Global Jobs Pact Country Profile: Indonesia

Document | 14 September 2010

Indonesia creates jobs for young men and women

Due to a strong domestic market the crisis has had limited impact on the Indonesian economy in comparison with many other countries in Asia. After the 1997 Asian Crisis, Indonesia enacted strong banking regulations which limited its exposure to financial shocks. As the bulk of Indonesian workers are employed in export oriented industries, they have been less affected by the economic slowdown.

However, the country has not been spared completely from any secondary effects, such as a reduced aggregate demand and tighter credit. Prior to the crisis, there was already wide spread unemployment and underemployment. Significant layoffs were registered in a range of key sectors, such as food and beverages, electronics and the construction industries.

The recovery package in the amount of US$ 7.6 billion (approximately 1.4 per cent of the GDP) has helped local communities improve their infrastructure. The largest portion of the package was spent on a tax rebate through which the Government hoped to prevent massive layoffs by easing tax burdens on companies.

The National Program of Community Empowerment (NPCE), one of the main outputs of the fiscal stimulus package, aims at creating one million jobs throughout the recovery process. ILO Jakarta and the Government of Netherlands have implemented an employment-intensive project nationwide, providing skills training modules for young men and women. The project has strengthened institutional capacities at local level and enabled young people’s access to decent work opportunities, hence contributing to Millennium Development Goals 1 (Eradicate extreme poverty and hunger) and 8 (Develop a global partnership for development).

For more information on the job crisis and recovery in Indonesia, please read Indonesia’s response to the crisis (G20 country brief) and statistical update Indonesia: Higher informal employment during the economic slowdown or visit the ILO Job Crisis Observatory.