Aditya Suharmoko, Jakarta – Contrasting figures between shrinking unemployment and growing underemployment suggest the country's investment climate has yet to support the growth of the formal sector, an economist says.
The Central Statistics Agency (BPS) reported last week unemployment dropped 10.6 percent to 9.43 million people in February compared to a year earlier, while underemployment rose from 30.24 million to 30.64 million.
The chief economist at the Indonesian Chamber of Commerce and Industry, Faisal Basri, said the rising number of underemployed indicated the country's employment condition was of poor quality.
"A decrease in the unemployment number is not always a good indication, especially if it is followed by a rising underemployment rate and a burgeoning number of people engaging in the informal sector," Faisal said.
He said the government should focus on developing the manufacturing industry, which could absorb more workers and provide better salaries and job certainty.
The BPS defines underemployment as those working less than 35 hours a week. It conducts its employment survey twice a year, in February and August.
BPS director for labor force and population statistics, Wendy Hartanto, said the public service and trade sectors absorbed more employees in the past year. "The public service sector includes working as maids, while the trade sector includes working in shops or opening stalls," Wendy said.
A busker in Grogol, West Jakarta, said his daily income was about Rp 30,000 (US$3.22) on average. With a five-day work week, he makes about Rp 660,000 a month, which he spends mostly on food. "It is hard for me to save my money," said Daniel, 23, who has worked as a busker for almost a year.
Daniel, who used to work as a repairman at a shop in Atrium Senen, Central Jakarta, was forced to find new work after the shop went out of business.
A newspaper seller in Slipi, West Jakarta, said he made between Rp 30,000 and Rp 40,000 a day. "It is a tough job, but you need to keep on working," said Supriyatno, 30, who has been selling newspapers since he was in elementary school.
Supriyatno said he spent Rp 10,000 of his daily income for his daily needs, and the rest for his family – a wife and two children below the age of five. He said he could save little from his income.
Outgoing Coordinating Minister for the Economy Boediono said last week it was normal for workers to move between the formal and informal sectors, at least until the country's economy reached a stable growth of between 6.5 and 7 percent annually.
Last year, the country's economy grew by 6.32 percent. This year, the Finance Ministry has estimated it will grow only by 6 percent due to the global economic slowdown.
Businesspeople have repeatedly said a stronger formal sector will help reduce the number of people working in the informal sector, and in turn lessen the poverty rate.