Indonesia's jobless rate could hit decade-high, ministers warn

JAKARTA • Indonesia's unemployment rate could hit its highest level in more than a decade this year due to the coronavirus pandemic, with South-east Asia's largest economy set to contract more than previously expected in the second quarter, ministers said.

Planning Minister Suharso Monoarfa told a parliamentary hearing yesterday that 4 million to 5.5 million people could lose their jobs this year, pushing the unemployment rate up to 8.1 per cent - 9.2 per cent, versus 5.28 per cent last year.

The unemployment rate may remain between 7.7 per cent and 9.1 per cent next year, he said.

The forecast is still more conservative than that of the Indonesian Chamber of Commerce and Industry, whose chairman expects new rounds of layoffs by August, on top of an estimated 6.4 million jobs shed so far.

The number of people living below the poverty line is expected to rise to between 26.2 million and 27.5 million, Mr Monoarfa said, representing a poverty rate of 9.7 per cent to 10.2 per cent in a country with more than 260 million people.

"This pandemic between March 30 and June 6... has resulted in massive losses in working hours. This has shed around 362 trillion rupiah (S$35.6 billion) in purchasing power," he said.

His ministry's estimates were made assuming gross domestic product (GDP) this year comes in within a range of a 0.4 per cent contraction to a 1 per cent expansion.

Finance Minister Sri Mulyani Indrawati told the same hearing that second-quarter GDP was expected to contract 3.8 per cent, compared with her previous estimate of a 3.1 per cent drop.

She also warned that a rising number of coronavirus cases recorded in some of the country's biggest provinces, such as East Java, could increase pressure on GDP.

Mr Monoarfa predicted foreign exchange earnings from tourism this year would slump to between US$3.3 billion and US$4.9 billion (S$4.6 billion and S$6.8 billion), from US$19.7 billion last year.

The government has allocated nearly US$50 billion in spending on healthcare, social protection and economic stimulus programmes to try to manage the pandemic's impact.


A version of this article appeared in the print edition of The Straits Times on June 23, 2020, with the headline 'Indonesia's jobless rate could hit decade-high, ministers warn'. Subscribe