Quarterly Report - Kadin Indonesia

III. Employment, Unemployment and the Role of T&C IndustryOfficial prediction from BAPPENAS with respect to labor market developmentissued in mid.2005 is presented in Table 18. It indicates that open unemployment wasexpected to reach at about 10.22% of total work-age population in 2005. However, recentprediction from BPS has a different picture. The open unemployment was predicted at11.6 million people in October and it would reach 12% (or more) by the end of 2005. Thepredicted number of unemployed people in October is higher by 700,000 people than in 7month before at about 10,9 million persons (or 10.26% of total work-age population at105.8 million people in that period). The BAPPENAS prediction in Table 18 mayoverlooked the possible higher unemployment effect of domestic economic shocks suchas oil subsidy reduction in 2005.Table 18. Predicted Economic Growth and Labor Market Development, 2003-2009(000 000 persons)Total populationWork-age population/labor force- New comersWorking populationNew created employmentEconomic growth (%)New employment by 1%economic growthOpen unemployment- number- %Sumber: Bappenas2004 2005 2006 2007 2008 2009216.4103.971.3493.720.915.13178,00010.259.86219.0105.951.9895.732.015.50365,00010.229.65221.5107.962.0198.322.596.08426,0009.648.93223.96110.012.05101.242.926.70436,0008.777.97226.5112.12.09104.573.337.20463,0007.536.72226.95114.232.13108.393.827.64500,0005.845.11One of the reasons why trade policy regarding the T&C sector has been a politicallysensitive issue is the importance of these activities in employment. Employment datafrom the ILO are presented in Table 19. It should be noted that the figures refer to paidemployment and do not capture self-employment in the sector, which in some countriescan be significant.The T&C industry in Indonesia from all size categories (i.e. small, medium and large)is one among the most important industries in Indonesia from employment creationperspective. Official prediction shows that this industry employs about 3.2 millionpeople. A large-scale T&C factory needs, on average, one person to keep five machinesrunning. This means that a large T&C company that normally has more than 300machines with production of one billion meter of cloth per month would need at least 60workers. This number does not yet include workers for other directly related activitiessuch as packing, machines maintenance, storing raw materials, etc. All these directrelated activities need on average about 140 persons.T&C small and medium sized companies on average have 50 to 300 machines whichcan absorb about 25 to 150 machine operators. Production capacity of this group ofQuarterly Report - January 2006 28 Kadin Indonesia – www.kadinindonesia.or.id