The impact of the financial and economic crisis on women and families

Op-Ed by Dr. Noeleen Heyzer, Under-Secretary-General of the United Nations and Executive Secretary of ESCAP

Published by New Straits Times, Malaysia

Date: 10 May 2009

We are living through a global economic crisis of a scale not seen since the Great Depression. The biggest blow to the Asia Pacific region came at the end of 2008, when exports orders plummeted, related financing disappeared, and unemployment skyrocketed. As many as 23 million people, particularly young women employed in the export-oriented manufacturing sector, are projected to lose their jobs while millions more will experience rising income insecurity.

Past economic crises have shown us that it is the poor, particularly women and children, who are the hardest hit. In 1997, 19 million Indonesians and 1.1 million Thais fell below the poverty line as earnings slumped and jobs disappeared. Recovery in real wages and employment took much longer than the recovery of GDP.

Not only do the poor take longer to recover from economic crises, but they are also more affected, lacking the buffers required to reduce the impacts. The poor predominantly possess unskilled labour and engage in the informal sector. This restricts their ability to cope by switching jobs and exposes them to unregulated labour markets. They lack assets such as bank deposits and have only limited and expensive access to credit. Unskilled labour are the most vulnerable to job loss because they are unlikely to be covered by formal unemployment insurance or social protection schemes.

These factors push poor households into a vicious cycle of poverty. Coping strategies include cutting down on meals, reduced healthcare spending, and withdrawing children from school all of which increases the level of poverty for these families. Often these coping strategies impact women and girls the most.

In the Asia Pacific region, women still constitute the majority of temporary, casual, seasonal and contractual labourers. The vulnerable contractual status of women seems to be a common denominator across Asia, though agriculture still remains the biggest employer of female workers in South Asia (60% in 2007), whereas the majority of women workers in East Asia and South East Asia and the Pacific have moved onto industry and services .

The made in Asia consumed in America growth model is now being put to the tested. Unlike the previous financial crises of 1997, where Asia was the epicenter of the problem, the current economic crisis is connected to market forces outside our region. Low-skilled, labour intensive manufacturing sectors have been the hardest hit. Exports are declining rapidly in textiles, apparel and clothing, footwear, and electronics across Asia Pacific. Other impacted sectors include tourism and related services industries. Women happen to play dominant roles in all these sectors. Additional sectors where layoffs are financial services, ICT based back-office services and overseas workers where the gender composition is fairly equal. The burden is borne not only by women. Male dominated industries like auto parts and construction have suffered serious setbacks.

The main casualty of the current crisis is the flexible labour force – low skilled, temporary, casual workers. Women constitute the majority of these workers in the Asia Pacific. The fiscal reforms of ten years ago did not establish the foundations of social protection, nor the basis for women to receive equal opportunities in the work force.

Poor and particularly women are considered “subprime” borrowers by commercial banks. As a result of having limited or no access to the formal banking sector, they tend to rely on micro-credit facilities for financing their businesses and providing funds for household consumption during difficult times. Early evidence from South Asia suggests that microcredit programmes have been hit hard. This will have a direct impact on poor, especially women.

While food prices have come down from the historical peaks observed in early-2008, they still remain high. As a result the poor now face both high food costs and shrinking incomes. Women who have the responsibility of putting food on the table, bear the brunt of the burden.

Findings therefore indicate that it is the current structure of manufacturing and informal sectors that discriminates against women, who constitute the majority of the work force. Women are now demanding more accountability from both the public and the private sector in terms of how the markets are structured and how state funding is being used in stimulus packages. Women are pushing as consumers for increased corporate social responsibility through fair trade where workers rights, in particular women’s rights are protected through improved corporate standards.

Fiscal stimulus packages introduced by many countries in Asia Pacific over the last few months are largely pro-poor. However, more needs to be done to address the disproportionate burden on the poor and women.

Engendering fiscal stimulus packages needs to be a priority. Large public infrastructure and public work projects are common features in all stimulus packages that have been tabled. These jobs are mostly in construction where 80-90% of jobs are held by men. Introducing similar expenditures for the provision of health services and education would open equal opportunities for women. If the economic crisis continues however, past experience shows that governments tend to cut down on social sector spending. Concerted efforts need to be made to avoid this.

Increased emphasis should be placed on gender budgeting and tracking. Establishing effective public expenditure monitoring systems will help to ensure that budgetary allocations reach intended target groups.

Public spending and investments in agriculture should be increased. Agriculture is the main livelihood of the poor and still provides employment for 60% of the working population in Asia and the Pacific. The majority of our region’s farmers are women. Investments in sustainable agriculture and measures to improve national food security need to ensure that they include women as an intrinsic part of local food production systems.

Protecting micro-credit is a lifeline for the poor and especially for women. Monetary authorities need to make sure that state owned banks provide uninterrupted financing for micro-credit schemes and institutions; and that commercial banks that receive liquidity support from Central Banks maintain present levels of funding for micro-credit.

The current economic crisis can be turned into an opportunity. ESCAP’s research indicates that restricting women’s access to work, education and health services comes at a significant costs. Women are in a position to contribute an additional US$80 billion a year to the economy if their access to employment and education is improved.

A lot can be achieved through simple, low-cost interventions. Girls’ attendance in schools can be increased by providing separate toilets and wash areas. Providing free lunches at school for children and special nutritional packages for pregnant women will go a long way toward improving the health of the poor. Mobile clinics in remote areas and community-based emergency transport systems can drastically reduce maternal and infant deaths.

While social progress is spurred by economic progress, the reverse is also true. Economic growth can be driven by advances in social policy. This needs to be remembered by decision makers as countries in our region search for new drivers of growth as they respond to the economic crisis.