While investors and global financiers watch nervously as the financial crisis unfolds in East Asia, the human face of that crisis remains unseen. It should, of course, be at the centre of policy discussions regarding the region. Unfortunately, poverty is conspicuous by its absence from the agenda of the International Monetary Fund, under whose aegis the multi-billion dollar rescue packages for the region have been put together.
Three decades of rapid growth and dramatic reductions in poverty in East Asia have obscured the scale and depth of deprivation which remain, contributing to the absence of debate over the social implications of the financial crisis. It has been too easy to forget that poverty remains, deep and pervasive.
Indonesia has more than 20 million people - 10 per cent of its population - living on less than $1 a day, and as many people again living perilously close to the official poverty line. Under these conditions, any formula for responding to the financial crisis must have an integral strategy for protecting the poor.
However, the IMF's programmes - which include a doubling of real interest rates in Indonesia and South Korea and a 10 per cent cut in public spending in Thailand - have been designed primarily to bail out reckless international investors, whose activities have contributed to the present crisis. The implications for the poor have been left unconsidered. This is despite the involvement of the World Bank, which has made an institutional commitment to review the effects of all its programmes on the poor.
Oxfam does not accept that underlying conditions in East Asia merit the severe debt deflation which the IMF is demanding. During the Latin American debt crisis of the 1980s, the IMF maintained that international creditors simply had to be paid back in full. This approach consigned Latin America to a decade of social and economic decline, with deflationary policies leading to a collapse in investment and spiralling poverty. We do not need to see a rerun of such a crisis in East Asia.
Human welfare in Indonesia depends critically on remittances from workers in urban areas to their rural-based families. It is estimated that around three million migrants from rural areas in the outer islands are now employed in Java, growing export industries having been a magnet for labour. These workers' remittances are crucial to meet their families' basic needs in food, clothing, school fees and health care.
Project workers in many areas are now reporting dramatic effects as remittances decline. Over 150,000 construction workers in Java recently lost their jobs and are no longer able to support their families. A similar situation is emerging in East Java, where Oxfam works with poor farmers. In Tulungagung we estimate one in three families has a relative working in an urban area sending remittances.
Meanwhile, domestic pressures have been exacerbated by the repatriation of around 400,000 Indonesian workers from Malaysia as the crisis there takes its toll. Each job-loss translates directly into increased pressure on poor rural households. And as remittances decline, the cost of basic foods is being driven up by the combined effects of drought and devaluation.
As well as loss of income in rural areas, mass unemployment in urban areas is starting to increase poverty. In a country lacking even the most rudimentary welfare state, the implications are devastating.
Oxfam's concern extends to other countries in the region. In Thailand, unemployment is projected to increase by 900,000 over the coming year. In South Korea, over 1 million people are expected to lose their jobs. Social tensions are high, and will increase as the country suffers an increase in poverty for the first time since the early 1950s.
Against this backdrop, the World Bank should immediately assess the impact of IMF-led rescue programmes on the poor in Indonesia, Thailand, South Korea and the Philippines. The implications for rural poverty of declining remittances should be a priority. Any such assessment is likely to establish that the IMF programme needs to be redesigned to provide a less deflationary framework with a priority on protecting jobs.
Countries in the region must also commit themselves to full disclosure of all public spending provisions and to the protection of priority social services. We need urgently to develop mechanisms which will ensure foreign investors bear part of the adjustment costs.
Mary Van Lieshout is policy manager of Oxfam in Ireland