Unemployment Compensation in East and South Asia
The countries of East and South Asia have the widest range of relative income variation among the eight regions studied in this volume. On the other hand, most of the countries of this region generally have low unemployment rates, with only the Philippines, Sri Lanka, and Pakistan having relatively high rates of unemployment. Unemployment rates increased, however, following the Asian financial crisis of 1997, and they continued to be higher in 2000—2001 than they were at the start of the 1990s. More than likely, unemployment rates in the region are going to remain higher than the rates experienced in the precrisis period.
To the extent that unemployment will be higher in the future, the need for income protection for the unemployed will grow. Yet, UC programs are not common in Asia. Indeed, there is not a strong tradition of utilizing PES to secure reemployment so that job matching by public agencies is generally quite limited. The Asian financial crisis highlighted the risks inherent in this situation, particularly with the large increases in poverty rates that accompanied the higher unemployment.
Certain institutional features in Asian labor markets would inhibit the applicability of a UC program. First, a sizeable share of employment is in agriculture, where UC traditionally does not apply. Second, particular groups of workers usually excluded by UC programs, such as the self-employed, form a high proportion of total employment in many Asian countries. Hence, if a low-income country in the region were to adopt UC with customary coverage provisions, it would likely include less than half of the total labor force. These issues are explored in the first section of the chapter.
The second section of the chapter describes UC recipiency in four countries with functioning UC programs as of 2001: Hong Kong, Japan, Korea, and Taiwan. Not only have unemployment rates risen in recent years, but UC caseloads have also increased. The growth in