Govt expects jobless rate to drop further to 7% in 2011
Aditya Suharmoko, The Jakarta Post, Jakarta | Wed, 05/12/2010 9:10 AM | Headlines
The government expects the unemployment rate will fall to 7 percent next year on the back of a surging economy.
Finance Minister Sri Mulyani Indrawati said in Jakarta on Tuesday that the fall in the jobless rate to 7.4 percent in February as reported by the Central Statistics Agency (BPS) indicated that the economic recovery had begun to create more jobs for the people.
Speaking to reporters following a Cabinet meeting at the State Palace , the finance minister said that with this encouraging report she was quite sure the government’s target to further lower the jobless rate estimate to 7 percent next year from 7.3 percent would be met.
BPS head Rusman Heriawan said it was feasible that the unemployment rate would hit 7 percent. “With a 6.3 percent economic growth, job creation is bigger,” he said.
But Rusman said it would take up to five years to significantly cut the number of people working in the informal sector.
According to the BPS, only 31.4 percent of workers are employed in the formal sector.
The agency reported Monday that the economy grew 5.7 percent in the first quarter, the highest
annual growth since the third quarter of 2008, supported by strong consumption, exports and
investment.
The government is projecting the economy to further expand to 6.3 percent in 2011.
Analysts said Indonesia ’s economy could expand close to 6 percent this year if the government accelerated spending.
Export and investment will drive growth this year along with a still-strong private consumption.
Mulyani said the 6.3 percent growth next year would be supported by a 5.4 percent growth in consumption, 10.8 percent export growth, 10.9 percent investment growth and an 11.2 percent growth in government spending.
Two significant factors that will affect Indonesia ’s economy are the Greece debt crisis and global liquidity, which may be withdrawn as countries remove their stimulus packages disbursed to cushion the impacts of the 2008 global financial crisis, she said.
“Both will present a challenge for Indonesia ,” said Mulyani.
Mulyani also said that the government would continue the bureaucracy reform, in which ministries should optimize their budget.
“Ministers should design highly-precise programs as accurately as possible... and make critical evaluations of ongoing programs,” she said.
In the Cabinet meeting, President Susilo Bambang Yudhoyono asked for four things: For government spending to spur growth; for the government to create a social safety net; for subsidies to be designed accurately and he also asked for manageable debts.
“Tax reform should be continued. It’s a lesson for us to make corrections without creating punishment for all officials; many of them are still good and manage the backbone of state revenue,” Mulyani said, echoing the President.
