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Name : Fika Aulia Kusuma
NPM : 1506710393
Title of Paper : Current conditions of Indonesia Unemployment based on the Unemployment
types.
Lecturer : Surjadi
Subject : Indonesia Economy
Date : March 28th, 2017
Signature :
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Introduction
Employment rate is the percentage of the labor force that is unemployed. Unemployment
rate is a key indicator of the economys health. Unemployment rate usually closely related to the
economys aggregate output (Case, Fair, & Oster, 2014). Unemployment occur whn people who
are in a working age dont have a job or are looking for a job.
However, people did not simply call as unemployed because they are not looking for job of
there is no job in the labor market. There are people who choose to leave their job and looking for
another jo. At time when they look for another job, they will be unemployed. There are also
people who fired by their employer because the company where they work having a bankruptcy or
lowering cost due to the economic recession. By the time they get fired. They are unemployed.
Student who just graduated or just finished their study from particular education will need some
times to find a job they are looking for, since fresh graduate tend to look for jobs that suits the at
first. By the time they look for a new job, they will be unemployed. Farmer who only work at the
particular seasons also can be counted as unemployed by the time that the seasons already end and
they dont have anything to do. Hence, many unemployment doesnt happen just because the labor
market is not available. It could happen because some factors that mostly unavoidable. Some
unemployment is unavoidable in free market economics (Lilien, 1982).
- Frictional unemployment, the portion of unemployment that is due to the normal turnover
in the labor market; used to denote short run job/ skill-matching problems
- Structural unemployment, the portion of unemployment that is due to changes in the
structure of the economy that result in significant loss of jobs in certain industries.
- Cyclical unemployment, is above frictional plus structural unemployment.
- Seasonal Unemployment,
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Explanation
Indonesia is a big country with large amount of citizen. Indonesia placed 4th as the country
with the highest population.
Penduduk Indonesia menurut Provinsi 1971, 1980, 1990, 1995, 2000 dan 2010
Penduduk
Provinsi
1971
1980
1990
1995
2000
2010
4
Maluku
Utara
-
-
-
-
785059
1038087
Papua
Barat
-
-
-
-
-
760422
Papua
923440
1173875
1648708
1942627
2220934
2833381
INDONESIA
119208229
147490298
179378946
194754808
206264595
237641326
Catatan
:
Termasuk
Penghuni
Tidak
Tetap
(Tuna
Wisma,
Pelaut,
Rumah
Perahu,
dan
Penduduk
Ulang-alik/Ngelaju)
Sumber
:
Sensus
Penduduk
1971,
1980,
1990,
2000
dan
Survei
Penduduk
Antar
Sensus
(SUPAS)
1995
Population, Total
2012 248,037,853
2013 251,268,276
2014 254,454,778
2015 257,563,815
The percentage of annual population growth is increasing through the year. It is a big
amount of citizenship is quite big remembering that Indonesia still a developing country. This does
not correlate with the death rate that shows consistent rate every year. This big amount of
citizenship lead to several problems that could affect directly or indirectly to the macroeconomic
indicator of Indonesian Economy, such as unemployment. Unemployment in Indonesia is
surprisingly decreasing in the past following years. Based on the statistic data, on 2014 Indonesia
unemployment rate based on the percentage of the labor force is 5,9% decreasing from 6.2 % on
2013 and 6.1 % on 2012. This decreasing of unemployment rate could be because of the
improvement of start-ups company that recently developing in Indonesia that attract new
employees and open jobs opportunities. The level of working age is increasing through the past
few years while the population of non working citizen is increasing. This is a good sign for the
unemployment rate since the number of retirement that indicated from the population for more than
65 citizen is decreasing and the birth rate that indicated by the population of 0-14 ages citizen is
also decreasing (World Bank, 2015).
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Population of working age
2012 66.585 %
2013 66.731 %
2014 66.909 %
2015 67.134 %
2012 28.39 %
2013 28.208 %
2012 5.025 %
2013 5.062 %
2014 5.109 %
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Population more than 65 age
2015 5. 174 %
(Source: worldbank.org)
According to data above, SMK graduated workers who are unemployed showing a big
number while university graduated worker showing low number. Fresh University graduated
student who just finish their study need more time to find a job that suit them and match with their
skill. By the time they look for another job, they will be unemployed. People who choose to resign
for their current job because they think they are not suit with their job, will also need time to look
for another job. They are call Frictional Unemployment. Frictional Unemployment caused by time
it takes workers to search for a job (Case, Fair, & Oster, 2014). This frictional unemployment can
affect the labor market itself which is the change of composition of demand among the industries
of regions called as sectoral shift (Case, Fair, & Oster, 2014). Sectoral shift will not have impact on
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the level of unemployment if labor allocation is affect the natural rate when it takes time for laid
off worker to be reemployed (Lilien, 1982). Many frictional unemployment in Indonesia are
consist of fresh graduated student who are tend to move from one job to another job. This
happened because fresh graduated student tends to look for a job that suit to their preferences and
their skill.
Natural rate of unemployment rate occurs as a normal rate of unemployment at the normal
functioning economy (Case, Fair, & Oster, 2014). Cyclical Unemployment also described as the
fluctuation of the natural rate of unemployment rate (Lilien, 1982). Natural rate of unemployment
regularly explained as the sum of the frictional unemployment and structural unemployment. This
theory of natural rate unemployment could relate to another types of unemployment which us
Cyclical unemployment. Sometimes cyclical unemployment is above the frictional and structural
unemployment itself. Cyclical unemployment could happen because there is an economic recession
in a particular country. Indonesia have already suffered from economic recession during 1997-
1998, that caused the price of goods are expensive and many organizations are suffering lost. in the
past 12 years, Indonesia has experienced two big economic crises, namely the Asian financial crisis
started by mid. 1997 and reached its peak in 1998, and the global economic crisis in 2008 and 2009
(Tambunan, 2010). This economic recession also caused some people lose their business and jobs.
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Indonesia is famous as agricultural and marine country. Indonesia is rich for their natural
resources especially for spices and seafood. Hence, many Indonesia citizens are depending on the
agricultural and marine sector as their daily job. Most of Indonesia citizen who live in the suburb
area is working as a farmer and fisher. However, working as farmers and fishers is different than
working in an office. Farmers and fishers mostly work based on the seasons. Especially farmer
who plant particular seeds that only grow in a particular times a year or period. After the seasons
end, the farmer will be unemployed. Fishers also work through the season. Fishers are working
according to the weather of the seasons. Fishers could not go fishing if it is raining seasons.
Unemployment will occur once they season come and they will not have jobs until the seasons
change again. According to data above, it may suggest that Indonesia is experiencing jobless
growth, it is important to note that employment outcomes have continued to fluctuate between
February and August substantially, pointing to both seasonal and other factors playing a role in
labor market churning (International Labor Organization, 2015). From the table below, we could
see Indonesia suffer the increasing of unemployment rate in agricultural, Forestry, Hunting and
Fishery on February since it is the raining season which prevent the seasonal workers to work
normally.
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Conclusion
Unemployment rate as one of the macroeconomic indicator is playing important role in the
Indonesias economic health. Imagine our GDP is really high, even higher than Singapore, but our
GDP per capita is not as higher as them. Unemployment directly and indirectly can affect the
economic health of Indonesia by reducing government income through tax and increasing the
social cost made by government.
Unemployment is unavoidable yet can be reduced by several ways. Pursuing people to open a new
business will open e anew job opportunity for other people. In the recent years, many Indonesian
people start to open a new business that allow workers who are seeking for job to have a job. For
example, is GO-JEK. GO-JEK has open some really big job opportunities for people who dont
have any education background yet have skill.
Indonesias percentage of annual population growth is decreasing through the past few years
following the decreasing of unemployment rate. The decreasing of population growth could
happen because government has push the KB (Keluarga Berencana) program in the past few years.
However, the population of working age is still increasing over the past years. This condition could
also happen because many female citizen are entering the labor force that is different from the past
years that many female citizen choose to stay at home a a housewives.
Frictional unemployment happens because these days there are so many people who change their
job many times. People like this tend to search for new environment or new experience and search
for comfortable work environment for them. This frictional unemployment could be overcome by
building a good work environment for the worker to avoid turnover. Structural unemployment tend
to be unavoidable because this happened from company side. Company sometimes have no choices
other than firing employees in order to lowering the operational cost. Solutions for the structural
unemployment is reallocated the labor force to another region or another sector so the labor force
would no be weighted on one region or sector. Cyclical unemployment is also avoidable because
sometimes it happened because of the economic recession which are also unavoidable. In order to
overcome the cyclical unemployment, we need too increase the purchasing power of the people
which is another homework for the government to increase the social welfare. For the seasonal
unemployment it is good for the workers, especially farmers and fishers, to look for another
alternative. Farmers could plant another seeds that match the seasons. Government could also
provide training skill to create new skill for the workers to fill their leisure time during the seasons.
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Works Cited
UNICEF. (n.d.). Economic Indicators. Retrieved from UNICEF:
https://www.unicef.org/infobycountry/stats_popup7.html
Case, K. E., Fair, R. C., & Oster, S. M. (2014). Principle of Economics. Harlow, Essex, England:
Pearson.
Badan Pusat Statistik. (2015). Rasio Jenis Kelamin menurut Provinsi. Retrieved from Badan Pusat
Statistik: https://www.bps.go.id/linkTableDinamis/view/id/844
Mankiw, G. N. (2012). Macroeconomics. New York City, New York, United States of America:
Worth Publishers.
Tambunan, T. T. (2010, August). The Indonesian Experiences with Two Big Economic Crisis.
Scientific Research.
International Labor Organization. (2015, November). Indonesia : Labor and Social Update Nov
2015. Asia Pacific Decent Work.
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