Camelia Pasandaran – Labour relations problems are holding back the growth of Indonesian industry, Manpower and Transmigration Minister Muhaimin Iskandar said on Friday.
Muhaimin said industries across Indonesia were having more trouble than ever fixing their already strained relationships with workers, mainly over dodgy work contracts, outsourcing and severance payments.
"These are the three issues causing the stagnancy in industrial growth," Muhaimin said at a discussion on labor issues at the Press Council in Jakarta. Muhaimin said that "insignificant progress" in industrial growth was limiting job prospects for millions of Indonesians.
"We have tried to reduce the numbers of unemployed by 1.5 million to 2 million annually. Our target is to decrease the unemployment rate to 5 percent or less," Muhaimin said.
The International Labour Organization (ILO) has said that the unemployment rate – which stands today at 9 million, according to ILO records – has been declining in Indonesia, whereas there was a steady increase of people being employed in the informal sector.
The ILO noted that the number of workers in the informal sector stood at 67.9 percent of the total workforce this year, up from 61.3 percent in 2008.
Kazutoshi Chatani, an ILO economist, said that many formal jobs in Indonesia were being lost in sectors ranging from textiles, garments, palm oil plantations, the auto industry and footwear, even though the country had weathered the global economic crisis relatively well compared to its neighboring countries.
"Subcontracted workers and temporary workers were those hardest hit," he said. "Overseas migrant workers were laid off and sent back home."
Millions of workers in Indonesia are underemployed, the ILO says.
Chatani said the declining demand for labor was caused by fierce competition and the high costs of starting and running businesses in Indonesia, as well as corruption and excessive bureaucracy.
Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), said that after the crisis, Apindo had tried fixing working conditions to promote stronger industrial relations but there continued to be limited investment in Indonesia.
"Most of the investment is in the natural resources and service industries but there's almost no investment in labor industries. Workers in the informal sector receive only a third of the salary received by those working in the formal sector," he said.
"They have no fixed working hours, no health insurance, no transportation allowance and no meal allowance. On average they earn only Rp 800,000 a month."
The number of the unemployed in Indonesia, as quoted by the ILO, may not be valid as they have no social security, Sofyan said.
Thamrin Mosi, president of the Confederation of All Indonesian Workers' Union, said that bringing down the high unemployment rate was the state's responsibility. "The government should support investment strategies that can absorb more workers," Thamrin said.