Employment Stagnation

Kompas/Jumarto Yulianus

Jobseekers crowd a career expo at the Sultan Suriansyah building, Banjarmasin, South Kalimantan. The South Kalimantan Job Fair 2017presented 2,500 job opportunities from 40 companies on Oct. 17 to 19. The regional administration held the exhibition again as part of an effort to reduce unemployment in South Kalimantan.

The slow pace of reducing unemployment and poverty levels has become a critical problem that the government has not been able to solve over the last few years.

Unemployment remains at about 7 million people, or 5.5 percent of the workforce. Data from the Central Statistics Agency (BPS) even shows the unemployment rate as having increased from 7.03 million people in August 2016 to 7.04 million people in August 2017, as reported by Kompas on Nov. 13.

The main reason for this is that workforce growth is not accompanied by the economic capability to absorb it. The low level of absorption occurs in line with the drop in the growth elasticity of employment. In 2014 every one percent of economic growth was capable of absorbing 450,000 workers. Since 2012 it could absorb fewer than 200,000 workers.

With an average economic growth rate of 5 percent and a labor market growth of 3 million people per year, it is difficult to reduce unemployment significantly, except unless a breakthrough in job creation policies is achieved to provide productive job opportunities.

Therefore, in addition to boosting economic growth, we appreciate the government\'s measures to focus on the problem of unemployment and job creation in 2018 by ordering a number of ministries to embark on various labor-intensive and empowerment programs. With these measures it is expected there will be reduced unemployment, poverty and inequality.

We worry there will be a social time bomb without any serious effort by the government to increase employment, because besides the rising trend of educated unemployment in urban areas, the sectors experiencing shrinkage of employment absorption are those which have so far absorbed a large number of workers, especially unskilled labor.

Reflecting on the mismatch between job opportunities and workforce so far, created jobs should also be focused on pockets where they are urgently needed by taking into consideration the demographic structure of the workforce as well.

By sector, the increase of job absorption takes place in the areas of services, manufacturing, trade, transportation and finance. On the contrary, a number of sectors show a trend of falling employment, especially in agriculture and mining. The slow rate of absorption also takes place in the construction sector even though there are massive infrastructure development projects by the government.

Falling growth and absorption of workforce in sectors like agriculture on one hand illustrates shifts in the national economic structure, but on the other hand is worrying because this sector is still how most rural unskilled workers make their living.

Steadily decreasing employment in the agricultural sector, without being accompanied by growth in other sectors, will further aggravate rural poverty, as is reflected from the index of depth and index of poverty severity, which are twice as much as those in urban areas.