Zakki P. Hakim, Jakarta – The still unfavorable labor environment continues to be the main cause for the declining number of jobs in key sectors, especially manufacturing, all of which has increased the unemployment rate, according to the latest government labor data.

The 2004 National Labor Force Survey (Sakernas) report published by the Central Statistics Agency (BPS) showed that the number of jobs in the manufacturing sector shrank by 3.6 percent to 11.07 million last year from 11.50 million in 2003.

According to the report, obtained by The Jakarta Post, the open unemployment rate rose to 9.86 percent last year from 9.67 percent in 2003.

The absolute number of unemployed had expanded to 10.25 million in 2004 from 9.94 million in the previous year.

BPS data shows that the country had 1.22 million new job seekers in 2004 to put the year's total workforce at 103.97 million compared to 2003's 102.75 million.

The National Development Planning Board (Bappenas) chairwoman Sri Mulyani Indrawati said the decline in the number of jobs was linked mainly to unfavorable labor regulations, which had discouraged firms from hiring more people.

"The labor regulations are still too rigid," she told the Post on Monday.

She went on to add that such labor regulations were good for workers in terms of higher wages and other benefits, but it eventually increased costs for firms, however, business has been relatively slow in the country and not able to compensate.

The report, however, said that the number of jobs in the agriculture sector (including forestry and fishery) had declined to 40.61 million last year from 43.04 million in 2003.

But jobs in the mining and quarrying sector rose from some 733,000 in 2003 to 1.03 million last year. The construction sector had 4.54 million workers last year, absorbing an additional 486,000 laborers.

In wholesale and retail trade as well as restaurants and hotels, this sector last year absorbed 1.87 million workers, for a total of 19.12 million jobs in 2004.

In April, Mulyani said the government had hoped to reduce open unemployment to 8.9 percent by 2006 by boosting economic growth, through increasing exports and investments by 5 percent and 1.2 percent next year, respectively.

According to BPS, Indonesia's exports reached US$75 million in 2004, while foreign direct investment reached $10.27 million.

The government expects economic growth to hit 6.1 percent next year, following an estimated 5.5 percent growth this year.

With an average of more than a million new workers entering the job market each year, Indonesia's economy needs to expand by at least 6 percent to be able to absorb them.

BPS has revised the 2003 Sakernas report in February, after it was realigned to accommodate surveys conducted by the committee for voter registration and continuous census (P4B) during the 2004 general elections.

Aden Gultom, head of the BPS workforce sub-directorate, said the revision changed the total working age population in 2003 to 151.41 million from the earlier 152 million.

The 2003 Sakernas report initially suggested that the workforce in that year stood at 100.32 million, declining from 100.78 million in 2002.