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.