Unemployment explosion imminent, analyst warns

National News - August 19, 2006

Ridwan Max Sijabat, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono's claim that his administration has made substantial inroads against unemployment is misleading and fails to recognize the urgent need for job creation, an analyst said Friday.

Former manpower minister Bomer Pasaribu argued there was actually the imminent danger of an unemployment explosion unless concerted efforts were made to develop the real sector.

"I don't know why the President claimed to have successfully reduced the unemployment rate when the number of poor families has been on the rise," the lecturer in labor economy at the Bogor Institute of Agriculture told The Jakarta Post here Friday.

"The President has acknowledged the number of poor families has increased to 19.2 million so far this August from 17.8 million in January."

In Wednesday's state-of-the-nation address before the House of Representatives, the President claimed the government succeeded in bringing down the open unemployment rate from 11.2 percent in December 2005 to 10.4 percent.

The director of the Center for Labor Development Studies said that with the double digit unemployment rate, the country would be saddled by soaring jobless and poverty numbers.

He feared the situation would worsen in the next three years unless economic policy was revised in favor of the poor.

"The poverty explosion is indicated by the increase in the number of poor people from 17.8 million in January to 19.2 million in August, or almost 38 percent of the total 52.3 million families, meaning the unemployment rate is also increasing because poverty and unemployment are two sides of the same coin. And this is a serious problem."

Bomer argued unemployment would continue to increase because the Yudhoyono administration had failed to make major breakthroughs to attract more foreign investment in the real sector and accelerate economic growth.

To cope with unemployment and poverty, he added, the government should promote a pro-poor economic and investment policy, as well as revitalize the agriculture and marine sectors and small and medium-size enterprises to generate more jobs and income for poor citizens.

"Almost all irrigation facilities in rice-producing areas in Java and Sumatra, which were constructed during the colonial and the New Order eras, need major renovation, while the marine sector which has great potential to create job opportunities has yet to be developed."

Bomer was pessimistic the government would be able to create 2.8 million new jobs in 2007 with the Rp 43 trillion allocated to help small and medium enterprises.

The secretary-general of the Indonesian Employers Association (Apindo), Djimanto, also believed it would be difficult for the country to achieve its 6.3 percent growth target and job creation goals with the uncertain investment climate and ineffective leadership.

"The unemployment rate will increase because few of the 2.3 million new labor force could be absorbed by the job market."

The targets could only be reached if national leaders were firm in taking concrete actions to repair the investment climate and encouraged all employees to work harder, Djimanto said.