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.