Indonesia's jobless rate 'serious'

JAKARTA (JP): Minister of Manpower Abdul Latief, disclosing the official unemployment rate as ranging from four and 40 percent -- depending on the definitions used, warned yesterday that Indonesia is facing a "very serious unemployment problem."

Latief told reporters, after reporting to President Soeharto at Merdeka Palace, that he plans to call for a series of coordinating meeting with other cabinet ministers, to discuss Indonesia's unemployment issue.

He explained that the government is now using three different definitions in determining the unemployment rate in the country.

The first, which has been used all this time, defines unemployment as those who work less than one hour a week. Using this definition, Indonesia's unemployment rate in 1994 was put at 3.65 million, or 4.37 percent of the total work force.

The second definition puts unemployment as those who work less than 15 hours a week. In 1994, there were 11.15 million people, or 13.33 percent of the work force, who fell into this category.

The third definition brings together anyone who works less than 35 hours a week as unemployed. Under this category, the unemployment rate is put at 33.35 million, or a staggering 39.85 percent of the work force.

Latief gave optimistic projections, saying that the unemployment rate of any of the definitions above will decline, based on the assumption that Indonesia's economy will perform well in the next decade or so.

He said that his planned coordinating meetings would take a "serious look" at the efforts of bringing down the unemployment rate. "We're counting on all governors to solve the unemployment problem in their respective provinces."

The key to solving Indonesia's unemployment problem is to encourage the growth of small and medium enterprises, which together, still account for the largest number of jobs available, he said. "The government will offer them incentives to grow."

The government is also revamping its vocational training centers, to better suit the needs of small and medium enterprises, he said.

One of the most serious problems confronting small and medium enterprises is their poor management, particularly at the middle level, Latief, a successful businessman recruited into the cabinet by President Soeharto in 1993, said.

Latief also reported yesterday to the President on ambitious plans to expand the business of PT Astek, the state-owned workers insurance company he oversees, into other fields of business, using its huge funds accumulated from insurance premiums.

Current projections of Astek's business activities and revenues, he said, would make the company one of the largest and most modern insurance companies in Asia.

Astek plans to set up subsidiaries active in profitable businesses, such as pulp and plywood, he said, stressing that, from a business point of view, these two areas are considered among the safest.

Latief said he was optimistic that Astek's annual revenue from its Workers' Social Insurance plan premiums will increase from Rp 0.9 trillion (US$390 million) this year, to Rp 9.83 trillion in the year 2000, Rp 28.75 trillion in 2008 and 61.67 trillion by 2018.

Its accumulated investment fund will grow from Rp 3.20 trillion this year, to 14.92 trillion in 2000 and 706.33 trillion in 2018.

This projection is based on the assumption of an ever growing number of participants in the insurance plan.

PT Astek has launched a vigorous campaign to ensure that companies register all their workers for the social security program, something which is compulsory under a 1992 law, although the government has given companies time to adjust to the legislation.

To prepare Astek divest its business, the company has been undergoing a "re-engineering" process in its organization and management, the minister said.

Latief added that the President has already approved Astek's expansion plans. (emb)