Jobs in key sectors drop, says BPS

Jobs in key sectors drop, says BPS

Zakki P. Hakim, Jakarta

The number of jobs in key industries such as manufacturing,
construction and trade has contracted significantly as an
unfavorable labor environment has prompted companies to hire
fewer workers and cancel investment plans, according to the
latest government labor data.

The 2003 National Labor Force Survey (Sakernas) report
published by the Central Statistics Agency (BPS) also suggested
that more women quit their jobs, particularly due to rising
transportation costs.

According to the report, obtained by The Jakarta Post over the
weekend, the number of jobs in the manufacturing sector shrank by
9.76 percent to 10.93 million last year from 12.11 million in
2002.

The number of jobs in the construction and trade sectors
(retail, hotel and restaurant), declined by 3.90 percent and 5.34
percent to 4.11 million and 16.84 million, respectively.

For many years the above have been the main provider of jobs
in the formal sector, particularly in the heavily populated
island of Java.

Arif Rahman Hakim, an economist at the National Development
Planning Agency (Bappenas), said that the decline in the number
of jobs was linked mainly to widespread labor problems and
unfavorable labor regulations, which had prompted companies to
adopt capital-intensive approach instead of hiring people.

Analysts have said that labor regulations that are too
favorable to workers in terms of higher wages and other benefits
had increased costs for companies at a time when business was
slow due to weak economic growth at home and a slow recovery in
the export market.

The lingering labor conflict is also seen as one of the major
factors discouraging new investment, which in turn has caused the
economy to grow at a mere 3 percent to 4 percent per year, as it
relies heavily on domestic consumption. Such low growth is
deemed insufficient to provide sufficient jobs for some 2 million
people entering the job market each year. The economy needs to
grow at around 6 percent to 7 percent.

The labor report said that open unemployment in 2003 increased
to 9.45 percent (9.53 million people) from 9.05 percent (9.13
million) the previous year.

The report, however, said that the number of jobs in the
finance, insurance and real estate sectors increased by 30.67
percent to 1.3 million jobs. These, particularly banking,
started to recover from the impact of the late-1990s economic
crisis.

Agriculture, forestry and fisheries created about 1.5 million
new jobs last year.

Another bizarre development last year, according to the
report, is that the workforce in a country of 220 million
population declined to 100.32 million from 100.78 million.

This is in spite of the fact that the working-age population
increased to 152 million from 148.7 million people.

"This is a peculiar development," said University of Indonesia
economist Chatib Basri, adding that it was probably caused by a
rising number of women opting to stay at home and exit the
workforce.

Arif concurred, saying that rising transportation costs,
following increases in fuel prices and other costs, had
discouraged 3.5 million women (around 3.7 percent of the total
workforce) from continuing in their part-time jobs.