Growth seen as adequate for new job-seekers

Growth seen as adequate for new job-seekers

Urip Hudiono, The Jakarta Post, Jakarta

With the economy expected to grow by 6 percent this year, the
government still faces the formidable task of reducing the
unemployment rate and creating enough jobs to absorb those people
entering the workforce for the first time, an economist said.

An average of 2.4 million enter the workforce each year.

Commenting on a report from the Central Statistics Agency
(BPS) indicating that unemployment continued to rise, Muhammad
Chatib Basri of the University of Indonesia said on Saturday that
only after next year could the economic growth manage to absorb
all first-time jobseekers.

"The best thing the government can do to improve the economy
is to slow down the rising unemployment rate," he told The
Jakarta Post. "The country's investment climate in particular
needs to be fixed to stimulate the creation of more jobs."

The government's pledge to reduce unemployment was again
questioned when the BPS reported last week that the open
unemployment figure increased by 600,000 people during the six-
month period ending in February.

The country's workforce increased by 1.8 million people, from
104 million last August to 105.8 million in February, but the
number of people employed only rose by 1.2 million, from 93.7
million to 94.9 million.

The number of underemployed workers -- those working less than
35 hours a week -- also rose, from 27.9 million, or 29.8 percent
of the total number of people employed, to 29.6 million, or 31.2
percent.

Explaining the data in the report, which was taken from the
agency's 2004 and 2005 National Labor Force surveys, BPS chief
Choiril Maksum said the unemployment problem arose because the
country's economic growth was driven more by capital-intensive
rather than labor-intensive investment.

The 2004 survey showed the open unemployment rate rose to 9.86
percent last year from 9.67 percent in 2003. The government hopes
to push this figure down to 9.6 percent next year by boosting the
country's economy through labor-intensive investment and export
activity.

Chatib, an expert staff at the Office of the Coordinating
Minister for the Economy, said the BPS report was not as
discouraging as it might appear, explaining that it took time
before investments began to absorb workers.

Giving an example of establishing a factory, Chatib said it
took time to obtain the investment licenses, build the factory
and prepare the production process, before finally hiring
workers.

"I think the BPS figures are still realistic ... and the
government can still reach its target by the end of the year," he
said.

"The government, however, still has to work hard to improve
the country's investment climate and push for 7 percent economic
growth, to absorb new workers as well as to reduce the
accumulated number of unemployed from previous years."

Indonesia's economy grew 5.13 percent last year and 6.35
percent during this year's first quarter. Every 1 percent of
economic growth translates roughly to the creation of some
400,000 new jobs.

The government has launched several major infrastructure
investment projects, as well as an agriculture revitalization
program, to kick start labor-intensive activities in the country.