Tue, 27 Jan 2009
When the Jakarta Post, Indonesia’s leading English-language newspaper, recruited trainees in 2007, 10 people were offered jobs. But, says Endy Bayuni, the chief editor, the best five turned their offers down, having secured better packages elsewhere.

Twelve months and an economic crisis later, “there’s a vast difference”, Mr Bayuni notes. “The quality of job seekers is much higher. This time, the people have no jobs or the luxury of saying they have other jobs waiting for them.”
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Such situations are becoming increasingly common. Even though the global economic crisis has yet to hit Indonesia’s economy as hard as those of its more export-oriented neighbours only 40,000 jobs were expected to be lost in the manufacturing sector up to the end of December most companies based there are feeling the consequences of the global slowdown.

For example Shell, the Anglo-Dutch oil group, has seen a rise in applications from Indonesians based overseas. Darwin Silalahi, the company’s country head says, “As a result of the slowdown in developed economies and the Asian big economies, we’re seeing Indonesians wanting to come back to Indonesia.”

Mr Silalahi says it is now usual to get thousands of applicants for each opening, and this is only in response to advertising on the company’s website. “We brought on board 80 people in 2008 and received tens of thousands of applications for those jobs.”

The odds of success are equally daunting for job seekers in other sectors. Wahyudin Adikusumah, human resources director at Axis, the most recent mobile phone company to launch in the country, said he received between 3,000 and 5,000 applicants for each of three jobs advertised recently.

“At least 80 to 90 per cent are junk,” he says. “And I would say we are lucky if 2 per cent are extraordinarily good.”

And the odds are unlikely to improve in the short-term. Indonesia’s economy has grown at just over 6 per cent for each of the past three years, barely sufficient to absorb the new entrants to the labour market.

The government predicts that growth in 2009 will be anywhere from 4.5 per cent to 6 per cent, while private-sector economists are forecasting between 2.6 and 5 per cent.

Indra Soebardi, a headhunter with local company AAC, says it will be several months before the full effects of the crisis are felt in the labour market and it will not just be businesses in trouble that rein in their recruitment.

“A lot of companies used the 1998 Asian crisis to trim down, even though they might not have been in dire straits,” she says. “The same could well be happening now, so we’re likely to see an acceleration of outsourcing, particularly among the banks.”

Stewart Hall, head of Indonesia’s Bank Permata, agrees. “With the current challenges, most banks have a hiring freeze on and in the next 12-18 months there’ll be pressure to manage costs’.”

But while the immediate future might be gloomy for those starting their careers, the longer-term outlook appears brighter.

Until a few years ago, virtually all the brightest job seekers had had international education or work experience. This was mainly because former dictator Suharto for decades ensured educational standards were maintained at a certain level but no higher. That is now changing.

Mr Hall says: “Overall, there is still a demand-supply imbalance. So, skilled Indonesians have enjoyed salary increases three to four times, or more, in the past few years. But at the younger level, there are very good people coming through and not necessarily educated overseas.

“If I’m looking five years out, there will be a much better balance throughout the industry, while at the moment there’s still more demand [for staff] than supply.”

The Jakarta Post’s Mr Bayuni says the improvement has arisen more because Indonesian society has become less repressed than because of a noticeable improvement in education standards.

“Students are more open, more aggressive than in the Suharto years,” he says. “So they are much more mature in their approach; they’ve got more worldly experience.”

Ms Soebardi of AAC says this is also seen in middle-ranking employees’ increasing flexibility. “Ten years ago, if you were a banker you were a banker, or if an advertising person an advertising person,” she says. “Now it’s changing and we’re seeing much more crossover.”

Employers agree the biggest obstacle aside from the financial crisis is Indonesia’s labour laws

“The inflexibility of hiring and firing regulations in Indonesia is a definite disincentive,” Mr Silalahi of Shell believes. “We’re particularly experiencing it at the middle-manager level and above. It’s deterred the group from bringing in as many external hires as it might have wanted and that benefits no one in the long run.”

The main reason for the restrictive laws is the lack of a social safety net, but it has negative consequences.

“The result is that people are turning to outsourcing, which has pluses and minuses,” Mr Bayuni says.

“It’s cheaper but you don’t get the same level of commitment.”



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