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Global trade slump hits Asian labor

Many factory workers in export-heavy economies like Thailand's have lost their jobs. With agricultural demand also down, farming has become a less reliable Plan B.

By Correspondent of The Christian Science Monitor / March 24, 2009

PAPERWORK: Job hunters line up at employment office in Rayong, a manufacturing hub hurt as global trade falls. On busy days, the center receives more than 700 people.

Andy Nelson/The Christian Science Monitor

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Rayong, Thailand

When Visut Charoenchai lost his job in January in a French-owned glass factory, his mother told him to come home. There's always rice here to eat, she said.

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So far, Mr. Visut, the eldest son of a farming family, is resisting. His $850 of severance pay and unemployment checks cut him some slack as he hunts for a new job, chasing dead ends in this industrial zone. When he gets bored, he goes fishing at a nearby reservoir. "I'm trying to find work in a factory, but there's nothing going," he says.

As Thailand's export-led economy goes into rapid reverse, tens of thousands are being thrown out of work, sparking fears of mass unemployment and social unrest. Similar shocks are roiling other Southeast Asian exporters that had ramped up capacity to meet credit-driven appetite in the West for cheap goods and now face a yawning gap in demand that even the fattest stimulus packages are unlikely to fill.

While recession-hit city-states like Singapore and Hong Kong can afford to take care of their unemployed, laid-off workers in developing countries have much further to fall. Malaysia predicts that 4.5 percent of its workforce – nearly half a million people – will be out of work this year, up from 3.7 percent in 2008.In the Philippines, which already has the region's highest unemployment rate, electronics and textile plants are closing.

Social security nets for the jobless are patchy. Thailand's government pays Visut half of his $160 monthly salary for six months, then he's on his own. Countries like the Philippines and Indonesia, which so far hasn't felt the full force of the global downturn, lack any national benefits system.

This crisis hits workers hardest

The last time a major crisis swept the region in 1997-98, wealthy speculators in real-estate and financial securities were the first to take a hit. Bankers in Bangkok, ground zero of the meltdown, saw their assets – and bonuses – shrivel in value, triggering a collapse in the real economy.

By contrast, the current crisis has spared banks but hammered the industrial sector, particularly in export-oriented provinces like Rayong, a magnet for workers from the rural north. That means more hardship for poor families who rely on these breadwinners to tide them over after the harvest is sold.

"This time the economic shock will hit people at the level of the most vulnerable," says Ammar Siamwalla, a prominent Thai economist who advises the government.

Sema Suebtrakul, who runs a legal aid center for workers in Rayong, estimates that factories in the area have shed about 10,000 jobs since December. At the provincial labor office, which last year saw under 100 applicants a day, more than 700 people crowd inside on busy days to register for work.

The Thai government has said national unemployment could double this year to 1 million. Some economists say this prediction underestimates the global collapse in trade. Last year, exports of goods and services accounted for 73 percent of Thai GDP. In the last quarter of 2008, the economy shrank by 6 percent.

Slim pickings in the countryside