The government says its efforts to reduce unemployment are still within the target outlined in the medium-term development plan, despite recent statistics showing an increase in absolute numbers.

The latest data from the Central Statistics Agency (BPS) show that 121.02 million people were employed as of August this year, an increase of 2.61 million, or 2.2 percent, from the same month of 2016.

That has helped reduce Indonesia’s open unemployment rate to 5.5 percent from 5.61 percent a year earlier, as BPS data show.

In absolute numbers, however, there was an increase of 10,000 people within a year, as the number of unemployed people rose to 7.04 million in August 2017 from 7.03 million in August 2016.

Despite the increase in absolute numbers, National Development Planning Board (Bappenas) head Bambang S. Brodjonegoro insisted the figures remained on track with targets set in the National Mid-Term Development Plan (RPJMN) for the 2015-2019 period.

“Despite the small increase [in the latest data], it is still within our target of creating 10 million new jobs by 2019, which means an average of 2 million new jobs per year,” he told reporters in Jakarta on Monday.

The national mid-term plan also tasks the government with pushing the open unemployment rate below 5 percent by 2019.

Ahmad Heri Firdaus, an economist with the Institute for Development of Economics and Finance (Indef), said the increase in absolute unemployment was due to the dwindling contribution of the industrial sector to Indonesia’s gross domestic product (GDP).

The manufacturing sector contributed 19.93 percent to Indonesia’s GDP in the third quarter of this year, slightly down from 20.25 percent in the preceding quarter, according to BPS data.

Ahmad argued that the decrease of the manufacturing sector’s contribution was a symptom of “early deindustrialization,” in which the economy was shifting too quickly to the services sector while the manufacturing sector had yet to mature.

He said industries in the country needed to increase their efficiency to compete with imported goods penetrating the domestic market.

“To combat deindustrialization, we need to become more efficient, so that our products can become more competitive, especially in the domestic market,” he said.

The Indonesian workforce increased to 128.06 million people as of August this year, up 2.09 percent from 125.4 million in the same month of 2016.

Bappenas’ Bambang remained optimistic about the government’s efforts to reduce the number of unemployed people, explaining that the current unemployment rate of 5.5 percent was the lowest since the 1998 economic crisis.

He said Bappenas was conducting research to study the impact of the current boom of the digital economy on the labor force on the back of rising concerns about whether digitization and automation would negatively affect employment opportunities.

Based on preliminary conclusions of the study, he said, vocational education remained the key to combat unemployment resulting from digitization. There were still plenty of jobs that could not be automated, he added, citing barbers and housekeepers as examples.

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