About 7 million are jobless
JAKARTA, KOMPAS – The open unemployment rate has generally fallen in the last year. Up to 7 million people were unemployed in August 2018, a decrease of 40,000 people from August 2017.
However, the open unemployment rate in rural areas has increased because of declining employment in the agricultural sector.
According to Statistics Indonesia (BPS) data, the open unemployment rate in August 2018 was 5.34 percent, lower than 5.5 percent in August 2017.
Open unemployment in cities declined from 6.79 percent in August 2017 to 6.45 percent in August 2018. In rural areas, open unemployment increased from 4.01 percent in August 2017 to 4.04 percent in August 2018.
Anton J Supit, employment and industrial relations deputy chairman at the Indonesian Chamber of Commerce and Industry (Kadin), said that boosting investment to absorb manpower was one way to reduce unemployment.
“In order to achieve this, the government must maintain a conducive investment climate, including maintaining regulatory consistency. Moreover, certainty is highly important in the business world,” said Anton, who was asked to comment on the employment data BPS released in Jakarta on Monday (11/5/2018).
The Investment Coordinating Agency’s data shows that cumulative absorption of manpower in January-September 2018 was 704,813 people, of which 327,206 people were absorbed in domestic investment projects and 377,607 in foreign investment projects.
Anton said that vocational programs also needed to be optimized to provide competent workers to meet the needs of the working world. “The two main vocational pillars are education and industry,” he said.
He added that strong coordination was necessary in preparing human resources for industry and must involve workers, employers, the central government and regional administrations.
Raynaldi Inaray, the international candidate manager at Robert Walters Indonesia, a labor recruitment consultancy, on Monday also stressed the need for a competent workforce, as the needs of international and national companies were frequently unmet. Specifically, demand was high for workers skilled in information technology.
“Because the digital economy is still developing, the availability of expert talents in the domestic market is limited. Many local workers in technology have worked overseas. When they return home, their expertise can be transferred to other workers,” he said.
Earlier, National Development Planning Minister/National Development Planning Agency (Bappenas) head Bambang PS Brodjonegoro said that with an economic growth target of 5.3 percent in 2019, open unemployment was projected to fall to 4.8-5.2 percent.
Structural changes
BPS chairman Suhariyanto said that the open unemployment rate was increasing in rural areas because of changes in the employment structure, and that fewer job opportunities were available especially in the agriculture, forestry and fishery sectors. From August 2017 to August 2018, 220,000 fewer people were employed in these sectors.
“This condition has also been affected by the economic transformation toward Industry 4.0, which targets the younger workforce,” he said.
Suhariyanto stressed that structural changes in agricultural employment had the potential to affect the national economy. This was because that the agricultural sector had a broad multiplier effect, especially in relation to employment, commodity exports and domestic demand.
In terms of provinces, he added, the highest open unemployment rate was in Banten at 8.52 percent. “The open unemployment rate in Banten is high because many workers from villages cannot be absorbed,” he said.
BPS defines unemployment as people who do not have jobs but are actively seeking employment, and also includes those setting up new businesses, those not actively looking for jobs because they feel they will not receive a job offer, and those who have been employed but have not started working.
Labor Institute Indonesia executive secretary Andy William Sinaga said that village funds for labor intensive projects and accelerated infrastructure development projects could help lower the open unemployment rate.
“Accelerated infrastructure development projects absorb many young laborers. The government has to think about next steps. Once the accelerated infrastructure projects are completed, where will these workers go?” he said. (KRN/CAS/MED)