Benefits of the Job Creation Law for Accelerating the Absorption of Local Workers
By: Wahyu Pratama )*
Currently, Indonesia is heading towards the demographic bonus era where the productive age population (15-64 years) is expected to dominate the domestic population. Based on the results of the Inter-Census Population Survey (SUPAS) in 2021, it is estimated that 60 productive workers will support 100 residents. This condition continues to increase, until the period 2030-2040 the productive age population is estimated to continue to increase to 205 million and it is estimated that 2 million people of productive age will enter the workforce. the job market every year.
Along with the increase in the productive age, the number of the workforce continues to increase. Based on data from the Central Statistics Agency (BPS) in August 2021, the number of the workforce reached 140.15 million people, an increase of 1.40% (yoy) compared to August 2020 which was recorded at 138.22 million people. However, the increase in the labor force has not been matched by the availability of business fields, so that the utilization of the productive age population is still not optimal in generating added value for the domestic economy. This is reflected in the number of working people only reaching 131.05 million people, while the Open Unemployment Rate (TPT) reaches 12.75 million (9.10%).
To optimize employment and reduce unemployment, the Government needs to improve investment performance. Based on data from the Investment Coordinating Board (BKPM), the realization of Foreign Investment (PMA) and Domestic Investment (PMDN) in 2021 reached Rp 901 trillion, an increase of 9% (yoy), compared to 2020 which was recorded at Rp 826.3 trillion. However, based on the 2021 World Competitiveness Yearbook (WCY) Survey conducted by the Institute Management Development (IMD), Indonesia’s competitiveness is ranked 37 out of a total of 64 countries, an increase compared to 2019 which was ranked 40.
Managing Director of the Management Institute of the Faculty of Economics and Business, University of Indonesia (LM FEB UI), Willem Makaliwe said that although Indonesia’s ranking has increased in total, in terms of ranking in the Asia Pacific Region, Indonesia remains in 11th position out of 14 countries. It is understood that the increase in Indonesia’s ranking is not entirely due to an increase in national competitiveness but also a decrease in the competitiveness of other countries, especially due to the Covid-19 pandemic. According to the Head of Research and Consulting LM FEBUI Bayuadi Wibowo, Indonesia has experienced an increase in ranking in the components of business and government efficiency. However, it experienced a downgrade in the components of economic performance and infrastructure. This condition is driven by labor factors, education level and infrastructure readiness.
To encourage investment acceleration and the creation of new business fields that can increase employment, so that Indonesia can optimize the demographic bonus to push the national economy towards a better direction, the Government of Indonesia under the leadership of President Joko Widodo has issued Law Number 11 of 2020 concerning Job Creation. on 2 November 2020. The regulation aims to create jobs and increase foreign and domestic investment by reducing regulatory requirements for business permits and land acquisition
An economist at the Faculty of Economics and Business at the Syarif Hidayatullah State Islamic University (UIN), Djaka Badrayana, said that the ease of the investment process will encourage business actors to invest in Indonesia, thereby creating an economic sector that can increase employment. Increased investment can increase labor productivity, which can increase people’s incomes and the competitiveness of the domestic economy.
Seeing this positive impact, Public Policy Researcher from Saiful Mujani Research and Consulting (SMRC), Saidiman Rahmat considered that Law Number 11 of 2020 concerning Job Creation is part of the framework for economic transformation aspired by President Joko Widodo, previously President Joko Widodo. has carried out economic transformation in the form of infrastructure development on a large scale, to support the convenience of business actors. With the existence of Law Number 11 of 2020 concerning Job Creation, it is hoped that it will improve the business climate so that it can increase positive investor sentiment towards Indonesia’s economic prospects.
Law Number 11 of 2020 concerning Job Creation aims to create jobs and increase foreign and domestic investment by reducing regulatory requirements for business permits and land acquisition. This regulation can increase the interest of investors to invest in Indonesia, thereby increasing investment that can absorb labor and reduce poverty. This condition certainly makes Indonesia get optimal benefits from the demographic bonus.
)* The author is a Public Policy Observer
