Unemployment figures hide depth of Indonesia's despair

Rendi A. Witular, The Jakarta Post, Jakarta

The number of unemployed people increased by 400,000 to around 8.4 million during the first half of this year, the Central Bureau of Statistics (BPS) said in its latest quarterly survey.

However, independent experts say the figure does not reflect the true picture of the pressing unemployment problem in Indonesia.

The BPS survey sampled 36,000 households. The result of the survey was seen by The Jakarta Post Tuesday, but there was no explanation about the figures as the bureau has yet to complete its report.

A BPS source said the report would be published in September.

The BPS unemployment figure refers to open unemployment, which the bureau defines as the number of people categorized as part of the labor force but who have no job and are seeking work.

"This (figure) does not show the real unemployment problem," former labor minister Bomer Pasaribu said.

He said that by using the BPS figure, the country's unemployment rate would only be around 8 percent, which he said was lower than the rate in some European countries.

The labor force is defined by the BPS as: "Persons aged 15 years and over who, in the previous week, were working, temporarily absent from work but having jobs, and those who did not have work and were looking for work."

Bomer said that since unemployed people in developing nations like Indonesia were not supported by government social welfare, the number of disguised unemployed should also be taken into account to measure the true unemployment rate.

"According to my calculations, the number of unemployed in this country is between 40 million to 45 million because there are so many disguised unemployed here," he said.

Disguised unemployment is defined as the number of those in the labor force working less than 35 hours a week.

Bomer's estimate has often been cited by the press.

Noted economist Djisman Simandjuntak shared Bomer's opinion.

"The most worrying for our country is the disguised unemployment figure, since the rate is so high," he said, adding that people categorized in this group were doing any kind of job in order to survive.

Djisman said the ongoing economic and political crisis which hit the country in the late 1990s had caused many companies to completely shut down their businesses or shrink their operations, forcing many people out of work.

The number of unemployed will multiply as some 2.5 million job seekers are entering the job market every year, and an estimated 400,000 illegal Indonesian workers have just been expelled from Malaysia.

"This can really create serious social problems here," Djisman said, pointing to rising crime rate, infant mortality and social depression.

Economists have said that to absorb the huge number of job seekers, the country's economy must be able to grow at pre-crisis levels of around 6-7 percent per year.

The government has only targeted an economic growth of 4 percent for this year.

But the National Development Planning Agency (Bappenas) has said recently that the world's economic slowdown coupled with the poor investment climate at home would only allow the domestic economy to grow by three percent this year.

"Unless the country is able to attract more investors to put up money for business activities here, the problem of unemployment can not be resolved," Djisman said.

The Investment Coordinating Board (BKPM) said that foreign direct investment (FDI) during the first half of this year dropped by 42 percent to US$2.5 billion compared to the same period last year, while domestic investment plunged by 70 percent to Rp 11 trillion.

Analysts have said that the drop in investment was due to the poor investment climate due to, among other things, continuing labor conflicts, security problems, poor implementation of regional autonomy policy, the unfavorable global investment climate and corruption at all levels of government, the bureaucracy and the judiciary.

The fall in investment occurred at a time when the government managed to improve the country's macro economic condition such as slowing inflation, a stronger rupiah and lower interest rates.

The continuing labor conflict has also affected the country's export performance as foreign buyers are diverting their orders to other neighboring countries who can guarantee a timely delivery of goods.

According to data from the central labor dispute agency (P4) at the Ministry of Manpower and Transmigration, the number of laid off workers during the first half of this year reached 62,666. If this figure is annualized it already nears the 1998 figure of around 131,000, when the country first plunged into the regional economic crisis.

According to P4, most of the laid off workers come from export-oriented companies which had either shut down operations or streamlined their businesses to cope with the unfavorable economic condition.