Gender Analysis of Fiscal Responses to the Economic Crisis in Asia by Lorraine Corner (UNICEF)

Transcription

1 Gender analysis of Government Fiscal Responses to the Economic Crisis Gender Analysis of Fiscal Responses to the Economic Crisis in Asia by Lorraine Corner (UNICEF) DRAFT FOR DISCUSSION ONLY PLEASE DO NOT QUOTE WITHOUT THE AUTHOR S WRITTEN PERMISSION Draft Abstract This paper analyzes the impact on women and men of fiscal responses to the economic crisis in Cambodia, China, Indonesia, Lao PDR and Viet Nam. Women and men occupy different parts of the economy. Women are more likely to work in insecure jobs and sectors that are especially exposed to the crisis. Stimulus packages pay insufficient attention to whether they mitigate the specific crisis impact on vulnerable women. National women s machineries and advocates need to engage with economic decision makers early in the design of response packages if the needs of women and their children are to be addressed. Presented at the UNRISD conference on the Social and Political Dimensions of the Global Crisis: Implications for Developing Countries November 2009 Geneva 1

2 Table of Contents I. Introduction...4 A. Gender responsive budgeting is needed to analyse the impact of revenues and expenditures on women and men and girls and boys...5 B. Women s influence on the well being of children extends beyond their role as mothers...5 C. States are obliged under international law to protect women s and children s rights...7 II. Fiscal Policy as a Response to Economic Crisis...7 III. Selected indicators on the pre crisis economies and the situation of women and children...9 IV. Women and men in the pre crisis economies...11 V. Crisis and response in the selected countries...13 VI. A. Cambodia...15 Concerns that household coping strategies will harm women and children...16 B. China...16 Impact of the response on women and children...17 C. Indonesia...18 Impact of the fiscal response on women and children...19 D. Lao PDR...19 Impact of the fiscal response on women and children...20 E. Vietnam...21 Impact of the fiscal response on women and children...23 Conclusion: what needs to be done? Present the case for fiscal responses that take into account the potential effects of gender differences between women and men and are child friendly Decision makers must recognize that women and men occupy different positions in the economy and are likely to be affected differently by both crisis and response Taking women s domestic and care roles into consideration in the design of the fiscal response ensures women have access to benefits and enhances program impact Access to basic social protection is essential for women in poor households Gender sensitive child centred systems to monitor the impact of the crisis are essential National women s machineries need to engage with decision makers on the fiscal response on an informed basis in the early stages of package development Women s NGOs, other advocates for women s and children s interests, including UNICEF, and gender budgeting and children s budgeting groups should support the women s machinery

3 VII. 8. Groups advocating with Government for more gender responsive and child friendly fiscal responses to the crisis should draw on a rights based approach...26 List of References...27 VIII. Annex List of Tables Table 1 Pre crisis condition of women and men in the selected economies...12 Table 2. Major impacts of and responses to the global crisis: Cambodia...15 Table 3. Major impacts of and responses to the global crisis: China...16 Table 4. Major impacts of and responses to the global crisis: Indonesia...18 Table 5. Major impacts of and responses to the global crisis: Lao PDR...20 Table 6.Major impacts of and responses to the global crisis: Viet Nam...22 List of Charts Chart 1. Women are active economic providers for their families...6 Chart 2. Women s labour force participation rates are high in four of the five countries...6 Chart 3. % growth in GDP per head Chart 4 Gross National Income - PPP $ per head Chart 5. Average annual % growth Chart 6. ODA $US per head Chart 7. Ratio of girls to boys enrolments in primary and secondary school Chart 8. Selected indicators of child health...10 Chart 10. Transmission mechanisms from the global economic crisis to households...1 List of Text Boxes Text box 1. Women spend more of their income on children...1 3

4 Gender analysis of Government Fiscal Responses to the Economic Crisis I. Introduction This paper focuses on the fiscal response to the crisis by governments rather than on the direct impact of the crisis itself. Past crises show that women and children, particularly those in poor households and socially excluded groups, are especially vulnerable. Experience has also shown that inappropriate responses may exacerbate the initial impact on vulnerable groups. Although governments may be unable to avoid the direct impacts of externally generated crises, they can and should mitigate the direct and indirect impacts on the population. In the East Asia and Pacific region, much should have been learned about the negative impact on women and girls from the experience of the Asian financial crisis of the late 1990s. The paper examines the extent to which those lessons have been incorporated into the fiscal responses of governments in Cambodia, China, Indonesia, Lao PDR and Viet Nam. Girls and boys are the primary targets of the work of UNICEF. However, the initial impact of both the global financial crisis and the response to it falls first on women and men and secondarily on girls and boys. The differential impact of crises on women and men has been well documented 1, although it is not yet well recognized by governments or integrated into policy in most developing countries. Any negative effects on women will inevitably flow on to the children and men in their families. The impact on women and girls is the least considered by policy makers, most of whom are men. Women and girls often have limited legal rights and protection, few assets, low levels of earned income, and little decision-making authority within households. Women therefore also have fewer mechanisms to cope with economic hardship and those they do have tend to involve long hours, increased risk to their health and well-being, low returns and potentially negative long-term implications for both women and their children. For example, women are often the first to skip meals or forgo medical check-ups, which can have harmful effects on their health, including maternal health. In the Philippines during the 1997 Asian Financial Crisis, women reduced consumption by eating only two meals a day in order to give their children three. They also reduced their utilization of health care, resorting to herbal remedies, traditional health practitioners or self medication. 2 Poor families withdrew children from school, sending children into the labour force, and reducing health care expenses in general. Such strategies tend to have lasting adverse affects for children in terms of poorer health indicators, and lower educational attainment that violates their rights and will reduce their potential human capacity for the rest of their lives. The differential impact of economic crisis on women and men also arises from their different roles in the economy, the specific impact of women s reproductive roles on their participation in other aspects of life, including the economy and decision making outside the household, and from sex-segregation in the labour force. Women and men tend to be concentrated in different sectors and occupations and to work under different types of employment contract. Men typically have higher paying jobs in higher productivity sectors and more skilled 1 UNIFEM, Making economic stimulus packages work for women and gender equality, Working Paper Draft June Knowles, Pernia and Racelis,

5 occupations with benefits and unemployment insurance. Women often constitute the majority of temporary, low-skilled and informal workers in low productivity and often export-oriented sectors, with few or no benefits. These jobs require longer working hours and are likely to be among the first to be eliminated during times of crisis as global demand for imports decreases. Women are then often forced into even more poorly paid and riskier forms of employment in the informal sector which may lead to exploitation, as migrant workers that may lead to trafficking, or in entertainment-related occupations that may lead to commercial sex work. A. Gender responsive budgeting is needed to analyse the impact of revenues and expenditures on women and men and girls and boys By contrast, the potentially differential impact of government fiscal responses to the crisis on women and men, and ultimately on girls and boys, is less well recognized. However, the mechanisms and consequences are generally similar and the phenomenon was well documented in the critiques of IMF structural adjustment policies and to a lesser extent in studies of the Asian financial crisis. Gender-responsive budgeting 3 is needed to integrate consideration of the potentially different needs of women and men, and boys and girls, into budget-related processes at all levels, their different conditions of access to benefits and the possibility that policies and programs may also have unintended differential negative consequences for them. Gender differences should be considered at all stages of budgeting, from the macro level to budget implementation at the local level. Countries such as Indonesia and Cambodia are progressing toward gender-responsive budgeting but none of the five countries under review has a comprehensive system at all levels. B. Women s influence on the well being of children extends beyond their role as mothers UNICEF is currently in the process of developing a new global gender policy that recognizes that women are more important in the lives of their children than just as mothers. Women are important to children through a variety of roles: 1. Women are important contributors to household income. The conventional stereotype is that men are breadwinners who provide the incomes on which families depend for their basic needs and women do not participate in the labour force or contribute significantly to household income. Chart 1 shows that this stereotype is quite inaccurate in the five selected countries, where women are significant providers of household income. Women provide more than half of the labour force in Lao PDR and almost half in both Cambodia and Vietnam. In most female-headed households (24 percent of households in Cambodia 2007 and 12 percent in Indonesia and 27 percent in Viet Nam 2004) women are the only sources of income for their families. Chart 2 similarly challenges the stereotype that women are not economically active. Although reported labour force participation rates for women are much lower than for men in 3 Gender responsive budgeting involves integrating the different needs and conditions of access of women and men and girls and boys into all budget related processes, including planning, budget formulation and allocation, programming and budget implementation to ensure that women and men and girls and boys will benefit equally from the use of public resources. 5

6 Indonesia, the difference is much smaller in the other countries and participation rates are actually higher for women than men in Lao PDR. Chart 1. Women are active economic providers for their families Chart 2. Women s labour force participation rates are high in four of the five countries Cambodia China Indonesia Lao PDR Viet Nam Women's share of the labour force If women s contribution to the economy in the form of unpaid family work, informal sector work, carrying water and fetching water were included in the measurement of the labour force, the economic contribution to their households and the welfare of their children would exceed that of men. Women s role as economic agents is more important for children than the size of their contribution to household income might suggest because they tend to spend more of their earnings on the needs of the family than men (Text box 1). Text box 1. Women spend more of their income on children IDRC found that poor women spent 75 percent of available funds on food compared with only 22 percent for men ( Studies in South Asia have also shown that men and women spend differently. Women spend a higher proportion of their income on food and health care for children while men use more of their wages for personal expenditure. Women s incomes are more strongly associated with improvements in children s health and nutritional status. (Devi Sridhar 2008) 2. In times of crises, women are also providers of last resort. The initial impact of a crisis often deprives women of their main sources of income and employment. When women lose their jobs, the impact on families is often more severe than when men lose their jobs. Research shows that women s earnings are more important to family subsistence, children s health and education, especially in the poorest families. Since women are concentrated in poorly paid work, they usually have few savings or assets and are much less likely than men to have access to social security benefits. As a result, relatively small falls in earnings (or increases in prices) can be very damaging for them and their families. A 1997 survey in the Philippines found that 64 percent of households in which a man lost his job reported that their incomes had decreased but 94 percent of households in which a woman lost her job reported a decrease in income. 6

7 Even where the initial employment impact falls primarily on men, the major impact falls immediately on women in their families. Whether the reduced household income is due to the loss of earnings by women or men, women must still find ways to meet the family s basic needs. For some women this involves entering the labour market for the first time without experience or recognized skills. The result is poorly paid employment and long hours, usually in the informal sector or petty trade. A secondary impact may affect girls who have to substitute for adult women minding younger siblings, doing household chores and fetching water and fuel. 3. Women provide most unpaid household work and are primary caregivers in most households for children, the elderly, ill or disabled. Unpaid household work including care work promotes well-being and supports economic activity. Time use surveys show that women work more hours than men because most work in the economy as well as doing most of the unpaid and care work in the household. The 2004 time use survey in the Republic of Korea showed that women spent 13 percent of their time on household and family care compared with 3 percent for men. In 2004, 17 percent of males aged 10 and over provided some personal care averaging one hour per day compared with 39 percent of women averaging three hours per day. 4 Poorer households in particular rely more on unpaid household and care work because they cannot afford market substitutes. C. States are obliged under international law to protect women s and children s rights States Parties have a responsibility under international law and their ratification of human rights instruments, particularly the UN Convention on the Rights of the Child (CRC) and the Convention on the Elimination of All Forms of Violence Against Women (CEDAW), to ensure that the potentially negative impacts of the crisis on women and girls are addressed within policy responses to the economic crisis. They are specifically obliged to protect women s rights and the rights of the child, both girls and boys. In the context of the economic crisis, article 24 recognizing the right of the child to the enjoyment of the highest attainable standard of health, article 28 recognizing the right of the child to compulsory and free primary education and access to secondary education, and article 32 recognizing the right of the child to protection from economic exploitation and from performing any work that would interfere with education or personal development are particularly relevant. II. Fiscal Policy as a Response to Economic Crisis Fiscal policy is an important policy tool for governments in the context of an economic or financial crisis. Fiscal policy relates to both government expenditures to provide goods and services and to the way in which governments finance these expenditures. All government expenditures have a stimulating effect on the economy but different kinds of expenditures may affect parts of the economy in different ways with different effects on population subgroups, including on women and men within those groups. 4 Miyoung An, The Political and Social Economy of Care: South Korea Research Report 2, UNRISD, September 2008: 8, 10. 7

8 The way in which expenditures are financed can also have different effects on the economy and on women and men. Governments can finance expenditures through taxation revenue or by borrowing. Since men earn higher incomes than women, men tend to provide a larger share of taxation revenue than women. By contrast, borrowing shifts the burden of payment from the current to future generations and may involve risks with potentially higher costs for women and children. If domestic savings are insufficient and governments borrow from overseas, economies may become vulnerable to movements in international capital markets and fluctuations in currency exchange rates. The resulting economic instability can have serious consequences for women and children in particular. In Indonesian the number of children under five visiting primary health care centres fell from 46 to 28 percent. 5 The percentage of 7-12 year olds not enrolled in school doubled from 6 to 12 percent between 1996 and 1998, with rural areas being most affected. 6 5 Miller, Calum (2005) Draft Background Paper The Human Development Impact of Economic Crises, Human Development Report 2005, HDR Office: Miller 2005:

9 Gender analysis of Government Fiscal Responses to the Economic Crisis III. Selected indicators on the pre crisis economies and the situation of women and children Chart 3. % growth in GDP per head Chart 4 Gross National Income - PPP $ per head 2007 Chart 5. Average annual % growth Chart 6. ODA $US per head 2006 Provision for social protection varies Indonesian and Viet Nam spent 7.4 and 9.1% respectively of total government expenditure on public social protection and health expenditure in Public social protection (excluding health) expenditure was 1.1% of GDP for Indonesia and 2.7% for Vietnam. In 2005, China announced it would widen coverage of the pension scheme from 173 million people in 2005 to more than 220 million in The Vietnamese government launched a limited unemployment insurance scheme commencing January 1, Chart 7. Ratio of girls to boys enrolments in primary and secondary school 2006 Source: World Bank, World Development Report 2009: Table 2 9

10 Chart 8. Selected indicators of child health Sources: UNICEF country statistics; World Bank, World Development Report 2009: Table 2 10

11 Gender analysis of Government Fiscal Responses to the Economic Crisis IV. Women and men in the pre crisis economies The relative situation of women and men in the pre-crisis setting in each of the selected countries facilitates identification of the differential impact on women and men of changes in specific sectors as a result of the crisis (Table 1). Selected indicators on children add an important family dimension to the understanding of the situation of women and points to past and potential coping strategies. 11

12 Gender analysis of Government Fiscal Responses to the Economic Crisis Table 1 Pre crisis condition of women and men in the selected economies Cambodia China Indonesia Lao PDR Viet Nam Women Men Women Men Women Men Women Men Women Men Labour force participation Participation rate Female share of labour force Sex division of labour Employees, agriculture, % of employment by sex Employees, industry, % of employment by sex Employees, services, % of employment by sex Female share of non-agricultural workforce wage employment (2004) Wage & salaried workers (% of employed by sex) Unemployment (% of labour force by sex) Self-employed (% of employed by sex) Education Ratio of female to male enrolments in tertiary enrolment (2006) (2006) 74 Ratio of female to male enrolments in secondary enrolment (2006) Ratio of female to male enrolments in primary enrolment (2006) Leadership Female share of administrative and managerial positions (2005) Proportion of seats held by women in national parliament (2008) Female headed households (2003) Access to social support % of women with health insurance % of poor with health insurance by sex % eligible for compulsory health insurance % of job-seekers registered with job agencies by sex 2005* % successful female job seekers placed through job agencies* 44.6 % participating in job training* % female migrant workers with maternity insurance 6.7 Sources: * UNDP (2008), China Human Development Report 2007/08 Access for all: Basic public services for 1.3 billion people +Ministry of Planning And Investment Viet Nam continues to achieve The Millennium Development Goals December

13 Gender analysis of Government Fiscal Responses to the Economic Crisis V. Crisis and response in the selected countries A chain of complex economic relationships links men, women and children in households to the global economic crisis (Chart 9). Although the linkages between the global crisis and its domestic impact were similar in all five countries, each was affected in specific ways and developed different responses. The size and composition of packages do not necessarily indicate the actual fiscal impact of governments responses to the crisis. It is not always clear whether the spending identified in the fiscal stimulus package is new spending or was already planned. Some packages also include measures that are part of monetary rather than fiscal policy. As in regular budgets, financial allocations may not actually be spent. In some countries as much as half of regular budget allocations are not spent within the relevant budget year. A high proportion of the rest reach the implementation level only at the end of the financial year. For example, in 2008 the Indonesian government spent only 50.7 percent of the allocated budget in the first nine months of the year. As late as January 2009, 57 percent of all regional governments had not completed their budgets. 7 Such delays tend to affect the kinds of expenditures made. Capital and equipment expenditures tend to be favoured over services and more routine expenditures, although these are usually of most direct benefit to women and children. In addition to the formal response package, governments may already have initiated policies and programs, such as reforms to labour laws, social protection and social insurance schemes, that mitigate some of the negative impacts of the crisis but are not part of the stimulus package. For example, both Indonesia and Viet Nam had initiated social protection reform prior to the crisis. 8 The packages are subject to review and modification to meet new challenges and address emerging issues. Some countries have already brought out at least three rounds of their fiscal response to the crisis. This is not necessarily a negative because it raises the possibility that responses that are currently completely blind to their different needs and situations might yet be modified to increase their positive impact on women and children, particularly girls. 7 Titiheruw, Ira S, Hadi Soesastro and Raymond Atje. May 2009: GTZ September

14 Gender analysis of Government Fiscal Responses to the Economic Crisis Chart 9. Transmission mechanisms from the global economic crisis to households Global slowdown in economic activity Imports & exports of goods & services Remittances Migration Foreign direct investment (FDI) Macro economy Growth / recession Household income and employment Unpaid domestic & care work Household spending Food education health etc Poverty & deprivation Nutrition & health outcomes Education & human capability Financial markets Foreign aid Government revenue & spending on public services Supply of public services Education Health Water & sanitation Transport etc Human rights Women s rights Children s rights 14

15 Gender analysis of Government Fiscal Responses to the Economic Crisis A. Cambodia Cambodia was particularly vulnerable to crisis as its sources of growth are few and it is heavily dependent on exports, which made up more than 40 percent of its GDP in Three of its growth engines were directly affected by the global crisis. The demand for garment exports fell sharply, the construction industry slowed down and the number of tourist arrivals fell together with the amount they spent. This led to a recession in 2009, when GDP growth fell into negative figures. 10 Women were particularly affected by both lay-offs in the garment sector and the decline in tourism. More than 80 per cent of garment workers are female. Those who do not lose their jobs are likely to face reduced working hours and lower wages. This will have an inevitable impact on the rural families they are supporting, including on the children in those families. The Government s capacity to respond to the impact of the crisis has been limited by its dependence on overseas aid, which finances a quarter of the national budget. 11 Government expenditures as a share of GDP increased from 14 to 20 percent. Table 2. Major impacts of and responses to the global crisis: Cambodia Impact Macro economy Reduced demand for garment exports Slowdown in construction Fewer tourist arrivals, lower spending per head air arrivals down by 13 percent, sharp increase in one-day arrivals but length of stay decreased and per capita spending fell Volume of agricultural production maintained but farm debt increasing Economic growth 2008 around 7% compared to an annual average of 9.8% GDP growth recession percent growth Reduced foreign direct investment has seen a further 25,000 jobs lost in construction. Shrinking demand from US and EU markets has already forced 60,000 job losses in the garment sector most will be women who support their rural families. Increased insecurity leads to more industrial unrest and disputes in Many laid-off workers do not receive their pay or entitlements. Cuts to hours of work & wages expected for those still in employment. Hotel occupancies well below last year Angkor Wat revenues fall by 27 percent SMEs, which employ 85 percent of the urban labour force, are also under pressure due to lack of access to credit Fiscal Response Cambodia lacks sufficient funding for a comprehensive fiscal stimulus package. Subsidies to offset higher fuel and electricity costs Helped enterprises in textiles & garments by reducing export fees and other bureaucratic costs. Ongoing public sector finance reform should improve budget efficiency & effectiveness Real wages of civil servants (e.g. increasing the base wage by 20%, spouse and children allowances by 100%, and teacher allowances by 10%), additional 20,000 riels Ongoing reforms to labour laws are helpful Admission fee to Angkor Wat has been halved National Bank provided a $100 million short-term loan fund targeting SMEs 9 ILO February UNICEF July ILO February 2009: 23 15

16 Impact Construction and retail industries are very weak Steel imports fall 30 percent, other construction materials fall 25 percent percent decline in motorcycle and car imports in 2009 Wasting among poor urban children increased from 9.6 % 2005 to 15.9 % 2008* Fiscal Response Special financing for rice millers to increase rice stocks and internal distribution systems and Reduced taxation on the importation of agricultural machinery. economic migrants in Thailand, Korea, and Malaysia face increasing pressure to return home; fewer remittances sent back to rural families Sources: * Cambodia Anthropometric Survey 2008, cited in Impact of the Global Economic Crisis on Children in East Asia and the Pacific: A mid-year update on UNICEF Policy and Programme Responses: 9 + World Bank, World Development Report 2009: 356, Table 3. Concerns that household coping strategies will harm women and children Concerns have been expressed that the household coping strategies most likely to be adopted in Cambodia may have long-term harmful effects on women and children in particular. The 2008 increase in acute malnutrition among poor urban children aged under five years has already been linked to the higher food prices and reduced earnings among the urban poor. It is feared that poor families may reduce the number of meals per day or eat less nutritious foods, reduce their use of health services, withdraw children from school and place them in work, or sell household assets or land. B. China China s vulnerability stems from its high dependence on foreign trade. Manufacturing exports were around 30 percent of GDP prior to the crisis. The impact of the crisis endangered export processing and export oriented industries especially in the processing zones. Some industries in particular zones employed up to 70 percent female labour, mainly young women migrants from the countryside. However, the majority of migrant workers losing their jobs are likely to be men. Although spending under the fiscal response program has been approved, more than twothirds is to come from local governments, banks and enterprises. It remains to be seen whether they are willing or able to implement the Government s plans. Table 3. Major impacts of and responses to the global crisis: China Impact Slow down in rate of growth from 10.6 per cent in the first quarter of 2008 to 6.8 per cent in the fourth quarter and 6.1 in first quarter of 2009 Consumer and producer price indexes decreasing since mid 2008 approximately 20 million migrant workers who lost jobs in factories and cities have returned to their home villages Fiscal Response 9 NOV 2008 Fiscal expenditure 13% of GDP CNY 4 trillion USD 585 billion Infrastructure low income housing (280 billion CNY) Improving rural living standards (370 billion) Technological innovation (160 billion) Infrastructure railways, highways, airports, power grids (1.8 trillion) 16

17 Impact Impact is unclear because numbers on employment have not been released Number of working places in industrial enterprises fell by 7.3 % late 2008-March 2009 Official rate of registered unemployed urban people increased from 4 to 4.3 percent in the same period Concern that the impact of the crisis on unemployment could lead to social conflict, public unrest and political instability Fiscal Response Health care, education (40 billion) Ecological and environmental protection (350 billion) Post-disaster reconstruction (1 trillion) 12 JAN 2009 Expedited spending of planned projects (600 billion) Recovering program for 10 major industries all largely male-dominated sectors 21 JAN 2009 Health care reform to provide basic medical security for all Improve quality of medical services Make medical services more accessible Increase rural and urban population covered by basic the medical insurance system or the new cooperative medical system to at least 90 % by 2011 Each person covered to receive an annual subsidy of 120 yuan from 2010 Improve quality of medical services by upgrading grassroots medical institutions, improving health services in rural areas and launching a pilot programme to reform services of public hospitals FEB 2009 Household Electronics for Villages program seeks to improve rural living conditions & stimulate domestic demand for consumer durable goods Provides a subsidy of 13 percent to each rural household for two items of household electronic goods Special program to encourage job placement for university graduates, with subsidies and social insurance for those willing to work in villages and local communities. Female graduates may benefit although it is unlikely that the program considers their different needs for accommodation and personal safety. MARCH 2009 Increased allocation for health, hygiene, education and culture from 40 to 150 billion Reduced allocation for basic infrastructure from 1800 to 1500 billion Reduced allocation for energy and environment from 350 to 210 billion Increased allocation for innovation and structural change from 150 to 370 billion Impact of the response on women and children The Chinese response to the economic crisis is heavily biased toward spending on infrastructure and most of the jobs created are likely to be taken by men. Although most of the laid-off migrant workers are also likely to be men, women entering the labour force or who are breadwinners will face even greater problems finding employment. Much of the investment in infrastructure targeted rural areas where the wives and children of absent male migrant workers would be among the beneficiaries. 17

18 Women may benefit from access to labour and time-saving consumer durable goods chosen by rural households utilizing the Household Electronics for Villages subsidy. However, since men continue to be the main household decision makers, particularly in rural areas, most purchases may be items for entertainment. The January 2009 spending plan to improve health care and provide universal health coverage within three years offers important benefits for women and children, particularly if it succeeds in providing coverage to previously discriminated groups such as the families of migrant workers. However, only a small portion of the package as a whole deals with issues like social security, pensions or health care. In the absence of a comprehensive social safety net, the needs of the many women concentrated in informal employment will not be addressed. C. Indonesia The Indonesian economy is relatively open and therefore exposed to the global economic crisis through falling demand for its exports. However, the initial impact of the crisis was financial. This was soon followed by a decline in exports and lay-offs in export-oriented industries. As during the Asian financial crisis, many of the workers who lost their jobs were women and few had social insurance. Table 4. Major impacts of and responses to the global crisis: Indonesia Impact Financial sector hit by negative sentiments Rupiah tumbled 17.5 percent depreciation 2008 Decline in growth from 6.2 percent in 2008 to a projected 4.5 percent in 2009 Decline in investment growth down to 5.9 from projected 7.5 percent Food-driven inflation CPI rose to 12% in 2008 compared with 6.6% in 2007 Food prices accounted for 49% of rise in inflation (CPI weight for food is 36%) Reduced capital inflows The stock market tumbled during the first half of 2009 Fiscal Response Macro policy Deficit financing 2009 fiscal deficit 1.2% of GDP Fiscal stimulus Jan 2009 US $ 6.7 billion 1.4% of GDP 76.5% of this is tax cuts 16.8% expenditure on infrastructure 6.7% on subsidies Three objectives Maintain consumption growth above 4 percent by reducing personal income tax rates and increasing tax free income band, subsidies for medicines and cooking oil, cuts in fuel prices, pay increases for civil service, military and police, retired government personnel and teachers and lecturers and direct cash transfers to poor households Prevent worker lay-offs through reduced company taxes, subsidised import duties and VAT, reduced electricity billing rates Mitigate impact of job losses through expenditure on labour-intensive infrastructure development Aug 2009 General income tax cut (43 trillion) Government borne-tax and import duties (13.3 trillion) Infrastructure spending (9.7 trillion) Energy subsidy and financing for the support of small business activities (7.3 trillion) 18

19 Impact Fiscal Response Footwear & textile exports fell - 60% of production is Trying to expand domestic market for footwear & textiles exported Direct subsidies for purchase of machinery US5.17 billion for footwear industry US22.1 billion for textile industry Declining exports Interest rates cut In the second quarter of rubber exports fell 32% To 7.8% 2009 from 9.5% 2008 Price of tin fell from US23,595 per ton Jul 08 to Import substitution strategy US12,355 Apr 09 Scheme to increase cotton production by 48,000 tons Increase area under cotton to 40,000 hectares Subsidies for seeds & farm inputs During the last two months of 2008, job reductions in Indonesia exceeded 40,000, mostly in electronics and manufacturing sectors additional retrenchments are also expected in construction and textiles Temporary lay-offs in wood-based and estate industries Reduced remittances from migrant workers overseas, many of them women, and increased numbers returning due to loss of employment Sources: International Policy Centre, One Pager No.86 June 2009; Komara Djaja (2009). Impact of the Global Financial and Economic Crisis on Indonesia: A Rapid Assessment (Bangkok, ILO) Impact of the fiscal response on women and children The main objectives of the Indonesian fiscal response are focused on the macro level of economic activity. More than three-quarters of the fiscal stimulus is obtained through tax cuts which are generally of little benefit to poor households, children at risk or to women whose earnings are usually below the taxation threshold. Women and children in the 18.2 million households in the poverty alleviation program should benefit directly from subsidized cooking oil and direct cash transfers. The cash is usually paid to mothers and is therefore more likely to be spent for children and the family than if paid to men. Women and children should also benefit from the subsidies for generic medicines, biofuel and cooking oil. Some infrastructure investments such as the provision of clean water to an additional 10 million low income households and the planned 10 percent reduction in transport fares through subsidised automotive diesel should also assist women and children. However, the long gestation period of infrastructure investments means that the benefit to the users may come only after the main impact of the crisis has passed. By contrast, the employment benefits of the labour-intensive infrastructure program will be realized in the short term but are most likely to benefit men because of the nature of the jobs created. Although the Ministry of Finance is currently involved in a pilot of gender-responsive budgeting in seven sectors and agencies, there is little indication that any thought has been given to the potentially differential impact of either the crisis or the fiscal response on women and men. D. Lao PDR Lao PDR is surviving the global financial crisis better than many other countries in the region. The real sector continues to perform reasonably well although fiscal management, particularly the budget deficit and off-budget spending, is considered by the World Bank to 19

20 be of concern. 12 The impacts of the crisis are felt through falling foreign direct investment, prices and demand for exports, especially from the resource sectors and agriculture. Tourism and garment manufacturing, in which a large proportion of workers are women, were not greatly affected by the crisis in early 2009 but remain vulnerable. The crisis story in Lao PDR is not so much one of the impact on the population but the impact on government finances. Revenues have fallen at a time when there is a high demand for public infrastructure investment. This has resulted in increasingly risky funding strategies that could seriously jeopardize the government s capacity to respond should the impact of the global economic crisis on the Lao economy suddenly increase. Table 5. Major impacts of and responses to the global crisis: Lao PDR Impact Economic growth GDP growth expected to fall from 7 percent in 2008 to around 5 percent in 2009 Reduced external demand and tourism receipts Fiscal deficit likely to increase sharply due to pressure from SEA Games and other infrastructure projects Rapid fall in reserves Decline in net capital inflows 69 percent of firms report their businesses have been affected by the crisis but limited impact on business performance and operations 44 percent reported higher revenues in first quarter 2009 compared with 2008 Little impact on employment or working hours Business confidence remains strong in manufacturing, retail and tourism sectors Impact of the crisis in second half of 2009 may be greater Fiscal Response Main challenge is financing the deficit Government facing difficulties in financing the deficit budget and responding to the crisis without appropriate fiscal space Three main sources to finance the deficit Additional excise and luxury taxes and fees and reducing leakage of revenues Mobilizing additional donor funding Increase domestic financing through a bonds issue In response to a request from the Government of Laos, the Australian Government will contribute $250,000 to fund an independent audit of the seven State-owned commercial banks. Impact of the fiscal response on women and children There is no real fiscal response to the crisis in Lao PDR because it has so far had limited impact on the population. The main impact has been on the fiscal situation of the government and the main responses relate to the difficulties the government faces in funding a significant and growing budget deficit. These difficulties have recently been compounded by the effect of a major flooding disaster in the South of the country which has a far greater effect on the population, particularly women and children, than the economic crisis. 12 World Bank June 2009: 1 20

21 Although the global economic crisis has had limited impact on women and children to date, both remain vulnerable to external shocks. Garment and other exports and tourism are increasingly important sources of income for the country and for the large numbers of women who work in these sectors. Women in Lao PDR make up more than half of the labour force and child labour is widespread. Around 10 percent of children aged 5-11 are involved in child labour, mostly in agriculture, urban shops or private households. Sexual exploitation of children continues to be reported and Lao is a country of both origin and transit for human trafficking. 13 The Secretariat of the National Council of Women (NCOW) is currently housed in the building of the Ministry for Planning and Investment, although its institutional location is in the Office of the Prime Minister. Each Ministry, including the Ministry for Planning and Investment, has a unit of NCOW that is responsible for ensuring the integration of women s concerns and gender equality in polities, plans and programs. However, the Secretariat lacks the capacity to facilitate the effective development of the ministerial units, particularly in an area such as economic policy in which it lacks technical capacity. The Secretariat similarly lacks the technical capacity to advocate on issues such as the economic crisis from an informed position. It is largely engaged in the implementation of its five year plan, which does not provide for monitoring or responding to emerging issues such as the global economic crisis. Most national women s machineries in government are in similar positions. Consequently, in most countries as in Lao PDR women have no voice at the economic decision making table where fiscal stimulus packages are designed and funded. E. Vietnam Vietnam had already entered a period of macroeconomic instability when it was hit by the global financial crisis. Vietnam s macroeconomic situation had deteriorated, largely due to high inflation, a fragile financial system, and an emerging balance of payments deficit. This has created difficulties for the government in responding to the impact of the global financial and economic crisis. Where other governments were releasing large public expenditure packages to stimulate the economy, the first Viet Nam package in April 2008 cut public expenditure to reduce the budget deficit. It was only after the tight fiscal policy was successful that Viet Nam was able to stimulate economic activity through budget expenditures. Vietnam was in the process of reforming and developing a national system of social protection before the economic crisis. Viet Nam already had in place mandatory social insurance systems for illness, old age, death, disability, work accidents and industrial diseases for public and private sector employees. It also had a voluntary social insurance system for the self-employed, farmers, students and those employed on a short-term basis or without labour contracts. Free means-tested social assistance was also available for vulnerable groups to provide cash transfers, access to health care and other basic services. The government was already introducing a gradual process of reform to extend coverage of voluntary social insurance, implement unemployment insurance and improve outreach of social assistance delivery when the crisis struck Kane, June 2009: GTZ September

22 Table 6.Major impacts of and responses to the global crisis: Viet Nam Impact Economic growth Growth fell from 8.48 percent in 2007 to 6.23 percent in 2008, the lowest level in almost a decade Export revenues fell 6.5 percent in November 2008 and a further 24 percent in January 2009 (year on year) Major falls in order for manufactured exports including garments, footwear and furniture, as well as seafood products Export growth is forecast to decline from 30 percent in 2008 to 13 percent in FDI inflows also fell; many projects are likely to be delayed or cancelled Stock market recorded its worst performance in its eight years of operation the VN-Index fell 66.9 percent Surging trade deficit since September 2008 Non-Performing Loans in the banking system Unemployment increased It is estimated that 88,000 workers lost their jobs in 2008 Viet Nam Labour and Employment Agency forecasts 400,000 will lose their jobs in 2009 Unemployment stood at 4.65 percent in February 2009 Business difficulties particularly among export producers Reverse migration of the unemployed from the cities to the country side Decreasing remittances from overseas workers, which stood at 5-10 percent of GDP Fiscal Response April 2008 Resolution No. 10/2008/NQ-CP Measures to restrain inflation, stabilize the macro economy and ensure social security and sustainable growth Tight fiscal policy to reduce the budget deficit Reduced public investment, especially in state-owned enterprises Prioritized investment in the economic sectors Dec 2008 Resolution No. 30/2008/NQ-CP Fiscal expenditure (VND 100 trillion, USD 6 billion, 6.8 % of GDP) Focused on boosting production and supporting businesses, strengthening exports 4% interest subsidy on loans to SMEs Reduction in corporate income tax for SMEs Temporary refund of VAT for exported goods Extension of time for payment of taxes Stimulating investment and consumption Exemption on personal income tax from Jan to May 2009 Investment in infrastructure for housing, schools, hospitals Tet bonus (200,000 VND per poor person, up to 1,000,000 VND per poor household). Support to 61 poorest districts Housing support for the poor (around 0.5 million rural households to receive 7.2 million VND each) Support for low income civil servants Guaranteeing social security Launched an unemployment insurance scheme with effect from 1 January 2009 (limited eligibility) Interest free loans to enterprises to pay salaries, social insurance or unemployment subsidies for their workers If companies cannot pay workers entitlements, workers can ask local governments to pay January 2009 Decision No. 131/QD-TTg Stimulus package of USD 1 billion to subsidize interestrates for short-term loan contracts Mar 2009 Fiscal expenditure (VND 300 trillion, USD 17.6 billion, 21% of GDP) Infrastructure projects Measures to support manufacturing and export sectors Projects designed to support social security and welfare 22

23 Local consumer demand has collapsed. Sales during the Tet holiday in January 2009 were down 50% from the previous year. Car sales were down 68%. The downturn is also being felt by the middle class, and the rich. A comprehensive revision of the Labour Code that should result in market-based rules for employment contracts; employment of women, young workers and persons with disabilities; working time; protection of wages; and labour inspection. Impact of the fiscal response on women and children The fiscal response to the crisis in Viet Nam incorporates a significant focus on the social impact of the crisis, including the impact on vulnerable groups. Yet it lacks explicit recognition that the impact and the effects of the response may be systematically different for women and men with consequent effects on children. The support provided to firms and enterprises are likely to benefit more men in the short term because more men than women are business owners and decision makers. Public sector infrastructure investments in the Viet Nam response are designed to mitigate the impact of unemployment by creating jobs. However, whether it is women or men who benefit depends on the type of job created. Construction work is most likely to provide employment for men. Thus, although the public investment program will build housing, schools and hospitals that may eventually provide services for women and children, the immediate beneficiaries are the men who are paid to build them. By the time the buildings are in service, the economic crisis may be over. In the meantime, women who have lost their jobs and are unable to find other employment may adopt coping strategies that have longterm damaging effects on themselves or their children. Viet Nam introduced an unemployment insurance scheme for wage earners as part of the December 2008 package. However, this is only available to workers who sign at least a oneyear contract with a foreign, government or individual company. Wage earning workers account for less than 22 per cent of total employment. 15 It is likely that many would not meet the criteria for the unemployment insurance scheme and also that fewer women than men would be eligible. VI. Conclusion: what needs to be done? What do we need to do to avoid repeating the mistakes of the Asian financial crisis? How do we ensure that differences between the needs and situations of women and men, girls and boys are taken into consideration and integrated into fiscal response packages? 15 ILO February 2009: