ILO: Indonesia`s 2008 economy shows sound improvement

Jakarta, (ANTARA News) - Indonesia`s economy has been growing positively but the labour market has not yet developed significantly, according to a report of the International Labour Organization (ILO) on Labour and Social Trends in Indonesia 2008, Wednesday.

While the unemployment rate has fallen to 9.1 percent followed by a rise in involuntary underemployment, such as that the share of those "fully employed" is actually bellow the level in 2002, the report said adding that looking ahead, it forecast unemployment to fall to 7.0 per cent by 2009.

"The report presents socio-economic and labour market trends in Indonesia aimed at drawing attention to key policy challenges and informing the development of Indonesia`s next Medium Term Development Plan (2010-2014), said Alan Bourton, ILO Director for Indonesia.

The report notes that poverty remains largely a problem of the unemployed as it is estimated that about one in two employed persons are poor at the US$2 a day poverty line.

These working poor do not suffer from the lack of economic activity but rather the unproductive nature of such activities, it said. As such, boosting labour productivity is critical for poverty reduction.

Indonesia`s labour productivity has grown at a healthy annual average of 4.3 per cent in 2000-2007, but the report cautions that the gains from productivity growth need to accrue to firm for both added investment and innovation but also to workers in the form of higher real wages, improved working conditions and countinous on-the-job learning to ensure sustainability.

The report suggested that real wages of workers have stagnated in recent years despite the increasing efficiency of their labour.

The report cautions that while unemployment is an informative indicator, it does not provide an adequate measure of labour market performance.

"It is critical to assess other indicators, including those used to measure progress on the new Millennium Development Goal (MDG) target of full and productive employment and decent work for all" said the ILO Economist Kee Beom Kim.

The new target for MDG is to reduce poverty and its indicators including the employment-to-population ratio, vulnerable employment, and the share of the working poor.

It is also essential to look at the age and gender aspects of labour market indicators. Young women and men in Indonesia represent only 21 per cent of Indonesia`s labour force and 57 per cent are jobless.

While women are likely to be employed in recent years, characterized by decent work deficits in terms of low quality, unproductive and poorly renumerated jobs, not to mention the absence of rights at work and representation.(*)