Economic slowdown drives up Indonesia's unemployment rate

JAKARTA - Indonesia's unemployment rate reportedly rose in August on the back of the economic slowdown, as shown by the latest data from the Central Statistics Agency (BPS).

In a report published on Wednesday, the BPS announced that the open unemployment rate (TPT) surged to 6.25 per cent as of August, higher than the 5.92 per cent posted in February and 6.14 per cent recorded in August 2012.

The report also said that the total number of working people had declined to 110.8 million in August from 114.02 million in February. Compared year-on-year, the figure had dropped by 10,000.

Most workers were recorded in the agriculture sector, while the rest worked in trade, social services, industry, construction, transportation, finance and other sectors.

Meanwhile, the number of the unemployed climbed to 7.39 million in August from 7.17 million in February and 7.24 million in August last year.

BPS head Suryamin said that the economic slowdown had negatively affected employment in the country and, at the same time, there had been an increase in the labour supply, thanks to a higher number of people qualifying for the workforce age limit.

Data from the BPS revealed that the amount of people who qualified for the workforce stood at 176.66 million as of August, up from 173.93 million in the previous year.

In terms of education, the vocational school graduate segment recorded the highest TPT rise, up by 3.51 per cent to 11.19 per cent within the February to August period, followed by university graduates, college graduates and high school graduates.

Labour analyst Payaman Simanjuntak attributed the higher TPT to the declining competitiveness of local industries as they were not able to compete with imported goods, which inundate the country.

"They cannot afford purchasing raw materials either as most of them are imported and expensive," he said. In the end, companies were forced to lay off their employees, according to Payaman.

He warned that the TPT would continue to rise in 2014 if the government failed to reduce imports, curb contraband and promote local businesses, including informal ones, as more than 50 per cent of workers were reported in the informal sector.

The BPS' results were announced amid widespread labour strikes, in which workers demanded higher minimum wages as well as the elimination of contract employment and the outsourcing system.

Data from the Manpower and Transmigration Ministry said that as of Wednesday, the administrations of 22 out of 34 provinces had already set their minimum wage limit for 2014.

Separately, Suhartono, the ministry's spokesman, said that the higher TPT was caused by the mismatch between the workforce's competencies and market demand as well.

He said the government was currently preparing a job creation programme to absorb the unemployed by implementing five strategies that would include developing workforce skills through training, helping the workforce set up small and medium enterprises and carrying out an emergency job creation programme.

"We are optimistic that we can reduce the number of unemployed citizens in our country gradually. We want to reduce the [TPT] figure to 5.1 per cent by the end of 2014," he said, adding that it would also collaborate with private sectors to channel them to related industries across the country.