4 - The Human Face of the Crisis: Key Findings of Focus Group Discussions with Vulnerable Workers and Households

Summary

COPING WITH THE GLOBAL CRISIS AND MORE

The human face of the global financial and economic meltdown vividly demonstrates the shock's catastrophic effects. The poor and the vulnerable are most at risk in the event of economic shock because, already living from hand to mouth, every penny counts to ensure their meagre income, minimum consumption, and the already fragile state of their overall human development. The range of coping mechanisms available to them is much more limited. Given that least developed countries such as Cambodia constantly suffer from insufficient funds, the availability and sustainability of social protection for the poor cannot always be guaranteed. The near–poor likewise are highly exposed to crises as they can easily fall under the poverty line given a loss of employment or greater underemployment. There is a lot to celebrate from the end of the global recession and movement towards economic recovery, albeit weak. However, the world cannot be comfortable as yet. It is not only that the threat of a double dip can become real anytime. It is also because even though the crisis has ended, some of its effects on the poor linger.

Cambodia's poverty headcount stood at 30 per cent in 2007. This could have increased by 1 to 4 percentage points due largely to the global crisis (World Bank 2009a). As outlined in Chapter 2, the poverty impact of the shock was the end result of the contraction in trade and capital inflows which in turn severely hurt Cambodia's garment, construction and tourism sectors. Although agricultural growth was not upset by the shock, the sudden deflation over the period of the crisis proved devastating especially for farmers who had made production investments against the expectation that the previous commodity price spikes would continue. The role of agriculture as crisis buffer was also undermined by its low absorptive capacity.

This chapter substantiates the estimated poverty increase in Cambodia during the crisis by overviewing the results of the FGDs and SSIs conducted by CDRI with vulnerable worker groups and rural households.