Government Target: Indonesia's Unemployment Rate to 5.7% in 2014
The government of Indonesia has the ambition to reduce Indonesia's unemployment rate to about 5.7 percent in 2014. This ambition was pronounced by Armida Alisjahbana, the minister of National Development Planning. According to the latest data released by Statistics Indonesia, the country's unemployment rate currently stands at 5.92 percent. The minister stressed that the unemployment target of 6 percent that was set in Indonesia's National Medium Term Development Plan to be reached in 2014, has already been achieved.
But even though the government's unemployment target has already been achieved, Alisjahbana stressed that there is no time for complacency, particularly with global economic turmoil impacting on Indonesia's economic expansion and thus limiting job creation. The government's 6.3 percent GDP growth rate in 2013 is most likely a bridge too far. Indonesia's Finance minister, Chatib Basri, said that economic growth of about 6.0 percent is more realistic for 2013. This downward revision is mainly due to weak commodity exports and a slowdown in domestic consumption and investments.
More than a decade of macroeconomic growth has succeeded in pushing Indonesia's unemployment rate into a steady downward trend. But, as around two million Indonesians enter the labor force each year, it will be a challenge for the Indonesian government to stimulate job creation so that the labor market can absorb this group of annual newcomers; youth unemployment (among the freshly graduated) in particular is a cause for concern and action.
With around 240 million people, Indonesia is the fourth most populous country in the world (after China, India and the United States). Moreover, the country has a young population as around half of the total population is below the age of 30 years. Combined, these two features imply that Indonesia currently contains a large labor force; one that will grow larger in the foreseeable future.
Vulnerable employment (unpaid workers and own-account workers) - mostly found in Indonesia's large informal sector - for both men and women remains high compared to developed countries and its regional peers. Currently, Indonesia's vulnerable employment is about 60 to 70 percent according to World Bank reports.
¹ data from February 2013
Source: Statistics Indonesia