Chairman of Indonesia's Chamber of Commerce and Industry (Kadin) Suryo Bambang Sulisto stated that the most crucial problem which Indonesia is facing currently as well as in the foreseeable future is unemployment. Sulisto said that while the population of Indonesia has grown continuously in the past decade, unaffected by family planning programs, employment opportunities have not grown accordingly. In fact, they have declined. At end-2013, Indonesia's unemployment rate stood at 6.3 percent (of the total labor force).
Sulisto said: "according to the Indonesia Investment Coordinating Board (BKPM) total investment realization in the first quarter of 2013 was IDR 93 trillion. These investments (both domestic and foreign direct investments) absorbed 361,924 workers. However, in the first quarter of 2014, when total investment realization accelerated to IDR 106.6 trillion, only 260,156 new positions were added."
These numbers show that investment in Indonesia has shifted from labor-intensive to both capital-intensive and technology-intensive industries. If this pattern continues, then the target of generating 400,000 jobs for every one percent of economic growth will not be achieved. "Therefore, viewed from the aspect of employment, the quality of investment in Indonesia has declined. As long as Indonesia's economic structure does not change from being mainly a natural resources exporter, then we will face a serious unemployment problem," Sulisto added.
Indonesia's unemployment rate has declined steadily from 10.3 percent in 2006 to 6.3 percent in 2013 amid robust economic growth. However, from 2012 to 2013, the unemployment figure increased from 6.1 to 6.3 due to the slowing pace of economic growth.
Indonesia's (un)employment statistics:
¹ data from August 2013
(percentage of total labor force)
Sources: World Bank and Statistics Indonesia