Jakarta – The government needs to place decent and productive employment at the center of its socio-economic policies to ensure a link between economic growth and job creation, the International Labor Organization said in its latest report.
In the report, titled "Labor and Social Trends in Indonesia 2008: Progress and Pathways to Job-rich Development", ILO's Indonesia office noted between 2000 and 2007 Indonesia's economy – southeast Asia's largest – showed healthy enhancement, but labor market outcomes had not improved dramatically.
The ILO found the employment rate fell to 9.1 percent in 2007, from 11.2 percent in 2005, but this was not accompanied by a rise in the number of involuntary underemployed. The number of those fully employed in 2007 was actually less than the 2002 level. Looking ahead, the report predicted underemployment would drop to 7 percent by 2009.
"This report presents socio-economic and labor market trends in Indonesia, with the aim of drawing attention to key policy challenges and informing the development of Indonesia's next Medium-term Development Plan (2010-2024). It also seeks to assist in building the capacities of national partners to identify key challenges and design appropriate policies," ILO country director Alan Boulton said at the launch of the report on Wednesday.
The report also noted poverty remained largely a problem of the employed. It estimated about one in two employed persons were classified as poor under the US$2-a-day poverty criteria.
"These working people do not suffer from a lack of economic activity, but rather the unproductive nature of that activity," the report said.
Indonesia's labor productivity, the report added, grew at a healthy annual average of 4.3 percent between 2000 and 2007. But the report warned the gains from productivity growth needed to accrue to firms for both added investment and innovation, and also to workers in the form of higher real wages, improved working conditions and continuous on-the-job learning in order to ensure sustainability.
The report also warned while unemployment was an informative indicator, it did not provide an adequate measure of labor market performance.
"It's critical to assess other indicators, including those used to measure progress on a new Millennium Development Goal target of full and productive employment and decent work for all," said ILO economist and report author Kee Beom Kim.
The report stressed the importance of the age and gender aspects of labor market indicators. Women represent only 21 percent of Indonesia's labor force, but account for 57 percent of the country's jobless population.
With women being offered more employment opportunities in recent years, the report warned much of this work was in the informal economy, characterized by low quality, unproductive and poorly remunerated jobs, not to mention the absence of workplace and representation rights.