Crisis could push 140 million Asians into poverty: ILO

Agence France-Presse

Posted at Feb 18 2009 03:37 PM | Updated as of Feb 18 2009 11:38 PM

More than 140 million people could be plunged into poverty and 23 million lose their jobs in Asia this year as the global financial crisis batters the region, according to a study released Wednesday.

The crisis could also slow rural-to-urban migration, with many facing the prospect of returning to low-paid agricultural jobs as factories and firms lay off workers, the International Labour Organisation (ILO) report said.

And as unemployment rises, it is imperative for countries in the region to use fiscal stimulus packages for safety nets to prevent widespread social unrest from erupting, officials said.

"A dramatic increase in working poverty of more than 140 million people by 2009 is projected under this scenario, representing regression of the Asia and Pacific region to a working poverty rate of 2004," the study said.

"These projections are not just numbers, they carry with them a real risk that children may be forced to withdraw from school in order to work and support their families," it said.

It said the region's robust growth in the past was not matched by "broad-based gains in real wages," leading to sharp inequalities in many countries.

"The substantial growth slowdown taking place is likely to lead to stagnant or falling real wages, with the potential for increased incidences of wage related disputes," the study said.

ILO regional director Sachiko Yamamoto noted the situation was quickly evolving "into an employment and social crisis."

"Its impact is deeply felt in both industrialised and developing countries in Asia," she told senior policy makers from 11 countries at a meeting in Manila, stressing that the downturn's "magnitude and speed has been astounding."

The region too is at the tipping point of seeing social unrest explode into the streets, as the jobless and marginalised demand greater government action.

"That prospect is a real one, therefore the social partners should be included in policy discussions in order to make sure that the most vulnerable and affected people are given the central attention," Yamamoto said.

Migrant workers with short-term contracts as well as women working in small and medium sized factories and firms are particularly vulnerable, she said.

"From India to China to Vietnam, large numbers of internal migrants have lost their jobs, generating a reverse migration to the countryside in search of rural employment," Yamamoto said.

An average of 10 percent economic growth in China over the past 25 years, long considered the engine of growth for Asia still leaves "a large jobs shortfall" in urban areas, the ILO said.

It said the employment challenge there "still remains considerable."

Young people in the region meanwhile will also find opportunities dwindling, while children of poor families may be forced to quit school as incomes fall, she said.

The report said that as Asia moves to spend about 3.9 percent of its gross domestic product on stimulus packages, there is also a need to protect employment and support household purchasing power.

Governments should also spend on schools, hospitals and healthcare to mitigate the impact of the crisis while also looking at ways to boost worker skills for longer-term productivity, it said.

The Asian Development Bank's vice president for sustainable development, Ursula Schaefer-Preus, said any stimulus packages should include job creation and infrastructure needs that will most benefit the poor.