A rude ILO awakening<\/p>\n
Monday's announcement of the findings of a report commissioned
\nby the Jakarta office of the International Labor Organization
\n(ILO) painted what is undoubtedly the grimmest picture of our
\neconomy yet published since the crisis began over one year ago.<\/p>\n
The study, conducted by local and foreign experts, said that
\n5.4 million workers have been laid off this year, meaning that an
\naverage of 15,000 jobs are being lost every single day. Since
\nunemployment is the chief source of poverty, the study concludes
\nthat at this rate, more and more people will be joining the ranks
\nof the poor. By the ILO's estimate, the number of Indonesians
\nliving below the poverty line reached 75 million, or 37 percent
\nof the population, in mid-1998. Without any significant turn
\naround, this number will swell to 100 million people, or 48
\npercent of the population, by the end of this year, and 66
\npercent, or 140 million people, in 1999. This means that two out
\nof every three Indonesians will be living in dire poverty next
\nyear.<\/p>\n
A report as bleak as the ILO's is just what is needed to
\ndeliver a rude awakening to the government of President B.J.
\nHabibie, which has yet to come to terms with the grim reality of
\nthe crisis. Instead of tending to the crisis, administration
\nofficials have been applauding themselves and indulging in mutual
\nback-slapping since the International Monetary Fund (IMF) resumed
\ndisbursing its huge loans to the country and the rupiah showed
\nsigns of strengthening.<\/p>\n
Either these officials are completely ignorant, or they are
\nonce again trying to deceive the public when they suggest that
\nthese trends reflect a return of international confidence in the
\nIndonesian economy and the government. The IMF loans were
\ndisbursed precisely because the international community is fully
\naware of the gravity of the Indonesian crisis, while the rupiah
\nstrengthened because of heavy state intervention and because
\nspeculators were turning their attention to other currencies,
\nparticularly the Russian ruble.<\/p>\n
In the meantime the government is continuing with many of its
\npopulist policies, wasting huge sums of public money on those who
\nleast need it, such as bank owners, middle class consumers and
\nbig traders, all of whom are reaping the benefits of the state
\nbailout of ailing banks and the provision of subsidies on basic
\nfoodstuffs and fuel. The benefits of the much touted government
\nsocial safety net programs, which are heavily dependent on
\nforeign assistance for their funding, are not reaching their
\nintended recipients.<\/p>\n
Very few of the new policies introduced by the government have
\nhad any impact on the economy. The IMF loans and the
\nstrengthening of the rupiah have not done much to improve the
\nsituation either. Companies are still going under, workers are
\nlosing their jobs, and the price of basic foodstuffs is still
\nrising. And, as the ILO report suggests, more people are being
\nimpoverished by this process.<\/p>\n
The government's policy of maintaining high interest rates to
\nprop up the rupiah exchange rate comes at the expense of less
\ninvestment and the long term repercussions this brings with it.
\nWe are already seeing the impact of falling investment in the
\nfarming sector. The sharp drop in the nation's rice output has
\npartly been caused by the reduced use of inputs such as
\nfertilizer, which has now become unaffordable for most farmers.
\nThe full brunt of declining investment will be felt in the next
\nfew years. Recovery, if and when it comes, will be painfully slow
\nif we allow the capital base of the economy to be run down.<\/p>\n
The warnings presented in the ILO-commissioned report have
\nbeen voiced by other experts in the past, but this study is more
\nsolid as it comes with statistical figures produced after
\ndetailed research. Given the government's inclination to listen
\nmore to outsiders than home-grown experts, we hope the report by
\nILO -- which is a United Nations agency -- once and for all
\ninjects the sense of crisis that has been missing in the
\nadministration all along. Only then can we expect the government
\nto come up with rational policies to lift the country out of the
\ncrisis.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/a-rude-ilo-awakening-1447893297",
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"sponsor": "Okusi Associates",
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