The Indonesian Labour Market: Changes and Challenges (review)

More than two years after the 2008 global financial crisis, Indonesia's Chamber of Commerce and Industry (KADIN) predicted a 7 per cent economic growth for the country in 2011. While the outlook is optimistic, the perennial challenge of job creation was addressed by the chairman of the KADIN, Suryo Bambang Sulistiyo. Labour, with its demand and supply, has always been an important issue in Indonesia's economy, giving rise to implications to the country's social and political conditions. The Indonesian Labour Market by Shafiq Dhanani, Iyanatul Islam and Anis Chowdhury is a timely and thorough study on the topic, spanning over 200 pages discussing various angles and viewpoints on the workforce. The book began by situating the labour market within the historical framework of Indonesia's economy, starting with the post-colonial democratic experiment of the 1950s and ending the analysis in the decentralized post-Suharto period. It concluded with constructive policy recommendations that address contemporary challenges in the labour market.

Overall statistics with regards to unemployment in Indonesia have been pessimistic. The media has also contributed to several assumptions about the Indonesian labour market, which the authors counter with sufficient data. For instance, the bulk of the unemployed has been generally believed to comprise of migrants from the rural area coming to urban areas. These migrants are seen to lack the adequate and appropriate skills for urban work. However the book makes a good observation that open unemployment is occupied by first-time job seekers who would, within a few months be part of the employment statistics. (p. 62) Therefore, the book makes a good point that unemployment, although existing, does not comprise of the sector (that is, the rural migrants) generally assumed and is not indicative of labour market performance.

The authors also correctly observed that, contrary to popular beliefs, salaried workers do not comprise of the bulk of the Indonesian labour force. Instead, they point to the prevalence of self and family business-employed in the Indonesian economy (pp. 21-22).

In addition, the book makes a number of potentially useful observations that would have repercussions beyond the economy. For example the authors mentioned issues such as the potential of unemployed and underutilized youths becoming a vehicle for political discontent. However, these points tend not to be pushed across further. One reason could be that the research for the book is heavily reliant on statistics provided by the Indonesian Central Bureau of Statistics (Badan Pusat Statistik). There seems to be the need for the ample statistics to be substantiated by human voice. While peppered with graphs and data, the book is absent of interview. The inclusion of oral interview would have provided for a lighter reading as well as better insight into the accuracy of the statistics.

The book takes on a macro-level approach in studying Indonesia's labour market. In its introduction, it clearly stated that it is adopting a single-country approach (Introduction 2). This approach inevitably gave rise to several challenges in perspective. To its merit, the authors had done a commendable job of compiling the required statistics and performing analysis based on them. Studying the statistics of a vast country comprising of over 17,000 islands is no mean feat. However, it can also lead to the problem of over-generalizing. Understandably having used secondary-source data for their research, it is often unclear throughout the book where research took place. Names of specific cities were rarely mentioned, let alone statistics. It was also unclear who the people surveyed were. We could presume that the study includes anyone who is currently located in Indonesia. However their ethnicity and other background information remained shrouded behind the nationwide data. Would the statistics by the Central Bureau of Statistics have included expatriates for instance? Also, are immigrants part of those surveyed as well? It must be noted that migration into Indonesia, especially from South Korea, India and China, has been taking place in the...