Over 1 million to lose job in 2004: Apindo

Over 1 million to lose job in 2004: Apindo

Sandy Darmosumarto, The Jakarta Post, Jakarta

A leading business association warned on Monday that more than
one million workers would lose their jobs this year as most
businesses would remain in the doldrums, thanks to ineffective
government policies and cutthroat competition.

New investors, who are expected to create more jobs, will stay
away from the country, scared by uncertainties resulting from the
general elections, said the Indonesia Employers' Association on
Monday, which groups the nation's leading businessmen.

The grim prediction by the association came as the government
continued boasting about the country's improved macroeconomic
condition and the Jakarta Stock Index sharply rose to close at a
historic high on Monday.

Association chairman Sofjan Wanandi said that all sectors of
the economy, other than those related to the election, would face
potential trouble from the elections.

Some operations could be disrupted, which will cause many
firms to reduce their labor force.

Labor-intensive sectors, such as forestry and textiles, would
lay off many of their employees. Around 500,000 to 600,000
forestry workers were expected to lose their jobs this year, a
drastic rise from the 100,000 to 150,000 layoffs in 2003, while
in textiles, around 100,000 to 150,000 new layoffs were expected
to occur, Sofjan said.

A similar trend was expected in the shoe industry, he said.

Sofjan pointed at ineffective government regulations,
reduction of logging quota and the government's inability to deal
with illegal logging activities as some of the factors
contributing to the expected rise in the number of logging firms
closing down.

In the textile sector, the domination of low-priced imported
products from low-cost producers such as China and Vietnam has
caused local production to decline. Local firms are incurring
high production costs and cannot compete with low-cost
counterparts in competing countries.

Additionally, Sofjan said, trading activities would also slow
down as many dealers were unwilling to stock products during the
election. The low trading volume would force businesses to cut
production.

He predicted they would reduce utilization of their production
capacity by around 10 percent to 15 percent.

He commented that the issue of unemployment should be a
priority on the agenda of the incoming government.

"Without first addressing unemployment, we will not be able to
address any issues, including national security and political
instability," he said.

Quoting government data, Sofjan said there were currently
around 40 million underemployed and unemployed workers in the
country, including 10.5 million unemployed. In the last three
years, around one million people lost jobs annually, about half
of whom had become street vendors.

Despite its achievement in improving the country's
macroeconomic condition, the government has admitted that there
had been slow progress in the fight against poverty and
unemployment, saying it was the result of difficulties in
translating a sound and improving macroeconomic climate to the
various macroeconomic sectors.

In the past two years or so, most of Indonesia's macroeconomic
indicators have improved, but it has only helped drive economic
growth to a relatively stagnant 3 percent to 4 percent.

Such growth is insufficient to absorb a net influx of 2.5
million people entering the job market annually, meaning that the
country's unemployment rate has been increasing.