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Unemployment rate stuck at over 10%: BPS

Jakarta Post - June 2, 2006

Jakarta – The persistent weakness in Indonesia's economy has resulted in open unemployment remaining stubbornly high, with the number of people out of work in February compared to the same month last year staying unchanged at more than 10 percent of the workforce.

The Central Statistics Agency (BPS) reported Thursday that the number of people in jobs in February increased by only 300,000 to 95.2 million from the same month last year, which is still less than the natural increase in the country's labor force.

The BPS said that 900,000 people lost their jobs from February through November 2005, although 1.2 million of then found new jobs from November through February of this year.

The total number of people in Indonesia between the ages of 15 and 64 who were suitable for jobs in the formal sector had risen by 500,000 to 106.3 million by the end of February compared with a year ago. Indonesia has a population of some 220 million people.

As a result of this natural increase, no headway was made in reducing unemployment, which stood at 10.4 percent of the total workforce in February – a slight increase over the 10.3 percent recorded in February last year. The number of people working less than 35 hours a week also rose slightly to 29.9 million, or 31 percent of the total workforce.

"The 900,000 jobs lost from February to November 2005 shows that the year's fuel price hikes in March and October severely affected employment, although the situation then improved gradually up to February," the BPS said in its report.

The unemployment rate rose to 11.2 percent in November last year as Indonesia's consumption-driven economy stumbled under the twin strains of rising inflation and higher interest rates resulting from the fuel price hikes.

The economy slowed down again in this year's first quarter, growing by only 4.59 percent compared with 6.2 percent during last year's first quarter. It also appears now that a 1 percent growth rate now translates into only some 200,000 jobs compared with 400,000 in the past as investments nowadays tend to be more capital intensive than labor intensive.