Suggestions For The Upcoming Government in Term of Jobs Creation

In recent years, the decline of open unemployment rates have been as slow as molasses. It means that the labor market has reached its saturation point. In February this year, for instance, The Central Statistics Agency (BPS) data showed that the open unemployment rate was 5,7 percent. Compared with February last year, it means that the open unemployment rate only declined 0,12 percent from February 2013 to February 2014. Consequently, the new government, which will be resulted by the upcoming presidential election, needs to make a breakthrough to encourage jobs creation.

In term of jobs creation, Prabowo Subianto and his running mate Hatta Rajasa have already promised to create 2 million jobs annually if they were elected as president and vice president. This ambitious target will be gained by improving irrigation network and infrastructure for labor-intensive industry such as textiles, footwear and electronics (The Jakarta Post, May 22).

Instead of being pessimistic, in fact, creating 2 million jobs annualy is not easy. Moreever, if the eceonomic structure is remain dominated by the capital-intensive sectors like what happen in this time. Factually, in recent years,  our economy  has been much more underpined  by the service sector (non-tradable) than the real sector (tradable).  Whereas, this sector needs high skill labours, and most of our labours are unskilled or less-educated.

Consequently, the impact of economic growth on jobs creation is very weak. The statistics data showed that in recent years, for every 1 percent of economic growth, it only has created about 200 thousand  job opportunities. It is so far from the government's target that every one percent of economic growth should create at less 500 thousand new job opportunities.

If the economic structure is still dominated by non-tradable sector, the upcoming government must boost the economic growth more than 9 percent annualy to create 2 million job opportunities in one year. Of course, it is not easy to be realized.  Therefore, the performance of labour-intensive industry sectors as well as the agriculture sector, which absorp more labor than other sectors, must be improved.

Actually, there is another breakthrough that can be done by the upcoming goverment to create new job opportunities significantly, that is, evolving the entrepreneurship. This effort could be a solution for the problem that many of job seekers, who have diploma or scholar degree, are unemployed. Factually, the BPS data showed that in Febraury 2013, about 5,87 percent of labor forces who have scholar degree were unemployed. Meanwhile, for the job seekers having diploma degree, the percentage reached 4,31 percent.

It is very unfortunate that the progress of Indonesia in term of evolving the entrepreneurship is standing  behind the other countries, even if it is compared to others ASEAN’s countries. In its publication tittled “The Global Entrepreneurship and Development Index 2013,” World Bank reported that the global entrepreneurship development (GEDI) index  of Indonesia laid in rank of 76th of 118 countries. In ASEAN, the rank of the country stood behind of Singapore (13), Malaysia (56), Brunai Darussalam (63) and Thailand (64).

Therefore, the upcoming goverment  must relieve any constrain that obstructs the development of entrepreneurship in Indonesia such as difficulties in getting permit and funding. (*)