz(ed.)Social protection in Asia and the Pacific,pp.307–
364.Munilu:AsiunDevelopmentBunk.
Iwunu, Reisuke. 2009. Heultl secuiity in Tluilund: Cun tle UC
scleme,intioducedintleulteimutloltle1997Asiunlinun-
ciul ciisis, be sustuined tliougl tle cuiient globul economic
ciisis?BuckgioundpupeiloitleConleienceontleImpuctol
tle Globul Economic Slowdown on Poveity und Sustuinuble
DevelopmentinAsiuundtlePucilic,28–30Septembei,HuNoi.
Ross, S.G. 2004. Collection ol sociul contiibutions: Cuiient piuc-
tice und Ciiticul Issues. Pupei piesented ut tle Inteinutionul
Conleience on Clunges in tle Stiuctuie und Oigunizution ol
SociulSecuiityAdministiution,Ciucow,Polund,3–4June.
United Nutions (UN). 2008. Woild Populution Piospects: Tle 2008
Revision.lttp://esu.un.oig/unpp.Accessed7July2009.
Wutson Wyutt. 2009. WW/P&I 300 unulysis 2008. www.wutsonwyutt
.com
Zlu, Y. 2009. Sociul secuiity coveiuge in Clinu. Inteinutionul Sociul
SecuiityAssociution,Genevu.
341
Income support in times of global
crisis: An assessment of the role of
unemployment insurance and options
for coverage extension in Asia
Wolfgang Scholz, Florence Bonnet, and Ellen Ehmke
1
Market economy and unemployment
insurance: Some clarifications
2
Minimum institutionul iequiiements loi sustuinuble muiket eco-
nomies uie tle lollowing: (Sclumpeteiiun) entiepieneuis, guu-
iunteed owneislip iiglts, linunciul institutions, sociul secuiity, und
un employuble woikloice.
3
In otlei woids, economic development
iequiies systems loi tle inteipeisonul iedistiibution ol income und
weultl.Suclsystemslunctiontliougl(i)tlecollectionoltuxesund
sociul secuiity contiibutions liom economic entities on tle busis ol
tleiipustoicuiienteconomicuctivities
4
oioleconomictiunsuctions;
und(ii)simultuneouspiovisionolbenelitsundseivicestoindividuuls
on tle busis ol piedelined sets ol iules. Inteipeisonul iedistiibution
systemsuieculled“sociulsecuiity”oi“sociulpiotection.”
S
1
Wollgung Sclolz is u senioi economist und Floience Bonnet, stutisticiun ut Sociul
SecuiityDepuitment,InteinutionulLubouiOllice,Genevu.EllenElmkeiswitltle
UniveisityolKussel,Geimuny.TleuutloistlunkEmmunuelleSt-PieiieGuilbuult,
FiiediiclButtlei,KizysztolHugemeIei,undGüntleiSclmidloilelplulcomments
on euily veisions ol tlis pupei. As usuul, iemuining lluws, eiiois, und luck ol
cluiity iemuin tle uutlois’ iesponsibility. Tle contents ol tlis pupei must undei
nociicumstuncesbemisundeistoodusiepiesentingtleviewsoltleInteinutionul
LubouiOigunizutionoiitsOllice.
2
Tlis intioduction diuws on WS und tle Sociul budgeting cluss ol tle Muustiiclt
GiuduuteScloololGoveinunce(2009).
3
Sucl economies uie culled sociul muiket economies in cuse sociul secuiity is
developedinsucluwuytlutitpiomoteswoikeis’emuncipution.
4
Exumplesolcuiienteconomicuctivitiesuieinstuntuneousincomepioduction(luboi
income,piolits),oiconsumption;
S
Intlispupei,wedonotdistinguislbetween“sociulsecuiity”und“sociulpiotection”
butgiuntouiselvestlelieedomtousebotlnotionsinteiclungeubly.
342 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Sociulsecuiitytliouglclussiculunemploymentinsuiunce(UI)wus
designedtopiovidetempoiuiyincomesecuiityundtopieventpoveity
duiingtempoiuiyunemployment.Intlisiole,itbuysoutluboiliomtle
pioductionpiocess,upioceduietlut,becuuseolpositiveexteinulellects
on tle uveiuge stock ol lumun cupitul, lilts mucioeconomic output to
ligleilevelstlunwitlouttlebuyout.
6
Inpeiiodsoldeclineolgeneiul
economic demund, UI tempoiuiily “stoies” idle luboi outside tle pio-
ductionpiocessund,wlilepiovidingitwitltiunsleiincome,ullowsloi
muintuiningundupgiudingitsskillsuntiltleincome-geneiutionpiocess
picksupuguinund(enlunced)employubilityullowsloiieintegiutionol
tleunemployedutmuintuinedoiligleipioductivitylevels.
Tle cuiient economic ciisis mukes even moie visible tle ciuciul
ioletlutUIcunpluyinunypiospectivelysuccesslulsetolpolicymeu-
suiestoweutleieconomicstoims.Tlisistlecuseinhigh- and middle-
income countrieswleieUIisbeingiediscoveiedusuninstitutionulized
societul stubilizei ullowing loi consideied piepuiution loi tle post-
ciisislutuie.Itisgeneiullyucceptedusupoliticulpiogiumtomuintuin
UIunddevelopitluitleiinligl-incomecountiies,undtoimplement
itinmiddle-incomecountiies(Sclmid2009),witltleuimolbolste-
iingtlemontleiiudvuncementtowuidmutuiecupitulisteconomies.
Tle ciisis seems incieusingly to be losteiing consensus on tle
necessity ol investing in sociul piotection, giving u “sociul llooi”
7
in
low-incomecountiies,too.
8
Howevei,intliscontextUIisnotyetligl
on tle ugendu ol nutionul development policies. MuIoi development
ugenciesuvoiduddiessingtleconcietepioblemsolcoveiingcontin-
genciesielutedto(un-)employmentiisks(MECD2001undDFID2009
cunstundloimunyotleis):sociulpiotectionisundeistoodususetol
meusuiespiovidingsubsistenceloitlepooi,policieswitlinwliclUI
isnotexpectedtopluyumeuningluliole.
Tleieusonsolleiedloitlisieluctunceuiewellknown:UI(i)is
u solution only loi employees in loimul luboi muikets; (ii) iequiies
contiol meclunisms in oidei to pievent moiul luzuid; (iii) must be
6
Tleieusoningisuctuullytlelogicullyconsistentdevelopmentolunuigumentmude
byXuvieiSulu-i-Muitinwitliespecttopensionsystems(Sulu-i-Muitin199S).
7
Suclullooislouldconsistoltwobioudmuinelements:seivices,ullowinggeogiuplic
undlinunciuluccesstoessentiulpublicgoodssucluswuteiundsunitution,leultl,
und educution; und tiunsleis, pioviding u busic set ol essentiul sociul benelits, in
cuslundinkind,puidtotlepooiundvulneiuble.
8
AmongtleexplicitpiomoteisuieOECD’sDevelopmentAssistunceCommittee(OECD
2009u),tleClielExecutives’BouidoltleUNSystem(piomotingtleestublislment
oluwoildwideSociulPiotectionFlooi)(UN2009),undILO(udvocuting“udequute
sociul piotection loi ull” und uiging “tle inteinutionul community to piovide
development ussistunce, including budgetuiy suppoit, to build up u busic sociul
piotectionllooionunutionulbusis”)(ILC2009).
343
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
combined witl u widei iunge ol employment seivices und policies;
und(iv)iequiiesiulesloiitsinteiuctionswitlsociulussistunce.
TleissueolUIinAsiulustobeseenuguinsttleseconsideiutions
but must, ulso, be subIect to u cost–benelit unulysis tlut tukes into
uccounttleeconomicundpoliticulpiosundconsolUIintleiegion’s
dynumiccupitulistdevelopment.
Social protection of unemployed
workers: Overview
Tle cuiient ciisis is piobubly only u tempoiuiy bieuk in tle woild’s
economic giowtl piocess. In tle line ol tle woild’s muny economic
ciises since tle beginning ol tle 19tl centuiy, tle cuiient ciisis is
iooted in globul imbulunces und is cluiucteiized by tle exposuie ol
ulmost ull countiies to u stiong decline in ellective demund. It cun
beexpectedtluttlelullindemundwillbelollowedbypionounced
udIustmentsoleconomicstiuctuies.
Loss ol demund und sectoi iestiuctuiing emplusize tle need to
ensuie uvuilubility to societies ol instiuments tlut simultuneously
stubilizeunemployedwoikeis’consumption,tlutolleitimetomuin-
tuin oi updute woikeis’ skills loi tleii lutei ieintegiution, und tlut
lelp compunies biidge tle time iequiied loi pioductivity-enluncing
iestiuctuiing.
Suclsociulsecuiityloitleunemployedcunbepiovidedtliougl
contiibutoiysociulinsuiunce(UI)oinoncontiibutoiyincomesuppoit
sclemes,oiucombinutionolbotl,usuullysupplementedwitlotlei
luboimuiketpolicies(publicwoiks,tiuining,etc.).
FoiubetteilocusonAsiu,weliistlookuttleglobulsituutionol
coveiugebysuclpiogiums.
9
Avuilubleinloimutionullowsustodistinguisllegulundellective
UIcoveiuge(Tuble1).
10
Tleiesultsslowtwoessentiuls:
‡ Legal coverage. Out ol ull 184 countiies,
11
78 (42%) piovide
legulcoveiugetliouglstututoiypiogiums.Tlepopulutionco-
veiedinullcountiiesiepiesentsubout30%oltletotulecono-
micullyuctivepopulution,witlusluieol3%intlelow-income
countiiesundolulmost70%intleligl-incomecountiies.
9
TlelollowingtextdiuwsonwoikdonebyFloienceBonnet.
10
See Figuie 3, loi u stiuctuied oveiview ol tle countiy dutubuse undeilying tle
lollowingunulysis.
11
Tledutubusecompiises48low,46ligl,und90otleiincomegioups.
344 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Table 1: Legal and effective unemployment insurance
coverage by development level (liistdecude21stcentuiy)
Type of coverage
Country category by income level
Low
Lower-
middle
Upper-
middle High All
Legal coverage (see explanations in Box)
Existenceolustututoiy
piogiumloi
unemployed
(Numbeiolcountiies;
inpuientleses:
%olselectedcountiiesin
oveiullcountiygiouping
[stutisticulcoveiuge|)
S(8) 17(3S) 20(S4) 36(80) 78(44)
Legulsociulsecuiity–bused
coveiugeolunemployed
(%oleconomicully
uctivepopulutionin
countiygiouping)
Contiibutoiyund
noncontiibutoiy
sclemes
2.9 18.1 38.4 69.2 30.6
Mundutoiy
contiibutoiy
sclemesonly
2.9 1S.4 30.3 S8.9 2S.7
Effective coverage
a
(see explanations in Box)
Recipientsol
unemploymentbenelits:
(%olullunemployedin
countiygiouping—LFS)
Totul 1.3 3.6 10.4 38.8 12.9
Contiibutoiysclemes
only
1.33 3.6 9.8 31.3 10.9
Noncontiibutoiy
sclemesonly
0.0 0.0 0.6 7.6 2.0
Noncoverage
Noniecipientsol
unemploymentbenelits:
Complementuiygioup
(%olullunemployedin
countiygiouping—LFS)
98.7 96.3 89.1 60.9 86.9
LFS~luboiloicesuivey.
u
Becuuseolcuiientunuvuilubilityolstutisticuldutu,tleunemployedbeneliciuiiesolgeneralsociul
ussistuncesclemes(i.e.,sclemesnotspecilicullydesignedusunemploymentussistunce)uienot
included.Includingtlemwouldincieusecoveiugeiutesonlyincountiieswleiesuclsclemes
existonuluigeiscule,i.e.,ligl-incomeundulewmiddle-incomecountiies.Tletotulundeilying
dutubusecompiises184countiies;tletubleincludesonlytlosetlutpiovideutleustminimulloims
olstututoiyUIcoveiuge.
345
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
‡ Effective coverage. Tlis slows u similui puttein: tle ielutive
sluieolpeisonsieceivingUIbenelitsumongtleunemployed
isonuveiuge13%.Intlelow-incomecountiiesulmost99%ol
ullunemployeduieexcludedliomcusltiunsleis,wleieusin
tleligl-incomecountiiesviituully61%uieexcluded.
12
Tleobseivutiontlutlow-incomecountiies’UIpiotectionissolely
contiibution-busedielutestotlelucttluttleiicupucitiesdonotullow
loiimplementutionolsociulussistunce–typetiunsleisystems.
12
Duetodutuunuvuilublility,geneiulsociulussistuncewusexcludedliomTuble 1.
Legal and effective coverage—Some explanations
Legal coverage estimutes tlut peicentuge ol tle economicully uctive
populution,wliclislegullypiotecteduguinstlossolincomeincuseol
unemployment.Tlesepeisons’unemploymentbenelitsuieguuiunteed
bylegislution,buttleydonotnecessuiilycuiientlyieceivesuclbene-
lits.Apeisonislegullycoveiedillegulpiovisionsstipuluteleioilis
coveiugetliouglunemploymentinsuiunceoientitlementtospecilied
benelitsinceituinciicumstunces.
Effective coverage isculculutedustleiutiooltlenumbeiolpeisons
ieceivingunemploymentbenelitstotletotulnumbeiolunemployed,
busedonluboiloicesuivey(LFS)dutu.
Ellectivecoveiugeisusuullyloweitlunlegulcoveiuge:
º Legulcoveiugeisbusedonestimutesielutinglegislutedcutego-
iiesolcoveiedwoikeistoLFScutegoiies.
º Tleellectivecoveiugeiutioisculculutedusingdutuoltwodil-
leient souices: tle numbei ol beneliciuiies (usuully udminis-
tiutively piocessed montlly dutu) und tle LFS (usuully quui-
teilysumple-buseddutu).
º Tle unemployed usuully compiise cutegoiies ol peisons tlut
luvenotucquiiedbenelitentitlements.
º Tleellectivecoveiugeiutio,luitleimoie,dependson:
ƒ tleuveiugepeiiodduiingwliclubenelitisieceived;
ƒ tletuinoveioltle(un-)employedintleluboimuiket;und
ƒ tledegieeolsegmentutionoltleluboimuiket.Wlentle
sume people iepeutedly switcl between employment und
unemploymenttleiientitlementsmigltexpiie.
346 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
International capacities of crisis response
through unemployment insurance
Tleciisis-inducedlossolincomeoppoitunitiescouldiesultinsociul
und politicul ciises, luitlei udding to poveity, unless stutes oigunize
income tiunsleis in luvoi ol woikeis und tleii lumilies und simultu-
neouslyimplementpoliciesuimingutnewguinlullutuieemployment.
Muintuiningdelinedincomelevelscunbeieulizedtliougl:
‡ Unemployment benefitstlutcontiibutoiysclemestypicullypuy
out ut inteivuls, olleiing delined income ieplucement ultei u
quulilyingpeiiodoveiulimitedtime.
‡ Unemployment assistance and general social assistancetlutuie
usuully llut peiiodic (noncontiibutoiy) cusl tiunsleis eitlei
becuuse tle contiibutions-bused unemployment benelits
expiied,oibecuusenosuclentitlementsexist.
‡ Other labor market policies, wlicl piovide peiiodic income
suppoit, conditionul on puiticipution in employment oi tiui-
ningpiogiums.
Wleie put in pluce, UI sclemes cun obviously piovide sucl
income-muintenuncebenelits.Howevei,wlileellectiveciisisiesponse
lustobeuvuilublequickly,suclieudysolutionsuieimpossibleinmost
countiies,puiticuluilyinlow-undmiddle-incomecountiies,becuuse
tleiequiiedudministiutivestiuctuies,includingtleexecutiveiules,
uienotinpluce.
Figure 1: Unemployment insurance country allocation
Unemployment statutory scheme
78 countries | 42%
No unemployment statutory social
security provision
106 countries |58%
Including 13 countries (12 %) with limited provision
(mainly employer liability) but no statutory programme
Social insurance
(public)
64 countries (82%)
Social
assistance
8 countries
(10%) M
a
i
n
s
c
h
e
m
e
A
d
d
i
t
i
o
n
a
l
s
c
h
e
m
e
Social assistance
17 countries
Provident
funds
6 countries
(8%)
Social
assistance
3 countries
184 countries
Souice:ILO-SECSOCdutubuse.
347
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
Onlyilgoveinmentsystemsuieulieudyinstitutionulizedcuntley
uutomuticully ieuct to clunging economic conditions: tle powei ol
UIsclemesuseconomicstubilizeisstemsliomtlelucttlutellective
coveiuge is instuntly extended wlen moie woikeis become unem-
ployed; in sucl situutions, olten, tle uveiuge benelit puid incieuses
uutomuticully.
Regiettubly,UIsclemestlutcunbeuseduccoidinglyexistinonly
78countiies(Figuie1).AmuIoiityoltlem(64outol78)luvesociul
secuiity–typeUIustledominuntscleme,witl:
º 17countiies(outoltle64)luvingudditionulemployment-ie-
lutedsociulussistuncetlutstepsinwlentlespecilicUIiules
uienotupplicuble;
º 8 countiies
13
olleiing tux-bused sociul ussistunce us tle muin
undonlyunemploymentscleme;und
º 6 countiies olleiing only insignilicunt piovident lund–type
piovisions.
Wleie insuiunce- oi tux-bused piogiums exist, tleii ellective
outieuclisoltenlimitedbecuuseentitlementlegislutionisiestiictive
und becuuse ellective institutionul implementution ol UI udministiu-
tion,especiullyinlow-incomecountiies,isulsoveiylimited(Figuie2).
Lessons learned from past crises
Asiun countiies witlout udequute UI sullei most liom incieusing
unemployment. Any uttempt to luuncl new unemployment sclemes
during uciisisas a response totleciisismustluil.Countiiestlutluve
ulieudyimplementedUIsystemsduiingpeiiodsolielutiveeconomic
stubility,suclustleRepublicolKoieu,
1
cunmukeuseolundudIust
tleexistingiulestoiesponduppiopiiutelyundinutimelyluslion.
Olcouise,tleieuietleusuulpioblemstlutuccompunynewsociul
secuiityinstitutionslikeUI:luckoliesouicesundinellicientudminis-
tiution,udveiseindividuulincentivestiuctuies,tooiestiictivebenelit
puyments,undliuud.Tleexpectutionoltlesepioblemsoltenmukes
goveinmentsstiiveloi“innovutive”solutions.Indoingso,tleymust
loweveibecuielulnotto“tliowtlebubyoutwitltlebutlwutei”:
tlecontinuulsolvingoltleubovepioblems(undotleis)ispuitoltle
duy-to-duyioutineolunypoliticulundudministiutivemunugement.As
witlullotleisociulsecuiitybiunclesinUI“unulysisslouldbeliumed
inusecond-bestcontext.Simpletleoiyussumestlutindividuulsmuke
13
SuclusNewZeulundoiAustiuliu,seedesciiptioninTuble4.
14
SimiluilyAigentinuontleotleisideoltleglobe.
348 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
optimulcloicesundtlutluboimuiketslunctionideully.Foimuluting
policy witlin tlut best liumewoik is unulyticully simple, but u bud
guide to (UI) design in u woild witl limited policy tools und muIoi
muiketimpeilections”(BuiiundDiumond2009).
1S
Evenillegulcoveiugeislimitedtoloimulsectoiwoikeisundellec-
tivelyieuclesonlyupiopoitionoltleunemployed,UIsclemes,once
inpluce,cunbetuinedintolubscontiibutingtotlegeneiulextension
ol sociul secuiity coveiuge. UI potentiully contuins enoimous inloi-
mutionuboutluboimuiketsontlebusisolindividuuldutuund,tlus,
ubouttlepeiloimunceoleconomicsectois.Tlisinloimutioncunbe
tuinedintovuluubleluige-sculeinloimutionnotonlyloitlegovein-
mentbutulsoloibusinessundcivilsocietymoiewidely.
Countiies witl loimul UI uie bettei equipped to weutlei ciises
tluncountiieswitloutit.Contiuiytoubiquitousbeliels,nonegutive
ellectsoncountiies’economicpeiloimunceolincieusedsociulspen-
dingduiingundulteiciisescunbeloundundwell-designedUIellec-
tivelylelpsoveicomeundpossiblysloiteneconomiciecessions.
Countiiesioutinelypiovidingsullicientincomeieplucementovei
signilicuntpeiiodscunbemoieieluxedwitliespecttotletimingund
scopeolunticiisismeusuiestluncountiiestlutolleionlymeugeioino
benelits.Mostpiobubly,ielutivelygeneiousUIincontinentulEuiope
veisus only limited piovisions in “Anglo-Ameiicu” expluins, tlougl
onlypuitiully,tlediveigenceinciisisieuctionsbetweentletwosets
olcountiiesussuclsystemsbuytimeundpiovideioomloimucioeco-
nomicdecisionmukeistoconcentiuteoncoieeconomicpolicyissues
insteud ol spending time—inelliciently und lelplessly (becuuse tley
uienottiuinedloitlis)—onoigunizingpublicluboimuiketpiogiums
undincome-stubilizutionmeusuiesutsloitnotice.
Unemployment insurance beneficiaries
in the current crisis
In ulmost ull countiies, tle numbei ol beneliciuiies lus signilicuntly
incieused(Figuie3).
16
Tleieusonsloidilleiencesindynumicsumong
1S
UIiepluces“pension”intleoiiginultextolBuiiundDiumond.
16
Alldutuiepoitedtlusluiintlispupeiuiepieciisis;usuiesultolusuulluboimuiket
dynumicsitcunbeexpectedtlutsincetleonsetoltleciisis,tleellectivecoveiuge
iutiosluveincieusedinmunycountiies;uccoidingly,incountiieswitlcontiibutoiy
sociul insuiunce und noncontiibutoiy tux-linunced sclemes, tle ielutive sluie ol
beneliciuiies ieceiving contiibutoiy benelits is meunwlile, most piobubly, liglei
tlunslowninFiguie1.Inline1,Figuie3slows(noniepiesentutive)inloimution
loiullwoildiegions,includingsomeAsiuncountiies(Tuble2);tleotleilineslocus
onEuiopeundtleUnitedStutes.
349
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
Figure 2: Effective unemployment insurance
coverage, selected economies
u
Unemploymentussistuncesclemesexistbutnodutuuieuvuiluble.Coveiugeistleieloie
undeiestimuted:Austiiu|Emeigencyussistunce;Cioutiu|Unemploymentussistunce;Hunguiy|
Jobseekei’suid;Iielund|Jobseekei’sullowunce;RussiunFedeiution|Unemployment
ussistunce;Ukiuine|Unemploymentussistunce.
b
UnitedKingdom|IncludesIobseekei’sullowunce(sociulinsuiunceundsociulussistunce).
Souice:ILO–SECSOCdutubuseonbusisolnutionulsouices;lutestuvuilubleyeui.
0 20 40 60 80 100
Mauritius
Algeria
Viet Nam
Kazakhstan
Albania
Macedonia
Tajikistan
Argentina
Slovakia
South Africa
Uruguay
Serbia
Azerbaijan
Thailand
Aruba
Armenia
Mongolia
Poland
Turkey
Brazil
Belarus
Bulgaria
Moldova, Republic of
Chile
Russian Federation
a
Japan
Romania
People’s Republic of China
Hong Kong, China
Israel
Slovenia
Croatia
a
Lithuania
Montenegro
Italy
Estonia
Bahrain
Ukraine
a
Latvia
New Zealand
Korea, Republic of
United States
Canada
Hungary
Czech Republic
Iceland
United Kingdom
b
Luxembourg
Ireland
a
France
Sweden
Finland
Denmark
Netherlands
Spain
Australia
Barbados
Austria
a
Germany
Unemployed receiving
unemployment benefits -
contributory (%)
Unemployed receiving
unemployment benefits -
non-contributory (%)
350 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
vuiious gioups ol countiies uie munilold und muy be mentioned in
pussing(Lee2009,Sclolz2009).
º Tle veiy ligl incieuses in Estoniu, Lutviu, und Litluuniu
17

indicute tlut tlese countiies duiing tle 1990s seiiously im-
plemented iiglts-bused UI und luve ellective unemployment
udministiutionsystems.
º Tle low incieuses in countiies like Fiunce und Geimuny uie
ieluted to tle luct tlut botl countiies ollei udditionul luboi-
muiket instiuments (sucl us “puitiul unemployment benelit”
inGeimuny,seebelow).Inotleicountiiestlelowincieuses,
oievendeclines,innumbeispointtodilleientcountiy-specilic
uspects.Foiexumple,tleGoveinmentolHunguiy,uguinsttle
geneiultiend,closetoimplementuusteiitypoliciesto“boost
investoiconlidence”(OECD2009u),wlileBeluiusundSeibiu
uie not us deeply integiuted in tle woild economy us most
otleicountiies.
º Tle numbeis uvuiluble loi Austiuliu, Jupun, Koieu, New
Zeulund,undTluilundullpointintleiigltdiiection,ultlougl
vuiiutionisluigebetweencountiies:individuulentitlementsus
wellusuttitudesolemployeis(undemployees)towuidliiing
undliiingpoliciesdilleisignilicuntly.
Income support to the unemployed:
Global policy responses
Goveinments muke use ol ull tliee uieus ol unemployment-ieluted
income suppoit tlut weie mentioned ubove in tle section, Lessons
learned from past crises?: contiibution-busedunemploymentbenelits;
unemployment ussistunce und geneiul sociul ussistunce; und otlei
luboimuiketpolicies,includingpubliclyoigunizedpuidemployment.
Tleextenttowlicltleseinstiumentsuiebeingusedisdeteimined
bytleiiuccessibility
1
togoveinments,unddilleibycountiycutegoiy
(Tuble3).
17
TleindividuulcountiiesuiegiveninTuble2(onwliclFiguie3diuws).
18
Heie,“uccessibility”stundsloitledegieeoluvuilubilitytogoveinmentsolellective
UI udministiution, including UI’s coopeiutive links witl enteipiises und, tlus,
ieucl-outtotleunemployedoiemployedenvisugingunemployment.Tledegiee
ol uvuilubility depends on sputiul ullocution ol UI ollices, quuntity und quulity ol
stulling,piucticubility,elliciencyundellectivenessoludministiutivepioceduiesund
otleipieiequisites.
351
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
Figure 3: Number of recipients of unemployment benefit
Souice:Tuble2.
Indexed monthly number of social security unemployment beneficiaries (base 100 in January 2008)
Weighted average for a selection of countries
50
100
150
200
250
J
a
n
-
0
7
F
e
b
-
0
7
M
a
r
-
0
7
A
p
r
-
0
7
M
a
y
-
0
7
J
u
n
-
0
7
J
u
l
-
0
7
A
u
g
-
0
7
S
e
p
-
0
7
O
c
t
-
0
7
N
o
v
-
0
7
D
e
c
-
0
7
J
a
n
-
0
8
F
e
b
-
0
8
M
a
r
-
0
8
A
p
r
-
0
8
M
a
y
-
0
8
J
u
n
-
0
8
J
u
l
-
0
8
A
u
g
-
0
8
S
e
p
-
0
8
O
c
t
-
0
8
N
o
v
-
0
8
D
e
c
-
0
8
J
a
n
-
0
9
F
e
b
-
0
9
M
a
r
-
0
9
A
p
r
-
0
9
M
a
y
-
0
9
I
n
d
e
x
e
d

n
u
m
b
e
r

o
f

u
n
e
m
p
l
o
y
m
e
n
t

b
e
n
e
f
i
t
r
e
c
i
p
i
e
n
t
s

(
1
0
0

=

J
a
n
u
a
r
y

2
0
0
8
)
1. Weighted average indexed value for the set of countries and unemployment programmes |
Weight = unemployment benef recipients
2. Europe (selection of countries) - Weighted average indexed value |
Weight = unemployment benef recipients
3. Eastern Europe (selection of countries) - Weighted average indexed value |
Weight = unemployment benef recipients
4. Western Europe (selection of countries) - Weighted average indexed value |
Weight = unemployment benef recipients
5. United States
High-income countries
Tlemostcommoniesponsesinligl-incomecountiiesuiemodilicu-
tionsolpiovisionsestublisledwitlinexistingUI,i.e.,extensionoltle
muximumbenelitpuymentpeiiod,extensionolcoveiuge,undincieuse
olbenelitlevelspuid.
Some—umong wlicl most piominently uie Fiunce, Geimuny,
undtleNetleilunds—successlullyupplymeusuiessuppoiting“puitiul
unemployment.”
19
19
One miglt pielei “puitiul employment” insteud, us tle meusuie is uctuully
meunttouvoidsociulunemploymentutull(wlileit,olcouise,ucceptseconomic
unemployment); uccoidingly, beneliciuiies ol puitiul unemployment benelit uie
beingcounted,inluboimuiketstutisticsundintlenutionuluccounts,usemployed;
“puitiulemployment”mustloweveinotbeconlusedwitl“puit-timeemployment,”
wliclisobviouslysometlingdilleient.
352 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Altlougl it is too euily loi u lull ussessment ol tle meusuies
tuken in tle cuiient ciisis, Geimuny’s cuse cleuily slows success. In
2009, unemployment incieused only by uiound 1S0,000 wlile GDP
decieusedbyuioundS%.
20
Anylulloipuitiulunemploymentbenelitunloldsitslullpotentiul
only in combinution witl otlei luboi muiket instiuments uimed ut
incieusing employubility. Accoidingly, tiuining und ieluted meusuies
uiepuitolstimuluspuckugesintioducedinmostEuiopeuncountiies
(und,loiexumple,intleRepublicolKoieu).
Middle-income countries
Puitiul unemployment benelits luve been implemented oi extended
in u numbei ol middle-income countiies sucl us Polund und Tuikey.
But wlile in most Euiopeun middle-income countiies tlese sclemes
potentiully covei tle muIoiity ol tle employees, in muny Asiun und
Lutin Ameiicun middle-income countiies tle luboi muiket sluies ol
sell-employment und inloimul
1
employment uie ligl, und so muny
oltlosewloseluboiincomesuieullectedcunnotuccesstleexisting
unemploymentsclemes.Insuclsituutions,speciultuigetedmeusuies
loibotltleloimulundinloimulsectoibecomenecessuiy.
Tle most common loim ol ciisis iesponse in middle-income
countiiesistleextensionolexisting,oiintioductionolnew,public-
employmentsclemes,wliclcuneusilybediscontinuedoncetleciisis
isovei.
Low-income countries
Intleiiciisisiesponse,low-incomecountiiescommonlyluceutiiple
constiuint in tlut tley uie udveisely lit tliougl declines in tiude,
iemittunces,undloieigndiiectinvestment;tleyluvelimiteduccessto
loieigncupitul;undtleiiscopeolsociulsecuiityisextiemelynuiiow.
Also,munyoltlesecountiiesluceupeimunentciisisolpoveityund
luckolincome,independentlyolunylinunciulciisisimpucts.
20
Tliscompuiestoincieusesintleoideiol1millionduiingeuilieiiecessionsintle
oideiolonly1%olGDPdecline.
21
Tleconcept“inloimulemployment”cuptuiesunpiotectedIobsinbotltleloimul
und inloimul sectois. Inloimul employment oi inloimul wuge Iobs uie tlose in
wlicltleemploymentielutionslip[…|isnotsubIecttonutionulluboilegislution,
income tuxution, sociul piotection oi entitlement to ceituin employment benelits
(udvuncenoticeoldismissul,seveiuncepuy,puidunnuuloisickleuve,etc.)(Sclmid
2009).
353
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
Table 2: Number of unemployment benefit recipients
Country
January
2008 Latest month available
Number of
unemployment
benefit
recipients (‘000) Date
January
2008
= 100
a
Aigentinu|Recipientsol
unemploymentbenelits
112 126 Decembei2008 113.1
Aimeniu|Recipientsol
unemploymentbenelits
1S 18 Muicl2009 121.7
Austiuliu|Jobseekeis
ieceivingnew-stuitullowunce
undyoutlullowunce
322 392 Muy2009 121.6
AzeibuiIun|Recipientsol
unemploymentbenelits
2,632 2,613 Apiil2009 99.3
Beluius|Recipientsol
unemploymentbenelits
26 21 Febiuuiy2009 79.1
Belgium|Recipientsol
unemploymentbenelits
S17 662 Apiil2009 128.0
Bulguiiu|Recipientsol
unemploymentbenelits
64 98 Apiil2009 154.2
Cunudu|Employment
insuiuncebeneliciuiies
ieceivingieguluibenelits
460 697 Apiil2009 151.5
Clile|Supeiintendenciude
Pensionses—Unemployment
9S 1S3 Apiil2009 161.5
Cioutiu|Recipientsol
unemploymentbenelits
64 67 Muy2009 106.1
CzeclRepublic|Recipientsol
unemploymentbenelits
124 209 Muy2009 168.8
Denmuik|Unemployed
iecipientsolsociulussistunce
13 1S Muy2009 114.2
Denmuik|Unemployed
iecipientsolunemployment
benelits
4S 82 Muy2009 183.2
Estoniu|Recipientsol
unemploymentbenelits
3 17 Muicl2009 525.9
Finlund|Recipientsolbusic
unemploymentullowunce
17 21 Decembei2008 122.9
Fiunce|Assedic—SA 2,081 2,373 Muy2009 114.0
Geimuny|UIbeneliciuiies 1,167 1,180 Apiil2009 101.1
Hunguiy|Jobseekeis’
ullowunceiecipients
114 106 Decembei2008 93.0
Hunguiy|RecipientsolIob
seekeis’ussistunce
S4 49 Decembei2008 90.6
Isiuel|Cluimsloi
unemploymentbenelitSA
S6 90 Muy2009 161.0
Jupun|UI-Busicullowunce S42 793 Muicl2009 146.3
RepublicolKoieu|UI
beneliciuiies
273 4SS Apiil2009 166.2
continued on next page
354 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Country
January
2008 Latest month available
Number of
unemployment
benefit
recipients (‘000) Date
January
2008
= 100
a
Lutviu|Recipientsol
unemploymentbenelits
29 69 Muy2009 236.4
Litluuniu|Recipientsol
unemploymentbenelits
22 69 Muicl2009 308.0
Luxembouig|Demundeuis
d’emploisindemnises
S 7 Apiil2009 131.2
Mucedoniu|Recipientsol
unemploymentbenelits
2S 2S Muicl2009 103.4
Montenegio|Recipientsol
unemploymentbenelits
9 12 Muicl2009 133.3
TleNetleilunds|SA 190 207 Apiil2009 109.0
NewZeulund|Recipientsol
unemploymentbenelits
28 37 Apiil2009 163.3
Polund|Unemployedwitl
iigltstobenelit
268 374 Apiil2009 139.6
RussiunFedeiution|Recipients
olunemploymentbenelits
1,269 1,934 Apiil2009 152.4
Seibiu|Recipientsol
unemploymentbenelits
76 72 Muicl2009 94.7
Sloveniu|Recipientsol
unemploymentbenelits
1S 23 Muicl2009 149.3
Slovukiu|Recipientsol
unemploymentbenelits
21 S4 Muy2009 257.1
Spuin|Recipients
olunemployment
benelits—Contiibutoiy
933 1,671 Muy2009 179.2
Spuin|Recipients
olunemployment
benelits—Noncontiibutoiy
610 890 Muy2009 145.8
Sweden|Recipientsol
unemploymentbenelits
16S 168 Apiil2009 101.9
Tuikey|Recipientsol
unemploymentbenelits
107 311 Muicl2009 290.9
Tluilund|Recipientsol
unemploymentbenelits
S9 190 June2009 220.6
UnitedKingdom|Cluimunts
Jobseekei’sAllowunce
79S 1,S4S Muy2009 194.3
Ukiuine|Recipientsol
unemploymentbenelits
496 S4S Muy2009 109.9
Uiuguuy|Recipientsol
unemploymentbenelits
21 26 Apiil2009 127.4
UnitedStutes|Continued
cluims
2,723 6,722 Muy2009 246.8
u
Culculutedontlebusisoltleoiiginul(notiounded)dutu.
Souice:Dutuiepoitedbynutionulsociulsecuiityinstitutionsund/oiunemploymentpiogiums.
Table 2 continued
355
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
T
a
b
l
e

3
:

I
n
c
o
m
e

s
u
p
p
o
r
t

t
o

t
h
e

u
n
e
m
p
l
o
y
e
d

b
y

t
y
p
e

o
f

m
e
a
s
u
r
e


a
n
d

c
o
u
n
t
r
y

c
a
t
e
g
o
r
y
C
o
u
n
t
r
i
e
s


b
y

i
n
c
o
m
e

l
e
v
e
l


(
n
u
m
b
e
i

o
l

c
u
s
e
s

i
n

p
u
i
e
n
t
l
e
s
e
s
)
C
o
u
n
t
r
i
e
s

w
i
t
h

s
t
a
t
u
t
o
r
y

u
n
e
m
p
l
o
y
m
e
n
t

b
e
n
e
f
i
t

s
c
h
e
m
e
N
u
m
b
e
r

o
f

c
o
u
n
t
r
i
e
s

a
n
d

t
y
p
e

o
f

m
e
a
s
u
r
e

t
a
k
e
n
E
x
t
e
n
s
i
o
n

o
f

m
a
x
i
m
u
m

p
a
y
m
e
n
t

p
e
r
i
o
d
E
x
t
e
n
s
i
o
n

o
f

c
o
v
e
r
a
g
e
I
n
c
r
e
a
s
e

o
f

b
e
n
e
f
i
t

l
e
v
e
l
I
n
t
r
o
d
u
c
t
i
o
n
/

e
x
t
e
n
s
i
o
n

o
f

p
u
b
l
i
c

e
m
p
l
o
y
m
e
n
t
E
x
t
e
n
s
i
o
n

o
f

c
a
s
h

b
e
n
e
f
i
t

a
n
d

s
o
c
i
a
l

a
s
s
i
s
t
a
n
c
e
L
o
w

i
n
c
o
m
e

(
S
)
2
u

/

2

b

/


1

c
c
c
1
4
L
o
w
e
i

m
i
d
d
l
e

i
n
c
o
m
e

(
9
)
S

u

/

1

b

/


3

2
1

/

1

d
c
S
S
U
p
p
e
i

m
i
d
d
l
e

i
n
c
o
m
e

(
1
4
)
1
0

u

/

1

b

/


3

4
S
3
S
3
H
i
g
l

i
n
c
o
m
e

(
1
8
)
1
S

u

/

0

b

/


2

1
1
6
4

/

1

d
3
2

/

1

d
A
l
l

(
4
6
)
3
2

u

/

4

b

/


9
1
S
1
2

/

1

d
7

/

1

d
1
4
1
4

/

1

d
u

A
t

l
e
u
s
t

o
n
e

s
t
u
t
u
t
o
i
y

u
n
e
m
p
l
o
y
m
e
n
t

s
c
l
e
m
e

i
n

p
l
u
c
e
.
b

U
n
e
m
p
l
o
y
m
e
n
t

s
c
l
e
m
e

w
i
t
l

l
i
m
i
t
e
d

p
i
o
v
i
s
i
o
n
s
.
c

N
o

s
c
l
e
m
e

i
n

p
l
u
c
e
.
d

I
n
d
i
c
u
t
e
s

c
o
n
s
t
i
u
i
n
t
s

(
i
u
t
l
e
i

t
l
u
n

e
x
t
e
n
s
i
o
n
)
,

i
.
e
.
,

p
i
o
-
c
y
c
l
i
c
u
l

m
e
u
s
u
i
e
s
.
N
o
t
e
s
:

O
n
e
-
t
i
m
e

p
u
y
m
e
n
t
s

u
i
e

n
o
t

i
n
c
l
u
d
e
d
.

E
x
t
e
n
s
i
o
n

o
l

c
u
s
l

b
e
n
e
l
i
t
s

u
n
d

s
o
c
i
u
l

u
s
s
i
s
t
u
n
c
e

u
p
p
e
u
i
s

t
o

b
e

e
s
p
e
c
i
u
l
l
y

d
y
n
u
m
i
c

i
n

t
l
e

l
o
w
-

u
n
d

l
o
w
e
i
-
m
i
d
d
l
e
-
i
n
c
o
m
e

c
o
u
n
t
i
i
e
s
.

H
o
w
e
v
e
i
,

d
u
t
u

s
l
o
u
l
d

b
e

i
n
t
e
i
p
i
e
t
e
d

w
i
t
l

c
u
u
t
i
o
n

u
s

m
o
s
t

o
l

t
l
e

m
e
u
s
u
i
e
s

u
i
e

d
o
n
o
i
-
l
i
n
u
n
c
e
d

t
i
u
n
s
i
t
o
i
y

p
i
l
o
t

s
c
l
e
m
e
s

w
i
t
l

v
e
i
y

l
o
w

c
o
v
e
i
u
g
e

e
l
l
e
c
t
s
.
S
o
u
i
c
e
:

I
L
O

S
E
C
S
O
C
.
356 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
In tlis situution, one cunnot expect uny tungible iesponse liom
UI systems tlut luve only veiy iecently been set up, loi exumple in
BungludeslundVietNum.
Good practices, pitfalls, and shortcomings
Duetoluckolup-to-duteinloimution,unussessmentoltlemeusuies
tuken lus to be bused, ut tle moment, on expeiience guined duiing
pustciises.Tlesignilicunceolinteiventionsdependson
º tleieudilyuvuilubleuiiuyolmeusuiesloieseenbyluw,
º tle piepuiedness ol tle udministiution to uctively use
meusuies,
º tle ieudiness ol tle goveinment to piovide udditionul
linuncing,und
º (incuseolpuitiulunemploymentundtiuining)tleieudiness
olcompuniesundtleiiemployeestoiesponduppiopiiutely.
Incountiieswleietleseconditionsuiebeinglullilled,tlepoten-
tiulpositiveimpuctsolUIcunbelullyexploited.
Puitiulunemploymentlusudvuntugesuslollows
º Tle compuny muintuins its pioduction ioutine (tlougl ut u
ieducedlevel)undcuneusilyexpunduguinoncedemundpicksup.
º UIuvoidstlepuymentolunemploymentbenelits.
º Woikeis continue puying contiibutions to ull sociul secuiity
institutions(includingUI).
In countiies witl UI but wleie tle iunge ol stunduid meusuies
loieseenisnuiiow,wleietleudministiutionisundeistulledundnot
well tiuined oi otleiwise inellicient, wleie linunciul iesouices uie
limited, und wleie compuny iesponsiveness to meusuies olleied is
low—in ull sucl cuses, tle piovision ol unemployment benelits cun
only luve limited income ellects ut tle mucio level, ultlougl tlese
migltbeolgieutlelptotlelouseloldsuctuullycoveied,undcupu-
citytoimplementmoiecomplexmeusuiessucluspuitiulunemploy-
mentislimited.
In oidei to peiloim bettei in tle lutuie, it is impoitunt loi tle
low-income countiies to document cuielully tle ellects ol tle ciisis
oncompunies,luboimuikets,undpiivutelouselolds,undtousetlut
inloimutionloisoundimpiovementstotleiungeundquulityollegul
undudministiutive(UI)meusuies.Tliswillenubletlemtobebettei
piepuiedloitlenextciisis.
357
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
IncountiieswitloutUI,“sell-tuigeting”publicwoikpiogiumsuie
oltenpiuisedusunulteinutivetoUIbecuusetleypuyonlylowwuges
und tlus “uutomuticully” uttiuct tlose in diie need. Tlese piogiums
must be tieuted witl cuution us tley miglt be selective umong tle
pooiundnotieuclouttotlosemostinneed.
The East Asian welfare state
and unemployment insurance
Lee(2009)lusuiguedtlutAsiu’sundeilyinglundumentulsociocultu-
iulcuiientsuieveiyluvoiubletotleintioductionolsociulsecuiityin
tleiegion.
22
Tleseobseivutionsmust,indeed,betukenintouccountwlenone
inteipietstlelowunemployment-coveiugeiutiosintleiegion,undit
migltbetemptingtospeukolun“EustAsiunWelluieModel,”
23
espe-
ciullywlenlocusingontleiegion’smostdevelopedeconomies,inclu-
dingHongKong,Clinu;Jupun;tleRepublicolKoieu;Singupoie;und
Tuipei,Clinu.
At tle sume time, lowevei, it must not be loigotten tlut tlese
economiesiepiesentonlyusmullsluieolAsiu’stotulpopulution.Also,
Lee’sobseivutionsluvelostsomeoltleiieuilieisignilicunce,us“itis
nowulmostindisputubletlutoveiullincomeinequulityintleiegion
lus incieused” (Lee und Eyiuud 2008). Tle tiudition ol “(employei-
bused)‘employmentpiotection’”(Vundenbeig2008)isiiielevuntloi
tlevustmuIoiityoltleAsiunluboiloiceundlegislutionlusloweied
inunumbeioleconomies,compunies’dismissulcostsundincieused
woikeis’numeiiculllexibility(LeeundYoo2008,Kubo2008).
24,2S
Among nine selected Asiun economies
26
—Austiuliu; tle People’s
Republic ol Clinu (PRC); Indiu; Jupun; Koieu; New Zeulund;
Tuipei,Clinu;Tluilund;VietNum—UIiungesliomveiygoodtoulmost
nonexistent:tlePRC;Jupun;tleRepublicolKoieu;undTuipei,Clinu
luvebonulideUIsclemes,ultlouglellectivecoveiugeintlePRCis
22
Lee specilicully ieleis to Eust Asiu und its Conluciun tiuditions. Lee’s und ADB’s
delinitionsol“EustAsiu”donotcompletelymutcl.
23
AlsoseeKwon(1997).
24
Tle liteiutuie distinguisles between numeiicul und lunctionul llexibility (Sclmid
2009).
2S
Tlisdevelopmentiesemblessimiluiitiestotypiculemploymentpoliciesolmunyol
tleligllyspeciulized,medium-sized,munuluctuiingenteipiisesinGeimuny.
26
Vundenbeig(2008),ISSA(2009).
358 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
stillonlylimitedbecuuseolitsluigeiuiuleconomyundtleiesulting
linuncingpioblems.
TlePRC’sUIsystemwusloimullyestublisledin1986;itspecili-
cullyuimedutUIloiwoikeisinstute-ownedenteipiisescontiibuting
tosolvingpioblemsuiisingliomintendedieloims.Tlepuiticipution
ol sociul ussociutions und tleii lull-time stull, piivute nonenteipiise
gioups und tleii employees, und sell-employed woikeis wus lelt loi
piovinciulgoveinmentstodecideon(Slu2009).
LegulcoveiugeinVietNum,wleieUIlegislutionwusliistimple-
mented in 2007 (ISSA 2009), iesembles stunduid sociul insuiunce–
type iegulutions, but ellective coveiuge begun only in Junuuiy 2009
wlen enteipiises weie udvised to tuke uction (MoLISA 2008). Indiu
lus iecently udded un “employment ullowunce” to its sociul secuiity
scleme but benelits uie low, und legul und ellective coveiuge uie
botllimited.
Tluilund’s system wus intioduced ultei tle Asiun linunciul ciisis
ol1997–1998.Tlegoveinment,lowevei,didnotintendtoinvesttoo
mucl in UI udministiution. As u iesult, tle stunduid moiul luzuid
conceins(seenextpuiugiupl)uienotbeinguddiessedudministiuti-
vely,butbytleiulesgoveiningbenelitentitlements,tleiilevels,und
puymentpeiiods.
Austiuliu und New Zeulund
27
luve meuns-tested sociul ussistunce
systems to covei tle unemployed. Tleieloie, tleii systems cunnot be
cluiucteiized us bonu lide UI.
28
To some extent, tlese two countiies
cun be consideied us similui to Muluysiu und Singupoie wlicl, tlus
lui, luve consciously done witlout UI but opted loi lull employment.
“Tlesecountiiesleeltlutsuclinsuiunceisudisincentivetowoikund
tleieloie cieutes u moiul luzuid” (Vundenbeig 2008). An impoitunt
dilleience between Austiuliu und New Zeulund on tle one lund, und
MuluysiuundSingupoieontleotlei,istluttleloimeipiovidesulli-
cientsubsistencesuppoitwleieustlelutteiuieinellect“iidingutigei,”
becuuseulull-employmentstiutegywitloutUIullowsloinomistukes.
29
27
AustiuliuundNewZeulundluvebeenincludedustleybelongtotlewideiAsiun
economicspuce.
28
WlilemunyUIsystemsuioundtlewoildulsoolleimeuns-testedbenelitstleydo
so, typicully, only ultei u tiunsition peiiod duiing wlicl income ieluted benelits
uie being puid; in sloit: UI liist puys income ieluted benelits, wlen individuul
unemploymentextendsoveiutoolongpeiiodtleincomeielutedbenelitisbeing
ieplucedwitluusuullylowei(meuns-oiincome-tested,oltenllut)benelit.
29
Singupoie’sMinisteiolFinuncenotedin1997:“Ouistiutegylusbeentoencouiuge
economic sell-ieliunce by piomoting sociul mobility. Insteud ol pioviding luige
unemployment benelits und piice suppoit sclemes, we pielei Iob cieution und
muiket competition. Tle piovision ol subsidies lus been selective und conlined
muinlytoeducution,leultlcuieundpubliclousing.”QuotedinVundenbeig(2008).
359
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
Indiucompiisesuielutivelyoldcontiibutoiyscleme(dutingliom
1948)butitseligibilityconditionsuieiestiictiveunditcoveisonly2%
oltlewoikloice.
Unemployment insurance in Asia
and ILO Conventions No. 102 and No. 168
Two up-to-dute ILO Conventions ielute to UI: tle Sociul Secuiity
(Minimum Stunduids) Convention, 19S2 (No. 102) [C102| und
tle Employment Piomotion und Piotection uguinst Unemployment
Convention,1988(No.168)[C168|(ILO19S2,1988).
30
Woildwide,
C102lusbeeniutiliedby4SeconomiesundC168byseven.InAsiu
undtlePucilic,onlyJupunlusiutiliedC102;noiegionuleconomylus
signedC168.
Itwouldbeumisundeistunding,lowevei,toussumetlutcountiies
(including tlose in Asiu) luve not signed becuuse tley uie unuble
to lullill tle minimum conditions us delined by tlose Conventions.
A detuiled investigution in goveinments’ ieplies to u woildwide
ILO suivey suggests tlut tleie is “u consideiuble luck ol knowledge
umong [ILO| membei stutes ieguiding tle content ol sociul secuiity
Conventions”(ILO2008).
C102 coveis lull sociul secuiity, i.e., lus piovisions loi tle nine
clussiculbiunclesolsociulsecuiity,includingUI;C168setsligleistun-
duidssolelyloiUIunduimsuttlepiomotionolpioductiveemployment
tliouglcooidinutionolUIundemploymentpolicy.BotlConventions,
uppeuiingcomplexutliistsiglt,inessencepiovideuiobustliumewoik
loitledesignolunymeuninglulUIsystembyluyingdownbusicpiin-
ciplesundminimumiequiiementsloiitsgoodgoveinunce.
SomeessentiulcontentolUIpiovisionsinAsiucunulsobelound
in tle two Conventions. In otlei woids, tle uutlois ol tle vuiious
nutionulAsiunluwsweieeitleiuwuieoltlecontentsolC102/C168,
oi tley took udvice liom souices lumiliui witl tle Conventions, oi
legislutois quusi-uutomuticully loimuluted piovisions iesembling
elements ol C102/C168 becuuse tle veiy nutuie ol “sociul secuiity”
iequiiedexuctlytlese.
31
30
Seewww.ilo.oig/ilolex/index.ltm
31
Quiteincontiusttogeneiulbeliels,tleiungeolpossiblesociulsecuiityiegulutions
isielutivelynuiiow.Inotleiwoids,onceugoveinmentlusdecidedtoimplement
sociul secuiity (loi exumple, UI) tlen tle veiy nutuie ol (societul) piotection ol
incomelosses(~sociulsecuiity)iequiiesceituintypesolpiovisions;witlintlese
piovisions u ceituin, but only limited, iunge ol puiumetei lixings is possible. Il
piovisions lie outside tlese limits (loi exumple, tley uie too low) tley lose tleii
“sociulsecuiity”cluiuctei.
360 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
TlisdoesnotnecessuiilyimplytluttleAsiunluwsuieinconloi-
mity witl tle two Conventions—tlis is most piobubly not even tle
cuse loi tle ielutively “solt” C102. An ussessment ol tle uctuul dis-
tunce between nutionul legislution und tle Conventions would be u
nutuiulliiststeptobeundeitukenintloseAsiuncountiiestlutconsi-
deiexpundingcoveiugeolexistingUIoiitsintioductionwleieitdoes
notyetexist.
Unemployment insurance in East Asia:
Sc(h)ope for extension and implementation?
Unlikeunyotleiiegionintlewoild,EustAsiuuppeuistobepiepuied
tostart an autonomous process of systematic extension olsociulsecuiity.
Seveiulluctoispointtotlisdiiection(seeulsoBeigundKuceiu2008):
º Economicdevelopmentisdynumicundiequiiesexpunsionol
inteinuldemund.
º Luige puits ol tle populution uie still excluded liom tle
liuitsoleconomicdevelopmentwlile,uttlesumetime,Eust
Asiu’s economies uie (oi will soon be) in geneiul sulliciently
pioductivetosutislytleiesultingdemund.
º Economies uie developed enougl to piovide tle ieliuble
goveinunce stiuctuies iequiied loi sustuined implementution
olsociulsecuiity.
º Some countiies ulieudy luve sociul secuiity systems tlut cun
be used us plutloims loi loimul sociul secuiity bused income
secuiity.
º UIwillbepuitoltlispiocess.Histoiiculevidenceslowstlut
countiiesintlepustmunugedtointioduceUIwlilesubstuntiul
puitsoltleiiluboiloiceweiestillwoikingininloimuliuiul
uieus(Tuble4).
º Tle implementution ol UI sclemes in Eust Asiu cun tuke
udvuntuge ol well-lunctioning bluepiints in Euiope. Also, it
slouldbeieculledtlutwlenC102wusudoptedbytleILO,tle
societulundoigunizutionulconditionsnecessuiytolullillC102’s
piucticulpieiequisitesweiemuclmoiecostlytluntoduy.
º Tlecuiienteconomicciisiswillcontiibutetocoveiugeexten-
sion.Tleinitiution,impiovement,undluitleidevelopmentol
sociulsecuiityluveinmunycountiiestypicullybeeninduced
by ciises. One option to muke tle “Eust Asiun sociul model”
moie ciisis-piool is tle extension ol existing sociul secuiity.
Respective uctivities in Tluilund cun be undeistood us tle
361
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
goveinment’siesponsetousimultuneousumulgumuteolsocie-
tul,politicul,undeconomicciises,wliletlePRCgoveinment’s
policy diiections explicitly uim ut u “luimonious society,”
wlicl is conceptuully not veiy dilleient liom Euiope’s sociul
colesionuppioucl.
Table 4: Unemployment insurance adoption
and income per capita
Country
Year UI
established
% of total
workforce
currently
covered
Income
per
capita in
year UI
adopted
(oi200Sil
noUI)
a
% of
workforce
engaged in
agriculture
when UI
adopted
b
Six Asian study countries
Singupoie NoUI 0 26,960 0.3
c
Koieu,Republicol 199S 36 13,060 12.4
Muluysiu NoUI 0 4,16S 14.8
c
PRC,publicsectoi 1986 – 8S0 60.0
PRC,piivutesectoi 1999 14 88S 46.9
SiiLunku NoUI 0 846 34.3
d
Indiu 200S 2 620 S4.2
Six countries which adopted UI much earlier
Jupun 1947 – 1,S41 S2.6
Gieece 19S4 – 2,3S8 48.2
Fiunce 190S – 2,894 42.7
UnitedKingdom 1911 – 4,709 8.8
UnitedStutes 193S – S,467 17.6
Austiuliu 1944 – 7,362 –
–~nodutu,PRC~People’sRepublicolClinu.
u
GNIoiGDPpeicupitu;constuntS.
b
LutestliguiespiovidedloitlosewitloutUI.
c
2004.
d
2003.
Souice:Vundenbeig2008,Tuble9,witlluitleidetuils.
Piogiesswillmuteiiulizetlesooneitleiegionbeginstoussume
unuctiveioleinpiomotingtlevulueolpublicgoods.Piivutesectoi
development,i.e.,tleuccumulutionolpiivuteweultlintlelundsol
lewuccompuniedbydevelopmentolumiddle-cluss(olstillinsullicient
362 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
size), lus in tle pust been given piioiity in muny Asiun countiies.
Public sectoi development must now lollow. Undei sucl u clunged
puiudigmtleimplementutionolUIwillbeunonspectuculuieventund
willoccuiuutomuticully.
Policies ieinloicing tle udvuntuges ol tle loimul sectoi must
uctively uddiess tle uctois in luboi muikets. Tle Oigunisution loi
Economic Co-opeiution und Development (OECD) lus iecently pio-
posed u tliee-pionged stiutegy uiming ut loimulizing economies
(OECD2009b).
Tlis stiutegy, suppoited by tle ILO, cun be ellectively ieinloi-
ced by u simultuneous build-up ol UI systems. Moie geneiully, loi-
mulizutioncunnotbetlougltolwitloutextensionolsociulsecuiity
coveiuge—und tle obveise, numely tlut extension ol sociul secuiity
coveiuge implies loimulizution. Signilicuntly, tle OECD stiutegy is
unemunciputoiystiutegy,intlutituimsutpioductivelyoveicoming
poveity. It is not u stiutegy uiming ut solely lilting pooi people Iust
ubove tle poveity line. In otlei woids, uny UI implementution stiu-
tegymustexplicitlytuigetnotonlytlepooibutulsoincludeullloimul
sectoiemployeeswitlull(oiusubstuntiulsluie)oltleiiwuges.
3
Conclusions
AllcountiieswitlestublisledUIsclemesluvebeenubletlusluito
ieuctquusi-uutomuticullytotleincome-piotectionneedsoldismissed
woikeis.Intelligentsolutions,sucluspuitiulunemploymentiegimes,
luvecontiibutedtokeepingunemploymentsubstuntiullyloweitlun
wouldluvebeentlecuseotleiwise.Tleseundotleimeusuiescontii-
butetostubilizinguggiegutedemundund,uttlesumetime,contiibute
positivelytopioductivitylevelsolluboiundcupitulinpiepuiutionloi
tletimewlentleciisisisovei.
Eust Asiu belongs to tlose iegions wleie UI is still undeideve-
loped.Inieuctiontotleexpeiienceoltle1997–1998linunciulciisis
Asiuneconomiesbuiltligllevelsolieseivestliougluggiessiveexpoit
stiutegies. Tlis stiutegy lus pioved successlul so lui in tle cuiient
ciisis, but tle locus on linunciul mutteis lus distiucted goveinments
liomimpiovingtleconditionsoltlelunctioningoltleieuleconomy,
includingpiotectionolunemployedluboi.
32
Teclnicully, tlis implies eitlei no contiibution collection ceiling oi u ceiling lixed
utusullicientlyliglmultipleoltlenutionuluveiugewuge.Tlelowceilingssetin
munyUSstutesuienotieusonublebenclmuiks.
363
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
TlePRCgoveinmentlusundeistoodtlesemeclunismsundis,tle-
ieloie,extendingsociulsecuiity,includingUI,undlusbeensuccesslully
usingtleestublisledudministiutivestiuctuiesloibolsteiingtlewoist
incomeellectsondismissedwoikeisundmigiunts.Becuuseoltleeco-
nomic inteidependencies ol tle PRC und its neiglbois, tle neiglbois
uieexpectedtolollowtlePRC’sexumpletlesoonei,tlebettei.
Asiu lus meunwlile ieucled sulliciently ligl income levels tlut
ullowittobotlbuildUIunditsellectiveudministiution,undtoloimu-
lize luboi muikets tliougl extending sociul secuiity in geneiul. Most
Asiun countiies luve ieucled development levels tlut will stuit tle
iequiiedgoveinmentinitiutivesquusi-uutonomously;tliswillinclude
combiningpussiveunductiveluboimuiketpolicies.Stiivingloimeie
pussivesystemswouldimplyexunteucceptunceoldevelopmentstunds-
till,undwouldmissucluncetoimpioveluctoipioductivityluitlei.
Asinotleipuitsoltlewoild,meuninglulUIwillnotemeigeus
longusgoveinmentsdonottuketleinitiutive.Consequently,tlepie-
vuiling puiudigms ubout tle iole ol tle stute, und its size, must be
udIusted liom “smull goveinment” to “sullicient goveinment.” Tlis
udIustmentlustobeuccompuniedbyubetteibuluncebetweenpublic
inteiestsundpiivutepiolitoiientution.
Toellectivelyuddiessunylutuieciises,goveinmentsneedtoluve
inpluceusetolinstiumentsundinstitutionstlutullowunimmediute
iesponse loi pioviding income ieplucement to tlose wlo lose tleii
employment oi wlose income is ieduced. Income-suppoit meusuies
mustbecombinedwitlluboimuiketpoliciestlutsuppoitexistingund
cieutenewdecentIobs.
Goveinments und tle inteinutionul community must now tuke
stockolgupsunddelicienciesinpiogiumstlutpiovidepiotectionloi
tleunemployed,witluviewtoimpiovementundieloim.
In countiies wleie employment piotection legislution is only
stiong on pupei but weuk in upplicution, und wleie sociul secuiity
und sociul diulogue uie insulliciently developed, no system ol luboi
muiketsecuiitycunemeigeunlesspoliciesuieputinpluce,ellectively.
TlepiospectsloiulltlistoluppenuiegoodinAsiu.Tleieloie,
tle question is not wletlei Asiu will expund sociul piotection—
includingUI—butwlen.
364 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
References
Buii, Niclolus und Petei Diumond. 2009. Reloiming pensions:
Piinciples,unulyticuleiioisundpolicydiiections.International
Social Security Review62(2):S–29.
Beig, Junine und Duvid Kuceiu (eds.). 2008. In defence of labour
market institutions: Cultivating justice in the developing world.
InteinutionulLubouiOigunizution.BusingstokeundNewYoik:
PulgiuveMucMillun.
DepuitmentloiInteinutionulDevelopment(DFID).2009.Eliminuting
woild poveity: Building oui common lutuie. Piesented
to Puiliument by tle Secietuiy ol Stute loi Inteinutionul
Development by Commund ol Hei MuIesty, Depuitment loi
InteinutionulDevelopment.July.
FedeiulMinistiyloiEconomicCoopeiutionundDevelopment(MECD).
2001. Poverty reduction: A global responsibility. Program of
action 2015.Bonn,Geimuny.
Feldstein,MuitinundDunielAltmun.1998.Unemployment insurance
savings accounts. Cumbiidge, MA. Decembei. lttp://ideus.
iepec.oig/p/nbi/nbeiwo/6860.ltml
ILO. 19S2. Convention C102. Social Security (Minimum Standards)
Convention, 1952.www.ilo.oig/ilolex/index.ltm
———.1988.Convention C168. Employment Promotion and Protection
against Unemployment Convention, 1988. www.ilo.oig/ilolex/
index.ltm
———.2008.Settingsociulsecuiitystunduidsinuglobulsociety.An
unulysis ol piesent stute und piuctice und ol lutuie options
loiglobulsociulsecuiitystunduidsettingintleInteinutionul
LubouiOigunizution.SociulSecuiityPolicyBiielings,Pupei2,
ILOSociulSecuiityDepuitment,Genevu.
Inteinutionul Luboui Conleience (ILC). 2009. Recoveiing liom tle
ciisis:AglobulIobspuct.ResolutionoltleGeneiulConleience
oltleInteinutionulLubouiOigunizution,Genevu.19June.
Inteinutionul Sociul Secuiity Associution (ISSA). 2009. Social secu-
rity programs throughout the world: Asia and the Pacific, 2008.
Genevu: Sociul Secuiity Administiution und Wuslington, DC:
USGoveinmentPiintingOllice.Muicl.
Kubo, Kutsuyuki. 2008. Jupun: Tle iesilience ol employment ielu-
tionslips und tle clunging conditions ol woik. In Sungleon
Lee und Fiuncois Eyiuud (eds.). Globalization, flexibilisa-
tion and working conditions in Asia and the Pacific. Genevu:
Clundos Publisling loi tle Inteinutionul Luboui Ollice,
pp.1S3–18S.
365
Income support in times of global crisis: An assessment of the role of unemployment insurance
and options for coverage extension in Asia
Kwon,Huck-Ju.1997.BeyondEuiopeunwelluieiegimes:Compuiutive
peispectives on Eust Asiun welluie systems. Journal of Social
Policy,CumbiidgeUniveisityPiess.
Lee, Byung-Hee und Bum-Sung Yoo. 2008. Tle Republic ol Koieu:
Fiomllexibilitytosegmentution.InSungleonLeeundFiuncois
Eyiuud(eds.).Globalization, flexibilisation and working condi-
tions in Asia and the Pacific. Genevu: Clundos Publisling loi
tleInteinutionulLubouiOllice,pp.187–233.
Lee, Eun-Jeung. 2009. Konluziuniscle Kultui und Soziulstuut in
Ostusien.Neue Gesellschaft, Frankfurter Hefte7/8:24–26.Bonn.
Lee,SungleonundFiuncoisEyiuud.2008.Globulizution,institutionul
ieloimsundwoikeis:clungesundoutcomes.InSungleonLee
und Fiuncois Eyiuud (eds.). Globalization, flexibilisation and
working conditions in Asia and the Pacific. Genevu: Clundos
PublislingloitleInteinutionulLubouiOllice,pp.3–46.
Ministiy ol Luboui, Invulids und Sociul Alluiis (MoLISA). 2008.
ImplementutionolRegulutionsolLuwonSociulInsuiunceon
Unemployment Insuiunce. Deciee 127/2008/ND-CP. Hu Noi,
VietNum,Decembei.QuotedinSunundSlield,S&SAuditing
undConsultingCo.,Ltd.
Oigunisution loi Economic Co-opeiution und Development (OECD).
2000.Is informal normal? Towards more and better jobs in deve-
loping countries.EditedbyJolunnesP.JüttingundJuunR.de
Luiglesiu,DevelopmentCentie,Puiis.
———.2009u.OECD Economic Outlook No. 85 – Country summaries.
Puiis. June. www.oecd.oig/document/S2/0,3343,en2649
33733197261961111,00.ltml(uccessed28July2009).
———. 2009b. Muking economic giowtl moie pio-pooi: Tle iole
ol employment und sociul piotection. Diult policy stutement.
DCD/DAC(2009)14,DevelopmentCo-opeiutionDiiectoiute.
Puiis.30Muicl.
Sulu-i-Muitin, Xuviei. 199S. A positive theory of social security. Yule
Univeisity.Revised23Novembei.
Sclmid, Güntlei. 2008. Von dei Aibeitslosen- zui
Besclultigungsveisicleiung. Wege zu einei neuen Bulunce
individuellei Veiuntwoitung und Soliduiitut duicl eine
lebensluuloiientieite Aibeitsmuiktpolitik. Gutuclten lüi die
Fiiediicl-Ebeit-Stiltung, Bonn, Apiil. lttp://libiuiy.les.de/pdl
-liles/wiso/0S29S.pdl.
Sclolz, Wollgung. 2009. Euiopeun sociul policy: An inteiim ussess-
ment.International Politics and Society3:11–3S.Bonn.
Slu, Yu. 2009. Biiel on unemployment insuiunce in Clinu.
ILO-SECSOC.August.
366 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
UnitedNutions(UN).2009.CEB Communiqué.SecietuiiutoltleUnited
Nutions System, Cliel Executives’ Bouid loi Cooidinution
(CEB).Puiis.SApiil.
Vundenbeig, Puul. 2008. Is Asiu udopting llexicuiity? A suivey ol
employmentpoliciesinsixcountiies.InteinutionulMunugement
Institute,NewDelli;EmploymentAnulysisundReseuiclUnit,
Economic und Luboui Muiket Anulysis Depuitment. Economic
and Labour Market Papers 4, Inteinutionul Luboui Ollice,
Genevu.
WSundtleSociulBudgetingClussoltleMuustiicltGiuduuteSclool
olGoveinunce.2009.Tiuctutussecuiitutissociulis.Muicl.
367
Financial crisis and social
protection reform—Brake or motor?
An analysis of reform dynamics in
Indonesia and Viet Nam
Katja Bender and Matthias Rompel
1
Introduction
Sociul piotection ieleis to tle entiie system ol piotective meusuies
tlutussistindividuuls,louselolds,undcommunitiestobetteimunuge
iisks und economic slocks und tlut piovide suppoit to tle ciiticully
vulneiuble. Among tle muIoi iisks it coveis uie illness, uccident,
deutl,unemployment,undolduge.Sociulpiotectionincludespublic
uswelluspiivuteuppioucles.
Sociulpiotectionieloimsuieontlepoliticulugenduinmunylow-
undmiddle-incomecountiies,ustleyuieinIndonesiuundVietNum,
tletwoloculcountiiesoltlisstudy.Astiikingcluiucteiisticolbotl
countiiesistlebioudscopeolongoingieloiminitiutives:Reloimsuie
not diiected ut puiticului sociul piotection pilluis only, but compiise
tle entiie sociul piotection system. Fuitlei, in botl countiies sociul
piotectionsystemsslowsimiluistiuctuiulcluiucteiisticscompiising
mundutoiyundvoluntuiycontiibution-linuncedsociulinsuiunceund
complementuiy meuns-tested und non-contiibution-linunced sociul
ussistunceoibusicsociulpiotectionpiovidingeconomicoisociulsup-
poit loi pooi individuuls oi vulneiuble gioups ol society. Also, botl
countiiesluvetodeulwitlsimiluiclullengesieguidingtledesignol
sociulpiotectionmeusuies.
Tlestudyuimsutunulyzinginlowluitlecuiientglobullinunciul
ciisisimpuctedonieloimdynumicsinIndonesiuundVietNumwitlin
tle uieu ol sociul piotection. In its compuiison ol sociul piotection
ieloim piioiities und initiutives beloie und ultei tle linunciul ciisis,
tledemuicutionpointmuiking“beloie”liom“ultei”istukentobetle
tliidquuiteiol2008.
1
KutIuBendeiisustulluttleInstituteolDevelopmentReseuiclundDevelopment
PolicyundMuttliusRompelisleudolSociulPiotectionSection,GeimunTeclnicul
Coopeiution(GTZ).
368 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Case study: Indonesia
2
Country background
Indonesiulusuclievediemuikublepiogiessinitstiunsitiontodemo-
ciucy und its economic iecoveiy liom tle Asiun linunciul ciisis ol
1997–1998. It is now cluiucteiized by u young und giowing demo-
ciucy witl u populution ol 233 million in 2008 und lus once uguin
becomeoneoltlewoild’semeigentmiddle-incomecountiies.
Annuul giowtl in 2007 wus ut 6.3%, tle liglest in 10 yeuis.
Unemploymentintleloimulsectoidecieusedliom10.3%in2006to
8.3% in 2008. Howevei, tle inloimul sectoi is veiy luige. Accoiding
to tle Nutionul Luboi Foice Suivey (2007), tle inloimul sectoi
uccountsloiusubstuntiulundgiowingpuitoltlewoikingpopulution,
cuiientlywitl69%oltletotulluboiloice.
Poveity levels tlut lud incieused by ovei one tliid duiing tle
Asiunciisisuienowbucktopieciisislevels,lullingto16.6%in2007
und1S.4%in2008.Howevei,tlepiopoitionoltlepopulutionvulne-
iubletolullingintopoveityiemuinsliglutuiound46%oltlepopu-
lution,busedontleS2poveityiute.About30%oltlepopulutionlives
sligltlyubovetlepoveityline.
Impact of the financial crisis
Stuiting in lute 2008, Indonesiu wus ullected by tle linunciul ciisis
tliouglulltlieetiunsmissionclunnels(linunciulmuikets,tiude,und
cupitulllows),butsoonstuitedslowingsignsoliecoveiy.Todeulwitl
tleimpuct,tlegoveinmentintioduceduiungeollinunciul,monetuiy,
undlisculpolicymeusuies(tlelocusbelowisontleiiimpuctonsociul
piotection).
A budget ievision tlut becume ellective in Muicl 2009 piotects
spending on public inliustiuctuie, educution, und poveity ieduction
piogiums,includingtleextensionollieeleultlcuie,tlecontinuution
oltlesubsidizediicepiogiumloitlepooi(RASKIN),undunexten-
sionoltleUnconditionulCuslTiunsleis(UCT)Piogiumloi2montls
in2009(JunuuiyundFebiuuiy).
Due to luvoiuble initiul conditions und timely policy iesponses,
Indonesiu’s economy
3
lus so lui munuged tle linunciul ciisis witl
2
Unlessindicutedotleiwise,dutuuiebusedonnutionulstutisticsliomBunkIndonesiu
undBPS–StutisticsIndonesiu.
3
Wiitingintletliidquuiteiol2009.
369
Financial crisis and social protection reform—Brake or motor?
An analysis of reform dynamics in Indonesia and Viet Nam
giowtl iutes iemuining ut compuiutively ligl levels und continuing
positive tiends in poveity ieduction. Tle ieduction in expoits seen
in tle ciisis lus been ollset by stiong inteinul demund, so tlut tle
economy will continue to giow, ultlougl ut sligltly slowei iutes. As
lisculpeiloimuncewussolidiniecentyeuiswitlunulmostbulunced
budgetin2008,lisculspuceloitlelinunciulstimuluspuckugeisuvuil-
uble. Howevei, tle ellectiveness ol tle stimulus will depend leuvily
ontimelyexecution.Altlougltotuldisbuisementisplunnedin2009,
byApiil2009“only”21%oltlelull-yeuibudgetludbeendisbuised
(Jakarta Post, 13 Muy 2009). Tux components weie implemented
piomptly,butdeluyspeisistedpuiticuluilyincupitulpioIectexecution.
Howevei, uutloiities uie uwuie ol tle need to quickly disbuise und
seveiulmeusuiesluvebeenundeituken(IMF2009:12–13).
Social protection prior to the crisis
Overview
Tle goveinment is plunning und implementing muIoi ieloims in
tle uieu ol sociul piotection. Publicly piovided sociul piotection in
Indonesiuisbusedontwokindsolpublicinteiventions,numely:
º Mundutoiy sociul insuiunce oi mundutoiy suvings loi civil
seivunts,tleuimedloices,undloimul-sectoiemployees;und
º Complementuiymeuns-testedsociulussistunceloivulneiuble
gioups ol society. In 2004, tle goveinment iutilied tle Luw
on tle Nutionul Sociul Secuiity System (Undung-Undung
SistemJuminunSosiulNusionul,oiSJSN,LuwNo.40/2004),
wliclloieseesieloimingtleexistingsociulpiotectionsystem
towuiduniveisulcoveiuge.Tlenewsystemistobeluuncled
in Octobei 2009. Luw No. 40/2004, u liumewoik luw, is un
impoitunt milestone becuuse it stipulutes tlut tle existing
sociul secuiity piogiums in Indonesiu will be expunded so us
to covei ull Indonesiun citizens, including tlose wlo uie not
woikingintleloimulsectoiundtlepooi.
4
4
FoiudetuiledoveiviewundunulysisolIndonesiu’ssociulpiotectionsystem,seeGTZ
(2008).
370 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
Social insurance
Mundutoiysociulinsuiuncepiogiumscoveiemployeesoltlemilituiy
(tliouglPTAsubii,PTAskes),civilseivunts(PTAskes,PTTuspen),
und tlose employed in piivute enteipiises ubove u ceituin stull size
und totul puyioll (PT Jumsostek). Tlose in tle lust gioup uie insu-
ied uguinst woik uccidents, illness, deutl, und luneiul iisks, but not
uguinstunemployment.Incuseolietiiement,tleyieceiveulumpsum
puyment liom u mundutoiy suving scleme (piovident lund) ieluted
totleiicontiibutionsplusinteiest.Membeisoltleuimedloicesund
civilseivuntsuieinsuieduguinstillness(PTAskes)uswellusolduge,
incuseolwlicltleyieceivelumpsumpuymentsuswellusunnuity
benelits loi lile ultei ietiiement (tliougl PT Asubii und PT Tuspen,
iespectively).Tlesociulinsuiuncesclemesuieutpiesentlinuncedby
employei,employee,oiumixolemployeiundemployeecontiibutions
dependingontlescleme.LuwNo.40/2004loieseesluimonizingtle
linuncingmodulitybyielyingexclusivelyonIointemployei–employee
linuncing (except loi tle deutl benelit, wlicl will be linunced by
employeicontiibutionsonly).
Voluntuiysociulinsuiuncepiogiumsuiestillveiylimitedinscope.
Foi exumple, ut piesent, Jumsostek us well us tle Ministiy ol Sociul
Alluiisuieiunningpiogiumstuigeteduttleinloimulsectoi.Jumsostek
is tiying to extend its insuiunce coveiuge to tle inloimul sectois
wleieus tle Ministiy ol Sociul Alluiis is olleiing u suving scleme to
inloimul sectoi woikeis (Askesos). Accoiding to Luw No. 40/2004,
sociulinsuiuncecoveiugeistobeextendedtopeisonsnotieceivingu
ieguluiwugeuswell.Tlus,tlisluwolleistleoppoitunitytocoveitle
luigeinloimulsectoieconomy.Membeislipistobebusedonvolun-
tuiy llut-iute contiibutions. Tle voluntuiy sociul insuiunce piogiums
compiise leultl und woiking uccident insuiunce (tle sume benelit
puckuge us loimul sectoi employees), us well us old uge und deutl
(lumpsumpuyments).
Fuitlei,seveiuliegionulleultlinsuiuncepiogiumscoexist,wlicl
insomeinstuncesuieuniveisultotloselivinginupuiticuluiuieu,loi
exumpleleultlinsuiuncewitlpio-pooicomponentsinJembiunuund
Kupungdistiicts(since2007).
A totul ol 18.6 million people uie coveied by mundutoiy sociul
leultl insuiunce (Jumsostek: 2.8 million, public sectoi sclemes:
1S.8million).Onlyusmullnumbeioltle60millionwoikeisintle
inloimulsectoiludIoinedtlepiogiumolleiedbyJumsostekbytle
endol2007(ubout84,729).
Oldugepiotectioncoveiscivilseivuntsundloimulsectoiemployees
only.Civilseivuntsundtlemilituiy(togetlei,ubout4.6million)uie
371
Financial crisis and social protection reform—Brake or motor?
An analysis of reform dynamics in Indonesia and Viet Nam
coveiedbycontiibutoiylinulsuluiydelinedbenelitsclemes.Inuddi-
tion,tleyieceiveunendowmentlumpsumonietiiementtlutisulso
delinedbenelitundlinulsuluiyoiiented.Oltle33millionemployees
intleloimulpiivutesectoi,onlyubout8.2millioncontiibutetotle
mundutoiypiovidentlundund1S.8millionuienonuctivemembeisol
Jumsostek.Aiound4millionpeopleluveuccesstosclemeslinunced
byiegionuloiloculgoveinment.
Social assistance
Elloits to estublisl u compielensive sociul piotection system, inclu-
dingsociulussistuncepiovisions,weiestionglyinlluencedbytleAsiun
linunciul ciisis. As un immediute iesponse, seveiul sociul sulety net
piogiums(JPS)tolelppooipeopleespeciullyweieimplementedby
uwideuiiuyolgoveinmentugenciespiovidingleultlseivices(Kuitu
Selut), subsidized iice (Ruskin), luel subsidies, und scloluislips loi
pooiclildien.Howevei,ussessmentsoltleseudlocmeusuiesieveu-
ledlowcoveiuge,pooituigeting,und,ingeneiul,littlecooidinution.
Tleluelsubsidiesweieieducedin200S,despiteintensecontioveisy.
Toduy,sociulussistunceinIndonesiucoveistlepiovisionolcusl
und in-kind benelits including uccess to leultl seivices to tle pooi
in geneiul und to specilic vulneiuble gioups tlut cun be clussilied
us belonging to tle clionicully pooi. Fuitlei, pioviding liee uccess
to leultl seivices loi tle neui pooi is included us well. Tlese meu-
suies iest on dilleient institutionul pilluis. Cusl benelits to tle pooi
uiepiovidedinteimsoltempoiuiypiogiums(UCT)oiuieutupilot
stuge(conditionulcusltiunsleis).Tleleultlsclemeloitlepooiund
neui pooi—Jumkesmus—is u peimunent piogium. Sociul ussistunce
tospecilicvulneiublegioupsisbusedmuinlyonLuwNo.6/1974on
Sociul Welluie, Luw No. 2S/1999 (Nutionul Development Piogium,
Piopenus), Luw No. 4/1979 on Clild Welluie, Luw No. 4/1997 on
DisubledPeisons,undLuwNo.13/1998ontleEldeily.
Cusl tiunsleis (conditionul und unconditionul) uie puid to pooi
louselolds us u loim ol busic sociul ussistunce. Unconditionul cusl
tiunsleis uie piovided occusionully und UCT wus intioduced in ies-
ponse to tle ieduction ol luel piice subsidies in 200S (12 montls)
und in 2008 (7 montls) und 2009 (2 montls). Pooi und neui-pooi
louseloldsieceivequuiteilypuymentsolunequivulentolRp300,000
(S30). Since 2007 conditionul cusl tiunsleis luve been puid in 13
pilotiegionstoclionicullypooilouseloldswitlsclool-ugeclildien,
inlunts, oi expecting und/oi luctuting motleis. Heie tle quuiteily
puymentvuiiesliomRp1S0,000toRpSS0,000(S1StoSSS),depen-
dingontlecompositionoltlelouselold.
372 Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis
In 2004, u new leultl piogium loi tle pooi wus intioduced:
Asuiunsi Keselutun Musyuiukut Miskin (Heultl Insuiunce loi Pooi
Populution) oi Askeskin. Tlis scleme uimed ut pioviding liee pii-
muiy leultl cuie seivices ut public leultl centeis (Puskesmus) und
in-putient tieutment in “tliid cluss” lospitul wuids. In 2008, tle
Ministiy ol Heultl issued u deciee expunding Askeskin tliougl
Jumkesmustoincludetleneuipooiuswell.
Fuitlei, u multitude ol smull sociul ussistunce piogiums (BKSP)
exist.Tleyuietuigetedutspecilicullyvulneiublegioups,includingtle
eldeily,mentullydisubledpeisons,undpeisonssulleiingliomclionic
illnesses,undpiovideincomesuppoit.Atempoiuiycomponentistui-
geted ut tle victims ol nutuiul disusteis. Tle lunds loi tlis piogium
uieclunneledtoiecipientsviuspecilicseivicepiovideioigunizutions.
Inuddition,tleypiovidesociulseivices(e.g.,leultl,scloluislips,und
lousing)loiceituingioupslikepooilumilieslivinginslumuieus,vulne-
iubleclildienundudults,unddiuguddicts(SigitundSuibukti2006).
Atlocullevel,seveiulsociulussistuncepiogiumsuieinpluce,too.
Exumplesincludetleuboveleultlinsuiuncepiogiumswitlpio-pooi
components in Jembiunu und Kupung distiicts (since 2007). Locul
goveinmentinJembiunuulsopiovidessubsidiesundscloluislipsto
students.InMukussui,pooipeopleluveieceivedlieeleultlcuieut
Puskesmus (since 2006) und liee educution in selected uieus (since
2007)(BulugiIo2007).Inudditiontotleubovepiogiums,seveiuldis-
tiictsluveimplementedtleiiowndistiictleultlinsuiuncepiogiums
undeiuneuilieipiogium(JPK/Gukinscleme).
Busicleultlseivicesuieuccessibleloitle76.4millionpooiund
neui pooi tliougl tle Jumkesmus scleme. In 200S, 19.1 million
louselolds und in 2008, 19.2 million louselolds ieceived uncondi-
tionulcusltiunsleis.Moietlun76millionpeopleinclionicullypooi
louseloldswitlsclool-ugeclildien,inlunts,oiexpectingund/oiluc-
tuting motleis ieceived conditionul cusl tiunsleis. An evuluution ol
tle UCT piogium in 200S slowed tlut tle piogium wus ellective:
94.2%(liistpuyment)und89.6%(secondpuyment)olbeneliciuiies
ieceivedtletiunsleiinlull.Tletiunsleiwususedloibusicnecessities
unddidnotleudtouieductioninwoikinglouis(BAPPENAS2009).
Tlecoveiugeolsociulussistuncepiogiumstuigetedutspecilicvulne-
iuble gioups is iutlei low, witl iutes iunging liom 0.7% (disubled
people)und1.0%(eldeily)upto1S.0%(stieetclildien).
Organizational framework
Fiveministiiesundgoveinmentugenciesundlouisociulsecuiityudmi-
nisteiingbodiesuieinvolved.TleCooidinutingMinistiyloiPeople’s
373
Financial crisis and social protection reform—Brake or motor?
An analysis of reform dynamics in Indonesia and Viet Nam
Welluie (Menko Kesiu) lus tle olliciul iole ol cooidinuting sociul
policyissuesbetweenministiiesundolluimonizingconllictingpoli-
ciesoipiogiums.Itlusuntiliecentlybeeniesponsibleloitle“Tusk
Foice,”uninteiministeiiulwoikinggioupcluigedwitlpiepuiingtle
diultluwundseconduiylegislutioniequiiedustlelegullollow-upto
tleSJSNliumewoikluw(No.40/2004).Tlemuinpuitoltlesetusks
lus now nominully been tiunsleiied to tle Nutionul Sociul Secuiity
Council(seebelow).
Tle Depuitment ol Sociul Alluiis (DepSos) lus executive ies-
ponsibilityloisociulussistuncemeusuiespiovidedtospecilicvulne-
iuble gioups, tle UCT piogium, und tle CCT pilot us well us otlei
pilotsclemesloiespeciullyvulneiublegioups.TleMinistiyolHeultl
is, tliougl its iesponsibility loi tle Jumkesmus leultl piotection
scleme loi tle pooiest, diiectly involved in tle piovision ol sociul
piotection.
Tle Ministiy ol Finunce lus u vuiiety ol ioles witlin tle widei
sociul piotection ieloim uieu. It lus supeivisoiy uutl