Gloomy labor, social trends in Indonesia, warns ILO

Despite some progress in coping with the impacts of the global financial crisis, labor and social trends in the country this fiscal year will likely remain gloomy, the International Labour Organization (ILO) has warned.

Speaking at a discussion and a book launch about the 2009 labor and social trends in Indonesia here Tuesday, ILO economist Kazutoshi Chatani said the government should immediately provide social protection for unskilled and semi skilled workers, especially for those who had not been included in the government’s pro-employment programs.

Due to the stagnant growth of the formal sector affected by the global crisis, a part of the labor force, mainly dismissed workers, returned migrant workers and job seekers, have been entering the informal

sector where they are not insured, he said.

The global economic downturn, which has rocked Europe, the Middle East and Asia since late last year, has forced foreign employers to terminate hundreds of thousands of jobs held by Indonesian migrant workers, while falling orders have forced many processing companies at home to rationalize the size of their labor.

However, Chatani said that due to the government’s stimulus package, tax rebate, labor-intensive infrastructure development projects and soft loans for SMEs, as a rapid response to the crisis, more than four million jobs had been created.

The government also increased the allocation of the state budget for poverty alleviation program.

This fiscal year, it allocated Rp 66 trillion to lower poverty, up from Rp 58 trillion disbursed in 2008.

It has also allocated Rp 369 billion for job training, Rp 110 billion for training in the labor-intensive sector and Rp 30 billion to bolster labor networking, in a bid to upgrade worker competence and competitiveness as well as create decent employment and wages.

Chatani also called on the government to keep holding social dialogues with social partners such as labor unions, employers and international agencies to seek peaceful settlements to industrial disputes and avoid social unrest.

Unionists expressed pessimism the government would provide social protection for the unemployed and economically disadvantaged over the next five years.

“The appointment of politician Muhaimin Iskandar as new manpower minister is a strong indication the President does not see labor as a crucial issue that has to be dealt with immediately,” said the chairman of the Indonesian Workers Organization (OPSI) Saepul Tavip, adding the 2004 National Social Security System Law had been not been properly enforced.

Chairman of the State-owned Enterprises Employees Union (FSP BUMN), Abdul Latief Algaf, was skeptical about the unemployment benefits, saying the government had yet to show its commitment to protecting workers as only 8.7 million of 30 million workers in the formal sector were insured by social security programs (Jamsostek).

Deputy chairman of the Indonesian Employers’ Association (Apindo) Djimanto said the government should allocate a part of the state budget to finance social security for the unemployed and encourage employers to provide a better severance scheme for dismissed workers in the country.