Emerging Economic Development With Youth Entrepreneurship - The Fact of Unemployment, Economic Stagnation, and Its Social Impact
Chapters
Chapter 1:
The Fact of Unemployment, Economic Stagnation, and Its Social Impact
Chapter 2:
Creating Add Value by Idea and Knowledge
The Fact of Unemployment, Economic Stagnation, and Its Social Impact
Chapter 1
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Updated Nov 04, 2007
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First of all, we would like to discuss about our national vision. Indonesia’s aim to become a welfare state, to reach the target for prosperity for all, is still exist in our life spirit. Indonesia’s way of life within Pancasila ( The Five Basic Principles) wrote the hope to become a prosperous country.
Secondly, the country enjoyed tremendous economic growth in the 1980s and much of the 1990s, due to Indonesia’s abundant natural resources and increases in the manufacturing and services sectors. As a result, Indonesia’s middle class grew considerably, but poverty remained widespread. The agriculture sector led the Indonesian economy in output until 1991, when it was overtaken by manufacturing. In 2003 agriculture accounted for 17 percent of the GDP. Annual output grew by 3 percent per year during the early and mid-1990s. Indonesia has achieved remarkable success in economic development in recent years. During the last decade GDP growth ran as high as 7.8% per year (in 1996), but since the economic crisis that hit Indonesia in 1997, as a result of the crisis that year in Thailand growth has plunged, falling to just 0.85% in 1999. During the first quarter of 2002, however, GDP growth has rebounded, climbing to 3.25%.
The rupiah, which had been in a range around Rp8,600/$1 since mid-2003, depreciated by about 12% over the first 6 months of the year to around Rp9,600. Government subsidies insulate consumers from the direct impact of rising oil prices, but higher prices for imported food and other items put upward pressure on consumer prices. Indonesia, traditionally an exporter of oil and gas, did not get benefit from the rise in global oil prices over the first half of the year. The Government’s subsidies on domestic fuel are projected to cost $2.4 billion this year, constituting a major drain on the budget.
The total population of Indonesia was estimated to be 213 million as of 2001. At the same time, the size of the economically active population age 15 and over was estimated to be 144,033,873. Between 1997 and 2001, the employment rate increased 4.32%, from 87,049,756 to 90,807,417. The largest share of the workforce is still dominated by workers with only a primary-school education (50,280,736 workers in 2001). The share of workers with high school and university degrees, however, has been rising in urban areas, but less-well educated workers are still a majority even in cities.
Indonesia's open unemployment rate is high compared to the other developing Southeast Asian countries. In 2003, the official rate of 9.5% was astronomically higher than those of its neighbors, Malaysia and Thailand, which were just 3.6% and 1.5% respectively. It is only lower than that of the Philippines, which was 10.2%. Taking the comparison a bit further, Korea’s unemployment rate in the same year was only 3.6%. Open unemployment rate jumped from 4.4% in 1994 to 6.5% in 2004, or there was a 47percent proportional increase. If one looks between 1994 and 1997, just prior to the economic crisis, unemployment rate was relatively stable. During the crisis, it skyrocketed to almost 6.5% in 1999 before starting to descend in the following year and reaching 5.5% in 2001. Afterwards, the rate went on a generally upward trend up until 2004. More than half of the unemployed are highly educated, with at least 12 years of education, and a further quarter having nine years of education. This is in accordance with the higher open unemployment rate among the highly educated found in other studies (BPS, 2003; Irawan, Ahmed, & Islam, 2000). Young workers dominate the unemployed in both areas, hovering between 62% and 68% in urban areas and between 71% and 79% in rural areas. This shows that it was more difficult for new entrants, who were generally better educated, to get into the labor market to find jobs in rural areas. Hence, it is of little surprise that many of the young and the educated leave rural areas and flock to urban areas.
Social impacts of the high rate of unemployment are, the rise of criminal number, the decrease of social quality of life, lack of trust, and the worst, because of most of the open unemployment are youth and highly educated, meaning that, the future of Indonesia is still in a big question mark! The future of country is the youth, if there are so many young people live with unclear future, lack of appreciation, and no guarantee of good social life, meaning no trust, Indonesia facing unclear future.
Secondly, the country enjoyed tremendous economic growth in the 1980s and much of the 1990s, due to Indonesia’s abundant natural resources and increases in the manufacturing and services sectors. As a result, Indonesia’s middle class grew considerably, but poverty remained widespread. The agriculture sector led the Indonesian economy in output until 1991, when it was overtaken by manufacturing. In 2003 agriculture accounted for 17 percent of the GDP. Annual output grew by 3 percent per year during the early and mid-1990s. Indonesia has achieved remarkable success in economic development in recent years. During the last decade GDP growth ran as high as 7.8% per year (in 1996), but since the economic crisis that hit Indonesia in 1997, as a result of the crisis that year in Thailand growth has plunged, falling to just 0.85% in 1999. During the first quarter of 2002, however, GDP growth has rebounded, climbing to 3.25%.
The rupiah, which had been in a range around Rp8,600/$1 since mid-2003, depreciated by about 12% over the first 6 months of the year to around Rp9,600. Government subsidies insulate consumers from the direct impact of rising oil prices, but higher prices for imported food and other items put upward pressure on consumer prices. Indonesia, traditionally an exporter of oil and gas, did not get benefit from the rise in global oil prices over the first half of the year. The Government’s subsidies on domestic fuel are projected to cost $2.4 billion this year, constituting a major drain on the budget.
The total population of Indonesia was estimated to be 213 million as of 2001. At the same time, the size of the economically active population age 15 and over was estimated to be 144,033,873. Between 1997 and 2001, the employment rate increased 4.32%, from 87,049,756 to 90,807,417. The largest share of the workforce is still dominated by workers with only a primary-school education (50,280,736 workers in 2001). The share of workers with high school and university degrees, however, has been rising in urban areas, but less-well educated workers are still a majority even in cities.
Indonesia's open unemployment rate is high compared to the other developing Southeast Asian countries. In 2003, the official rate of 9.5% was astronomically higher than those of its neighbors, Malaysia and Thailand, which were just 3.6% and 1.5% respectively. It is only lower than that of the Philippines, which was 10.2%. Taking the comparison a bit further, Korea’s unemployment rate in the same year was only 3.6%. Open unemployment rate jumped from 4.4% in 1994 to 6.5% in 2004, or there was a 47percent proportional increase. If one looks between 1994 and 1997, just prior to the economic crisis, unemployment rate was relatively stable. During the crisis, it skyrocketed to almost 6.5% in 1999 before starting to descend in the following year and reaching 5.5% in 2001. Afterwards, the rate went on a generally upward trend up until 2004. More than half of the unemployed are highly educated, with at least 12 years of education, and a further quarter having nine years of education. This is in accordance with the higher open unemployment rate among the highly educated found in other studies (BPS, 2003; Irawan, Ahmed, & Islam, 2000). Young workers dominate the unemployed in both areas, hovering between 62% and 68% in urban areas and between 71% and 79% in rural areas. This shows that it was more difficult for new entrants, who were generally better educated, to get into the labor market to find jobs in rural areas. Hence, it is of little surprise that many of the young and the educated leave rural areas and flock to urban areas.
Social impacts of the high rate of unemployment are, the rise of criminal number, the decrease of social quality of life, lack of trust, and the worst, because of most of the open unemployment are youth and highly educated, meaning that, the future of Indonesia is still in a big question mark! The future of country is the youth, if there are so many young people live with unclear future, lack of appreciation, and no guarantee of good social life, meaning no trust, Indonesia facing unclear future.
