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Depressed Asian economies feed spiraling social unrest Nations lack aid programs to cushion unemployment


HONG KONG -- The social costs of the Asian economic crisis are far higher than initial estimates and are "dramatically worsening," according to a report Tuesday by the International Labor Organization.

The United Nations agency said the economic collapse had resulted in a combustible mixture of soaring unemployment, spreading poverty and dashed expectations. The lack of social welfare programs made the hardest-hit countries, such as Indonesia, "fertile ground for breeding social unrest."

"I would veer to the pessimistic side," said Eddy Lee, an ILO economist, who wrote the report. "The unrest in Indonesia is spilling over into Malaysia. And even where you don't have street riots, there is a tremendous amount of social instability just beneath the surface."

Indonesia has seen violent clashes between soldiers and students and between Christians and Muslims. In Malaysia, demonstrators are protesting against Prime Minister Mahathir Mohamad for ousting and imprisoning his deputy prime minister, Anwar Ibrahim.

The report called on governments to increase spending on social programs, particularly unemployment insurance, which is largely unknown in Asia. It likened the crisis to the Great Depression of the 1930s, which galvanized the United States to weave a social safety net.

The report's tone is starkly at odds with both Asia's resurgent financial markets and other international agencies, such as the International Monetary Fund, that have played up the prospects for a rebound.

Lee said a swift recovery was unlikely, given the deep recessions in Indonesia, Thailand and South Korea. In Indonesia, the report estimates, economic output will decline 15 percent in 1998, while in Thailand and South Korea it will shrink by 6.5 percent and 5 percent, respectively.

The report estimates that the crisis has wiped out one-fifth of non-farm jobs in Indonesia this year, a loss that will drive 40 million people, or 20 percent of the population, into poverty.

In Thailand, the report predicts, the jobless rate will soon be 6 percent. Even in South Korea, which is perceived as recovering, unemployment is expected to jump to 8.2 percent, from 2.3 percent.

Pub Date: 12/03/98

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