Broken Lives
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In This Series
  • Part Two: A Generation Lost to Destitution
  • Part Three: The Abandonment of the Worker
  • Part Four:
    The Tragedy of Three Friends

    From The Post

  • Asia Economies Report
  •   Middle Class Plunging Back to Poverty

    First of three articles

    By Mary Jordan
    Washington Post Foreign Service
    Sunday, September 6, 1998; Page A01

    SEOUL – The ambulances, lawyers and guards with chains swooped into Seoul Christian Hospital without warning one day this summer. They loaded patients onto gurneys and carted them all away, including a semiconscious little boy who had lain curled and silent in Room 3B since his birth nine years ago.

    They chained down expensive equipment and locked cabinets and doors. They took away medicine and machines and all the things that had saved lives here, until South Korea's economic collapse made lifesaving too expensive.

    When the hospital went bankrupt, all that was left behind was the disbelieving staff -- more than 200 nurses and pharmacists and medical aides who had stuck by their patients and their hospital long after their paychecks stopped coming. They were owed an average of $7,000 each in back wages, and when the owner tried to throw them into the street, they simply sat down, too stunned to move and too scared to face life without a job.

    This is what the Asian economic crisis has brought to South Korea. Nearly 100 times a day somewhere in this country, someone's dream -- a tennis shoe factory, a corner grocery story, a giant automaker, a promising fashion house, even a hospital -- is crushed under the weight of the economic collapse. Unpaid bills are piled too high, the "closed" sign is posted, workers are dumped, and the nation's economy slips a little lower.

    From the tropical islands of Indonesia to the mountains of Thailand to the factories of South Korea, East Asia's amazing rush to affluence in the last 25 years made life better, safer, more comfortable and more hopeful. But the growth went haywire -- too much borrowed money and too much corruption -- and the abrupt crash has shattered the lives of tens of millions of people.

    Asia's Economic Crisis

    Beginning in the early 1980s, huge amounts of investments began pouring into Asian countries, lured by high returns, stable governments and currencies pegged to the dollar. The foreign money paid for factories and skyscrapers, and a booming export economy created a newly comfortable middle class that in turn stimulated more consumption.

    But success led to too much building, over-lending and over-consumption in just about all of Asia's emerging economies. When speculators lost confidence in the Thai currency last spring, sending the baht tumbling, other Asian nations followed suit, and despite rescue packages by international lending institutions the slide continues.

    The Fall

    Thailand's economy began to slow in the spring of 1997, triggering a run against the baht by speculators. The Thai central bank used up most of its foreign currency reserves to buy its own currency in an effort to prop up its value. But in July 1997, devaluation came, and foreign investors fled. The Thai crisis started an avalanche that rolled across Asia with local currencies going into free fall, stock prices crashing and inflated real estate prices plummeting. New loans dried up, and banks that had borrowed in dollars, marks and yen were unable to repay, so they called in their loans elsewhere, speeding the contagion. The International Monetary Fund worked out rescue packages for several Asian nations, imposing harsh economic reforms.

    Currencies and stock markets have dropped precipitously in the past 12 months (Sept. 4, 1997, through Sept. 4, 1998):



    Jakarta composite index: - 83%

    Currency Rupiah:- 73%

    S. Korea


    Korea composite index:- 69%

    Currency Won:- 33%


    Currency Baht:- 12%


    Thai Stock Exchange:- 65%

    Total of committed IMF-arranged rescue packages, in billions of dollars:

    Total amount of rescue package, including IMF share, multilateral and bilateral loans: S. Korea $58.2; IMF funds paid so far: $17

    Total amount of rescue package, including IMF share, multilateral and bilateral loans: Indonesia 42.3; IMF funds paid so far: 5.0

    Total amount of rescue package, including IMF share, multilateral and bilateral loans: Thailand 17.2; IMF funds paid so far: 2.8

    The Consequences

    The crisis has hit Asia's new middle class hard. Factories laid off workers and many companies went bankrupt, throwing millions out of work. The social safety network in these countries is fragile or non-existent, making it even harder on families, who have to rely on their savings or on relatives to survive. Consumer prices have risen steeply, and families are selling their possessions and even pulling their children out of school because they cannot afford the fees.

    SOURCES: UNCTAD, World Bank, World Almanac, Bloomberg News, IMF, International Finance Corp., Consensus Economics via Korea Economic Institute of America and Japan Research Institute


    "Every aspect of my life has changed," said X-ray technician Youn Sung Mook, 32, who hasn't seen a paycheck since February and began sleeping in the hospital lobby when it shut down. "Just about everything is gone, even my friends. I avoid them. It is too embarrassing to go out with an empty wallet."

    The greatest success story of East Asia -- the emergence of a broadening middle class -- is evaporating like steam from a cup of tea. Millions of newly comfortable people who had decent jobs and good living conditions, who were better educated and living longer than their parents, are slipping back into worse conditions.

    Hunger and malnutrition are rising, more and more children are dropping out of school, and child labor is increasing as Asia's miracle dissolves into misery. And those who already were poor are suffering even more.

    Relentless waves of bankruptcies and unemployment are battering the region. In Indonesia, there were about 5 million people unemployed last summer. By the end of this year, that number is expected to reach 20 million -- nearly twice the combined population of Maryland and Virginia. Another 1 million have lost jobs in South Korea this year, and 2,000 people a day are losing jobs in Thailand.

    Americans increasingly view the year-old Asian financial crisis in terms of how big a threat it is to Wall Street. But in Asia, the crisis is wrecking so many lives that the focus is not on investment returns but on what some are calling a historic "class plunge."

    "I can't even eat what I want to eat," said nurse Chang Sook Hee, as she recalled weekends and fun and how life used to be. Most of the summer, she too slept in the hospital's dimly lit lobby surrounded by her colleagues -- people with college and professional school degrees who used to enjoy expensive vacations but now cannot afford to eat meat or go to the movies.

    Until this year, Chang had just about everything she wanted, except time. She had two children and a job she adored; she was proud to be elected a union chief. But now her allegiance to her union and her family has created "tension." "I have no expectation that it will get better any time soon," she said.

    "I can't even imagine buying clothes for myself. I can't buy gifts for my parents' or my kids' birthday," said Chang, 32. When she and the others talk about maybe someday getting the money to eat out, it is no longer about sipping chardonnay at a restaurant with tablecloths -- it is more like Chicken McNuggets.

    The East Asian middle class is diverse: In poor Indonesia or the villages of Thailand, a successful middle-class person might be defined as one with glass in his windows and cows in his field; in the richer nations of South Korea and Singapore, the worker drives a reliable car and travels abroad. But the crisis unites them in loss: Whatever these people had, they suddenly have a lot less of it.

    In Chiang Mai in northern Thailand, Somjit Klangjai worked six years in a cigarette factory and did not consider herself poor. But she and 100 others who used to turn tobacco leaves into cigarettes lost everything almost overnight when the factory shut down. She is selling her possessions one by one to keep going. She is down to one hen.

    "You sell whatever you have. If you have chickens you sell chickens. If you have rabbits, you sell rabbits," she said, adding to the chorus of people who say it is humiliating and depressing to go from comfort to need overnight. "I cried. I tried to commit suicide. I wanted to escape from this world."

    The crash has exposed how vulnerable people were. Many borrowed far more than they had saved, so office clerks, bank tellers and construction and factory workers who had grown accustomed to nightclubs and cellular telephones had little to fall back on when the crash occurred. In a matter of weeks they slid from a good life to borrowing to pay for groceries and sleeping on the mats and floors of relatives to avoid paying rent.

    In each of the three hardest-hit East Asian countries -- Indonesia, Thailand and South Korea -- yuppie-oriented outdoor food carts have become a favorite way for out-of-work stockbrokers and car salesmen to earn cash. They now sell treats they had grown used to, such as cappuccino and Black Forest cake, to people who can still afford them.

    "For the last 30 years, it was growth, growth, new jobs, new jobs, so people all became middle class," said Kim Young Jin, president of Jindo Corp. in Seoul, a once-thriving company that manufactures commercial shipping containers. In the last year, Kim has had to lay off 1,100 of his 1,700 workers. "Now it is really miserable. There is no middle class. These people are all lower class."

    The dozens of hospital employees living in the lobby of the Seoul Christian Hospital have slipped from comfort to desperation in one year. Since July, many of them have slept in the lobby because they don't have 30 cents for bus fare to go home and back every day. Some of them are camped out in the quixotic hope that if they just stay put, maybe they will get the money they are owed. And more importantly, maybe they will get their old jobs back and reenter their lost lives as if nothing had happened.

    For years, the six-story hospital has been a meeting place and cornerstone of the low-income neighborhood of Myunmok Dong, but now it is a hushed, hollow place. A nurse recently sat on newspapers and peeled potatoes for lunch. Rows of citrus-colored waiting room chairs, once filled with people waiting for prescriptions, now are heaped high with jeans, hair dryers and other personal belongings. Laundry dries on a plastic rack in front of the shuttered pharmacy.

    "I feel like we've been fooled," said a pharmacist. "How else could this happen?"

    An Asian 'Lost Decade'?

    The first attempts at quantifying and estimating the scale of human suffering in terms of school dropouts and child labor, rising medical problems, poverty and hunger are now being made by the World Bank, Oxfam and other international relief organizations and the individual countries themselves. In interviews with those conducting the surveys that will be released in the coming months, all indications are that the human aftershocks of the crisis have been underestimated.

    "It is not a total wipeout," said Charles Morrison, president of the East-West Center in Honolulu. "But it is a tremendous reversal for the region. It's no longer a question of whether the region will recover in one year or two, but whether the recovery will come in five or 10 years."

    In the meantime, the growing gap between rich and poor has raised global concerns about class conflict and political instability. In Indonesia, where one in five workers is expected to be jobless by year's end, there already have been eruptions of lawlessness and looting, as well as violence against the country's better-off ethnic Chinese community.

    Economists have stopped drawing charts of what happened here as a "V," since almost no one believes the sudden collapse will be followed by a quick recovery. The graphs now look more like an "L," with the crash followed by an extended period of hard times.

    Scholars are beginning to wonder if this is the beginning of the Asian "Lost Decade," a reference to the living standard setbacks in Latin America in the 1980s after a similar debt crisis.

    People here are just surviving one day at a time.

    "All I can do is try as hard as I can and pray," said Zen Zainudin, who sang for six years at the New Mugen karaoke club in Jakarta before it shut down this year. As he sat on a blue metal bench outside a government employment office in the Indonesian capital, he said he only needed about $30 to cover his monthly food and housing expenses, but he had no idea how he could find a job when so many others also are looking.

    "Their world has just crashed around them," said Lim Say Boon, regional director of the Singapore-based Crosby Corporate Advisory group. "They are shell-shocked, numb."

    In Thailand, jobless bankers and stockbrokers have earned cash by selling their designer clothes and jewelry at informal Markets of the Formerly Rich. For many of them, it is a humiliating experience.

    Yupavadee Sungkamala, 30, stood in one of those markets recently in Bangkok with armloads of her belongings; she needed cash since she had lost her job selling medical supplies. As she stood with her arms folded uncomfortably, a young man bargained hard for her golf clubs. She wasn't asking all that much -- about $50 -- but the man was offering only half that.

    Sungkamala already had sold her car to keep her house, and it was getting harder to part with her favorite possessions. "Something like the golf clubs, that I loved, when they bargain so low it hurts," she said.

    Eggs and more eggs -- that's what this crisis has come down to for Kalya Sripran, a laid-off factory worker in Bangkok. Her once diverse diet has been narrowed to mostly eggs -- boiled, fried, scrambled. She tries to make a living peddling fruit from her bike. Her main goal -- like so many middle-class Asians -- is to keep her two children in school. She said it is a shocking comedown to find herself desperately trying to feed and educate her children after taking those things for granted for so long.

    "I'd sell part of my body to keep them in school," she said about her children, ages 7 and 17. "Even if I have to sell a leg or a hand, I'll keep them in school."

    Rise of the Homeless

    The psychological and practical impact of losing a job in East Asia is profoundly different from losing one in the United States, where people frequently switch jobs and the unemployed can rely on food stamps and government benefits. Many Asian workers had expected to stay with one company for life, and self-worth is tightly linked to one's job.

    Even more importantly, when this financial crisis hit, East Asia was in a transition phase where its traditional social safety net -- a network of family and friends -- was weakening, but a modern government system of food and cash support was not yet in place.

    This hurt the elderly in particular. South Korea has a relatively new pension system and many neighboring countries barely have one at all; older people routinely survive on their savings, as well pocket change and housing from their working sons and relatives.

    Paik Kee Hyun, 73, was working as a security guard at a Seoul factory until February, when the company closed. Then the company gave Paik a promissory note for six months' salary as severance pay, but Paik has no illusions that it will ever be paid.

    "It's just paper," said Paik, a soft-spoken man in a grandfatherly plaid shirt.

    With his only son out of the country, Paik found himself at a soup kitchen near Pagoda Park in Seoul talking to Kim Kum Bok, the retired policeman who runs it.

    Kim heard Paik's story and took him home, an hour's bus ride away. After a long walk down a footpath through the woods, past abandoned, wrecked cars and a sleeping German shepherd chained to a rusted mobile home, Kim's compound for the homeless emerges.

    Chickens, ducks and dogs -- all raised for food -- roam the area around four domed-roof buildings. The sound of hammers and drills fills the air at the largest building. The place is one of the growing number of new private havens for the homeless.

    Paik is a man of few words, and he and his benefactor, a devout Christian who sold his suburban home to pay for feeding and housing the homeless, don't want to talk much about their lives. They just want to get through this, the toughest time South Korea has known since the Korean War began in 1950.

    In addition to the official jobless count that grows in East Asia by increments of millions, there are many more who are barely employed. Many work only an hour or two a day, and many, particularly in South Korea, keep working with little hope of getting paid. Across the region, it has become routine for those lucky enough to have jobs to take a 30 percent pay cut.

    In Jakarta, Warih Wijayanti used to be an architect working on a new downtown banking center. But these are bad times for banks, and the owner couldn't pay the builder and the builder couldn't pay her. So now the mother of an infant daughter has a temporary job teaching primary school. Instead of making $135 a month, she makes $40.

    She has no job and no home of her own -- she lives with relatives -- but she wouldn't be classified as unemployed or homeless in any government statistics. She is an invisible casualty of the Asian financial crisis, and there is no government help for her.

    Easier to see are the homeless, building villages along railroad tracks and under freeways.

    Last summer, it was rare to see a homeless person in Seoul. This year, almost every Seoul city park has become a tent city. Police now spend early mornings shooing homeless people away from subways.

    Hong Kwan Pyo cuts an odd figure of a homeless man. His white pants are clean and pressed, and he carries a neat canvas briefcase. Until a few months ago, Hong was part of the proud middle-class muscle that built South Korea into the world's 11th-biggest economy. A college graduate, he managed an elevator company that employed 30 people. The business had all the work it could handle as building after building rose on Seoul's skyline.

    Hong and his wife were raising their son, 9, in a spacious three-bedroom in Kang Nam Ku, a nice suburb south of the Han River. They took ski vacations and treated themselves to expensive resorts; they ate out, and well. He bought what he wanted, not just what he needed.

    Then the crash came. Banks stopped lending, builders stopped building, and the last thing anybody needed was a new elevator. Hong borrowed thousands of dollars from his in-laws to try to pay the company's bills. He sold the house. Nothing worked, and the company went bankrupt.

    Kang's wife and son moved in with her parents. Proud and broken, Hong moved to Seosomun Park beside Seoul's main train station, where he joined thousands of other newly homeless men sleeping under the stars. Hong said he is too humiliated to face his wife or his in-laws. He has vowed that he will not go to them until he has raised the $4,000 he figures he needs to start his own small outdoor food stand. In his briefcase, Kang keeps a stock of magazines he is selling to make money.

    "I will stay away until I am able to stand up with nobody's help," Hong said.

    There is a homeless shelter near the park, but he refuses to stay there because he fears facing one of his former employees. But he does slip in during the morning to wash and iron his clothes, to keep up a businesslike appearance that helps him maintain his resolve.

    "I will come out of this," he said.

    As Hong sat on the grass in the park, a few drunk homeless men came by looking for a fight. In the distance, some newcomers, a young family with children, set up a small nylon tent. At the spigot outside the park's public restrooms, one man shaved and another, clad in shorts, took a cold outdoor shower.

    Hong admits it is tough to fight off the despair all around him, and a few weeks ago he thought about killing himself. That is a route more and more South Koreans and other Asians are taking out of the crisis.

    But images of his son, he said, kept him from doing it: "I decided to live, to try to survive because of him."

    Now Hong sleeps in the park at the foot of a statue of a child who holds a ball in his arms. Hong looks up at him each night and tries to sleep by dreaming of his boy and counting stars amid the loud screeches of the commuter trains. He thinks it will take five months to earn enough money to face his family again, but the wait is agony. One day he was overcome by the need to see his son, so he went to the boy's school, hiding in the shadows so he would not be seen.

    "I cried all the way back here," he said.

    Striving for Dignity

    Across East Asia, marital separations and incidents of domestic abuse are way up, social and religious workers say, as families bear the brunt of East Asia's heartbreak.

    "More and more women call every day, crying for help after their husbands beat them," said Paik Sung Hwa, of the Women's Hotline in Seoul. "The husbands relieved their stress by beating their wives. As time goes by, the degree of violence gets worse."

    In prayer meetings at some Jakarta mosques, recent discussions have focused on instructing men not to vent their frustrations on their wives and children. In Thailand, increasing numbers of women and children are taking refuge in government-run shelters.

    But beyond the stories of depression and anger and abuse, there are many more heartening stories of people coping. Far more than the billions of dollars of international aid and loans now being pumped into this region, it is individual resilience and strangers' charity that is doing the most to piece back together shattered lives.

    People who have seen their businesses swallowed by the economic crisis are starting over on smaller scales. In South Korea, for instance, more than 3,800 businesses went bust in the seven largest cities from January to April, but 6,200 new ones were created in the same period. Many of these also won't last and are nothing more than a person trying to sell newspapers on a street corner, but it is a hopeful sign.

    One of the new entrepreneurs is Choi Jin Gyu, who lost his job at a clothing store in Seoul's Namdaemun market, and then his apartment. Like thousands of others he wound up on the street, drinking and depressed.

    But with a dozen other newly homeless men and a $1,000 loan from a divinity student, he helped start a small outdoor food stand called "a covered wagon." He now serves up boiled noodles and seaweed and raw octopus. In a nod to the International Monetary Fund loans to the nation, the men called their little restaurant the IMF Hope Wagon.

    You Il Soo, a social worker and divinity school student who lent the start-up cash, organized Choi and the other men -- all of whom had been sleeping on the concrete floor of the city's main train. He lets them sleep in his small three-room suburban apartment, overlooking the restaurant.

    The IMF Hope Wagon makes almost no money. But it has recovered some of the men's dignity lost along with their jobs.

    Correspondents Keith B. Richburg in Thailand and Kevin Sullivan in Indonesia and special correspondent Cindy Shiner in Indonesia contributed to this report.

    © Copyright 1998 The Washington Post Company

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