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Picture of labor force conditions in indonesia

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Picture of labor force conditions in indonesia

Picture of labor force conditions in indonesia

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  • 1. “Picture of Labor Force Conditions in Indonesia” One of the macroeconomic concern and problem that government has to handle is theunemployment. Unemployment in the simple term is someone who does not have a job butare looking for one. Thus, the number of unemployment directly reflects the prosperity andthe performance of economy of a country; it also shows the condition of job opportunitiesand absorbing rate of labor force. In Indonesia, the number of labor force increase togetherwith the increasing number of population. Figure 1. Labor Force Condition in Indonesia (in Millions) Source: Central Bureau of Statistics From the graph above, it can be seen that the number of labor force rise graduallyfrom 106,3 million in February 2006 to 119,4 million in February 2011. We can also see thatjob opportunities grow on average 1,58 % each year. This condition was good because fromFebruary 2006 to February 2011 there were additional workers about 16,08 million. On theother hand, from February 2006 to February 2011 unemployment rate could be reduced to6,80 %, or approximately 2,98 million unemployment on aggregate. As can be seen that thenumber of unemployment fell from 11,1 million in February 2006 to only 8,12 million inFebruary 2011. Unemployment rate in 2006 was about 10% with respect to labor force, then itdeclined to around 9% in 2007 and to 8,40% in 2008. This decreasing rate-trend continuallyhappened in 2009, 2010, to February 2011, which was about 7,90%, 7,40%, and 6,80%respectively. Page 1 of 4
  • 2. Figure 2. Unemployment Rate from February 2006 to February 2011 (%) Source: Central Bureau of Statistics According to the picture, it can be said that government could administer his programs in reducing number of unemployment. Many efforts have been done, such as opening new job opportunities together in cooperation with private sectors, and encouraging society to build their own business as entrepreneurs. Government also provides financial assistance to help people in developing their business through credit with lower interest rate. Table 1. Composition of Work Force in All Sectors (in Millions) Feb- August- Feb- August- Feb- August- Feb- August- Feb- August- Feb-No Industrial Origin 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 20111 Agricultural 42,3 40,1 42,6 41,2 42,7 41,3 43 41,6 42,8 41,5 42,47 Mining and2 0,9 0,9 1 1 1,1 1,1 1,1 1,2 1,2 1,3 1,41 Quarrying Manufacturing3 11,6 11,9 12,1 12,4 12,4 12,5 12,6 12,8 13,1 13,8 13,71 Industry Electricity, Gas, and4 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 Water Supply5 Construction 4,4 4,7 4,4 5,3 4,7 5,4 4,6 5,5 4,8 5,6 5,58 Trading, Hotel, and6 18,6 19,2 19,4 20,6 20,7 21,2 21,8 21,9 22,2 22,5 23,24 Restaurant Transport and7 5,5 5,7 5,6 6 6 6,2 5,9 6,1 5,8 5,6 5,58 Telecommunication8 Financial 1,2 1,3 1,3 1,4 1,4 1,5 1,5 1,5 1,6 1,7 2,069 Public Services 10,6 11,4 11 12 12,8 13,1 13,6 14 15,6 16 17,03 Source: Central Bureau of Statistics Page 2 of 4
  • 3. Based on the composition, it can be clearly highlighted that agricultural sector absorb the biggest workforce with around 42,47 million workers in February 2011. This number had increased from 42,3 million workers in February 2006 or it can be said that there were additional workers about 170 thousand. Interestingly, the numbers of workers in this sector have tendency to decrease in every period of February to August; then it increased in the period of August to February. This condition surely happened because agriculture is correlated with harvesting time (means increasing employment) and waiting time. The second biggest sector is trading, hotel, and restaurant which was covered about 23,24 million workers in February 2011. This proportion rose from 18,6 million in February 2006 or in other words, there were additional workers about 4,64 million in this industrial origin. Electricity, gas, and water supply remained stable with about 0,2 million workers from February 2006 to February 2011. It could be sum up that additional employee from February 2006 to February 2011 in mining and quarrying industrial was about 0,51 million, in manufacturing industry reached 2,11 million, construction approached 1,18 million, financial sector around 0,86 million, Public services roughly 6,43 million, and the lowest was transport and telecommunication with just about 0,08 million or 80 thousand workers. Agricultural sector still play a role as the primary sector that supposed to take in the labor force. Industrial origins that use many sophisticated machines and technology have absorbing rate of labor force lower than the others. Table 2. The Percentage of Labor Force According to the Level of Education < Primary Junior High Senior High Vocational Year Labor Force Diploma > University % School School School SchoolAugust 2008 Working 53,96 18,57 14,04 6,59 2,80 4,05 100,00 Unemployment 28,18 21,01 25,58 15,00 3,86 6,37 100,00February 2009 Working 53,05 18,99 14,48 6,88 2,56 4,04 100,00 Unemployment 28,30 22,19 23,04 14,45 5,25 6,77 100,00August 2009 Working 52,64 18,49 13,90 7,86 2,66 4,44 100,00 Unemployment 24,21 19,76 27,58 15,70 4,92 7,83 100,00February 2010 Working 51,50 18,90 14,55 7,77 2,69 4,60 100,00 Unemployment 24,77 19,29 24,57 15,56 6,26 9,54 100,00August 2010 Working 50,38 19,07 14,71 8,20 2,79 4,85 100,00 Unemployment 25,97 19,97 25,83 14,37 5,33 8,54 100,00February 2011 Working 49,53 19,07 14,70 8,74 2,98 4,98 100,00 Unemployment 23,66 22,21 27,90 13,32 5,35 7,55 100,00 Source: Central Bureau of Statistics Page 3 of 4
  • 4. From the table, it can be seen that the biggest percentage of workforce that workingbased on the level of education is those who had in primary school level or below withaverage 51,48%. The second biggest percentage is those who had in junior high school level(with average 18,85%); then followed by senior high school level with average 14,40%. Thephenomena of higher number of workers with lower education level could be assumed thatthey tend to accept to work in any sectors and to work with lower wage, which is why theycould present in all industrial origins. On the other side, it could also be assumed thatcompany only use and exploit many workers with lower level education. The percentages of unemployment in group of diploma and university level compareto them (in same level of education) who are working are still higher. On average, those whoworking were about 4,49 million less than those who were not working (unemploymentgroup) with approximately 7,77 million. Unemployment in group of diploma from August2008-February 2011 rose to 1,49 million, while unemployment in group of university alsoincrease from 6,37 million in August 2008 to 7,55 million in February 2011 or in other wordsthere was an additional number of unemployment around 1,18 million people. This picture is a major problem and paradoxical situation for government amid effortsto encourage people to take higher education. Government argues that in higher level ofeducation, labor force could develop their skill and competence; also it can increase thequality of human resources in Indonesia. Some economists even said that it is important tohold human resources to stay in school because it could reduce labor supply in the labormarket. However, government should think hard to provide more job opportunities for themwho are in group of diploma and university, in which the number of unemployment hasreached 7,55 million. Page 4 of 4

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