B. Nicodemus, Jakarta – I was at Abu Dhabi airport few months ago, waiting for my flight to Jakarta. I was chatting with friends when we saw a group of women rush to a small restaurant at the airport. Their faces and language were familiar to us. They were Indonesian women, on their way to work in Arab countries.
Working abroad, and in Arab countries in particular, has long been a dream for jobless Indonesians. Even before the darkest days of the 1997 financial crisis, many Indonesians were already eagerly flying off to Gulf countries to find jobs. I would not be surprised if the number has increased in the hard times that have followed the crisis.
Unemployment is still the biggest problem in this country. The government recently said one million jobless Indonesians would join the job market in 2007, adding to the total number of unemployed, which is already above 10 million. In response to this, the government has highlighted a five-step employment program. The steps are: granting financial and technical aid to poor families; providing training and placement for skilled workers in the service sector; improving the investment climate to create more jobs; accelerating the export of labor; and resettling poor families.
After the economic crisis, the unemployment trend was as follows: 6.4 percent in 1999, 8.1 percent in 2001, nearly 10 percent in 2004 and slightly over 10 percent in 2005 and 2006.
It has been argued that the main reason for such terrible figures is the slow growth, of around five to 5.6 percent, that followed the crisis.
This is the reason why the government wants to accelerate economic growth by focusing on attracting investment, particularly from overseas. It is believed that high investment will create more jobs. As a result, the government is working hard to improve the investment climate by reforming the bureaucracy, revising labor laws and improving infrastructure, among other measures.
Focusing on providing jobs through foreign investment has been the mainstream view in Indonesia. Unfortunately, there are still numerous problems.
Firstly, attracting more investors requires structural reforms, and such reforms take time. As job seekers really cannot wait, time is not on our side.
Secondly, under current conditions, the economy will only grow at around 6 percent in the coming years. As a result, there will be no dramatic drop in the unemployment rate.
While structural reform remains in progress, the economy will probably not provide enough jobs for the jobless.
Another issue to look at is who exactly Indonesia's job seekers are. Based on data from Central Statistics Agency, of the 10 million or so unemployed, around 3.9 million (36 percent) finished senior high school, 2.6 million (24 percent) junior high school, and nearly 2.5 million (23 percent) had only primary education. University graduates accounted for only 6 percent of total job seekers.
Based on this, we should be careful of the assumption that foreign investment would benefit the majority of job seekers. For Indonesia, labor intensive investments, such for the production of garments and shoes, would create many jobs. But most foreign investors have so far entered the oil, gas, mining or high-tech industries. These industries are not labor intensive and mostly require university graduates or highly skilled workers.
Moreover, the bad news is that many investors in labor intensive industries have already left Indonesia and moved to other countries. Therefore, the issue is not just attracting new investors but also maintaining existing ones. Unfortunately, we have not heard much about this from the government.
In our rush for overseas money, we also seem to miss out on using our own capabilities. We have a huge pool of small and medium enterprises (SMEs) right here in Indonesia.
SMEs' employment performance has been very impressive. And this has increased, even after the crisis. Official data shows that SMEs employed around 67 million people in 1999, 70 million in 2000, and 72 million in 2001. In 2004, the figure was more than 75 million.
It is essential that the government develop SMEs. But this has not been included in the government's five-step program.
We should also diversify job opportunities by taking advantage of our increasingly borderless world. In this regard, the policy of increasing the export of labor should be welcomed. In some countries, there are jobs for foreigners that local people do not want to fill. These include nurses, construction workers, shop attendants and housekeepers. The government should actively seek out these work opportunities and prepare our workers for them.
Jobs abroad also have an advantage local jobs do not – income in foreign currencies. This is the reason why, for instance, our neighbor the Philippines pays serious attention to its workers abroad, providing them with assistance and facilities. It is no surprise the country is enjoying strong capital inflows from remittances as the demand for Filipino workers increases. The government should follow similar steps by training, assisting and safeguarding our overseas workers. It should be realized that overseas workers help reduce the number of job seekers at home, as well as support our foreign reserves.
[The writer is a graduate from the Institute of Social Studies in the Netherlands. He works for a Jakarta-based multilateral institution dealing with economic, agriculture, science and technology issues. ]