Unemployment figures hide depth of Indonesia's despair

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.