The economics of sex

Sex as a sector in Asia Fuels Economic Growth & Income For Millions

Dave notes this is excerpts of a report from way back in 1998 dealing with the Asian economic downturn.  However the idea of the economic benefits are still valid today.

Source:  World of Work, International Labour Organization No 26. September/October 1998
Used for educational purposes with full credit in compliance with International Copyright laws and treaties.

Prostitution in Southeast Asia has grown so rapidly in recent decades that the sex business has assumed the dimensions of a commercial sector, one that contributes substantially to employment and national income in the region.

The report is based on detailed studies of prostitution and commercial sex work in four countries - Indonesia, Malaysia, the Philippines and Thailand. The authors of the ILO report emphasize that the scrutiny of the "sex sector" of these four countries does not suggest that they have a unique prostitution problem or that their social, moral or economic values are especially aberrant. In fact, the national case studies in the report "are illustrative of the situation in many countries", and prostitution and its attendant problems are universal.

"If the evidence from the recession of the mid-1980s is any indication, then it is very likely that women who lose their jobs in manufacturing and other service sectors and whose families rely on their remittances may be driven to enter the sex sector," says Ms. Lin Lim, the ILO official who directed the study.

As to the prospect of a slowdown in the demand for commercial sex services following region-wide declines in personal income, the ILO report notes that "poverty has never prevented men from frequenting prostitutes, whose fees are geared to the purchasing power of their customers". Moreover, after decades of interaction with other economies, the sex industry in Asia is effectively internationalized: overseas demand is likely to be unaltered by domestic circumstances and may even be fuelled as exchange rate differentials make sex tourism an even cheaper thrill for customers from other regions.

In reporting on the economics of sex work, Governments are constrained not only because of the sensitivity and complexity of the issues involved but also because the circumstances of the sex workers can range widely from freely chosen and remunerative employment to debt bondage and virtual slavery. The countries have, however, taken action to eliminate child prostitution, an activity the ILO report characterizes as "a serious human rights violation and an intolerable form of child labour". Child prostitution risks growing as poverty and unemployment strain family incomes and contribute to the expanding ranks of street children who are an increasingly common sight on the streets of cities worldwide.

Major employment and revenue generator

The report says that although the exact number of working prostitutes in these countries is impossible to calculate anywhere between 0.25 per cent and 1.5 per cent of the total female population are engaged in prostitution.

Estimates made in 1993-4 suggest that there were between 140,000 to 230,000 prostitutes in Indonesia. In Malaysia, the estimated figures for working prostitutes range from 43,000 to 142,000, but the higher figure is more probable, according to the ILO analysis. In the Philippines, estimates range from 100,000 to 600,000, but the likelihood is that there are nearly half a million prostitutes in the country. In Thailand, the Ministry of Public Health survey recorded 65,000 prostitutes in 1997, but unofficial sources put the figure between 200,000 and 300,000. There are also tens of thousands of Thai and Filipino prostitutes working in other countries. The prostitutes are mainly women, but there are also male, transvestite and child prostitutes.

Including the owners, managers and other employees of the sex establishments, the related entertainment industry and some segments of the tourism industry, the number of workers earning a living directly or indirectly from prostitution would be several millions. A 1997 study by the Ministry of Public Health of Thailand found that of a total of 104,262 workers in some 7,759 establishments where sexual services could be obtained, only 64,886 were sex workers; the rest were support staff including cleaners, waitresses, cashiers, parking valets and security guards.

A Malaysian study lists occupations with links to the sex sector as medical practitioners (who provide regular health checks for the prostitutes), operators of food stalls in the vicinity of sex establishments, vendors of cigarettes and liquor, and property owners who rent premises to providers of sexual services. In the Philippines, establishments known to be involved in the sex sector include special tourist agencies, escort services, hotel room service, saunas and health clinics, casas or brothels, bars, beer gardens, cocktail lounges, cabarets and special clubs.

The sex sector in the four countries is estimated to account for anywhere from 2 to 14 per cent of Gross Domestic Product (GDP), and the revenues it generates are crucial to the livelihoods and earnings potential of millions of workers beyond the prostitutes themselves. Government authorities also collect substantial revenues in areas where prostitution thrives, illegally from bribes and corruption, but legally from licensing fees and taxes on the many hotels, bars, restaurants and game rooms that flourish in its wake.

In Thailand, for example, close to US$300 million is transferred annually to rural families by women working in the sex sector in urban areas, a sum that in most cases exceeds the budgets of government-funded development programmes. For the 1993-95 period, the estimate was that prostitution yielded an annual income of between US$22.5 billion and US $27 billion.

In Indonesia the financial turnover of the sex sector is estimated at US$1.2 billion to US$3.3 billion per year, or between 0.8 and 2.4 per cent of the countrys GDP, with much of prostitutes earnings remitted from the urban brothel complexes they work in to the villages their families live in. In the Jakarta area alone, there is an estimated annual turnover of US$91 million from activities related to the sale of sex.

Economic incentives drive the industry

While many current studies highlight the tragic stories of individual prostitutes, especially of women and children deceived or coerced into the practice, the ILO survey points out that many workers entered for pragmatic reasons and with a general sense of awareness of the choice they were making. About one-half of Malaysian prostitutes interviewed for the study said it was "friends who showed the way to earn money easily", a pattern that is replicated in the other study countries.

Sex work is usually better paid than most of the options available to young, often uneducated women, in spite of the stigma and danger attached to the work. In all four of the countries studied, sex work provided significantly higher earnings than other forms of unskilled labour.

In many cases, sex work is often the only viable alternative for women in communities coping with poverty, unemployment, failed marriages and family obligations, in the nearly complete absence of social welfare programmes. For single mothers with children, it is often a more flexible, remunerative and less time-consuming option than factory or service work.

Surveys within sex establishments reveal that while a significant proportion of sex workers claimed they wanted to leave the occupation if they could, many expressed concern about the earnings they risked losing if they changed jobs.

Surveys of women working as masseuses indicated that 34 per cent of them explained their choice of work as necessary to support poor parents, 8 per cent to support siblings and 28 per cent to support husbands or boyfriends. More than 20 per cent said the job was well paid, but only 2 per cent said it was easy work and only 2 per cent claimed to enjoy the work. Over a third reported that they had been subjected to violence or harassment, most commonly from the police but also from city officials and gangsters.

A survey among workers in massage parlours and brothels in Thailand revealed that "most of the women entered the sex industry for economic reasons." Brothel workers were more likely to say that they became prostitutes to earn money to support their children, while massage parlour women were often motivated by the opportunity to earn a high income to support their parents. Almost all of those surveyed stated that they knew the type of work they would be doing before taking up the job. Almost one-half of the brothel workers and one-quarter of the massage parlour workers had previously worked in agriculture. A further 17 per cent of the masseuses said they had previously worked in home or cottage industries and 11 per cent had been domestic servants.

The rationale, in Thailand and elsewhere, was that in exchange for engaging in an occupation which is disapproved of by most of society and which carries known health risks, "the workers expected to obtain an income greater than they could earn in other occupations". In nearly all segments of the sex trade, that expectation was fulfilled, and remittances from the women working in the sex industry provide many rural families with a relatively high standard of living. The earnings of Thai sex workers varied widely according to the sector and the number of transactions engaged in, but surveys showed a mean income per month of US$800 for all women, with a mean of US$1,400 for massage parlour workers and US$240 for women in brothels.

Studies of prostitution in Indonesia consistently show relatively high earnings compared with other occupations in which women with low levels of education are likely to find work. The personal incomes of high-range sex workers in large cities (for example call girls working in high-priced discos and nightclubs) can be as high as US$2,500 per month, a level which far exceeds the earnings of middle-level civil servants and other occupations requiring a high level of education. Average monthly earnings in the middle range of the sector were estimated at around US$600 monthly and US$100 at the low end (when the exchange rate was US$1= 2,000 rupiahs).

In contrast, the earnings and working conditions are miserably low at the bottom end of the market; sexual transactions in cheap brothels can be as low as US$1.50 and prices on the streets of slums or alongside market areas and railroad tracks are even lower, with comparatively higher risks in terms of personal safety and exposure to sexually transmitted diseases and HIV/AIDS.

In Malaysia, earnings in the sex sector are higher relative to earnings in other types of unskilled employment. In manufacturing, for instance, average wages per annum in 1990 were US$2,852 for skilled workers and US$1,711 per annum for unskilled workers. In comparison, a part-time sex worker in the cheapest of hotels who received US$4 per client, seeing about ten clients daily and working only once a week for about 12 hours, earned US$2,080 per annum.

One such sex worker explained "I can earn enough to look after my two young children. It is so difficult to get someone to look after them when you work elsewhere. Here I only come when I need the money and it is easy to find a babysitter for just one day."

All four country studies point out, however, that the information was gathered from establishments and individual prostitutes willing to be surveyed. The picture is incomplete for those establishments, especially brothels, which virtually enslave the workers and of those women and children who are the victims of serious exploitation and abuse.

* * * * *

* The Sex Sector: The economic and social bases of prostitution in Southeast Asia edited by Lin Lean Lim, International Labour Office, Geneva, 1998. ISBN 92-2-109522-3. Price: 35 Swiss francs.

Interview with Dr. Lin Lean Lim, editor of
"The Sex Sector: The economic and social bases
of prostitution in Southeast Asia"

World of Work (WoW): Has the sex sector in Asia become an economic sector, and how is it developing?

Ms. Lin Lim: Prostitution in Asia appears to have grown to a point where we can talk about an economic sector providing significant employment and income to large numbers of people who are either directly or indirectly involved in the sector. It also appears to have changed in response to the changing tastes and sophistication of customers, as well as the enforcement of legislation and because there are increasing national and international vested economic interests linked to the sex sector.

WoW: Does this represent a kind of "globalization" of prostitution?

Ms. Lin Lim: Yes, and we can talk about this globalization from two perspectives. The first is the fact that there appears to be growing international trafficking of women and children across national borders into the sex sector. And the second, of course, is the fact that growing sex tourism brings customers from other countries to - in this case - the south-east Asian countries.

WoW: What is the scope of the sex sector, and how is it linked to other sectors?

Ms. Lin Lim: The phrase "sex sector" implies that we cannot just look at prostitutes and individuals who are working as prostitutes, but must recognize the fact that it is a highly organized sector with linkages to some segments of the tourist industry, the hotel industry, the sale of cigarettes and liquor, and other very powerful and vested interests. We emphasize the economic basis of prostitution to draw attention to the fact that to deal with the problem one has to address the organizational structures of the sector. We should also recognize that macroeconomic development policies of governments could indirectly contribute to its growth.

WoW: What are these macroeconomic policies?

Ms. Lin Lim: Let me be clear. In none of the countries we studied is it the intention of the government to promote the growth of the sex sector. In the Philippines and Thailand*, prostitution is illegal. Still, policies to encourage the growth of tourism, promote migration for employment, promote exports of female labour for earning foreign exchange have contributed indirectly to the growth of prostitution. Also, by contributing to a rising disparity in incomes between rural and urban areas, development policies in some countries have caused the marginalization of some segments of their labour force. Inadequate economic opportunities for those with low levels of education and, very importantly, the lack of social security or social safety nets for the poor, may also have contributed to the growth of prostitution as a sector.

* Dave has to insert, yes due to Western pressure prostitution became "officially" illegal in Thailand but under the Prostitution Act "Special Services" at "Entertainment Places" was exempt from the law. As I discuss in my Thailand report, this was very wise.  Keep revenue from prostitution flowing by exempting the places where it most occurs for tourists, and don't enforce it against the local Thai brothels were few tourists ever go, where prostitution has been accepted and no big deal for centuries.  But officially they can say "prostitution is illegal".  A similar situation exists in the Philippines where "Guest Relations Officers" who are the gals that work in the bars and strip clubs are licensed and required to have std tests, but officially they don't provide sex.  This is the Philippine mentality, say it doesn't exist and poof  it doesn't.  Of course I in no way endorse child sexwork, but when I visited Thailand and the Philippines saw no evidence of it and there are very severe penalties for using or hiring under aged sex workers.

WoW: Why do women enter the sex sector and what are their working conditions like?

Ms. Lin Lim: There are a range of circumstances. Some enter freely as a form of sexual liberation, or by "choice", as the only economic opportunity available in the case of persons with extremely low education levels. In other cases, women are in the sex sector as a result of debt bondage or have been tricked into it. Depending on the mode of entry into the sector, the working conditions differ from a remunerative and relatively good working situation, to abusive and exploitative conditions involving virtual slavery. What the report emphasizes then is that the policies and programmes have to address differently the needs of the different groups involved in the sector. The emphasis is that adult prostitution has to be treated very differently from child prostitution. In the case of adult prostitution, one could take the stand that where prostitution is legal, proper working conditions and labour legislation should be applied to sex workers, just as they apply to other workers. But the ILO is very firm on the fact that child prostitution cannot and should not be treated in the same way as adult prostitution. Child prostitution is a serious violation of human rights and an intolerable form of child labour that must be eliminated.

WoW: Why do you stress the social bases of prostitution?

Ms. Lin Lim: To draw attention to the fact that in addition to the well-organized aspects of the sector and economic interests, the sex sector is also driven by social forces highlighting the inequality of relations between men and women. In many of these societies - patriarchal societies - there is a different set of moral standards and codes of conduct for men and women. And there are also codes of conduct and social norms that dictate relations between parents and children. Some daughters go into prostitution to help support families as a form of repayment to their parents.

Back to the Sexwork Main Menu