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The Impact of the Crisis on Women in Developing Asia

Introduction:

As developing Asia is the most “globalised” region of the world in terms of both trade flows and financial flows, it was expected that the global crisis would adversely affect the region.  However, while the impact has indeed been strong, Gross Domestic Product (GDP) growth has, as of yet, not been negative; rather, the impact has been seen through rapid rates of deceleration.  Therefore, at first glance, the impact appears to be less adverse than in some other developing regions.  However, the unfavourable effects are evident in a range of other variables, and may be of longer duration than the period of slowdown in aggregate income growth.  Because of this, the effects of the crisis also tend to be disproportionately distributed among the population, with certain vulnerable groups, including women and girls, affected to a worse degree than groups that are more secure or privileged.

Across most countries of developing Asia, gender discrimination is intertwined with other forms of social and economic disparity, such that region, location, community, social category and occupation also play a key role in the extent of deprivation.  It is worth noting that many of the worst affected in the recent crisis are also those who are already among the most disadvantaged in most countries, and who did not really gain very much from the previous economic boom that covered much of developing Asia.

The crisis has resulted in — and its impact has been felt through — the following: the global decline in exports, which has directly affected export production and, through a negative multiplier effect, domestic markets; the reversal of capital flows, including both portfolio capital and external bank lending; the pro-cyclicality of aid flows; the impact of the crisis on migrant workers and therefore upon remittances; exchange rate devaluation which has affected domestic production and prices; extreme volatility in global food prices; and the fiscal constraints in many developing Asian countries that have already led to cutbacks in important public expenditure, impacting access to basic services and the quality of life.  These processes have already had adverse effects on women in a variety of ways, and several of these impacts are likely to be exacerbated in the near future even if economies recover.  Some of the main impacts include: employment effects; declines in real wages and income from self-employment; changes in patterns of migration; the impact of higher food prices on food consumption of women and girls; access to health care; access to education; and greater exposure to domestic and other forms of violence due to increased social tensions.

1. Effects on Women’s Employment and Incomes

The most immediate and direct impact of the crisis on employment has been through exports.  The collapse in global demand has had a severe effect on developing Asian economies, which were heavily export-oriented.  Manufacturing exports from developing Asia have declined sharply since roughly September 2008 and — as of July 2009 — have continued to decline.  Women workers dominate export-oriented manufacturing production across most of Asia, especially Southeast Asia, Bangladesh and Sri Lanka, with a ratio of two to five female workers for every one male worker in sectors such as textiles, garments and electronics (Dejardin and Ownes 2009).  Already female unemployment rates in South and Southeast Asia in 2008 were higher than male rates: 6 per cent on average for females compared to 5.2 per cent for males (ILO 2009).  Reflecting on the Asian financial crisis a decade earlier, it is well known that women workers are usually the first to be laid off, given the job segregation that places women in low paying and more “flexible” activities.  Men, on the other hand, are often in more diversified and relatively more secure occupations.  For example, women were laid off at seven times the rate of men in South Korea (Seguino 2009).  Initial evidence from several countries suggests that this is already happening (UNDP RCC Colombo, 2009).  In addition, the pressure on exporters to compete in an increasingly hostile environment has been associated with attempts to reduce labour costs by driving down wages and forcing remaining workers to work longer hours and often for less pay.  This has been observed, for example, in the garment industries in Bangladesh and Sri Lanka, the electronics factories in Thailand and the Philippines and in a range of exporting sectors in India.

However, it is not only in export sectors that women’s employment has been affected.  Other sectors tend to be impacted by the negative multiplier effects of declines in exports: as such, construction and other industries catering to the domestic market have also been hit.  Two other categories of workers — less the focus of official policy — deserve special mention: women cultivators and women working in the informal sector and as home-based workers.

The majority of women workers in Asia are in farming, either as cultivators or agricultural workers.  The impact of the crisis on agriculture is much more severe than has been recognized: for example, cultivators in India have already been through more than a decade of agrarian crisis, which persisted even through the period of rising international crop prices.  In general, agrarian crisis in developing Asia is related to public policies from the early 1990s onwards.  These policies systematically reduced the protection afforded to farmers and exposed them to import competition and market volatility; allowed private profiteering in agricultural input supply and crop purchases without adequate regulation; reduced critical forms of public expenditure; tried to cut subsidies by increasing the prices of important inputs like fertiliser, water and electricity rates; ran down or destroyed important public institutions that have direct relevance for farming, including public extension services and marketing arrangements; reduced access to institutional credit; and did not adequately generate other non-agricultural economic activities.  At the same time, trade liberalisation meant that farmers were forced to operate in a highly uncertain and volatile international environment.

Volatile crop prices also generated misleading price signals.  This caused large and often undesirable shifts in cropping patterns, ultimately rebounding on the farmers themselves.  The associated increase in debt (often to private moneylenders) has become a major drag on the viability of cultivation.  These difficulties are heightened in the case of women farmers, because in much of Asia (especially South Asia) lack of land titles and other recognition has tended to deprive women of benefits such as access to institutional credit, extension services and subsidised inputs.  Therefore, women tend to have higher costs of cultivation than their male counterparts and less state protection.  In the absence of specific measures, they are more likely to be deprived of the benefits of crisis relief packages.

Women in informal work have already been negatively affected.  As opportunities for paid employment have dwindled, women workers in many countries have turned to home-based subcontracting activities, or work in very small units that do not even constitute factories.  Typically, these women work on a piece rate basis with poor pay and no known non-wage benefits.  This was evident in all the countries that suffered from the Asian crisis in 1997 (Ghosh and Chandrasekhar 2009) and is once again being seen today.  Thus the economic downswing is directly reflected in both declining orders or contracts and falling rates of remuneration.  In India, more than half of the 15 million women workers in the unorganised sector are involved in home-based work — predominantly on a piece-rate basis — for different types of industries, ranging from handloom and food processing to petty engineering and hazardous work involving acids and chemicals.  Very recent micro-evidence confirms the already poor and sometimes even deteriorating conditions of such work: a rapid decline in piece rates as well as a reduction in opportunities for work — even in such aforementioned activities — has been observed.  For example, in Ahmedabad, Gujarat, there is evidence of a 50 percent decline in rates for waste collectors (SEWA 2009) and almost equally sharp declines in rates for home-based workers in greater Delhi (AIDWA 2009).

A decline in access to credit for self-employed women is also evident: the meagre amounts of institutional credit that women could previously access have — for the most part — dried up.  Moreover, non-institutional sources have also become more difficult and expensive for women to access.  This has caused costs to increase even as small producers are being forced to reduce the prices of their goods and services in order to compete in increasingly adverse market conditions.  Floro and Dymski (2000) have already shown how financial crises can change gender relations through intra-household adjustments, and some of this appears to be happening in Asia at present.

2. Migration

It was widely predicted that remittance flows would quickly show signs of decline, and initial reports from countries like Jordan, Pakistan and Bangladesh supported this prediction.  As the crisis unfolds, however, it is also becoming clear that patterns of migration and remittances may be more complex than previously imagined.  For example, in several countries, such as India, remittance inflows have actually increased rather than declined.  To some extent, this makes sense: because even if the crisis leads to large-scale retrenchment of migrant workers who are then forced to return home, these workers would obviously return with their accumulated savings.  In such a case, there could be a (temporary) spike in remittances rather than a continuous or sharp decline.  Eventually, however, as the adverse conditions for overseas employment further aggravate, a decline in remittance inflows would occur.

However, a sharp decline in migration and remittances is not inevitable, largely because of the gender dimension.  International migration for work is highly gendered, particularly in Asia, with male migrants employed dominantly in manufacturing and construction sectors and women migrants concentrated in the service sectors, such as the care economy broadly defined (including activities such as nursing and domestic work and “entertainment”).  The different nature of work also affects remittance flows.  Female migrants are far more likely to send remittances home and typically send a greater proportion of their earnings back.  For male migrant workers, incomes are linked more closely to the business cycle in the host economy, so their employment and wages tend to vary with output behaviour.  Job losses in the North during this crisis have been concentrated in construction, financial services and manufacturing, all dominated by male workers.

By contrast, care activities disproportionally performed by women tend to be much less vulnerable to fluctuations in the business cycle.  The level of care work available is often more affected by variables such as demographic tendencies, institutional arrangements and the extent to which women in the host country work outside the home.  Therefore female migrant workers’ incomes are more stable over the cycle and do not immediately rise or fall to the same extent.  This, in turn, means that source countries that have a disproportionately higher share of women out-migrants (such as Philippines and Sri Lanka) tend to experience less adverse impacts in terms of downturns in remittances.  Indeed, the Philippines’ most recent data indicates that remittance flows are still increasing slightly, at an annual rate of around 2 percent.  This does not mean that there will be no negative impact at all, but certainly the adverse effects will be less and will take longer to appear than if the migration had been dominated by male workers.

Return migration was expected to be dominated by the worst hit workers (i.e. undocumented, irregular or illegal migrants primarily present in low-wage and low-skilled occupations and who do not qualify for welfare benefits or social security from the host country).  Once again, though, the initial evidence belies this expectation.  There are several reasons for this.  Many developing countries, including those in Asia, have been affected by the financial crisis to a greater degree than the US economy.  Migrants may therefore be unwilling to return home to possibly even more fragile and insecure employment conditions.  The unwillingness to return in such a context may be even stronger where the undocumented migrants have already developed some local social networks that allow them to survive while they look for other employment.  So the factors that initially catalyzed international migration for employment remain strong.

In the host country, employers who see a cheaper source of labour in undocumented migrant workers than in legal migrants or local workers may even prefer undocumented migrant workers.  A crisis context may well make that preference even sharper.  As women migrants dominate in the undocumented and illegal category, this may be another reason why women migrants may be less badly affected.  In any case, one of the basic factors drawing individuals toward international migration still remains significant: the demographic transition in the North that sees an increasing share of the older population requiring more care from younger workers, who must come from abroad.  So the current crisis may temporarily slow down the ongoing process of inter- national migration by women for work, but is unlikely to reverse it.

Internal migration, however, especially from rural to urban areas, has already been hit and indeed the return of migrants to rural areas is now more evident, for both men and women.  In China, for example, it is estimated that more than 30 million workers have already returned to their villages after employment opportunities in urban areas dried up.

3. Food Prices

In 2008, the dramatically high global prices of important food items adversely impacted national food security for food deficit countries and affected the food security of vulnerable groups within countries.  It is now quite widely acknowledged that financial speculation was the major factor behind the sharp price rise of many primary commodities, including agricultural items over the past year.  The subsequent sharp declines in prices were also related to changes in financial markets, in particular the liquidity needs of financial agents to cover losses elsewhere.  These price changes did not reflect real supply and demand, since both scarcely changed over the year (Ghosh 2009).  Financial deregulation in the early part of the current decade gave a major boost to the entry of new financial players into the commodity exchanges, and allowed unregulated activity in commodity futures markets, which became a new avenue for speculative activity.  The result was excessive volatility displayed by important commodities over 2008, not only in food grains and other crops, but also in minerals and oil.

Such volatility had adverse effects on both cultivators and consumers of food.  It sent out confusing, misleading and often completely inaccurate price signals to farmers, causing over-sowing in some phases and under-cultivation in others.  Also, while the pass-through of global prices was extremely high in developing countries in the phase of rising prices, the reverse tendency has not occurred when global prices have fallen.  In fact food prices in most of developing Asia (with the exception of China) are now around 30 percent higher than they were two years ago, even as wages have stagnated or declined.  This has particular implications for women and girls, who, in contexts of food shortage, tend to be the first to lose out in intra-household food distribution.  Thus, due to extreme price instability, both cultivators and food consumers lost out; the financial speculators — who were able to profit from rapidly changing prices — were the only ones to gain.

4. Effects on Conditions of Life

In addition to the impact on nutrition, the crisis has had other strong negative effects on the basic conditions of life for women.  In many countries of developing Asia, the crisis has been associated with a fiscal crisis of the state, and some countries — such as Pakistan — have already had to approach the IMF for emergency assistance.  Unfortunately, the IMF, which now accepts the need for countercyclical macroeconomic policies in developed countries, continues to insist on very harsh pro-cyclical policies in the developing world.  As a result, developing country governments are forced to cut back on expenditure and raise user charges for public services in order to reduce fiscal deficits.  This has meant reduced access to crucial public services.  When combined with the effect of losses of livelihood and wage incomes, this is disastrous.  There are already reports from several countries (Philippines, Bangladesh, India, Cambodia) of reduced household expenditure on health — leading to increased risk of maternal mortality — and reduced expenditure on education, leading to the withdrawal of girls from school.  In addition, withdrawal or reduction of public services usually places a greater burden on unpaid labour within the household, which is typically performed by women, and this too is already evident from quick surveys in different parts of developing Asia.

5. Policy Responses

Such adverse effects are not inevitable, since they can be ameliorated or even reversed by policy measures.  But the extent to which different governments in Asia can undertake effective policy responses is conditioned by the extent to which they have been battered by the crisis in the first place.  In particular, the extent to which a developing country experiences financial contagion and local financial crises has often depended on how much the developing country has liberalised financially.  The developing countries that have gone furthest in terms of deregulating (for example, Indonesia) have been the worst affected and may well have full blown financial crises of their own.  Countries with large external debts and current account deficits (such as Pakistan, Kazakhstan and Sri Lanka) have faced particular problems, as well.  By contrast, China, which has kept most of its banking system under state control and has not allowed many of the financial “innovations” that are responsible for the current mess in developed markets, is relatively safe.

This also means that the countries that are most able to take effective measures to revive employment, control food prices and so on, are those that are not dependent upon foreign resources.  Thus, while China has managed — despite international volatility — to keep domestic food prices largely stable, this has not been true for the majority of developing Asia.  The ability to engage in expansionary fiscal policy has also been severely constrained by lack of resources and the continuing explicit or implicit conditionality of international sources of funds.  The drying up of Official Development Assistance (ODA) in this context has also played an extremely adverse role.

Several policy issues arise, such as the significance of fiscal rather than purely monetary measures for recovery and the need to focus fiscal expansion not only on bailouts and subsidies for corporations but also (and more importantly) on public expenditure directed at increasing employment and maintaining living standards.  Fiscal expansion must be based on wage-led growth, with emphasis on certain types of spending, such as food distribution, health and education.  But the most relevant point for the purposes of this paper is the need to remove the male breadwinner bias that is inherent in many of the “people-oriented” policies that have been instituted or are being contemplated in response to the crisis.  This bias is expressed in many ways, such as in allowing male heads of households to determine the nature and content of assistance received, promoting male employment rather than recognizing the crucial productive role of women in agriculture and the informal sector, and failing to recognise the growing burden of unpaid work performed by women in the context of crisis.

This means that several aspects of national policy must be revised in order to ensure that the differential impact of the crisis on women is not too severe.  It is also worth noting that there is currently a danger that the media hype about “green shoots of recovery” can allow complacency to set in too quickly among governments in the region and prevent adequate crisis responses, leading to a more severe depression of living standards in future.

In terms of alternative recommendations at the international level, two extensions to the valuable proposals made by the Stiglitz Commission should be noted.  First, given the highly unequal and contractionary effects of devaluation upon developing countries — which, in turn, have adverse impacts upon real wages and essential consumption — it is necessary to encourage developing countries in Asia and elsewhere to institute capital management techniques that will control the destabilising flows of capital that cause havoc in exchange rates.  Second, the crucial interaction between food and finance needs to be recognised and dealt with.  It is true that the resolution of the global food crisis requires policies in the real economy, such as government interventions to provide more public support for sustainable and viable cultivation patterns and the creation and administration of better domestic food distribution systems.  International arrangements and co-operative interventions, such as strategic grain reserves, commodity boards and other measures to stabilise world trade prices are also helpful.  However, in dealing with the food crisis, specific controls on finance to ensure that food cannot become an arena of global and national speculation is also required.  These controls should include very strict limits (indeed, bans) on the entry of financial players into commodity futures markets; the elimination of the “swap-dealer loophole” that allows financial players to enter as supposedly commercial players; and the banning of such markets in countries where public institutions play an important role in grain trade.

References

Dejardin, A.K. and Jessica Owens (2009) “Asia in the Global Economic Crisis: Impacts and Responses from a Gender Perspective”, paper presented at ILO Workshop on Responding to the Economic Crisis — Coherent Policies for Growth, Employment and Decent Work in Asia and Pacific, 18-20 February 2009, Manila, Philippines.

Floro, Maria and Gary Dymski (2000) “Financial Crisis, Gender and Power: An Analytical Framework”, World Development Vol. 28, No. 7, pp. 1269-1283.

Ghosh, J. (2009) “The Unnatural Coupling: Food and Global Finance”, forthcoming in Journal of Agrarian Change, Symposium on the Global Food Crisis, also available on <www.networkideas.org>.

Seguino, S. (2009) “The Global Economic Crisis and Women”, presentation to UN Commission on Status of Women, 53rd Session, 3-15 March 2009, New York, USA.

UNDP RCC Colombo (2009) “Impact of the Global Financial Crisis on Developing Asia”, case studies based on quick surveys in 12 countries, work in progress.


Jayati Ghosh is Professor of Economics, Jawaharlal Nehru University, New Delhi.  This article was first published by the Association for Women’s Rights in Development (October 2009) under a Creative Commons license.




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