1997 meltdown 'unheeded lesson'

1997 meltdown 'unheeded lesson'

The Asian financial crisis should have spurred better labour protection, with employees still vulnerable

The 1997 financial meltdown, known as the Tom Yum Kung crisis, is an important lesson for policy-makers on the need to ensure better protections for the labour sector -- the hardest hit by the crisis -- so workers do not end up as "easy victims" of economic vulnerability, according to Narong Phetprasert, Chulalongkorn University labour economist.

He added that state policies are still bent on protecting businesses rather than workers, who bore the brunt of the impact 20 years ago.

The financial crisis forced business closures in unprecedented numbers, triggering mass layoffs. The bailout loan came with many strings attached, which curbed workers' negotiating power, Mr Narong said.

In fact, workers should have been allowed to retain strong bargaining power so they were not taken advantage of during the crisis, he said.

It was estimated that immediately after the crisis, about one million workers became jobless and by the end of 1997, a total of two million workers were out of work.

Governments cater excessively to businesses and investors, striking out the "balance". He said a business tax reduction should have been traded off to instead raise the daily wage, which would have stimulated the economy and improved workers' standard of living.

However, it has always been the policy to keep the daily wage low, the academic said.

Wichai Narapaiboon, manager of the Thai Labour Museum, said governments have repeatedly missed the opportunity to provide workers with sufficient skills training. He said proper training would have helped them be less vulnerable to being made redundant in times of financial stagnation.

"State policies and measures too often promote investments. That implies the sector offering labour is being overlooked," he said.

In times of crisis, measures are launched promptly to rescue investors. "It explains the saying that the (businesses) fall on the cushion while the workers are the ones getting hurt," Mr Wichai said.

Workers dealt a heavy economic blow in 1997 belonged mainly to the automobile and spare parts industry, which had to radically cut welfare and eventually lay off many workers, according to Wisut Ruengrit, vice-president of the Federation of Thailand Automobile Worker's Union.

The priority at the time was to urgently cut back on costs, as vehicle sales plummeted across the board. Workers had to take deep pay cuts and even delved into their provident funds, intended as post-retirement savings, so they could survive the dire financial situation.

Sampat Khamwong, 51, a former labour union member, said a number of independent self-employed workers today are from the generation of people who lost their jobs during the financial crisis.

Some factory workers, himself included, who had walked away with an early retirement package scraped together enough money to set up a van shuttle queue and a small van rental business.

However, he was among a fortunate few, he said.

Other workers became jobless with no severance pay or compensation as the job market had completely dried up with many businesses going bankrupt.

"Some employers insisted they would not avoid their workers but that they simply did not have the money to pay them," he said.

"The [foreign] investors came holding only a suitcase. They hired workers, exported products and saw their companies expand only to amass profits and fly home when the crisis hit," the former union member said.

The workers back then demanded the government establish a labour compensation fund, but it did not materialise.

Waithit Sirisuwan, Siam Commercial Bank's Labour Union chairman, said the Asian financial crisis marked the start of the "opened car trunk" flea market where cash-strapped laid-off workers and company employees sold off their personal belongings bought before the economic bubble burst.

The crisis, he said, should teach people to be disciplined with their spending and take better care of their finances. Financial security can help them mitigate the effects of harsh economic crunch.

However, according to Suthikorn Kingkaew, director of the Thammasat Consulting Networking and Coaching Centre, the economic conditions and pretexts of today are different from those that brought the country to its knees in 1997.

In the broader scheme, the 1997 crisis has spurred financial institutes to adopt stricter lending measures to effectively control non-performing loans as the government is better managing the real estate sector, said the expert.


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