Impacts of the crisis around the world - Social Watch reports


Civil Society to the fore 

by Social Watch Benin 

The increase in the cost of a barrel of oil, the development of agro-fuels and international speculation affected Benin through a general increase in the price of basic goods. For example, the price of corn – the most widely consumed product – increased by 220%. Low farm productivity and growing demand led to the over-consumption of locally produced foodstuffs and caused difficulties regarding distribution of these products to consumers’ homes. The Government reduced taxes and, through the Office Nationale pour la Sécurité Alimentaire (National Office for Food Security) created buffer stocks – temporary stocks to be used as reserves – that ameliorated the effects of the crisis to some extent, but above all enriched middlemen, who continued to sell at high prices and make large profits at the expense of consumers and the State. The poorer and more vulnerable consumers still have great difficulty in obtaining food and receive few real benefits from the subsidies. 

Civil society has carried out awareness-raising campaigns in various inhabited areas regarding the degradation of the mangrove swamps which reduces the productivity of lagoons considerably and threatens this ecosystem. It has also collaborated both as a partner and in liaison with the Government in promoting the means to combat the crisis, the green revolution and food for schools.  

The Government’s timid response 

by Fernando J Cardim de Carvalho
Social Watch Brazil

Although the domestic banking system was not exposed to the kind of speculative investments that hit the financial systems in the United States, Europe and part of Asia, Brazil is paying the price of being integrated into the international economy. In the last quarter of 2008, the GDP fell 3.6% in comparison with the previous quarter. Every sector of the economy contracted, manufacturing being hit the worst, falling more than 7%. In the short term, a still more somber scenario is likely to unfold, with increasing unemployment and social disruption. In case the Government rises to the challenge, Brazil still has a chance of attenuating these risks, but until now the monetary policy has been incompetent and the Federal Government’s spending policy has been extremely timid.
As important as it is to stop the economic decline in the short-term, it is even more important to prepare for the future and reset the path of the world economy. Green investments are the next frontier of investment and innovation, promoting environmentally sustainable growth strategies that increase the efficiency in the generation and use of energy. New regulatory and supervisory strategies are to be defined by focusing on how to make financial systems work in the promotion of development and the distribution of income and wealth. The current crisis offers a clear opportunity to attain the effective democratization of international institutions, a chance that cannot be missed.  

The crisis was already there 

by Burma Lawyer’s Council 

Burma has long been suffering an internal domestic financial crisis. Inflation in basic commodity prices, including food and fuel, led to widespread protests as individuals could no longer afford them and the price increases translated into job losses. The market for consumer or small business credit is functionally non-existent. At its heart, the development of a free market economy in Burma is a myth, and the rights to develop industries within the country are reserved for the ruling junta, their families, and their cronies.  The global financial crisis has further worsened the country’s economy. The fishing, mining, garment, food processing and advertisement industries, for instance, have all suffered.  Burmese living abroad are also financially distressed and thus unable to send as much money back to their families as they had before.  

The two sides of the grain of rice

by Social Watch Cambodia 

The price of food and oil skyrocketed in the first semester of 2008 and began dropping slowly in the second semester of the year. The sudden increase in the global price of rice, which has reached 100%, has made some rice surplus traders a handsome profit, but it has seriously affected the food security of 31% of the population (up to 4 million people).

The most vulnerable are those peasants living in the Tonle Sap region, who went into debt just to make ends meet. They had to resort to selling their productive assets, or take their children out of school to help with household income generating activities. The Government has responded with a USD 40 million programme to provide food aid to vulnerable people around the Tonle Sap region.

Opportunity lost 

by Canadian Feminist Alliance for International Action; North South Institute; Canadian Centre for Policy Alternatives and Gender Budget Coordinator/Coordinatrice, budget genré 

As the recession continues to deepen, reports of job losses in Canada become more frequent and more devastating. The Budget 2009 saw an opportunity for the Federal Government to lessen the blow of the recession by focusing on Canada’s most vulnerable citizens.  But, instead of using Government stimulus funds to get a number of things on a better track such as social and gender equality, the reduction of climate change and the improvement of public infrastructure (including soft infrastructure such as heath care and child care), the Government chose to address the crisis by consistently underplaying both the severity and potential duration of the downturn, and treating the stimulus as something that could just get the economy back to normal.  Jobs that are being created by Government investments are in male dominated industries, while women are over-represented in part-time and precarious work and are often the first to be laid off.  Civil society organizations are concerned that, as Canada focuses on reversing the economic downturn, environmental and sustainability standards will drop.  

An economy in recession 

by Centro de Estudios Nacionales de Desarrollo Alternativo 

The fall in the international price of commodities has been felt acutely, as the country’s economic and trade structure is heavily dependent on the export of a limited range of primary products with low added value. The fall in the price of copper affects the rate of exchange, the terms of trade, the balance of payments and general economic activity. By 2009, in step with similar worldwide tendencies, the Chilean economy entered a recession. The fall in pension fund resources, which are invested in Chilean and foreign financial assets, has affected financial markets, causing a considerable reduction in the population’s retirement savings, amounting towards the end of 2008 to a loss of USD 27,000 million, more than 26% of the total resources.  

Women out of jobs

by Charalambos Vrasidas, Sotiris Themistokleous and Michalinos Zembylas

It is gradually occurring that taxes, the State’s largest revenue source, are poised to fall dramatically as a result of the shrinking market. This will minimize the Government’s flexibility to stimulate public investments and programmes in order to alleviate the negative effects of the crisis. Furthermore, there is persistent low productivity in the public sector, which will reduce the Government’s ability to respond promptly and effectively to the rapidly escalating economic crisis.  Unavoidably, Cyprus will also have to deal with unemployment, which is expected to rise from 3.9% in 2008 to 4.5% in 2009. Tourism, an industry that employs mainly women, is expected to experience a continued decline in revenues, probably resulting in a large percentage of women losing their jobs.  

Change course, immediately 

by Mario Paniagua, Armando Pérez and Scarlett Cortez
Social Watch El Salvador (APSAL, CIDEP, CODEFAM, FUMA, MEC)  

The privatization programmes implemented in recent years have resulted in the failure to invest in agricultural production for food security, instead of concentrating on importing basic grains, while trade liberalization policies have led to inflation and decreased purchasing power, thereby weakening the country’s capacity to face the worldwide crisis. The national economy, which is intimately dependent on trade with the United States, began to suffer when exports, tourism and family remittances began to drop at the end of 2008. It is estimated that remittances will fall 3% in 2009 and 2010.  El Salvador should change course and strengthen the foundations for a sustainable development model that reconstructs agricultural and industrial productive capacity and generates social welfare.  

Between hunger and oppression 

by Daniel R Mekonnen
Eritrean Movement for Democracy and Human Rights 

Reports from different sources indicate progress in certain areas of the MDGs, such as reducing infant mortality and maternal morbidity. However, the extremely repressive political climate in Eritrea and the impossibility of obtaining reliable data make it difficult to accept these accounts at face value. The reality is that due to the Government’s failed economic policies, the national and local economies both had reached a breaking point long before the global financial crisis manifested itself in late 2008, as is evident from the country’s miserable ranking on numerous independent reports (which are dismissed as enemy propaganda).  To address the economic crisis, and begin to tackle the deep poverty suffered in the country, Eritrea needs to embark on an immediate transition to a democratic system of governance with the support of the international community. Meanwhile, humanitarian aid monitored by independent international NGOs appears to offer the most effective emergency plan to ensure the survival of the poorest members of the population, who are suffering not only from the economic crisis but also from severe political repression.

The ugly face of deregulation is being revealed 

by Uwe Kerkow
Social Watch Germany 

It is already clear that the financial crisis will have a major impact on the social welfare of several million Germans. Unemployment is on the rise and the ugly face of deregulation is being revealed. Non-standard employment relationships are the first to go: the number of temporary workers dismissed in recent months, up to and including January 2009, is estimated at around 120,000. The number of jobless might climb, from the current 3.4 million, to almost 4 million before the end of 2009.  The real surge, however, has occurred in relation to the category of short-time workers: in February, more than 16,900 companies applied to put 700,000 workers on short time for economic reasons: 648,800 more than the previous year. The austerity policies being carried out in the social sector will continue unabated in the wake of the massive bank bailout, thus possibly setting the course for a further dismantling of the welfare state and for an increase in widespread poverty.  

Indigenous peoples and peasants unprotected 

by Zully Morales and Helmer Velásquez
Coordinación de ONG y Cooperativas  

The world food crisis became evident in Guatemala during the last half of 2007, leading to a profound questioning of the scant progress made in the fight against hunger and poverty. State actions designed to eradicate extreme poverty and hunger (MDG1) had shown modest results. However, the ongoing food crisis has put the achievement of this objective into serious doubt.

Poverty and extreme poverty affect more than half the population. Approximately 6 million people, out of a total population of 13 million, have fallen below the poverty line (56.4% in poverty and 19.7% in extreme poverty). Between 2008 and 2009 these indices rose by 5.4 and 4.5 points respectively, amounting to 700,000 additional poor people. Some 1,300,000 poor households are in rural areas and 51% of them lack land or own less than one hectare. Among the indigenous population, poverty is twice as high and extreme poverty is three times higher than among the non-indigenous population.         

Out of control 

by Suyapa Martínez, Ana Ferrera and Mauricio Aguilar
Centro de Estudios de la Mujer - Honduras 

The increase of the international price of crude oil during 2008 caused the prices of producing and transporting food and goods to skyrocket. This led to a dramatic increase in the price of the basic basket of provisions and a drop in the purchasing power of the Honduran population. The production costs of electricity have also increased, since 70% of the energy consumed in the country is generated by plants which operate on fuel oil.

In early 2009 the National Congress submitted a bill for a decree establishing a dramatic cut in electric energy rates. This measure, which does not stipulate for any control mechanisms, would aggravate the already critical situation of the National Electric Energy Company while substantially benefiting the private plants. In response, social and popular organizations carried out a series of marches and public demonstrations demanding the nationalization of all of the country’s energy generation plants. 

Fresh problems for an already afflicted country 

by Himanshu Jha
Social Watch India 

The current crisis poses a new set of problems for a country already suffering from massive inequalities and alarming levels of hunger. Inflation peaked at 12.9% in August 2008 in comparison with 7.7% in March of the same year; banks are cutting back on credit, the rate of growth declined substantially in housing, from 12% in February 2008 to 7.5% in February 2009, and personal loans from 13.2% in February 2008 to 8.5% one year later. The downturn in the economies of the US, the EU and the Middle East, with whom 75% of India’s goods and services trade is conducted, has translated into an export slump. The challenge for the current Government is to strike a judicious balance between its ongoing economic reforms agenda and its duty to provide social and economic relief to 250 million people still living in extreme poverty. 

A dramatic increase in usury and unemployment 

by Social Watch Italy 

During 2008, the unemployment rate reached 7.1% (compared to 6.4% during the previous year); between January and February 2009, 370,561 workers lost their jobs, an increase of 46% compared to the same period in the previous year. Some projections estimate that there are at least 900,000 jobs at-risk. There is a dramatic increase in usury, particularly in the South, where the number of over indebted families has increased to 69.4% in the last year, and the recourse to usurers’ loans
increased by 48.2%. Due to the financial crisis, 5.9% of savings managed by pension funds was lost in 2008; open funds, usually riskier, registered a loss of 8.6%. In most cases, these workers’ savings simply vanished. 

A turnaround is mandatory 

by Social Development Network; SEATINI KENYA; Kenya Debt Relief Network; BEACON; Daraja; Futa Magendo Chapters; Mazira Foundation; Haki Elimu; Kenya Land Alliance; Migori Clan; KETAM; Kenya-Cuba Friendship Association; Bunge la Mwananchi; CCF and Undugu Society 

The Kenyan political elite, like the legendary desert ostrich, is burying its head in the sand, hoping that, once again, the storm will pass. In contrast to the deafening silence from political decision-makers, isolated voices from civil society keep reminding them that the boat they are sailing in is leaking and that they need to go ashore before they sink in the turbulent waters of neo-liberalism.  However, the ideological vision debated at the recent conference on The Kenya We Want, organized by civil society organizations, exemplified by Vision 2030, the flagship policy instrument for making Kenya a middle-income economy by 2030, reflects the same neo-liberal fantasies that confound even the most devout worshipers at the temple of the Washington Consensus. Even when the crisis-ridden Western countries are frantically nationalizing their banks in order to inject massive quantities of taxpayer resources into these entities, the Kenyan parliament is anachronistically authorizing the bargain price sale of the country’s few strategic public assets, further dispossessing Kenyan taxpayers.  

Worsening conditions for migrants and asylum seekers 

by Joseph M Sammut

The rise in international food and fuel prices resulted in higher consumer prices and an inflation rate of 4.7% in 2008 – the highest rate in the Euro area. In addition, Malta’s export market was the worst affected in the entire EU: there was a fall in exports of 14%, compared with an EU-wide average rise in exports of 6.2%. 

The situation of migrants and asylum seekers has not improved and, in some respects, it has also worsened due to the record number of boat people arriving in 2008 and in the first two months of 2009. The system is currently overloaded: in 2008 it had to cope with 2,775 new arrivals, compared to 1,702 during the previous year.    

Time to rearrange priorities 

by Social Watch Mexico 

By November 2008, exports had plummeted and hundreds of thousands of people had lost their jobs. By February 2009, unemployment was at 5.3% and industrial activity declined by 13.2%, the worst statistics since the so-called tequila crisis of the mid-1990s. Analysts agree that this year Mexico will undergo the most severe recession since that time. As unemployment rises among Mexican immigrants in the United States, remittances (which are received by 60% of the poorest households in the country) drop.  Although the Federal Government has asserted that it will maintain its spending levels, it is urgent that budgetary allocations highlight social sustainability by reducing operating expenses, refocusing priorities and reducing administrative costs in certain areas. This historic moment provides the opportunity for designing and fomenting a fairer economic and social model, as a way out of the crisis and as a way to prevent future crises. Respect for the international human rights framework is the key to making another Mexico and another world possible.  

Unemployment: an unaffordable scenario 

by Social Watch Philippines 

The impacts are already widespread. Remittances from abroad, for instance, made up 13% of the GDP in 2007 and Filipinos working abroad comprise one tenth of the total population (around 8 million people). Up to 575,000 overseas Filipinos could lose their jobs in the United States and other countries, particularly in South Korea, Taiwan, Macao, Singapore and Hong Kong. Overseas remittances are projected to slow down at a pace of 6-10%. Export earnings plummeted by 40.4% in 2008, in comparison with the previous year, with exports of electronic goods declining by 47.6%. Factories are closing not only in the electronics sector but also among garment manufacturers and other companies in industrial parks.  Filipinos cannot afford a scenario of increasing unemployment and underemployment. While the unemployment rate currently stands at 8-10%, underemployment had already climbed to 22% even before the global crisis hit. Indeed, employment itself does not guarantee a decent life: a majority (51%) of the labour force, composed of 12.1 million farmers and fisherfolk and about 10 million labourers and unskilled workers, are earning poverty-level wages, just like their counterparts in the informal sector.

Unemployment on the rise 

by Daniel Klimovský
Slovak Political Institute, Faculty of Economics, Technical University of Košice

The whole Central Eastern European region is one of the worst hit by the current financial and economic crisis, where poverty is deepening and neo-fascism is on the rise. In Slovakia in particular, despite initial predictions that it would be minimally affected by the global crisis, a more sober assessment was reached at the beginning of 2009. The car industry, an industrial powerhouse, has greatly reduced production as a result of falling European demand. Government figures show that job losses will top 30,000 in 2009.  

Insufficient responses 

by Ali Mahamoud Osoble
Somali Organization for Community Development Activities  (Secretariat of Social Watch Somalia Coalition)

More than 3 million people in Somalia will need humanitarian aid in 2009. In addition to the 1 million displaced persons who need urgent aid, 2 million people living in both rural and urban areas do not have enough food. The fact that Somalia lacks basic functional health facilities to adequately respond to these emergencies worsens the plight of those affected, especially women, children and the elderly. If food prices increase further and the shilling continues to lose value, more than 4 million Somalis could be facing an acute food and livelihood crisis by the end of next year.  In 2008, nearly a third of the population became totally dependent on food aid and emergency services provided by international agencies. These agencies, however, are facing extreme difficulties in trying to introduce food into the country; the task is hampered by the violence that internally displaced a million Somalis from April 2007 to September 2008. 

Unprecedented opportunity for real change 

by Global-Local Links Project, Institute for Agriculture and Trade Policy,
Center of Concern, Action Aid USA, Hunger Notes 

Since December 2007, job losses in the UE have increased the estimated number of unemployed to 13.1 million – 5.6 million more than at the start of the recession. However, these figures understate the true picture, as the official unemployment rate only includes those who have actively sought jobs in the last four weeks. Minorities have been disproportionally affected by declining employment prospects. As of March 2009, unemployment among Blacks, Hispanics and Whites reflected increases of 4.4, 5.2, and 3.5 percentage points, respectively. These differences also reflect longstanding trends in inequality, particularly in the areas of education, employment and access to justice.

Government intervention is a critical element for ensuring economic recovery and a new direction in domestic economic development. Domestic movements for human rights, green jobs, fair trade, healthcare and housing are advancing innovative proposals and stepping up their demands for real and structural change. The United States cannot afford to squander this unprecedented opportunity for real change.  

No integral strategy 

by Rafael Uzcátegui
Programa Venezolano de Educación-Acción en Derechos Humanos  

The rise in the price of crude oil during much of 2008 produced a large income and monetary surplus, which resulted in a steady rise of imports and a high level of public debt. The oil bonanza also made it possible for the Government to develop a variety of social programmes – known as ‘missions’ – and to reduce the poverty indices. Nevertheless, an inflation rate of 15% is estimated for the current period, four points above the inflation stipulated for 2008. The real rate of inflation in 2008 was 30.9%, the highest in the region for the third consecutive year.
Despite its promotion of food autonomy, the Government has resorted to increased imports. MERCAL, the social programme that distributes subsidized products in working-class areas of the country, imported 70% of the items on offer. By 2008, 45.6% of the average 2,460 calories consumed daily in Venezuela came from food purchased abroad. A comprehensive and systematic food security strategy, as suggested by General Comment Nº 12 of the United Nations Committee on Economic, Social and Cultural Rights, does not yet exist in Venezuela. Although a low-cost food distribution programme has achieved significant levels of success, other aspects of food security, such as increased national agricultural production, are less developed.