A million rural workers get jobs in formal sector

A million rural workers get jobs in formal sector

Zakki P. Hakim, The Jakarta Post, Jakarta

Despite constantly rising unemployment, the country last year saw
more of its workers enjoying regular incomes and job security as
an increasing number of rural workers moved into the formal
sector, according to the latest government labor data.

The 2004 National Labor Force Survey (Sakernas) revealed that
at least 1.19 million jobs were created last year in the formal
sector in rural areas, spread evenly between manufacturing,
trade, transportation and services.

Rural areas have apparently been able to develop the
manufacturing sector despite the continuing trend of job losses
in industry overall.

The report, published by the Central Statistics Agency (BPS),
shows that the overall manufacturing sector lost about 430,000
jobs last year so that it was only able to provide 11.07 million
jobs, compared to 11.50 million in 2003.

Meanwhile, the manufacturing sector in rural areas created at
least 226,000 new formal jobs last year, according to the report,
which has been obtained by The Jakarta Post.

The manufacturing sector in rural areas employed 2.07 million
workers last year, compared to 1.84 million in 2003.

The positive manufacturing trend in rural areas, which was
followed by similar positive trends in the trade, transportation
and services sectors, could be attributable to the strong
performance put in by small and medium enterprises (SMEs).

Aden Gultom, head of the BPS workforce sub-directorate, said
that SMEs, such as household industries, could be the key drivers
of job creation in rural areas.

"But we need further studies to confirm this," Aden told the
Post on Tuesday.

SMEs serve as the backbone of the country's economy. The
government and the United Nations Industrial Development
Organization (UNIDO) say that 99.9 percent of Indonesia's total
manufacturing establishments are SMEs.

SMEs provide 99.5 percent of jobs, 57 percent of goods and
services, and contribute 19 percent of total export value.
However, the government says that only 13 percent of the 42
million SMEs are capable of accessing banking and financial
services.

The government hopes to raise SME productivity by 6 percent
per year, increase employment by 3 percent per year per sector,
boost the export value of SME products by between 5.2 percent and
9.8 percent per year, and cultivate the emergence of new
entrepreneurs.

Overall, the formal sector created 1.61 million new jobs last
year, with three-fourths of these being in rural areas.

Jobs in the formal sector increased to 28.43 million last year
compared to 26.82 million in 2003, while the number of workers
employed in the informal sector fell to 65.30 million from 65.99
million in 2003.

Aden, however, suggested that the increased number of jobs in
the country's formal sector could also be attributed to a civil
service recruitment drive last year.

He further said that the government might want to recruit more
civil servants in order to achieve its target of reducing the
open unemployment rate to 8.9 percent next year and 6.7 percent
in 2008. Last year, the government recruited about 200,000 new
civil servants nationwide.

The report said that the open unemployment rate rose from 9.67
percent in 2003 to 9.86 percent last year, with the total
workforce standing at 103.97 million.

With an average of 2.5 million new workers entering the job
market each year (not one million as reported earlier),
Indonesia's economy needs to expand by at least 6 percent to be
able to provide jobs for them all.

The government is thus hoping for economic growth of 6.1
percent next year, following estimated growth of 5.5 percent this
year.

Formal & informal jobs in 2003-2004

2003* 2004

Formal Informal Formal Informal
Urban 18,645 18,632 18,875 18,384
Rural 8,357 47,357 9,551 46,912
Total 26,821 65,989 28,426 65,296

* revised 2003 Sakernas figures
Source: Central Statistics Agency