Mr. Prime Minister,
Excellencies,
Distinguished participants,
Ladies and Gentlemen,

        First, let me express my sincere gratitude to the International Social Security Office (ISSA) for extending me an invitation to be here today. And, I would also like to express my appreciation to the Social Security Office of Thailand for hosting this special event. Indeed, I am very pleased to have this unique opportunity to share my thoughts with this distinguished audience on a very important issue.

        My topic today is “Globalisation and Social Safety Nets”.

Ladies and Gentlemen,

        Globalisation is often described as the process of increasing integration of the world economy and of the countries becoming more interdependent and interconnected. As we embark on the 21^st century, advances in information and communication technologies (ICT) help pave the way for increased economic integration through unprecedented rapid flows of goods, services, capital and ideas. Evidence can be seen as more than US$1.5 trillion is now exchanged in the global currency markets each day, and nearly a fifth of the goods and services produced are traded each year.

        Much has been said of globalisation helping realise the benefits of free trade through comparative advantage and the division of labor in achieving greater efficiency. There is also supporting evidence of the link between external openness and economic growth via greater access to technology.It is irrefutable that countries which have more open economy have done better than those that have not.

        However, there are also many critics who observe that the acceleration of the globalisation process is accompanied with a sharp increase in economic inequalities. They often pointed out that less advanced economies are likely to be at the receiving end of the globalisation process. The fact that the fruits of globalisation have not been shared evenly are evident as more than 1.4 billion people around the world struggle to get by on less than $1 a day, one third of the children in developing countries are plagued with malnutrition, and an estimated 900 million people either unemployed or underemployed. The least developed countries (LDCs) account for less than 0.5 percent of the world exports and they receive less than 1% of the world’s total foreign direct investment.

Ladies and Gentlemen,

        Not too long ago, UN Secretary-General, Mr. Kofi Annan, said “the main losers in today’s very unequal world are not those who have been exposed too much to globalisation. They are those who have been left out”. On another occasion, Professor Amartya Sen, the Indian Nobel Prize laureate, stated that   

        “Opponents of globalisation may see it as a new folly, but it is neither particularly new nor, in general a folly. It is largely an intensification of the processes of interaction involving travel, trade, migration and dissemination of knowledge that have shaped the progress of the world over the millennia.”

        Thus, in my view, we cannot stop globalisation nor should we want to. Instead, we should concentrate our attention on how to harness the benefits of globalisation while trying to minimize the risks. Moreover, we must also acknowledge that openness alone will not always guarantee a successful outcome to our economic and social ills. Thus, we must have sound domestic macroeconomic policies in place to best assure our chances of achieving economic well-being.

        The 1997 Asian crisis has clearly revealed that the opportunities of globalization do not come without certain challenges such as financial crises, economic volatility, and marginalization. The Asian crisis was primarily caused by a combination of macroeconomic imbalances, structural deficiencies in financial sectors, and shortcomings in corporate governance. There was a mismatch between short-term foreign debts and long-term domestic lending. Once the confidence on the so-called Asian Tiger economies was shattered, the ensuing capital flight led to the depletion of foreign exchange reserves, making a currency devaluation unavoidable. In hindsight, poor regulation and supervision of the financial sector had considerably contributed to the causes of this catastrophe.

        Due to the depletion of foreign reserves, several crisis-hit countries had no choice but to seek financial assistance from the international organizations, in particular the IMF. These loans were granted with certain conditionalities, usually including further structural reforms and short-term austerity measures. It is undeniable that these adjustment measures, resulting in some economic slow-down, have adversely affected our national workforce. Over indebtedness in the private sector has ultimately resulted in the general economic recession forcing up the rate of joblessness above the normal level.

Ladies and Gentlemen,

        Now, three years have passed and it appears that the Asian economic recession has bottomed out. There are evident signs of economic recovery. The region’s real GDP is expected to grow by 6.9% this year and 6.5% in the year 2001. Inflation rates in most countries have remained subdued. Our hope is that this renewed growth in the region is of a systematic nature.

        Though the economic turbulence seems to be over, the social impact is still being felt by many. It should also be recognised that the numbers of the poor cannot be immediately brought back to the pre-crisis level even when the economic cycle has bounced back. The Asian crisis interrupted years of unprecedented growth and our progress in poverty reduction. Apparently, it has also revealed our inadequacies in social safety net. Numerous families’ livelihood was effected as business bankruptcies multiplied. In the case of Thailand the government moved rapidly to set up a national committee to tackle the unemployment problem and the attendant hardship of social degradation. For example, increased funds were provided for scholarship that have kept 100,000 of children at school when their parent became jobless.

Ladies and Gentlemen,

        Out of the world’s unemployed, only 25% of them-mostly residing in the developed countries – have unemployment insurance benefits. The Asian economic crisis has exposed weaknesses in our region’s social safety nets. During the economic boom years of double-digit growth rates, many governments in Asia were have not developed comprehensive program of social safety nets. Expenditures on safety nets is by definition counter-cyclical, that is, governments need to provide more during the economic downturns. The irony was at the time of greatest need, the nation’s coffers could not be adequately spared to meet the social needs since the money was tied up in solving the financial sector problems. Hence, the social safety nets should be set up or strengthened prior to the economic crisis, to dampen the impact of adversity and lessen the plight of many. Otherwise, the poor will be faced with even greater hardship in coping with crises with inadequate assistance from the state.

        The International Labor Organization (ILO) has been promoting formal social security arrangements. As of now, many countries have ratified a number of international labour conventions, including the Social Security (Minimum Standards) Convention of 1952. This particular Convention demands that protection should be extended to the large majority of workers and their families. As such, extreme burden in the case of accident, sickness, old age and other exigencies could be lessened.

        Throughout the world, some forms of a social security system are put in place to deal with misfortunes, for instance, disability, unemployment, old age, and death but the scope of benefits are vary in each country. The Asian crisis heightened the need to strengthen social benefits in the region. Established in 1990, the Social Security Office of Thailand has been providing the necessary social welfare to our workers and it is funded by the government, employees and employers. Currently, the social security system in Thailand provides 6 types of benefits: sickness, invalidity, death, maternity, child allowance and old-age pension, The Social Security Act and the Workmen’s Compensation Act provide protection to establishments with more than 10 employees. At present, the Social Security Office of Thailand, with the help from the ILO experts, is undertaking an assessment of the feasibility of implementing unemployment insurance in our country.

Ladies and Gentlemen,

        It is a painful reality that most Asian countries were unprepared to deal with the scale of human suffering. The social consequences were indeed exorbitant since responses were delayed due to lack of coordination and limited resources. Fortunately, many of the vulnerable in Asia could depend on strong family and communities-based systems at a time of desperate need. Without the Asian values, the results would have been more detrimental.

        In the midst of a crisis, the demands for safety nets are enormous but they will be much higher 10-20 years from now since the Asian societies are going through a rapid demographic change. Our population is aging and migrating into urban areas. In addition, it should be pointed out that more people are now working in the formal sector. This causes genuine concern and our social security offices must earnestly put their best efforts into preparing for these challenges beforehand.

Ladies and Gentlemen,

        Meanwhile, the international organizations, namely the IMF and ADB, and the relevant government agencies must put up an effective surveillance system to monitor and detect any signs of economic ills so that we can have a better chance of adopting proper preventive measures. Also, it has been generally agreed that economic growth is necessary in order to achieve sustained poverty reduction, however, growth alone is not sufficient to overcome the problem. Education and human resource development must remain our top priorities in fighting poverty. Equally critical is our endeavor to earnestly address the widening income inequalities that exacerbated after the crisis.

        At our APEC Ministerial Meeting during 12-13 November 2000  in Brunei Darussalam, the Ministers reiterated the importance of supporting the poor and vulnerable segments of the communities that were affected by the crisis and by the process of economic restructuring. In this respect, Ministers endorsed a proposal on the Revitalisation of Social Safety Net Activities in APEC by Korea and Thailand. They also agreed to establish an Ad-hoc Task Force on Strengthening APEC Social Safety Net for reviewing APEC’s activities on social safety and forward recommendations to Ministers in 2001.

        In addition, Ministers noted the further work by various APEC fora to strengthen social safety nets and to reduce the adverse impacts of the Asian crisis. This includes the establishment of the Australian-Thailand Social Protection Facility that focuses on providing capacity building assistance for the development of social policy and program delivery.

        In pursuance of development and eradication of poverty, international trade can definitely play a vital role as an engine of growth. Trade, among other things, can help us achieve our goal (set at the 1995 UN’s World Summit in Social Development in Copenhagen) of reducing poverty by half by the year 2015. However, it should be noted that even though many positive aspects  and virtues derived from trade liberalisation have been well-recognised, its implementation will inevitably brings some adjustment costs or some adverse social effects. Some workers will bear the costs in the short run due to these structural adjustments. Therefore, we should pursue liberalisation together with the drawing up effective social policies. Proper and adequate social safety nets for those who may have to endure the pains during the adjustment period must be provided.

        The ILO has been exemplary in dealing with its pertinent task and given mandate – core labour standards, as has been the remarkable efforts of the GATT/WTO to dismantle trade barriers, both tariff and non-tariff types in the past eight rounds of multilateral trade negotiations. The WTO has been focusing on creating new trade opportunities while trying to ensure stability, predictability, and non-discriminatory practices in the global trading system. Since its inception, global trade has expanded seventeen fold. There is no denying that the multilateral trading system has contributed considerably to the overall growth of the world economy.

        The challenge for the WTO in the 21^st century is to ensure that its global trading rules and agreements are relevant and up-to-date and are implemented in ways that benefit all Members equitably. Therefore, market liberalisation should focus not only on the sectors in which developed countries have a comparative advantage such as financial services or information technology but also those areas which developing countries have substantial interests, namely agriculture and textiles. The poor in developing countries have considerable interests in seeing further agricultural reform since farming is still an important source of income. Free and fair trade can be one of the effective means in helping alleviate the poverty issue, bring about better living standards as well as reducing income inequalities between Members.

Ladies and Gentlemen,

        In conclusion, the social impact of the crisis demonstrated the pressing need for pre-crisis social safety net policies which will ensure that the burden of adjustment does not fall disproportionately on the poorest and weakest groups in society. In addition, good governance in social spending programs will minimise waste and maximise efficiency.

        As for the Social Security Offices in Asia and Pacific, I would like to commend your tenacious efforts in providing social welfare to our workers with limited resources, especially in the depth of the crisis with little warning. No doubt, sharing and pooling our knowledge and insightful expertise together will be a great help in coping with the social impacts of an economic crisis.

        Although there remain many challenges ahead of us, I am confident that our collective efforts will be able to overcome the obstacles. I would like to reaffirm that your work is of vital importance to our workers and their families in giving them a sense of security as well as peace of mind.

Finally, I hope this meeting will achieve all its goals and objectives.

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