Press Statement
Transient Workers Count Too(TWC2) a local non-governmental organization that advocates for the well-being of migrant workers and improvements in the relationship between employers and employees, would like to submit the following statement as some of our concerns with regards to the policies of World Bank(WB) and the International Monetary Fund(IMF). Trade liberalization, privatization, and labour market deregulation are some of the policies that impact labour movement and labour standards of migrant workers.
TWC2’s aims with this statement are three fold:
1) Background On Migrant Labour
2) On the IMF Management of the Asian Crisis
Many migrant workers here are from our neighboring countries, all of whom including Singapore, faced the 1997 Asian Crisis. The effects of the measures taken at that time are still reverberating as countries like Indonesia whose people living below the poverty line, doubled by an extra 20 million. One outcome has been the outflow of Indonesians as foreign domestic workers as well as a brain drain effect on those who are better off migrate to rebuild personal businesses. The Asian Financial crisis was the greatest economic disaster since the Great Depression. For example, the CIA World Factbook reports that the per capita income (measured by purchasing power parity) in Thailand declined from $8,800 to $8,300 between 1997and 2005; in Indonesia it declined from $4,600 to $3,700; in Malaysia it declined from $11,100 to $10,400. Over the same period, world per capita income rose from $6,500 to $9,300. Indeed, the CIA's analysis suggests the economy of Indonesia was still smaller in 2005 than it had been in 1997 despite a population increase of 30 million.
It has been argued that the rescue packages that were offered in 1997 made the situation much worse rather than better and the IMF policies encouraging excessive market liberalistion were largely to blame for the contagion that spread so quickly. Bail out packages and conditionality exacerbated the problems by causing a run on banks. “One size fits all” policy prescriptions were inappropriate in Asia where state debt was not a problem before the crisis.
Some countries shifted their focus from prioritizing employment and growth to controlling inflation as the main aim of political economy as a result of the IMF initiatives at that time. In that way the transition was made from policies of industrialization to policies of stabilization.
(i) Impact of IMF policies and currency crisis on Indonesia
Unemployment rose by 10 times – at least 15% of the adult working population, that is, 5 million people lost their jobs in 1998.
Poverty doubled (an extra 20 million) and millions more went hungry due to drought. GDP fell by 13% and was still 7.5% lower three years later. The US$23b rescue package was used largely to repay foreign creditors. Food subsidies were temporarily abolished and no assistance was given to newly created poor, impoverished and unemployed. The closure of banks led to run on all the other banks. State debt mushroomed and so did the cost of servicing debt for future generations.
In June 2006, Indonesia repaid US$3.7b in IMF loans before their repayment date in 2010 to avoid conditionality.
(ii) IMF’s impact on the Philippines
The Philippines has been under IMF tutelage since 1962 but has not yet been able to reduce the level of poverty and underdevelopment relative to other SE Asian neighbours. Despite strict adherence to severe IMF fiscal policies and the privatisation of National Power and other utilities, the economic position of the Philippines has improved little. Only in the last two years has growth started to pick up and the budget deficit reduced. Due to lack of opportunities at home, at least 10% of the Philippines population has emigrated overseas as foreign workers. Foreign Workers remittances are now the largest source of foreign currency income for the country.
IMF policies which favour foreign creditors are seen by many to have worsened the level of poverty in many Asian countries after the financial crisis in 1998. Poverty leads to more workers seeking better opportunities in developed countries. Singapore for example, has benefited from the huge pools of cheap foreign labour available in the region for work that its citizens are reluctant to do in the construction, marine and domestic work industries. Singapore has one of the highest concentration of foreign domestic workers – one for every seven households - in the world.
Current IMF/WB Proposals
It is widely acknowledged that there are improvements and internal admission that policies could be improved from the Asian Crisis experience. There are new ideas and proposals to improve the approach and role of WB and IMF.
Recommendations
Greater transparency at WB and IMF and its communiqué becomes a regular feature. Its approach needs to be one of coalition building rather than a top-down one.
Aligning with Millenium Development Goals means greater emphasis on poverty reduction measures. Asia is home to more than two-thirds of the world’s poor. The global unemployment figures stands at 186 million of whom youths aged between 15 and 24 years old , comprise 14 per cent. The Gini Co-efficient that measures income equity shows rises in many regions – South East Asia is 0.43 to 0.49 while East Asia’s co-efficient has risen from 0.25 to 0.45. It is important to have policies that build up good social safety nets, collective bargaining, Corporate Social Responsibility, and that Core Labour Standards are observed.
WB/IMF needs to take on a multi-disciplinary approach to its policy/research arms.
WB/IMF works in tandem with the goals of UN and other International Organisations for greater harmonization across goals, indicators and standards.
Shrink it or Sink it discussions on IMF might be valid as countries are keen to repay debts quickly and get back to normalcy. The IMF runs the risk of looking like a glorified moneylender. More regional Funds could be set up – Asian countries have considered and agreed to the idea of Asian Monetary Fund, formed from Asian countries pooling some limited reserves. Eventually this may be a mechanism to cope with potential financial crises without involving the IMF.
Internationalisation
It is a preferred term by some authors to ‘globalisation’ as the role and importance of the state is greater in the former. The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology” (IMF, World Economic Outlook, May, 1997). The World Bank defines globalization as the "Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries". To think Internationalisation is a mindset change but it can mean enhancing the status of nation states, people and unions and labour rights become more important.
Conclusion
The World Bank and the IMF need to speed up on its structural reform program that will overhaul the structure and operating principles of the IMF.
It also means that IMF/WB needs to look at coalition-building approaches and be more transparent and inclusive of trade unions and CSOs in a world where interconnectivity and diverse solutions are so important.
The US veto power over all decisions must be abolished and the IMF must be made more democratic with more influence given to Asian countries.
Poverty reduction, conflicts, natural disasters and epidemics all demand specific responses. Each of these factors or a combination of all them will see workers leaving homes to look for work. There are many workers criss-crossing the globe today looking for work. They have little protection as workers or respect as human beings. Migrant labour needs to feature in the economic policy discussions of the WB and IMF and it is important they come under the Core Labour Standard regulatory framework.
- To emphasise the link between WB/IMF policies on poverty reduction, development and outflow of labour which can be both in the form of documented workers or undocumented workers, some of whom can be victims of trafficking.
- To make recommendations for improvements in the system.
- To be a voice for the CSOs working in this field of migrant labour who may not be here and to assert our solidarity on such concerns
1) Background On Migrant Labour
- There are about 190 million migrants who work temporarily in other countries. Women make up half of this number. Much of the migrant worker movement is from developing countries to economically better-off countries or to developed countries. In some instances people leave to seek work as a result of conflicts in the country. Migrant workers can be documented or undocumented.
- Total remittances sent back to sender countries from their nationals working abroad surpass total amount of foreign aid by about two to three times, according to the Migration Policy Studies. World Bank figures suggest that foreign workers around the world sent $167 billion home in remittances to Third World countries last year.
- Poverty, weak or inadequate development programmes, conflicts and natural disasters drive people to seek employment elsewhere. In Singapore almost 600,000 migrant workers (out of a workforce of 2.5 million people) who are unskilled or semi-skilled, take on he lower-end jobs here and sending money home to support families and villages in Indonesia, Philippines, Thailand, Myanmar, India, Sri Lanka, Bangladesh, Malaysia, China.
2) On the IMF Management of the Asian Crisis
Many migrant workers here are from our neighboring countries, all of whom including Singapore, faced the 1997 Asian Crisis. The effects of the measures taken at that time are still reverberating as countries like Indonesia whose people living below the poverty line, doubled by an extra 20 million. One outcome has been the outflow of Indonesians as foreign domestic workers as well as a brain drain effect on those who are better off migrate to rebuild personal businesses. The Asian Financial crisis was the greatest economic disaster since the Great Depression. For example, the CIA World Factbook reports that the per capita income (measured by purchasing power parity) in Thailand declined from $8,800 to $8,300 between 1997and 2005; in Indonesia it declined from $4,600 to $3,700; in Malaysia it declined from $11,100 to $10,400. Over the same period, world per capita income rose from $6,500 to $9,300. Indeed, the CIA's analysis suggests the economy of Indonesia was still smaller in 2005 than it had been in 1997 despite a population increase of 30 million.
It has been argued that the rescue packages that were offered in 1997 made the situation much worse rather than better and the IMF policies encouraging excessive market liberalistion were largely to blame for the contagion that spread so quickly. Bail out packages and conditionality exacerbated the problems by causing a run on banks. “One size fits all” policy prescriptions were inappropriate in Asia where state debt was not a problem before the crisis.
Some countries shifted their focus from prioritizing employment and growth to controlling inflation as the main aim of political economy as a result of the IMF initiatives at that time. In that way the transition was made from policies of industrialization to policies of stabilization.
(i) Impact of IMF policies and currency crisis on Indonesia
Unemployment rose by 10 times – at least 15% of the adult working population, that is, 5 million people lost their jobs in 1998.
Poverty doubled (an extra 20 million) and millions more went hungry due to drought. GDP fell by 13% and was still 7.5% lower three years later. The US$23b rescue package was used largely to repay foreign creditors. Food subsidies were temporarily abolished and no assistance was given to newly created poor, impoverished and unemployed. The closure of banks led to run on all the other banks. State debt mushroomed and so did the cost of servicing debt for future generations.
In June 2006, Indonesia repaid US$3.7b in IMF loans before their repayment date in 2010 to avoid conditionality.
(ii) IMF’s impact on the Philippines
The Philippines has been under IMF tutelage since 1962 but has not yet been able to reduce the level of poverty and underdevelopment relative to other SE Asian neighbours. Despite strict adherence to severe IMF fiscal policies and the privatisation of National Power and other utilities, the economic position of the Philippines has improved little. Only in the last two years has growth started to pick up and the budget deficit reduced. Due to lack of opportunities at home, at least 10% of the Philippines population has emigrated overseas as foreign workers. Foreign Workers remittances are now the largest source of foreign currency income for the country.
IMF policies which favour foreign creditors are seen by many to have worsened the level of poverty in many Asian countries after the financial crisis in 1998. Poverty leads to more workers seeking better opportunities in developed countries. Singapore for example, has benefited from the huge pools of cheap foreign labour available in the region for work that its citizens are reluctant to do in the construction, marine and domestic work industries. Singapore has one of the highest concentration of foreign domestic workers – one for every seven households - in the world.
Current IMF/WB Proposals
It is widely acknowledged that there are improvements and internal admission that policies could be improved from the Asian Crisis experience. There are new ideas and proposals to improve the approach and role of WB and IMF.
- Debt Relief Packages
IMF and WB are also aligned with the United Nation to achieve the Millenium Development Goals(MDG) 2015. As such it is imperative to offer more debt relief packages to the poorer countries to help them focus on economic reviews and job creation policies rather than look for ‘short-cut’ policies such as remittances to service and repay debts. In such economies it is the children and women who labour in awful conditions or become migrant labour akin to being trafficked(forced labour conditions). In instances where debt relief is given as was with Zambia WB and IMF can play a role in negotiating that the ‘savings’ from repaying and servicing the loan go towards meeting MDGs.
- Corruption
WB’s call for more transparency is to be lauded. But caution is needed that this conditionality is not at the expense of aid and/or programmes not reaching the poorest of the poor. It is also equally important to look at global governance, including WB projects where companies which clinch contracts, do create jobs at the local level and not contravene International Labour Organisation’s Core Labour Standards.
- Conditionalities and Economic Policies
The acceptance and implementation of economic reforms need to be more an exercise in coalition building among the stakeholders. Britain has currently announced withholding a payment of 50 million pounds till there is a greater understanding that WB and IMF works in consultation with local governments over economic policies such as privatization, policies on corruption. An example is that of Ghanaian farmers risking losing their livelihoods with no subsidies on their tomato production and no tariffs on imported produce, the homegrown products from these farmers are now more expensive than the imported ones.
- Quota System
Singapore’s Senior Minister Goh Chok Tong has asked for Asian countries and Singapore to have more voting rights at WB and IMF Meets. Asian countries contribute nearly a quarter of the world’s GDP but only have 10 per cent voting rights. The US has a 17 per cent stake while 90 poor countries share 4 percent of the vote. The suggestion is to increase the voting rights of China, South Korea, Turkey and Mexico. Europe is considering merging its many votes into a stronger and louder single voice for the European Union. There is also a discussion that in order to prevent the quota change from adversely impacting the voting shares of low-income countries it is best to offer such member countries at least a doubling of "basic votes". An official statement by 53 Commonwealth members also asked for increased voice and representation of developing and poor countries at the two organizations. However there are skeptics to this weighting of the quota system and they include Brazil, India, Argentina, Indonesia and Malaysia.
Recommendations
Greater transparency at WB and IMF and its communiqué becomes a regular feature. Its approach needs to be one of coalition building rather than a top-down one.
Aligning with Millenium Development Goals means greater emphasis on poverty reduction measures. Asia is home to more than two-thirds of the world’s poor. The global unemployment figures stands at 186 million of whom youths aged between 15 and 24 years old , comprise 14 per cent. The Gini Co-efficient that measures income equity shows rises in many regions – South East Asia is 0.43 to 0.49 while East Asia’s co-efficient has risen from 0.25 to 0.45. It is important to have policies that build up good social safety nets, collective bargaining, Corporate Social Responsibility, and that Core Labour Standards are observed.
WB/IMF needs to take on a multi-disciplinary approach to its policy/research arms.
WB/IMF works in tandem with the goals of UN and other International Organisations for greater harmonization across goals, indicators and standards.
Shrink it or Sink it discussions on IMF might be valid as countries are keen to repay debts quickly and get back to normalcy. The IMF runs the risk of looking like a glorified moneylender. More regional Funds could be set up – Asian countries have considered and agreed to the idea of Asian Monetary Fund, formed from Asian countries pooling some limited reserves. Eventually this may be a mechanism to cope with potential financial crises without involving the IMF.
Internationalisation
It is a preferred term by some authors to ‘globalisation’ as the role and importance of the state is greater in the former. The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology” (IMF, World Economic Outlook, May, 1997). The World Bank defines globalization as the "Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries". To think Internationalisation is a mindset change but it can mean enhancing the status of nation states, people and unions and labour rights become more important.
Conclusion
The World Bank and the IMF need to speed up on its structural reform program that will overhaul the structure and operating principles of the IMF.
It also means that IMF/WB needs to look at coalition-building approaches and be more transparent and inclusive of trade unions and CSOs in a world where interconnectivity and diverse solutions are so important.
The US veto power over all decisions must be abolished and the IMF must be made more democratic with more influence given to Asian countries.
Poverty reduction, conflicts, natural disasters and epidemics all demand specific responses. Each of these factors or a combination of all them will see workers leaving homes to look for work. There are many workers criss-crossing the globe today looking for work. They have little protection as workers or respect as human beings. Migrant labour needs to feature in the economic policy discussions of the WB and IMF and it is important they come under the Core Labour Standard regulatory framework.