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The Jakarta Post
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Editorial: A mere painkiller

  • The Jakarta Post

| Fri, December 7 2012 | 10:01 am

Better late than never” or, “better to do something than nothing” are the policy guidelines largely believed to have been imposed by the government in all weather conditions. Such principles are apparently the logic behind the government’s decision to set up a new agency tasked with expediting the creation of new jobs, a decision taken in the immediate aftermath of warnings sent out by the country’s employers’ associations of potential massive layoffs around the country.

Coordinating Economic Minister Hatta Rajasa told the media on Monday that President Susilo Bambang Yudhoyono had appointed him to lead the Job Creation Desk — the name of the new agency — with the primary task of enhancing the country’s positive investment climate and promoting labor-intensive sectors by providing fiscal incentives.

On the surface, the idea looks good as it shows that the government does care about the threat of widespread layoffs following the decision by several regional administrations to significantly increase minimum wages, and that it is taking all necessary action to tackle the problem — or at least mitigate its impact. But in reality, the idea needs further consideration and analysis as it will involve a large number of different elements to ensure the agency’s success in performing its task.

Apart from its embryonic status (a presidential decree on the agency’s legality has not yet been issued and its membership has yet to be determined), Hatta or the agency must further clarify its job description so as to prevent it from becoming a mere “painkiller”, let alone a “panacea”, for the problem. In other words, the agency should provide a long-term — not temporary — solution to the potentially large-scale worker layoffs.

On the policy side, the agency — whose membership will comprise senior officials in relevant fields — first needs to anticipate the planned lawsuit against the regulation governing provincial minimum wages for 2013 that is to be filed by the Indonesian Employers Association (Apindo) and other business associations with the state administrative courts and the Constitutional Court.

If the employers and business associations win their cases in these courts, the agency — and foremost the government — must anticipate the impact of the courts’ rulings; the worst will come in the form of massive and violent protests by the workers.

Meanwhile, employers and business associations will carry on with their plan to lay off the workers. Apindo had earlier warned that at least 10,000 workers could lose their jobs next year when the Jakarta administration enforces the new minimum wage of Rp 2.2 million (US$229);
a 44 percent increase of this year’s minimum wage.

On the technical side, the agency must clarify the mechanism to accelerate the creation of employment, as the government’s target of adding 1 million jobs this year is unlikely to be met since the government’s own data has revealed that only 500,000 new jobs were created as of November.

Such a clarification is necessary in order to avoid the repetition of past practices, which simplified the term of “providing jobs to the Indonesian people” into a mere launch of labor-intensive programs — mobilization of unemployed Indonesians to do petty jobs of clearing river canals or working on road construction projects — which were essentially temporary, short-term jobs for the unemployed.

The program was a cover-up for the government’s direct cash assistance (BLT) program for economically impoverished families in compensation for the intended fuel-price hike. The BLT program has received widespread condemnation, with critics saying that it would only create a beggar mentality among Indonesians.

If that is the case, the agency and its programs will be no different to these labor-intensive and BLT programs of the past, as such an approach will not provide a long-term solution to the country’s unemployment problems. And such programs will certainly be doomed to fail.


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