Desy Nurhayati, Jakarta – Experts have criticized the government for claiming they will continue to drive down unemployment and poverty rates despite data showing the global financial crisis is due to hit Indonesian industries hard and lead to mass layoffs.
The Manpower Ministry recently announced more than 42,000 workers had been laid off as labor-intensive export industries shut down operations amid the global economic turmoil.
The Indonesian Rattan Furniture and Craft Producers Association (AMKRI) has announced the industry may have to lay off nearly 35,000 workers in the early part of this year while the Indonesian Textile Association (API) predicts around 120,000 layoffs will occur next year.
Chairman of the Indonesian Employers Association (Apindo) Sofyan Wanandi said the global crisis had forced industries to reduce their production capacities by up to 30 per cent, meaning at least 500,000 workers could be jobless by mid-2009.
Despite the gloomy forecast from business experts, the government has drawn on entirely separate data to optimistically claim they will continue to drive down unemployment and poverty rates this year after having reduced levels in 2008.
Coordinating Minister for People's Welfare Aburizal Bakrie said last week Indonesia's unemployment rate dropped from around 10.55 million in 2007 to 9.43 million people in 2008.
Despite warnings, the government outlined its ambitious target to reduce the unemployment rate to seven million people and slash poverty from 35 million people to 31 million people.
"The targets are unrealistic and too ambitious. As part of the global economic system, the government should have considered the external factors that are guaranteed to affect Indonesia's financial condition," Maxensius Tri Sambodo of the Indonesian Institute of Science (LIPI) said.
Maxensius argued unemployment rates will actually escalate due to mass layoffs, which will in turn see a spike in poverty levels. Even though subsidized fuel prices were slashed twice last month, and the government is considering further cuts depending on global prices, the impacts of the crisis will be felt as unemployment rises.
"Poverty rates will increase, not because of commodity prices but due to massive layoffs and loss of income. This in turn will weaken consumer spending," he said, adding that a government failure to successfully enact anticipatory measures would cause an even greater downturn.
Aburizal said the government's various poverty-reduction programs, including direct cash aid (BLT), the Mandiri National Community Empowerment Program (PNPM Mandiri) and credit for small and medium enterprises (KUR) would help keep unemployment and poverty rates low.
Drajad Wibowo, an expert and member of the House of Representative's Commission XI overseeing economic issues, said the government's targets were a little over-zealous but were calculated using dubious and unreliable data from the Central Statistic Agency (BPS). "You can play around with data but not with reality," he said.
Drajad said state programs such as KUR and PNPM might aid in boosting the government's political image but would provide few remedies for the economy.
With the elections fast approaching, issues of poverty and unemployment have been capitalized by the government to draw voters while opposition groups have politicized the situation to attack the incumbent government.
An Indo Baramoter poll conducted last month however revealed many voters were pessimistic the elections would have any impact improving economic conditions.
According to the survey, around 60 percent of respondents were unsure whether the elections would reduce unemployment rates while nearly 50 percent did not believe the elected government could decrease the price of basic commodities.