Labour market developments in Indonesia during the new order

Abstract

This paper provides an overview of labour market change in Indonesia during the Suharto era (1970-90). It describes how the economy was able to absorb a rapidly growing labour force and affect a substantial, relative shift in employment out of agriculture. Agricultural development was encouraged by government policies and public spending targeted rural areas, thus avoiding heavy urban bias in job creation. Open unemployment rates are not high and have not risen over time. Although labour productivity has grown very rapidly in some segments of the economy, government policies have contributed to relatively slow rates of modern sector labour absorption. Underemployment is quite pervasive and labour productivity remains low for a sizable fraction of the workforce. Wages have grown slowly and the "informal' sector has continued to expand. -from Author Show more