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Jakarta Post

Unemployment surges to decade high as COVID-19 causes millions to lose jobs

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Thu, November 5, 2020   /   06:33 pm
Unemployment surges to decade high as COVID-19 causes millions to lose jobs On the hunt: Job seekers crowd the Education and Career Fair at the Smesco building in Jakarta on Feb. 14, 2014. The ongoing COVID-19 pandemic is projected to increase the unemployment rate by 5.5 million people this year. (JP/Nurhayati)

Indonesia’s open unemployment rate has surged to its highest level since 2011, with the pandemic causing some 2.67 million people to lose their jobs, Statistics Indonesia (BPS) announced on Thursday.

The country’s unemployment rate rose to 7.07 percent in August, a 1.84 percentage point increase from 5.23 percent in the same month last year. In total, 9.77 million people were unemployed in August, up by 37.61 percent year-on-year (yoy) from August 2019.

“The COVID-19 pandemic has had an extraordinary impact on the labor market,” BPS head Suhariyanto told reporters during a press briefing.

Some 29.12 million people or 14.2 percent of the country’s workforce have been affected by the pandemic, BPS data also shows.

From the total, 24 million people have worked shorter hours, 1.7 million people have been furloughed, while 2.56 million have lost their jobs and 760,000 are no longer considered as part of the workforce, according to the BPS.

Indonesia officially entered its first recession since the 1998 Asian financial crisis after the economy contracted again in the third quarter. Southeast Asia’s largest economy shrank 3.49 percent on an annual basis in the third quarter, as almost all gross domestic product (GDP) components fell amid the persistent rise in COVID-19 cases.

Read also: Breaking: Indonesia enters first recession since 1998 on 3.49% Q3 contraction

Suhariyanto said the pandemic also triggered a rise in informal workers and a fall in formal workers.

The number of informal workers from the country’s 128.45-million-strong workforce has increased by 4.59 percentage point to 60.47 percent in August. Meanwhile, formal workers made up 39.53 percent of the total workforce, down by 4.59 percentage points.

“The agriculture, trade and manufacturing sectors employed most workers in August,” he went on to say.

The agricultural and trade sectors employed the most people, with 29.7 percent and 19.23 percent of the workers, respectively. Both sectors employed more people in August this year compared to a year ago.

However, the manufacturing sector, which employed 13.61 percent of workers, cut its workforce by 1.3 percent in August compared to the same period last year.

Earlier in June, National Development Planning Minister Suharso Monoarfa announced that some 5.5 million people may lose their jobs this year, pushing the unemployment rate to between 8.1 and 9.2 percent, up from 5.23 percent last year.

As a result, up to 12.7 million people are expected to be unemployed by next year, up from 7.05 million people in 2019. The government’s baseline scenario for next year predicts that the unemployment rate will be between 7.7 and 9.1 percent.