Page 197 - e-KLIPING KETENAGAKERJAAN 7 OKTOBER 2020

If the unions continue to hold strikes and street demonstrations to push their demand for higher
wages and more generous welfare benefits at a time when we are in a coronavirus-induced
recession, then their action will be entirely counterproductive.

The problem is that wage hikes are not sustainable if revenues don’t increase, whether by
increased productivity, better infrastructure or higher sales.

But blaming the slow growth in formal jobs primarily on rigid labor rules could also mislead policy
decisions in both the informal and formal sectors. The key to spurring jobs growth in the formal
sector is investment policies that promote product diversification and facilitate business
restructuring.

To reiterate, more than 90 percent of the provisions in the Job Creation Law are appropriately
designed to stimulate private investment and businesses.

However, the government should also realize the blunt fact that while the majority of the
workforce is currently engaged in the rural sector, it is this very sector that policymakers have
long neglected.

It is no wonder that the rural sector has the highest underemployment rate and lowest
productivity, and will remain so unless the government boosts public investment in rural
infrastructure and expands the coverage of its agricultural extension program.

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