Discourse: Employment remains major challenge for RI: ILO executive

Tue, 04/01/2008 12:53 AM  |  Headlines

ILO executive director of employment promotion Jose M. Salazar-Xirinachs visited Indonesia at the invitation of the Indonesian Employers Association (Apindo) to attend its eighth national congress last week. He shared his views on business and labor issues with The Jakarta Post's Ridwan Max Sijabat.

Question: What is your assessment of Indonesia's labor conditions these days?

Answer: Indonesia has been challenged to take a series of measures to better its labor conditions, human rights, create more employment, improve its human resources quality and eradicate poverty despite its economic bonanza. Can you elaborate?

A: Indonesia ranks 107 out of 177 countries in the Human Development Index. The open unemployment rate continued to increase until 2005, and although it declined to 9.1 percent in 2007, this is still one of the highest in the Asian region.

Even more serious is the high rate of involuntary underemployment, estimated at 15 percent in 2007, as well as the preponderance of the informal sector employment at more than 60 percent.

Today, Indonesia has an estimated 40 million people who live below the national poverty line. And the number of people living below US$2 a day -- involuntary workers -- is estimated to be 110 million.

There are significant variations in poverty levels between different provinces and districts and there is the very important challenge of the high youth unemployment, which stood at 25 percent in 2007.

How should these problems be addressed?

It takes time, it takes patience and it takes skills. All these require economic policies for growth to expand the demand for labor.

Key policies here are the macroeconomic and financial policies, the investment climate and the trade and regional integration policies, all of which influence the size of the market and effective demand.

No matter how much is done on the supply side, if there is not enough demand via the expansion of markets or the corresponding dynamism in the private sector, it will be difficult to create more and better jobs.

And I think here is where the issue of "jobless growth" comes into focus. As recommended by the Global Economic Agenda (GEA), Indonesia should promote not just any kind of growth, but rather growth by explicit efforts to strengthen the link between growth, productivity and jobs.  

What do think of Apindo's move to promote bipartite negotiations between employers and labor unions/workers?

It is quite positive and it should receive a good response both from the government and labor unions. In their transparency and accountability, employers should invite workers to go to the negotiating table to improve their productivity, negotiate social welfares and settle their disputes, both at local and national levels.

This is quite necessary while bearing in mind that only 25 percent of the labor force is employed in the formal sector while the majority of 75 percent is in the informal sector or unemployed.

A sectoral or structural approach does not mean picking winners in the old sense of industrial policy, but it does mean having clarity about employment impacts of policies, and having policies that balance interventions and incentives across relevant sectors so that there is a vision about the employment quality of growth in a context of accelerating technological change and productivity.

Can you comment on employers' complaints on the low quality of human resources in Indonesia?

Both employers and the government should continue providing training programs to improve workers' skills, promote investment in the labor-intensive sectors and generate more job opportunities. Skills are key factors to improve productivity, diversify the production structure and create domestic technological capabilities. Skill upgrading is a critical factor underlying all the capabilities.

What should employers do to establish the right environment for sustainable enterprises?

Employers should show their strong commitment to social dialogues and good industrial relations, human resources development and conducive work condition creation and productivity, wage and other benefits improvement. Workers need compliance by employers to the core labor standards, to be able to participate in the success of enterprises and to gain a fair share in the benefits of economic activities and increased productivity. This helps contribute to a more equitable distribution of income and wealth.

What has the ILO contributed to Indonesian labor development?

The ILO has so far enhanced cooperation in the elimination of child labor, vocational training programs in various sectors, the battle on HIV/AIDS at the workplace and in training programs for labor unionists. The ILO has organized a labor training program especially for women ... in the post-tsunami reconstruction and rehabilitation work in Aceh.

I am visiting here also to look for other forms of cooperation the ILO and Indonesia can enhance in the future.

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