Ary Hermawan, Jakarta – While last year's moderate economic growth and the establishment of a more stable macroeconomic environment were positive accomplishments, they were still insufficient to start putting a dent in unemployment and reduce poverty, the Asian Development Bank (ADB) says.

The annual report, issued by the Manila-based donor Tuesday, says that the 5.5 percent growth rate posted in 2006 was "inadequate to provide more jobs".

"It has not been able to increase the number of new jobs to meet the challenge of a growing labor force," the bank's country director, Edgar A. Cua, said during the report's launch.

The moderate growth in the economy since 2001, the report said, had not been enough to block a persistent rise in the unemployment rate from below 9 percent of the total workforce in 2001 to an estimated 10.3 percent last year.

Taken together with more than 20 percent underemployment, the report says that about 42 percent of Indonesians live on between $1 and $2 a day, leaving them vulnerable to adversities such as ill health and natural disasters.

"Jobs are needed. So, it's not just about pursuing a higher growth rate, but how to create jobs," Edgar said. "We would like to see the growth rate being accompanied by full employment."

He stressed that "while macroeconomic stability has been restored, much remains to be done to combat unemployment and poverty."

Coordinating Minister for the Economy Boediono promised earlier this month to cut unemployment by strengthening the National People's Empowerment Program (PNPM), and expanding the opportunities for Indonesian migrant workers to gain jobs abroad.

A string of disasters around the country has also contributed to the number of new job seekers in 2007, which normally amounts to more than 2 million per annum.

At least 20,000 people lost their jobs due to the Sidoarjo mud volcano disaster in East Java, 600 due to the East Nusa Tenggara earthquake, 15,000 due to the West Sumatra earthquake, 60,000 due to the Yogyakarta earthquake, and about 223,007 due to the floods that hit Jakarta in February, Manpower and Transmigration Minister Erman Suparno said earlier.

Accordingly, the ADB said that the foremost challenge for the government "is to accelerate growth to a level that can create enough jobs to hold back the tide of unemployment and underemployment, and reduce the vulnerability of the poor."

The bank says it expects the economy to grow by as much as 6 percent this year and 6.3 percent in 2008 on the back of surging consumption and investment nourished by a bank-lending revival amid declining interest rates.

Inflation is expected to remain under control at 6 percent and 6.1 percent for this year and 2008, respectively.