Picture of labor force conditions in indonesia

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“Picture of Labor Force Conditions in Indonesia”

One of the macroeconomic concern and problem that government has to handle is the

unemployment. Unemployment in the simple term is someone who does not have a job but

are looking for one. Thus, the number of unemployment directly reflects the prosperity and

the performance of economy of a country; it also shows the condition of job opportunities

and absorbing rate of labor force. In Indonesia, the number of labor force increase together

with the increasing number of population.

Figure 1. Labor Force Condition in Indonesia (in Millions)

Source: Central Bureau of Statistics

From the graph above, it can be seen that the number of labor force rise gradually

from 106,3 million in February 2006 to 119,4 million in February 2011. We can also see that

job opportunities grow on average 1,58 % each year. This condition was good because from

February 2006 to February 2011 there were additional workers about 16,08 million. On the

other hand, from February 2006 to February 2011 unemployment rate could be reduced to

6,80 %, or approximately 2,98 million unemployment on aggregate. As can be seen that the

number of unemployment fell from 11,1 million in February 2006 to only 8,12 million in

February 2011.

Unemployment rate in 2006 was about 10% with respect to labor force, then it

declined to around 9% in 2007 and to 8,40% in 2008. This decreasing rate-trend continually

happened in 2009, 2010, to February 2011, which was about 7,90%, 7,40%, and 6,80%

respectively.

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Figure 2. Unemployment Rate from February 2006 to February 2011 (%)


According to the picture, it can be said that government could administer his

programs in reducing number of unemployment. Many efforts have been done, such as

opening new job opportunities together in cooperation with private sectors, and encouraging

society to build their own business as entrepreneurs. Government also provides financial

assistance to help people in developing their business through credit with lower interest rate.

Table 1. Composition of Work Force in All Sectors (in Millions)

No Industrial Origin Feb-2006

August-2006

Feb-2007

August-2007

Feb-2008

August-2008

Feb-2009

August-2009

Feb-2010

August-2010

Feb-2011

1 Agricultural 42,3 40,1 42,6 41,2 42,7 41,3 43 41,6 42,8 41,5 42,47

2 Mining and Quarrying

0,9 0,9 1 1 1,1 1,1 1,1 1,2 1,2 1,3 1,41

3 Manufacturing Industry

11,6 11,9 12,1 12,4 12,4 12,5 12,6 12,8 13,1 13,8 13,71

4 Electricity, Gas, and Water Supply

0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2 0,2

5 Construction 4,4 4,7 4,4 5,3 4,7 5,4 4,6 5,5 4,8 5,6 5,58

6 Trading, Hotel, and Restaurant

18,6 19,2 19,4 20,6 20,7 21,2 21,8 21,9 22,2 22,5 23,24

7 Transport and Telecommunication

5,5 5,7 5,6 6 6 6,2 5,9 6,1 5,8 5,6 5,58

8 Financial 1,2 1,3 1,3 1,4 1,4 1,5 1,5 1,5 1,6 1,7 2,06

9 Public Services 10,6 11,4 11 12 12,8 13,1 13,6 14 15,6 16 17,03


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Based on the composition, it can be clearly highlighted that agricultural sector absorb

the biggest workforce with around 42,47 million workers in February 2011. This number had

increased from 42,3 million workers in February 2006 or it can be said that there were

additional workers about 170 thousand. Interestingly, the numbers of workers in this sector

have tendency to decrease in every period of February to August; then it increased in the

period of August to February. This condition surely happened because agriculture is

correlated with harvesting time (means increasing employment) and waiting time. The second

biggest sector is trading, hotel, and restaurant which was covered about 23,24 million

workers in February 2011. This proportion rose from 18,6 million in February 2006 or in

other words, there were additional workers about 4,64 million in this industrial origin.

Electricity, gas, and water supply remained stable with about 0,2 million workers

from February 2006 to February 2011. It could be sum up that additional employee from

February 2006 to February 2011 in mining and quarrying industrial was about 0,51 million,

in manufacturing industry reached 2,11 million, construction approached 1,18 million,

financial sector around 0,86 million, Public services roughly 6,43 million, and the lowest was

transport and telecommunication with just about 0,08 million or 80 thousand workers.

Agricultural sector still play a role as the primary sector that supposed to take in the

labor force. Industrial origins that use many sophisticated machines and technology have

absorbing rate of labor force lower than the others.

Table 2. The Percentage of Labor Force According to the Level of Education


Year Labor Force< Primary

School

Junior High

School

Senior High

School

Vocational

SchoolDiploma > University %

August 2008 Working 53,96 18,57 14,04 6,59 2,80 4,05 100,00

Unemployment 28,18 21,01 25,58 15,00 3,86 6,37 100,00

February 2009 Working 53,05 18,99 14,48 6,88 2,56 4,04 100,00

Unemployment 28,30 22,19 23,04 14,45 5,25 6,77 100,00

August 2009 Working 52,64 18,49 13,90 7,86 2,66 4,44 100,00

Unemployment 24,21 19,76 27,58 15,70 4,92 7,83 100,00


Unemployment 24,77 19,29 24,57 15,56 6,26 9,54 100,00

August 2010 Working 50,38 19,07 14,71 8,20 2,79 4,85 100,00

Unemployment 25,97 19,97 25,83 14,37 5,33 8,54 100,00


Unemployment 23,66 22,21 27,90 13,32 5,35 7,55 100,00

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From the table, it can be seen that the biggest percentage of workforce that working

based on the level of education is those who had in primary school level or below with

average 51,48%. The second biggest percentage is those who had in junior high school level

(with average 18,85%); then followed by senior high school level with average 14,40%. The

phenomena of higher number of workers with lower education level could be assumed that

they tend to accept to work in any sectors and to work with lower wage, which is why they

could present in all industrial origins. On the other side, it could also be assumed that

company only use and exploit many workers with lower level education.

The percentages of unemployment in group of diploma and university level compare

to them (in same level of education) who are working are still higher. On average, those who

working were about 4,49 million less than those who were not working (unemployment

group) with approximately 7,77 million. Unemployment in group of diploma from August

2008-February 2011 rose to 1,49 million, while unemployment in group of university also

increase from 6,37 million in August 2008 to 7,55 million in February 2011 or in other words

there was an additional number of unemployment around 1,18 million people.

This picture is a major problem and paradoxical situation for government amid efforts

to encourage people to take higher education. Government argues that in higher level of

education, labor force could develop their skill and competence; also it can increase the

quality of human resources in Indonesia. Some economists even said that it is important to

hold human resources to stay in school because it could reduce labor supply in the labor

market. However, government should think hard to provide more job opportunities for them

who are in group of diploma and university, in which the number of unemployment has

reached 7,55 million.

Career

Picture of labor force conditions in indonesia