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Indonesia needs a second wave of structural transformation to secure jobs in light of technological changes, says new ILO report
Indonesia has maintained a steady growth momentum. Unemployment rate is falling, but many people are still engaged in low-productivity employment. In addition, like several emerging and industrialized economies, Indonesia is confronted by technological advancements which are likely to shape the economy and jobs of the future.
JAKARTA (ILO News): Indonesia has maintained a steady growth momentum. Unemployment rate is falling, but many people are still engaged in low-productivity employment. In addition, like several emerging and industrialized economies, Indonesia is confronted by technological advancements which are likely to shape the economy and jobs of the future, says a new report by the International Labour Organization (ILO). The report titled, Indonesia Jobs Outlook 2017: Harnessing technology for growth and job creation, is being launched on Thursday, 14 December, at an event in Pullman Hotel, Jakarta, from 09.00 – 13.00 pm.
Besides examining economic and employment trends in the country, the report looks into the current wave of technological developments and its impact on future jobs. “The nature of growth since the 1997 crisis has changed which has affected jobs,” said Owais Parray, the ILO Economist for the ILO Jakarta Office who is also the lead author of the report.
The nature of growth since the 1997 crisis has changed which has affected jobs."
Owais Parray, the ILO Economist for the ILO Jakarta Office who is also the lead author of the report
The report reveals that before 1997, Indonesian manufacturing sector was growing rapidly with a commensurate growth of jobs. But pace of job creation in manufacturing has slowed. Relatively low unemployment rate which fell further to 5.3 percent in 2017 does not fully reveal the employment situation in the country. There are still major deficits in employment outcomes by productivity, quality of work, gender, and disparities across the provinces. For example, unemployment among youth is still 19.4 percent, a rate much higher than the global average. Over 57 percent of workers are in vulnerable employment.
The report presents both sides of the technology and jobs argument. While some see technology playing its “creative destruction” role to spur innovation and growth, an opposing view is that the two are competing against each other. There is consensus that new technology in the production process can result in job losses, at least in the short-term. Studies have shown that several occupations involving routine tasks are facing the greatest threat from automation and machines.
With growth in the so called gig economy, the current labour governance systems should be reconfigured to provide better protection and social security to workers involved in non-standard forms of employment."
Michiko Miyamoto, Country Director of ILO in Indonesia
To address this challenge the report recommends that Indonesia should not resist technological changes. The country has to move away from its dependency on extractive industries and create new sources of growth in manufacturing and high value services. In this, technology can be used as a catalyst for ushering in the next wave of structural transformation.
“A culture of life-long learning should be instituted to enable workers to adapt to the changes in the labour market,” said Michiko Miyamoto, Country Director of ILO in Indonesia. “With growth in the so called gig economy, the current labour governance systems should be reconfigured to provide better protection and social security to workers involved in non-standard forms of employment,” she added.
At the launch event, the findings of this report are being discussed by a panel of eminent experts including Mari Elka Pangestu, Professor of International Trade and Economics, University of Indonesia who is also the former Minister of Trade and the former Minister of Tourism and Creative Economy, M. Rudy Salahudin, Deputy for Creative Economy, Entrepreneurship and Cooperatives as well as SMEs, Coordinating Ministry of Economic Affairs, Roby Arya Brata, Deputy Assistant for Commerce, Entrepreneurship and Labour at the Cabinet Secretariat of Indonesia and Harijanto, Chair of Indonesian Employers' Association (Apindo).
The flagship report is an annual publication of ILO Indonesia. It provides an in-depth analysis of the employment and labour situation in the country. The report aims to feed the national policy discourse, stimulate discussions and help shape future economic and employment policies and programmes in the country.
