Written by, Fiona and Febriyanti
College Student Management Faculty
Universitas Internasional Batam
In August 2021, the Central Statistics Agency or widely known as Badan Pusat Statistik (BPS) reported in its survey that Indonesia’s Open Unemployment Rate (OUR) was 6.49% or 9.1 million people counted.
According to the Head of BPS, Margo Yuwono, this figure has decreased by 0.58% compared to August 2020. The provincial breakdown shows that the highest OUR is in the Riau Islands at 9.91% and followed by the lowest is in Gorontalo at 3.01%. The our number shows that there has been quite a massive unemployment in Indonesia and has caused the potential for poverty to arise.
The phenomenon of unemployment has no small impact on the economy of a country at a macro level, which known as macroeconomic aspects. Reflecting on this, this essay will discuss how the impact of increasing unemployment rates can affect poverty in Indonesia during the COVID-19 pandemic.
Layoffs phenomenon during the COVID-19 pandemic in Indonesia tends to cause a continuous implication on a country economic aspect, specifically causing structural poverty in society. Structural poverty is a form of poverty caused by low access to resources, which generally occurs in a socio-cultural or socio-political order that does not support the liberation of poverty.
People who are laid off become marginal groups in society. Marginalized people are characterized by not having a clear or permanent livelihood, having a more emotional life pattern, being homeless, having a relatively low level of understanding of knowledge, attitudes, and the importance of education, and having weak social interactions. In this case, study shows that the poverty rate has a linear relationship and has a significant impact on the total number of COVID-19 cases.
In order to helps the society to prevent poverty, companies may use other alternatives to reduce operational costs, instead of layoffs. Executing layoffs policy in every companies are not the right step in reducing the company’s operational costs because it can lead to an increase in the unemployment rate which leads to poverty.
According to the Minister of Manpower of Indonesia, Ida Fauziah, the layoffs for reasons of company efficiency should be replaced by reducing wages and facilities, limiting overtime, or temporarily housing workers. Thus, existing workers will still have jobs and can continue their lives during the COVID-19 pandemic. whilst workers who do not experience layoffs can also contribute to reducing social inequality in society.
The poverty rate due to unemployment has also contributed to a decline in Indonesia’s economic development. This has an impact on Indonesia’s Human Development Index (HDI) because it is one of the indicators of economic development in Indonesia. People affected by poverty will get poorer, while the rich will get richer. In this regard, the government plays an important role in reducing unemployment by companies during the COVID-19 pandemic. Those Indonesia government actions are allocating funds for COVID-19 handling, holding incentive programs and prioritizing them for laid offs, and increasing employment opportunities expansion programs, such as cash labor intensive, productive labor intensive.
Many consider that layoffs in the pandemic era are the right actions because the pandemic is a force majeure. This is a dilemmatic issue that needs to be studied further with the applicable laws and regulations. Referring to Article 27 Paragraph (2) of the 1945 Constitution, it is stated that every citizen has the right to work and a decent living for humanity. Therefore, the state must be able to carry out its functions properly during the pandemic by providing job opportunities for the workforce.
Then, the increase of unemployment also increases the community’s ability to work independently and form MSMEs. This is not justified because the formation of MSMEs requires experience and sufficient capital to maintain the sustainability of the MSMEs.
In conclusion, the phenomenon of increasing unemployment rates during the COVID-19 pandemic in Indonesia caused by layoffs of poverty certainly causes poverty.
This indicates that the government has an important role in reducing poverty through programs that can solve the unemployment phenomenon that causes structural poverty in society. Reflecting on the impact, the execution of these programs should be implemented immediately in order to reduce poverty. This becomes an urgency so as not to have an impact on further aspects.
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Disclaimer
*The infomation provided by the author is for opinion and educational purpose
