PAPER MACROECONOMICS

ABOUT

THE IMPACT OF UNEMPLOYMENT ON THE COUNTRY'S ECONOMY

CREATED BY:

1. RAHMI MUFLIHAH ABRONI 17101021

2. WAHYUNI UTAMI 17101028

TAZKIA INSTITUTE BOGOR

ACADEMIC YEAR 2019/2020

MBS B 17 IP

DEPARTMENT OF SHARIAH BUSINESS MANAGEMENT

 FOREWORD

Praise the author prayed to the presence of Allah SWT because of the grace and
grace of God the author can complete this scientific work.
In preparing this scientific work, there are many obstacles that the writer
faces. But the author realizes that the fluency in making scientific works is none other
than the help, encouragement and guidance of mentors, coaches, parents and friends all
so that the obstacles that the authors face can be overcome. Therefore the authors thank:
1. The Chancellor of the Tazkia Intitute Bogor campus who has helped in
compiling the lecture program so that this scientific work is completed
2. Supervising lecturer Mr. Satria Hibatal Azizy who has guided the author in
making this scientific work
3. Parents who have helped encourage and pray for writers to always be
enthusiastic in writing this scientific work.
4. Friends all who participated helped in the manufacturing process .
5. And those who cannot be mentioned are all who also helped in the making of
this scientific work

Hopefully this scientific work can be useful and be a contribution of ideas for those
who need it, especially for all matriculation students so that the expected goals can be
achieved, and the writer also hopes that readers can provide criticism and suggestions so
that the writer can improve this paper later, Aamiin.

Bogor, 16 October 201 9

Author

The

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 TABLE OF CONTENT

FOREWORD ................................................................................................................... I

TABLE OF CONTENT ................................................................................................ II

CHAPTER I .................................................................................................................... 3

1.1 BACKGROUND .................................................................................................... 3

1.2 FORMULATION OF THE PROBLEM..................................................................... 3
1.3 PURPOSE ................................................................................................................. 4
CHAPTER II DISCUSSION ......................................................................................... 5
2.1 DEFINITION UNEMPLOYMENT................................................................................ 5
2.2 TYPES OF UNEMPLOYMENT ................................................................................... 6
2.2.1 Based on the Cause of Occurrence ................................................................. 7
2.2.2 Based on Business Hours................................................................................ 9
2.3 THE CAUSE OF UNEMPLOYMENT ..................................................................... 10
2.4 UNEMPLOYMENT RATE IN INDONESIA ............................................................ 11
2.5 The impact of unemployment on the economy on society .............................. 12
2.6 THE IMPACT OF UNEMPLOYMENT ON THE COUNTRY'S ECONOMY...................... 13

CHAPTER III CLOSING............................................................................................ 15

3.1 CONCLUSION......................................................................................................... 15
3.2 SUGGESTION ......................................................................................................... 15

REFERENCES ............................................................................................................. 16

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 CHAPTER I

INTRODUCTION

1.1 Background

Unemployment is one of the problems faced by all countries in the

world, especially in Indonesia which is still a developing country. High
unemployment has both direct and indirect impacts on poverty, crime, and socio-
political problems which are also increasing. Unemployment that is increasing can
also cause state revenues to decline, which is caused by the lack of state income
derived from tax payments by the public. So that it can cause the level of the economy
in Indonesia to decline.
Unemployment occurs because the number of available jobs is smaller
than the number of job seekers. Also the competence of job seekers is not in
accordance with the job market. In addition, the job market information is also less
effective for job seekers. The country of Indonesia is one of the countries in the world
with the most population. With a very large population, Indonesia should have quality
human resources. However, until now the country of Indonesia is still experiencing a
downturn in the economy because there are many and high poverty problems that are
mostly caused by unemployment.

1.2 Formulation of the Problem

In discussing the material on " The Impact Of Unemployment On The
Country's Economy" we raise the formulation of the problem namely:
a) What is meant by unemployment ?
b) What are some types of unemployment ?
c) What are the causes of unemployment ?

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 d) What is the unemployment rate in Indonesia?
e) What impact does unemployment have on the people's economy?
f) What is the government's effort to overcome unemployment?

1.3 Purpose
The purpose of this paper is to find out about :
a) To find out the meaning of unemployment.
b) To find out the types of unemployment.
c) To find out the cause of unemployment.
d) To find out the unemployment rate in Indonesia
e) To find out the impact of unemployment on the community economy.
f) To find out the government's efforts to overcome unemployment.

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 CHAPTER II
DISCUSSION
2.1 Definition Unemployment
Unemployment or unemployment is a term for people who do not work at all, are
looking for work, work less than two days for a week, or someone who is trying to get a
decent job. And Unemployment can also be defined as the macroeconomic problems that
most directly and severely affect people (Mankiw, 2009).

Unemployment is generally caused by the number of the workforce or job seekers

not being proportional to the number of jobs that can absorb it. Unemployment is often a
problem in the economy because with unemployment, productivity and community
income will be reduced so that it can cause poverty that will cause a decline in the
country's economy. For most people, losing their jobs means a reduction in living
standards and psychological stress. It is not surprising that unemployment is often the
topic of political debate and that politicians often claim that the policies they propose will
help create jobs.

Economics studies unemployment to identify the causes and to help improve

public policies that affect unemployment. Some of these policies, such as job training
programs, help people find work. Others, such as unemployment insurance, reduce some
of the difficulties facing unemployment. But other policies affect the prevalence of
unemployment accidentally. Laws that require high minimum wages, for example, are
widely considered to increase unemployment among less skilled and experienced labor
force members.

In fact, not everyone in the workforce has a job all the time: in all free market
economies, at any time, some people are unemployed. Figure 6-1 shows the
unemployment rate - the percentage of the unemployed labor force - in the United States
since 1950. Although the unemployment rate fluctuates from year to year, the
unemployment rate never approaches zero. The average is between 5 and 6 percent,
meaning that about 1 out of every 18 people who want a job don't have it.

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 Here we examine the determinants of the natural rate of unemployment - the
average rate of unemployment at which the economy fluctuates. The natural rate is the
unemployment rate in which the economy is attracted in the long run, given all the
imperfections of the labor market that prevent workers from getting jobs immediately.

2.2 Types of Unemployment

In further macroeconomic studies, the discussion of the problem of
unemployment will be carried out more specifically and carefully. For example, he will
discuss whether unemployment is voluntary unemployment or involuntary
unemployment. Voluntary unemployment is temporary unemployment, because someone
wants to find a job that is better or suitable or suitable. Dukalara unemployment is
unemployment that someone is forced to accept, even though he actually still wants to
work. Voluntary unemployment and dukalara unemployment are closely related to the
following types of unemployment.

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2.2.1 Based on the Cause of Occurrence
1. Frictional Unemployment
If during a certain period the economy continues to experience rapid
development, the number and level of unemployment will be lower. In the end
the economy can reach the level of full employment, that is if there is no frictional
unemployment. A group of economists uses the term normal unemployment or
jobless search. This type of unemployment is temporary and occurs because of
the gap between job seekers and job openings. This gap can be a time gap,
information, or due to geographical conditions / distance between job seekers and
employment opportunities. Those who fall into the category of temporary
unemployment are generally willing to exceed 4%. This unemployment is called
voluntary unemployment to get a job.

Frictional unemployment is not a result of the inability to get a job, but

rather as a result of the desire to find better work. In the process of finding a better
job sometimes they have to be unemployed. But unemployment is not serious
because it is temporary.

2. Structural Unemployment
It is said structural unemployment because of its fundamental nature of
seeking employment is unable to meet the requirements needed for available job
openings. This happens in a rapidly developing economy. The higher and more
complex the production process and / or the production technology used, demands
higher labor requirements. For example, the labor force required for the chemical
industry requires relatively heavy requirements, namely a minimum education of
baccalaureate (D3 Program), being able to use a computer and mastering a
minimum of English.

With the increasingly large role of market mechanisms increasingly

globalized, tolerance for lack of requirements no longer exists. Ten or twenty
years ago, someone who did not meet the required requirements could still be

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tolerated, as long as there were only a few shortcomings. Because the supply of
good quality labor is relatively little compared to needs. But now what is
happening is an excess of quality labor. If there is still a shortage, it can be
overcome by bringing in foreign workers.

Viewed from its nature, structural unemployment is more difficult to

overcome than frictional unemployment. Besides requiring large funding, also a
long time. Even for Indonesia, structural unemployment is a big problem in the
future, if there is no improvement in the quality of human resources.

3. Cylical Unemployment
Cyclical unemployment or conjuncture unemployment is unemployment
caused by changes in the level of economic activity. When economic activity
declines, companies must reduce their production activities. In practice this
means that working hours are reduced, some production machines are not used,
and some workers are laid off. Thus, economic setbacks will increase the number
and level of unemployment.

The workforce will continue to grow as a result of population growth. If

economic setbacks continue so that they cannot absorb additional labor, then
conjuncture unemployment will become more serious. This means that economic
policies are needed to increase economic activity, and efforts should be made to
increase employment opportunities for new workers entering the labor market (as
a result of growing population). Conjuncture unemployment can only be reduced
or overcome the problem if the economic growth that occurs after the economic
downturn is large enough can also provide new employment opportunities that
are greater than the increase in labor that occurs.

4. Seasonal Unemployment
This unemployment is closely related to fluctuations in short-term
economic activity, especially in the agricultural sector. For example, outside

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 the planting and harvest season, farmers are generally unemployed, until they
wait for the next planting and harvest season.

5. Technology Unemployment
Technological unemployment is unemployment that occurs as a result
of the change or replacement of human labor into machine power. For example,
before there was a rice mill, people who worked as rice pounders worked, after
there was a rice milling machine they did not work anymore or before there
was an e-toll card, people who worked as toll gatekeepers would work, but after
technology developed people who works as a payment guard are replaced by
e-toll cards.
6. Political Unemployment
This unemployment occurs because there are government regulations
that directly or indirectly result in unemployment. For example the closure of
problem banks that cause layoffs.
7. Deflatoir Unemployment
This deflationary unemployment is caused by insufficient employment
in the economy as a whole, or because the number of workers exceeds the level
of employment opportunities, resulting in unemployment.

2.2.2 Based on Business Hours

Based on working hours, unemployment is grouped into three types;
1. Disguarded Unemployment is a worker who does not work optimally for a
certain reason.
2. Under Unemployment is workers who do not work optimally because there are
no jobs, usually the underemployed workers are workers who work less than
35 hours for a week.
3. Open Unemployment is workers who really do not have a job. This type of
unemployment is quite a lot because they have not yet found work despite
trying their best.

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2.3 The cause of unemployment
The cause of unemployment is caused by several factors. First, increase the
population in Indonesia. This increase in population has resulted in a large increase in the
number of the labor force and the Indonesian state currently occupies the highest
unemployment rate at a young age. This illustrates that the increase in population is not
proportional to the number of employment opportunities in Indonesia. Second, the quality
of Human Resources (HR) is still low. The low quality of human resources is also a major
problem for the Indonesian state in increasing unemployment. The low quality of human
resources is caused by uneven education so that the knowledge and skills of people who
are still in school are also reduced. And until now, there has been no serious action from
the government towards improving the quality of human resources.

And also unemployment is caused due to Termination of Employment (FLE).

Termination of employment is one of the things most feared by the workers. Layoffs
occur because of a work contract that has expired or a reduction in employees caused by
lowering financial income in a company so that the need for expenses. If the number of
people who are laid off will cause unemployment to increase so that the poverty rate also
increases. However, unemployment is generally caused by the amount of labor that is not
proportional to the amount of work that can absorb it. Unemployment is often a problem
in the economy because with unemployment, productivity and incomes will decline so
that it can cause poverty and other social problems.

The unemployment rate can be calculated by comparing the number of

unemployed people with the total workforce expressed in percent. The lack of income
causes unemployment to reduce their consumption expenditure which causes a decrease
in the level of prosperity and welfare. Prolonged unemployment can also have adverse
psychological effects on the unemployed and their families. Unemployment rates that are
too high can also cause political, security and social turmoil that disrupts the development
process.

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2.4 Unemployment rate in Indonesia
The problem of unemployment is indeed very complex to be discussed and is
an important issue, because it can be associated with several indicators. Economic
indicators that affect the unemployment rate include economic growth in the country
concerned. The unemployment rate in 2008 - 2012 in Indonesia can be seen in the
following table;

Tabel 2.2

Tingkat Pengangguran Terbuka di Indonesia tahun 2008 – 2012

No. Tahun Total Pengangguran

1. 2008 9.394.515
2. 2009 8.962.617
3. 2010 8.319.779
4. 2011 7.700.086
5. 2012 7.244.956
Sumber : BPS, Data Strategis BPS 2012

From table 3.2 it can be seen that the number of unemployed people in Indonesia
from 2008 to 2012 has decreased. In 2008 Indonesia's total unemployment reached
9,394,515 people and in 2009 it decreased to a total of 8,962,617. This decline has
continued into 2012 with 7,244,956 unemployed people in Indonesia.

The Central Statistics Agency (BPS) recorded a decrease in the open

unemployment rate (TPT) to 5.01% in February 2019. Currently, the number of
unemployed people in Indonesia according to BPS is 6.82 million people. Based on
education level, Vocational High School (SMK) graduates still contribute the highest
unemployment rate among other education levels, which is 8.63%. The next highest rate
is at the diploma level I / II / III (6.89%). In other words, there are offers of labor that are
not absorbed, especially at the level of vocational education and diploma I / II / III.

BPS states, those with low education tend to be willing to accept any job, it can
be seen from the lowest TPT elementary school among all levels of education that is equal

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to 2.65%. However, compared to conditions last year, the decline in TPT occurred at all
levels of education. In total, the labor force in February 2019 was 136.18 million, up 2.24
million compared with February 2018. The labor force component is the working
population and unemployment. In February 2019, 129.36 million people were employed
and 6.82 million people were unemployed. Compared to last year, the number of people
employed increased by 2.29 million, while unemployment fell by 50,000.

The population structure that works according to work in February 2019 is still
dominated by three main occupations, namely: Agriculture, Forestry, and Fisheries by
29.46%; Trade 18.92% and Manufacturing Industry 14.09%. According to researchers
from the Bhima Yudhistira Institute of Economic and Financial Development (Indef), in
the last 20 years the open unemployment rate is currently the lowest. "If you look at a
longer time, in 1997, the unemployment rate was only 4.69%," Bhima said in Jakarta .

2.5 The impact of unemployment on the economy on society

The impact of unemployment is not only on the country's economic sector, but
also on the community's sector. Among the effects of unemployment on society are;

a) Production activities are hampered, due to declining output and the quality of
this output, which can reduce national income and per capita income.

b) Substandard distribution activities, because if the output produced by low-

quality companies, then the goods can not be sold in the market, both domestic
and foreign markets, so economic growth is low.

c) Consumption activities are reduced, because the goods needed by consumers

are not fulfilled by producers. Especially if producers are unable to produce goods,
starvation will occur

d) There is a psychological and psychological burden. Unemployment that often

occurs can increase the psychological burden on a person because of the many
needs that must be met, while there is no income earned. Therefore, in this case a

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 prolonged psychological burden will cause a person to commit acts of crime and
crime such as stealing, to make ends meet.

2.6 The impact of unemployment on the country's economy

Unemployment can also affect the rate of economic growth, because

unemployment is one of the benchmarks of economic growth or prosperity of a country.
Because a country with a high unemployment rate shows that there is instability in the
economy and is a barrier to the state to achieve economic development planned by the
government.

According to Sadono economic growth means the development of activities in the

economy which causes the goods and services produced in the community to increase and
the prosperity of the community to increase. Thus to determine the level of economic
growth achieved, real national income must be calculated according to a fixed price, that
is, the prices that apply in the selected base year. So economic growth measures the
achievements of an economic development. Therefore the concept that is suitable for
economic growth is GDP / GDP with constant prices. GDP is the value of goods and
services produced in the country in a given year. And among the effects of unemployment
on the economy are;

1. Causing a decline in national income (GDP)

High unemployment will reduce individual income potential. And if the

unemployment rate in a country decreases, it can increase national income in the country
concerned.

2. Reducing the level of capital investment

Because someone who does not work or unemployed does not have income, then
they do not have the opportunity to save. Though savings are one component of
investment. Therefore, people who do not work can reduce investment. And investment
is positively correlated to GDP. So that unemployment can reduce GDP, so if the
unemployment rate increases then the Gross Domestic Product (GDP) will decrease.

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And a country with a low income level will reduce investor interest in foreign companies
to invest in Indonesia.

3. Government revenue decreases

The impact of high unemployment and can be an obstacle in national development

is that state revenues decline. Because, this state revenue is sourced from taxes, foreign

exchange, and others that can help increase national economic growth. Decreasing state

income from the tax sector caused by high unemployment will cause economic activity

to decline so that income in the community also decreases. Thus, taxes that must be paid

by the people also decrease. If tax revenues decline, funds for government economic

activities will also be reduced so that development activities will decline. Tax revenue is

part of the Gross Domestic Product component, namely government expenditure (G). So

the higher the number of unemployed, the tax from the community also falls. Government

revenue fell, so that government expenditure (G) also fell. The component of government

expenditure (G) falls, so GDP also falls.

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 CHAPTER III
CLOSING

3.1 Conclusion
Unemployment or unemployment is a term for people who do not work at
all, are looking for work, work less than two days for a week, or someone who is
trying to get a decent job. Unemployment occurs due, among other things,
because the number of available jobs is smaller than the number of job seekers.
Also the competence of job seekers is not in accordance with the labor market. In
addition, the labor market information is less effective for job seekers. Every
unemployed person is endeavored to have a lot of work for humanity which means
productive and remunerative according to Article 27 Paragraph 2 of the 1945
Constitution with the participation of all Indonesian people. Make it even firmer
to make unemployment a national commitment .

3.2 Suggestion
To reduce the unemployment rate, there must be a role for the government.
The government must be able to issue policies that can create jobs, as well as
implement these consistent policies in earnest until maximum results are seen.
The government provides counseling, coaching and job training to the community
to be able to create their own jobs in accordance with their respective abilities and
interests to develop work competencies in order to improve their abilities,
productivity and welfare. Apart from the government, the community must also
participate in efforts to reduce the number of unemployed people in Indonesia .

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 REFERENCES

https://ardra.biz/ekonomi/ekonomi-makro/pengaruh-pengangguran-terhadap-perekonomian-
negara/

https://id.scribd.com/doc/309923693/Dampak-Pengangguran-Bagi-Ekonomi-Indonesia
Mankiw, N. G. (2009). Macroeconomics. USA: Worth Publisher.

https://www.herdiana.my.id/2019/11/dampak-pengangguran-terhadap-perekonomian-
negara.html

http://devinpratamasoftskill.blogspot.com/2011/11/dampak-dampak-pengangguran-
terhadap.html

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