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.