Jobs Shock In Asia
Scores of employees from three branches of Dongbang Peregrine Securities Co. in South Korea were dead set on saving their jobs. Faced with collapsing stock markets, DPS was shuttering their offices, and several dozen workers were being let go. So they stormed the headquarters in early December. For two days, the white-collar workers, clad in headbands and carrying protest banners, bullied the firm's executives by banging on tables and chanting slogans in an attempt to prevent layoffs. The exhausted executives finally promised to consider how to turn around the slumping company without firing so many people.
But even if these protesters keep their livelihoods, many others won't. An unemployment crisis is gathering force in Asia, and layoffs are soaring to levels not seen for more than a decade. Asia's currency crisis, which touched off bankruptcies, halted spending, and slowed growth when it began in July, is likely to result in nearly 2 million Asian workers losing their jobs by next year.
Not just the Korean financial sector, but Thai assembly plants, retail stores in Hong Kong, and construction sites in Indonesia are firing workers by the thousands. Also, the thousands of migrant workers who fueled Asia's building boom are likely to be sent home, worsening unemployment in their own countries. Even Japanese workers are seeing the long-sacred lifetime-employment system shrivel.
If these workers take to the streets in force, the region's political calm could be shattered. David C. Roche, an economist at London's Independent Strategy Ltd., notes that Mexican living standards fell nearly 30% after the peso shock three years ago. That kind of drop in Asia would produce "nothing short of a revolution," Roche says. What's compounding the risk is that most Asian countries lack the kind of unemployment benefits laid-off workers in Europe and the U.S. can expect. The International Labor Organization says that as a result, the sharp increase in unemployment could be "catastrophic" and create serious social tensions. "There's going to be a lot of unrest in Thailand, Indonesia, and Korea," says W.R. Simpson, a senior ILO official in Bangkok.
Already, the numbers of unemployed are alarming. In Indonesia, 420,000 construction, textile, and electronics workers have lost their jobs so far, according to Tohap Simanungkalit, chairman of a leading labor union, and the number could reach 1 million by next year. In Korea, the beleaguered conglomerates and merchant banks will have to start laying off workers in the factories and offices due for closure. The government concedes that over the next few months, the jobs of 350,000 Korean workers will be cut--without a social safety net.
Workers at the chaebol are bewildered by the possibility that they could lose their cozy jobs, where promotions have been based on seniority and initiative has counted for little. "This may sound odd to foreigners, but layoffs and pains of restructuring are a whole new concept for Koreans," says Sakong Eun Duk, economist at Hanwha Economic Research Institute. As a result, many are ready to take to the streets. Chong Kyong Ok, a manager at a merchant bank whose operations were suspended, may join in street protests. Says Chong: "Now workers are paying the price to clean up the mess others created."
BACK TO THE FARM. Asia's other emergency-ward patient, Thailand, is bracing for tougher times. It expects unemployment to rocket from 1.17 million now to 2 million by the end of next year. Construction workers, hotel and restaurant employees, and factory workers are all expected to join the 20,000 finance-company employees that were laid off as part of the IMF belt-tightening plan. Even though the government has established a "Mass Layoffs Center" to match people with jobs via computer, it will be unable to cope with the influx. Toyota, Mitsubishi, and Nissan have idled their auto-manufacturing plants and begun laying off workers. Small-ticket items such as sewing machines aren't selling either. Most of Singer Co.'s commissioned sales force has been let go as part of a worldwide slash-and-burn operation that will see 6,000 jobs cut.
Yet in Thailand, the potential for unrest is mitigated slightly by the economy's dependence on agriculture, which employs 60% of the Thai workforce--and by the Thais' fatalistic view of life. Rather than riot, the newly unemployed may head back to their villages and farms. Some of those staying in Bangkok are resigned to the new reality. Sirivat Voravetvuthikun, formerly a senior trader at Bangkok's CMIC Finance & Securities Co., became a local media celebrity after he went bankrupt and started peddling homemade sandwiches--first in the lobby of his building, then to a local hospital. Without bitterness, a sweat-drenched Sirivat tells a visitor to his kitchen work space: "I deserve my fate."
Even Hong Kong is feeling the strain of the regional slowdown. The giant Yaohan department store closed in late November, throwing more than 2,700 workers onto the street. From cellular operator Hutchison Telecommunications (Hong Kong) Ltd. to port handler Modern Terminals Ltd., thousands more have been sacked in the past month. Real estate agents have been closing shop as property sales have dived and prices fallen more than 20% since October. While unemployment is officially at 2.2%, it's expected to jump next year. "Unemployment is issue No.1 in Hong Kong," says Lee Cheuk Yan of the Hong Kong Federation of Trade Unions.
"HUNKER DOWN." Securities houses are also bracing for a tough year ahead. Peregrine, which has been hammered by turbulence in the regional markets, laid off 275 people, many of them in Hong Kong. "The markets are bad, and we need to hunker down and prepare for hard times," says Shankar Dey, managing director of Peregrine India, where 19 people were let go. Deutsche Morgan Grenfell Inc. also closed its eight-person equities operation in Bombay. And Jardine Fleming Securities Ltd. in Hong Kong, one of Asia's largest investment houses, has trimmed staff and is looking at further cuts.
Even if protests over job losses are subdued, the layoffs will change Asia's labor markets for decades. Asia's miracle used to mean that just about every employee would have a job for life. The image of Asia's workers may now change--from salaryman in a starched white shirt to banner-waving protester.