Jobs numbers drop due to unfavorable labor regulations

Jobs numbers drop due to unfavorable labor regulations

Zakki P. Hakim, The Jakarta Post, Jakarta

The still unfavorable labor environment continues to be the main
cause for the declining number of jobs in key sectors, especially
manufacturing, all of which has increased the unemployment rate,
according to the latest government labor data.

The 2004 National Labor Force Survey (Sakernas) report
published by the Central Statistics Agency (BPS) showed that the
number of jobs in the manufacturing sector shrank by 3.6 percent
to 11.07 million last year from 11.50 million in 2003.

According to the report, obtained by The Jakarta Post, the
open unemployment rate rose to 9.86 percent last year from 9.67
percent in 2003.

The absolute number of unemployed had expanded to 10.25
million in 2004 from 9.94 million in the previous year.

BPS data shows that the country had 1.22 million new job
seekers in 2004 to put the year's total workforce at 103.97
million compared to 2003's 102.75 million.

The National Development Planning Board (Bappenas) chairwoman
Sri Mulyani Indrawati said the decline in the number of jobs was
linked mainly to unfavorable labor regulations, which had
discouraged firms from hiring more people.

"The labor regulations are still too rigid," she told the Post
on Monday.

She went on to add that such labor regulations were good for
workers in terms of higher wages and other benefits, but it
eventually increased costs for firms, however, business has been
relatively slow in the country and not able to compensate.

The report, however, said that the number of jobs in the
agriculture sector (including forestry and fishery) had declined
to 40.61 million last year from 43.04 million in 2003.

But jobs in the mining and quarrying sector rose from some
733,000 in 2003 to 1.03 million last year. The construction
sector had 4.54 million workers last year, absorbing an
additional 486,000 laborers.

In wholesale and retail trade as well as restaurants and
hotels, this sector last year absorbed 1.87 million workers, for
a total of 19.12 million jobs in 2004.

In April, Mulyani said the government had hoped to reduce open
unemployment to 8.9 percent by 2006 by boosting economic growth,
through increasing exports and investments by 5 percent and 1.2
percent next year, respectively.

According to BPS, Indonesia's exports reached US$75 million in
2004, while foreign direct investment reached $10.27 million.

The government expects economic growth to hit 6.1 percent next
year, following an estimated 5.5 percent growth this year.

With an average of more than a million new workers entering
the job market each year, Indonesia's economy needs to expand by
at least 6 percent to be able to absorb them.

BPS has revised the 2003 Sakernas report in February, after it
was realigned to accommodate surveys conducted by the committee
for voter registration and continuous census (P4B) during the
2004 general elections.

Aden Gultom, head of the BPS workforce sub-directorate, said
the revision changed the total working age population in 2003 to
151.41 million from the earlier 152 million.

The 2003 Sakernas report initially suggested that the
workforce in that year stood at 100.32 million, declining from
100.78 million in 2002.