2016年-世界发展银行全球_Indonesian_Economic_Transformation_and_Employment___Policy_Input_for_an_Indonesia_Jobs_Strategy_48页_1mb

Indonesian Economic Transformation and Employment Summary

Core Content

This report analyzes Indonesia's economic transformation and its impact on employment, focusing on the shift from low-productivity sectors to higher productivity ones. It provides insights into labor mobility costs, employment elasticity, and the labor content of exports to inform policy design for a more productive and inclusive jobs strategy.

Main Points

1. Economic Transformation and Commodity Boom

• Indonesia's economic transformation from agriculture to industry began in the 1980s but was reversed in the early 2000s due to the commodity boom.
• The commodity boom led to a shift in employment from manufacturing and services to agriculture and mining, with a significant increase in the share of agricultural and mining exports.
• The real exchange rate (RER) appreciated by over 80% between 2002 and 2011, reducing the competitiveness of non-commodity exports and contributing to stagnant real wages and low productivity growth.
• The labor share in services and agriculture increased, while manufacturing employment stagnated, and the majority of new jobs were in low-productivity sectors.

2. Labor Mobility and Employment Trends

• Labor Mobility Costs: Indonesia has relatively high labor mobility costs, which hinder workers from moving between sectors, especially into manufacturing and high-end services.
• Low Mobility: Despite being a large country, Indonesia has shown limited geographic mobility of labor, with little movement of workers across islands.
• Sectoral Shifts: Services sectors absorbed the largest share of transitioning workers (38% between 1997–2000 and 2000–2007), while manufacturing absorbed only 12–18% of workers.
• Demographics: Young and male workers have a higher advantage in transitioning into employment, and the right skill mix is crucial for job matching.

3. Employment Elasticity and Productivity

• Employment Elasticity: Employment elasticity in manufacturing and services has increased over time, indicating a growing responsiveness of employment to economic growth.
• Productivity Gaps: Manufacturing productivity grew by 2.9% between 2001 and 2012, while trade and agriculture saw slower growth (4.8% and 4.5%, respectively).
• Real Wages: Real wages for both formal and informal workers have remained stagnant or declined, with Indonesia having some of the lowest real wages in the region.
• Skill Returns: The returns to schooling for younger workers in the formal sector have declined over time, reducing incentives for skill acquisition.

4. Labor Content of Exports

• Exports, particularly in manufacturing, generate significant labor value added, with indirect employment (backward linkages) playing a major role.
• In 2011, exports generated $60 billion in wages, with three-quarters of these jobs supported through backward linkages in services.
• While export-driven job creation has declined since 2001, new sub-sectors such as chemicals, rubber, and plastics show potential for higher wage employment.

5. Policy Implications

• Labor Mobility Reforms: To enable structural transformation, Indonesia must reduce labor mobility costs, which include skills mismatches, geographic mobility constraints, and severance/hiring costs.
• Sectoral Shifts: A depreciation of the Rupiah could help restore competitiveness in manufacturing and services, but must be paired with domestic price reforms to ensure effectiveness.
• Skills Development: Prioritizing skills training and upgrading is essential to align the workforce with higher productivity sectors.
• Formalization and Incentives: Encouraging movement into formal employment and supporting skill acquisition for younger workers are critical for long-term growth and job quality.

Key Information

• Commodity Boom Impact: The boom shifted employment from manufacturing to agriculture and low-productivity services, leading to low growth in productivity and stagnant wages.
• RER Stickiness: Indonesia's RER has been more sticky downwards compared to other commodity exporters, largely due to rising domestic retail prices and food inflation.
• Export-Driven Employment: Exports supported around 19 million jobs in 2011, but this number has declined since 2001, highlighting the need for new export sub-sectors.
• Informal Employment: A large portion of jobs created during the commodity boom were informal, contributing to low productivity and limited wage growth.
• Demographic Trends: Young workers are more likely to transition into employment, especially in services, but face lower returns to schooling compared to older workers.

Conclusion

Indonesia's economic transformation has been heavily influenced by the commodity boom, which shifted employment away from high-productivity sectors. While the current depreciation of the Rupiah offers a chance to reorient the economy toward manufacturing and high-end services, this requires complementary reforms to reduce domestic price distortions and labor mobility costs. Policies should focus on improving skills, reducing barriers to job switching, and promoting formal employment to support a transition to a more productive and inclusive labor market.