Nov 8, 2012

Indonesia - Indonesian workforce 'unable to fill available jobs'

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Indonesia must improve the quality of its local human resources so that more unemployed people can find jobs amid robust economic growth, a senior official says.

Deputy Finance Minister Mahendra Siregar told reporters yesterday that the poor quality of the local workforce meant that people were unable to find jobs in the growing industrial sector.

A report from the Central Statistics Agency (BPS) published this month said that unemployment dropped by only 460,000 in August on a year-on-year basis, despite growth of at least 6 per cent recorded in the same period.

Labour absorption to date has been far lower than government estimates, which have assumed that every 1 per cent of economic growth can create 450,000 jobs.

Gadjah Mada University economist Tony Prasetiantono said that the disparity between government assumptions and realised growth could be attributed to the central government's failure to develop labour-intensive sectors properly.

According to Prasetiantono, growth has been mostly driven by sectors that were not labor intensive and also required high-quality human resources. Examples of those sectors are the financial services, telecommunications and aviation sectors.

Data from the BPS showed that most of the workers in Indonesia were poorly educated.

Around 53 million workers in Indonesia, or 48.63 per cent of the workforce, have only finished elementary school. Only 10 million workers in Indonesia have a diploma or bachelor's degree. Most workers continue to work in agriculture.

However, although the agricultural sector absorbs most of the nation's workers, its growth has been relatively mild compared to the financial and service sectors, which require workers who are better educated and technologically oriented.

Based on BPS data, the agriculture and industrial sectors contributed 4.80 per cent and 5.86 per cent to 6.29 per cent growth in the first three semesters of 2012, while the financial and the telecommunications sectors contributed 7.41 per cent and 10.48 per cent, respectively.

"The government should have been able to push for more development within the manufacturing sector and open new agricultural areas, like in Papua," Prasetiantono said.

In addition, Prasetiantono said the government should start accelerating infrastructure development by launching new projects. "Infrastructure projects are usually labor-intensive as well," he said.

Separately, Aviliani, an economist from the Institute for Development of Economics and Finance, said that structure development had to be accelerated by the government within the next two years.

"As of 2014, the government is planning to implement numerous export bans to boost industrialisation in the country. Industrialisation will surely absorb more manpower and create new jobs, but it will not happen if we fail to properly develop our infrastructure to lure investors to invest here," she said.

"We can only achieve the quality growth that we have been dreaming of by properly developing infrastructure, which will create massive multiplier effects in society," she added.

Hans David Tampubolon

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