Financial Meltdown Prompts Return to Agriculture

By MARWAAN MACN-MARKAR / IPS WRITER

BANGKOK — As Southeast Asia feels the heal of the global financial meltdown leaders are turning to the informal sector, particularly agriculture, as a potential provider of employment.

Malaysian Prime Minister Abdullah Badawi echoed such a sentiment this week, resurrecting a view that had emerged after a financial crisis swept through this region in 1997. The Malaysian agriculture sector will help the country to "cushion the impact of the economic downturn," he said during an encounter with farmers, according to local press reports.

The agriculture sector accounts for about 60 percent of Southeast Asia’s informal sector, which is estimated to have 161 million workers, states a new study on labor trends released by the International Labour Organisation (ILO).

"Agriculture still accounts for 44.5 percent of (the region’s) total employment, albeit with considerable variations across countries, ranging from less than one percent in Singapore to over 80 percent in Laos,'' the ILO study said.

The past decade has also seen South-east Asian cities, which have expanded due to rapid urbanization and migration from rural areas, taking on a greater role as a venue for the informal labor pool, adds the ILO. Food vendors along the streets are typical of this trend. A majority of them are women, giving "vulnerable" work a "feminine face."

The number of workers in the informal sector are set to increase as jobs in the region’s formal economic sector, ranging from industries to services, become limited, says Gyorgy Sziraczki, senior economist at the ILO's Asia-Pacific regional office in Bangkok. "Employers will either delay hiring or freeze new recruitment and the wage growth will slow down, with pay increases lesser than in past years."

"There will be 850,000 fewer jobs created in 2008 than in 2007. And by 2009, that number could go up to 1.27 million fewer jobs in the region," he revealed in an interview. "The number of unemployed in the region may rise to 18.5 million in 2009 as against the 16.5 million unemployed people in 2007."

Such dismal estimates are a contrast to the robust economic growth the region experienced till the onset of the spike in oil and food prices early this year and soaring inflation in some countries in the 10-member regional bloc, the Association of Southeast Asian Nations. The region’s growth of 6.4 percent in 2007, up from six percent the previous year, "was the highest in over a decade," states the ILO in its 'Labour and Social Trends in Asean 2008.'

"The region’s strong economic performance in 2007 had a positive impact on its labour markets," adds the 116-page report. "Employment in Asean member countries increased from 260.6 million in 2006 to 268.5 million in 2007—an increase of three percent, or 7.9 million additional jobs."

The impact from the financial crash will be felt in the export sector in countries like the Philippines, which depends on the Japanese and US markets.

This week, Thailand's labor ministry revealed that 120 companies had shut down from January till October in industries dealing in food, garments and furniture.

Burma’s garment sector, which exports to Japan and the European Union, may also experience factory closures and workers being laid off, according to the military-ruled country’s garment manufacturers association.

But unlike a decade ago, governments appear more prepared to deal with layoffs and lack of work in the formal economy, says Raj Kumar, at the Economic and Social Commission for Asia and the Pacific (ESCAP), a regional UN body based in Bangkok. "The 1997 financial crisis caught governments by surprise and there was little preparation to help people affected by the economies that went into negative growth."

"They have learnt some of the lessons since then and are already talking about it," he told IPS. "The current talk about the role the agriculture sector will have to play to absorb people from the formal economy was never discussed before the ’97 crash."

Yet such expectations for the informal sector—particularly agriculture—to help people from cities to return back to their homes in rural areas and serve as a safety net are not limitless. More so since the rural heartland of many Southeast Asian countries have been ignored in the past 10 years, with limited amounts of investment pouring in from national budgets to improve infrastructure and agriculture outputs.

"There has been a serious neglect of the agriculture sector in the past decade. The investments have gone down," says Diderik de Vleeschauwer, spokesman for the Food and Agriculture Organisation’s (FAO) Asia-Pacific office. "Those areas are not what they used to be in ‘97."

The land area available for agriculture has also decreased, he told IPS. "This is because of new land-use patterns, land being sold for non-agriculture purposes such as hotels and golf courses and the drastic impact of climate change."

In fact in the Philippines, a country expected to face the brunt of the economic downturn, there is little hope for people who migrated to the cities from the provinces in search of work to go back home.

"The agriculture sector in the Philippines is at a very low point because the government’s investment in agriculture is not a priority," says Jillian Roque, research and advocacy officer at Public Services Labour Independent Confederation, a Manila-based national union of government workers.

"The only option available for the Filipinos, who end up in the informal sector is to search for jobs abroad," she said in a telephone interview about a country that already has 10 percent of its population as overseas migrant workers. "There will be an increase in people wanting to leave the country even if there is a threat of abuse and exploitation. The crisis is creating a sense of desperation."