Employment Sector Employment Working Paper No. 98 2011

Employment diagnostic analysis: Maluku, Indonesia

Per Ronnås Leyla Shamchiyeva

Employment Sector

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ILO Cataloguing in Publication Data Ronnås, Per; Shamchiyeva, Leyla Employment diagnostic analysis: Maluku, Indonesia / Per Ronnås, Leyla Shamchiyeva ; International Labour Office, Employment Sector. - Geneva: ILO, 2011 1 v. (Employment working paper ; No.98) ISBN: 9789221254690;9789221254706 (web pdf) ISSN 1999-2939 (print); ISSN 1999-2947 (web pdf) International Labour Office; Employment Sector employment / labour force participation / employment opportunity / poverty alleviation / Indonesia 13.01.3

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Preface

The primary goal of the ILO is to contribute, with member States, to achieve full and productive employment and decent work for all, including women and young people, a goal embedded in the ILO Declaration 2008 on Social Justice for a Fair Globalization,1 and which has now been widely adopted by the international community.

In order to support member States and the social partners to reach the goal, the ILO pursues a Decent Work Agenda which comprises four interrelated areas: Respect for fundamental worker’s rights and international labour standards, employment promotion, social protection and social dialogue. Explanations of this integrated approach and related challenges are contained in a number of key documents: in those explaining and elaborating the concept of decent work,2 in the Employment Policy Convention, 1964 (No. 122), and in the Global Employment Agenda.

The Global Employment Agenda was developed by the ILO through tripartite consensus of its Governing Body’s Employment and Social Policy Committee. Since its adoption in 2003 it has been further articulated and made more operational and today it constitutes the basic framework through which the ILO pursues the objective of placing employment at the centre of economic and social policies.3

The Employment Sector is fully engaged in the implementation of the Global Employment Agenda, and is doing so through a large range of technical support and capacity building activities, advisory services and policy research. As part of its research and publications programme, the Employment Sector promotes knowledge-generation around key policy issues and topics conforming to the core elements of the Global Employment Agenda and the Decent Work Agenda. The Sector’s publications consist of books, monographs, working papers, employment reports and policy briefs.4

The Employment Working Papers series is designed to disseminate the main findings of research initiatives undertaken by the various departments and programmes of the Sector. The working papers are intended to encourage exchange of ideas and to stimulate debate. The views expressed are the responsibility of the author(s) and do not necessarily represent those of the ILO.

1 See http://www.ilo.org/public/english/bureau/dgo/download/dg_announce_en.pdf 2 See the successive Reports of the Director-General to the International Labour Conference: Decent work (1999); Reducing the decent work deficit: A global challenge (2001); Working out of poverty (2003). 3 See http://www.ilo.org/gea. And in particular: Implementing the Global Employment Agenda: Employment strategies in support of decent work, “Vision” document, ILO, 2006. 4 See http://www.ilo.org/employment.

José Manuel Salazar-Xirinachs Executive Director Employment Sector

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Foreword

Indonesia was the first country to adopt the Global Jobs Pact to the national context. The Indonesia Jobs Pact (IJP) was signed by tripartite representatives of the Government, workers and employers at the Presidential Palace in Jakarta in April 2011. It attests the commitment and determination of the tripartite Constituents to adopt a common policy framework to address the social and employment impact of the crisis on Indonesian workers and enterprises and realize job-rich growth. The IJP serves as a foundation for tripartite action between 2011 and 2014, highlighting priorities based on the National Medium Term Development Plan and the priorities of the social partners.

In support of this endeavor and as a part of the commitment by the International Labor Organization (ILO) to strengthen government capacity - not least at the provincial level - to promote productive employment and decent work, the ILO cooperates with national and provincial governments and social partners in the field of employment analysis and employment planning.

The present study is the analytical outcome of a co-operation with the Government and social partners in Maluku Province of Indonesia, aimed at reaching a shared understanding of the nature of the main constraints and challenges to productive employment generation in Maluku, as a basis for effective policy making. A central feature of this cooperation has been a workshop held in Ambon in April, 2011, where the participants – including officials from Bappeda and other provincial government agencies and from employers and trade union organizations and local academia – jointly undertook a structured employment diagnostic analysis based on a methodology developed for this purpose by the ILO. This joint analysis formed the basis for a discussion on priorities for policy making and other public interventions, with a view to promote productive employment creation in an inclusive and sustainable manner.

The study includes an analysis of the dynamics of employment, the labour market and the economy in Maluku and a synthesis of the rich discussion and the main conclusions from the employment diagnostic workshop. It also contains estimates of the deficit of productive employment in the province and projections of the need for creating productive employment to achieve the ambitious poverty targets set by the provincial government. It is our hope that the study will contribute to a better understanding of the development and employment challenges facing Maluku and of the complex issues that need to be addressed to put the province on a path of sustainable and inclusive job-rich growth.

Peter Van Rooij Director ILO Jakarta Office

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Acknowledgements

The first part of the study draws extensively on research and available data and statistics at the time of the study. The second part of the study synthesizes the rich discussion and the main conclusions from an employment diagnostic analysis workshop that was held in Ambon in April, 2011.

The work would not have been possible without the wholehearted support of the director of the ILO office in Jakarta Peter Van Rooij and his staff. It has greatly benefitted from comments, discussions and collaboration with a number of colleagues in the ILO, particularly from Kazutoshi Chatani, Kee Beom Kim, Lucky Ferdinand Lumingkewas and his excellent team in Maluku.

We are also deeply indebted to the participants of the workshop (listed in Appendix II) for their insightful discussion and contribution to the second part of the study which results from their work. We wish to especially thank the head of Bappeda Maluku Mr. M.Z. Sangadji and the Government of the Province for their support and hospitality which was instrumental for making the workshop a real success. Generous funding from the Swedish International Development Cooperation Agency (Sida) within the framework of an ILO-Sida partnership agreement was instrumental for making the analysis and activities underpinning this study possible.

The authors bear the full responsibility for any inadequacies and shortcomings of present work.

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Contents

Page

Preface ....................................................................................................................................................... iii

Foreword .................................................................................................................................................... v

Acknowledgements .................................................................................................................................. vii

Introduction ................................................................................................................................................ 1

I. The Dynamics of Employment, the Labour Market and the Economy in Maluku ............................. 5

1. Demographic Characteristics .............................................................................................. 6

1.1. Age Structure of the Population ................................................................................ 6

2. Labour Force Characteristics .............................................................................................. 7

2.1. Labour Force Participation ....................................................................................... 8

2.2. The Employed and the Unemployed ......................................................................... 8

3. The Level of Development of Human Resources ............................................................. 10

4. Employment Structure ...................................................................................................... 12

5. The Dynamics of Economic Growth and Employment .................................................... 14

5.1. Contribution of Sectors to Growth in Value Added and Employment ................... 15

II. Poverty Reduction and a Projection of the Need to Increase Productive Employment .................... 18

1. The Characteristics of Poverty .......................................................................................... 19

2. The Need to Increase Productive Employment ................................................................. 21

III. Identifying Priority Areas for Increasing Productive Employment .................................................. 24

1. Human and Other Productive Resources........................................................................... 25

2. Creating Productive Employment Opportunities – A Focus on the Rate and Quality of Economic Growth ............................................................................................................. 27

3. Making Development More Inclusive and Sustainable .................................................... 32

IV. Concluding Remarks ........................................................................................................................ 34

References ................................................................................................................................................ 38

Appendix I. Workshop Results: Selected Factors Affecting Inclusive Growth in Maluku ...................... 40

Appendix II. List of Workshop Participants............................................................................................. 41

1

Introduction

Following a request for cooperation in the field of provincial level employment analysis and employment planning from the BAPPENAS (National Planning Board of Indonesia) and an agreement with the Provincial Government in Maluku, an extensive employment diagnostic analysis was carried out. This exercise comprised two phases. The first phase consisted of a thorough situation analysis of patterns and dynamics of employment and economic development. The second phase involved a systematic analysis of the causes behind the insufficient growth of productive employment and an identification of the factors constraining the translation of growth into productive employment creation and welfare and poverty reduction. Whereas, the first phase of the analysis was carried out through a comprehensive mainly quantitative desk research, the second phase of the analysis engaged the ILO social partners in Maluku who provided their input into the analysis in an employment diagnostic workshop. The methodology is presented in the next section in greater detail.

The workshop was jointly organized by the ILO and Bappeda Provinsi Maluku (the Provincial Planning Bureau) on April 11-13, 2011, in Ambon and saw participation of 25 representatives of Bappeda and a wide range of other governmental agencies at both the provincial and district levels, employers’ and trade unions.5 The main objective of the workshop was to reach a shared understanding of the nature of main constraints and challenges to productive employment generation in Maluku as a basis for effective policy development. The two and half day workshop was a highly interactive exercise where participants themselves assumed the lead role in a structured analysis based on a methodology developed for this purpose by the ILO.6

The conclusions from this joint analysis provided an important qualitative input into the present study and formed a basis for a discussion on priorities for policy making and other public interventions, with a view to promote productive employment creation in an inclusive and sustainable manner at both the provincial and the district level.

The objective of the present study is to summarise the conclusions from the workshop and the preceding analysis and present an overview of the core constraints to inclusive growth and translation of economic growth into welfare and poverty reduction through productive employment.

5 For a list of participants, see Appendix II. 6 Conceptual and Methodological Guide to Employment Diagnostic Analysis / Panduan Konseptual dan Metodologi untuk Analisa Diagnostik, (Geneva & Jakarta: ILO, 2010) Draft.

The first phasedevelopment context and employment situationanalysis. This overview identification of hypotheses regarding strengths and weaknesses of the economy and labour market and of the likely challenges

This phase of the studydemographic and other given factors; (ii) the broad patterns and dynamics employment, and (iii) the sectoras well as poverty and in

The formula sets the structure of the first phase of the analysis, comprising several parts. The first fragment of the formula is represented by the section on thestructure and its dynamicsfertility, age and sex structure and internal and external migration. It is a useful starting point for the analysis since the human resources and the necessity to create preconditions conducive to unleashing the creative and productive forces ifundamental. The second the patterns and dynamics of employmentin an analysis of the development of dynamics.

Phase Two diagnostic tree’ (see below)stakeholders in a workshopa broad array of often interdisentanglement of causal links results in identification of core constraints, challenges and opportunities for inclusive jobbranch and sub-branch depend on their identified importance as constraints or challenges to enhancing inclusive and jobthe lowest level.

As the study movechanged to a guided actors in the analysis in the second phase stakeholders in Maluku themselves, who within the framework of a training workshop arrived at informed conclusions on qualitative aspects of the analysis (Ambon, 112011). Hence, the role of the authors changeundertaken by the national stakeholders themselves, who the main conclusions. Ultimately, the purpose undertake an exercise of joint knowledge

Much of these parts can usefully be structured in line with the following stylised formula:

Or

In other words, change in GDP per capita is the sum of the changes the following:

Age structure,

Activity rate,

Employment rate,1

Labour productivity,

phase of the analysis aims to provide an overview of the development context and employment situation with a view to guide

This overview also intends to be sufficiently comprehensive to permit a first broad identification of hypotheses regarding strengths and weaknesses of the economy and labour market and of the likely challenges to sustainable inclusive job-rich growth.

This phase of the study elaborates on the three main areas and issues: (i) demographic and other given factors; (ii) the broad patterns and dynamics employment, and (iii) the sector-specific growth, employment and productivity dynamicsas well as poverty and inequality and the challenge to increase productive employment

The formula sets the structure of the first phase of the analysis, comprising several fragment of the formula is represented by the section on thedynamics and includes parameters such as the rates of populati

fertility, age and sex structure and internal and external migration. It is a useful starting point for the analysis since the human resources and the necessity to create preconditions conducive to unleashing the creative and productive forces inherent in this resource base is

The second and third fragment of the formula is represented by the analysis ofpatterns and dynamics of employment. The last component of the formula is discussed

analysis of the development of sector-specific growth, employ

of the diagnostic analysis is structured following (see below) and includes key conclusions from discussions with ILO

stakeholders in a workshop. This diagnostic process may be seen as a funnel. Starting from a broad array of often inter-related factors a structured process of elimination and disentanglement of causal links results in identification of core constraints, challenges and

nclusive job-rich growth. The attention and importance accorded to each branch depend on their identified importance as constraints or challenges to

enhancing inclusive and job-rich growth. Hence, all branches need not be explored down to

As the study moved from Phase One to Phase Two, the mode of implementation to a guided employment diagnostic analysis by ILO constituents. Thus, the main

actors in the analysis in the second phase were the ILO constituents and natistakeholders in Maluku themselves, who within the framework of a training workshop arrived at informed conclusions on qualitative aspects of the analysis (Ambon, 112011). Hence, the role of the authors changed to one of facilitating and guiundertaken by the national stakeholders themselves, who were also responsible for drawing the main conclusions. Ultimately, the purpose was not to produce yet undertake an exercise of joint knowledge-building on the province

Much of these parts can usefully be structured in line with the following stylised formula:

In other words, change in GDP per capita is the sum of the changes the following:

Labour productivity,

2

provide an overview of the province-specific with a view to guide the subsequent

intends to be sufficiently comprehensive to permit a first broad identification of hypotheses regarding strengths and weaknesses of the economy and labour

rich growth.

elaborates on the three main areas and issues: (i) demographic and other given factors; (ii) the broad patterns and dynamics and structure of

specific growth, employment and productivity dynamics, equality and the challenge to increase productive employment.

The formula sets the structure of the first phase of the analysis, comprising several fragment of the formula is represented by the section on the demographic

parameters such as the rates of population growth, fertility, age and sex structure and internal and external migration. It is a useful starting point for the analysis since the human resources and the necessity to create preconditions

nherent in this resource base is and third fragment of the formula is represented by the analysis of

. The last component of the formula is discussed specific growth, employment and productivity

of the diagnostic analysis is structured following the ‘employment and includes key conclusions from discussions with ILO

diagnostic process may be seen as a funnel. Starting from related factors a structured process of elimination and

disentanglement of causal links results in identification of core constraints, challenges and The attention and importance accorded to each

branch depend on their identified importance as constraints or challenges to not be explored down to

from Phase One to Phase Two, the mode of implementation by ILO constituents. Thus, the main

ILO constituents and national stakeholders in Maluku themselves, who within the framework of a training workshop arrived at informed conclusions on qualitative aspects of the analysis (Ambon, 11-13 April,

to one of facilitating and guiding the analysis also responsible for drawing

yet another study, but to province-specific constraints,

Much of these parts can usefully be structured in line with the following stylised formula:1

In other words, change in GDP per capita is the sum of the changes the following:

3

challenges and opportunities for enhancing inclusive job-rich growth. This also served the purpose of capacity building among ILO constituents in the field of employment analysis, and not least social dialogue, arriving at a common understanding of key employment challenges based on joint analysis.

This phase of the diagnostic analysis was informed by the overview of the development and employment dynamics (Phase One) as well as by the employment target analysis and consultations with national counterparts. The knowledge gained from these analytical exercises facilitated an interpretation of the indicators attached to the various ‘branches’ in the reference tree and speeded up the process of elimination and disentanglement of causal chains and identification of core causal factors and constraints without compromising on the robustness and relevance of the conclusions drawn. During this process less relevant aspects were gradually excluded from the diagnostic analysis.

The causal relationships within the branches were often interlinked and did not strictly fall under particular branches. For instance, an unsuitable sector composition of growth would not only exert a negative impact on the quality of growth, but also on the level of growth, as well as impairing the inclusiveness and sustainability of growth. A high degree of inequality with regard to resource endowment and/or opportunities is likely to have a negative impact on the rate of growth. In some instances there may be a long term vicious circle between low levels of human resources development and poor opportunities in the form of slow or poor quality growth and inequality. Hence, the exploration of vertical causal chains along the branches of the employment diagnostic tree was combined with the analysis of probable horizontal interrelationships across branches.

Figure 1. Employment diagnostic tree

Figure 1. Employment diagnostic tree

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5

I. The Dynamics of Employment, the Labour Market and the Economy in Maluku

This section explores the dynamics of employment, the labour market and the economy in Maluku province over the past decade. The analysis is based on the available provincial statistical data as well as the workshop conclusions. Maluku has made a considerable progress since the end of the conflict in early 2000’s. The conflict resulted in a split of the former Maluku province into Maluku Utara or North Maluku, and Maluku Province. Today Maluku comprises eleven municipalities, 57 districts and 876 villages. Maluku’s 1412 islands are divided into 12 clusters, with a service centre in each of them. In terms of religious affiliation half of the population of Maluku province are Muslim (50 per cent) and almost as many are Christian (49 per cent), mainly Protestant (39 per cent). The remaining less than one per cent is distributed between Hindus (0.2), Buddhists (0.03) and other confessions (0.65).

Maluku is dispersed over large tracts of ocean. The sea makes up 92.4 per cent of the area of the province. The population density differs greatly among the districts. It ranges from 7 person / sq km (in Maluku Tenggara Barat district) to 755 person / sq km in the city of Ambon. The population of outer districts (e.g. Maluku Tenggara Barat, Maluku Tenggara Tengah) has declined since 2000, while the population in Ambon city increased. There is no shortage of land or sea in the province, though there might be issues with gaining access to and utilising this productive resource. Much of Maluku also receives relatively abundant rainfall, which is conducive to agriculture development. Maluku is a province rich in natural resources. Yet, this has not translated into welfare of the population, and poverty remains widespread. The geographic inequality in terms of density of population and access to land might be one of the factors constraining the inclusiveness of growth in the agriculture sector.

The provincial economy has grown by 50 per cent since 2002, at an average rate of about 5 per cent per year. Whereas Figure 2, which illustrates the economic and employment development over time, paints a very positive picture at the first sight, this aggregate conceals major problems in the pattern of economic growth in Maluku: The economic and employment growth took place in different sectors. In Maluku, unlike most other parts of Indonesia, agriculture was the main driver of economic growth, whereas most of the jobs were created in the services sector. The sharp decline in employment in 2005 may reflect a wave of violence that occurred in the province that year.

Source: BPS, 2010

90

100

110

120

130

140

150

160

2002 2003 2004 2005 2006 2007 2008 2009 2010

Figure 2. Provincial GDP and employment growth index, Maluku 2002-2010 (2002=100)

GDP growth Employment growth

Productivity growth

Employmentgrowth

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1. Demographic Characteristics

According to the 2010 census data, the population of Maluku stands at 1,531.4 thousand with a rather even distribution between sexes (50.5 per cent of the population are men and 49.5 per cent women). Maluku’s population makes up 0.6 per cent of the total population of Indonesia. Many Moluccans reside in Central Maluku District and the capital city of Ambon, which is the largest city in the province.

The population growth has been steady since the first census in 1961; except that the province experienced a large decline in population size at the turn of the century when half a million people were displaced as a result of the conflict. Consequently the population growth in 1990-2000 was negative, followed by a sharp growth in last ten years of 2.78 per cent per year (See Table 1) induced by a wave of returnees after peace re-established.

Table 1. Annual growth rate of population

Year 1990-2000 2000-2010

Maluku -0.03 2.78

Indonesia 1.45 1.49 Source: BPS (2010b)

Presently, the total fertility rate (TFR) in Maluku Province is quite high; indeed, at 2.7 it is one of the highest in the country. The net reproduction rate is 1.33 which means 100 mothers are succeeded by 133 daughters.

1.1. Age Structure of the Population

The population pyramid in Maluku represents a so called bottom heavy structure, with a mostly young population (See Figure 3). People in the working age currently make up 67 per cent of the total population of the province. As the lower cohort of the pyramid – those younger than 15 – grows older in the next 15 years, the size of the working-age population will increase rapidly.

It is noteworthy that the growth rate of the population is declining. This, in combination with a growing labour force opens a so called “demographic window of opportunity”, when the present age-based dependency ratio will start improving in the coming decade.7 The dent in the pyramid among the young people in the working age suggests that young men and women migrate outside the province.

The next ten years will be crucial, as the large cohorts of young people enter the labour force, placing an increased pressure on the economy to create jobs. Figure 4 illustrates the projection of the working age population and labour force growth in the next fifteen years.8 Provided that the economy is capable of creating productive employment opportunities for the large number of entrants into the labour force without compromising the labour productivity, the per capita income will automatically increase, as the actual dependency ratio falls.

7 Age-based dependency ratio is the ratio between people in the working age and people not in the working age (-15 & 65+ / 15-65). Age-based dependency ratio is not to be confused with actual dependency ratio that is the number of working population over the non-working population, including children and elderly. The latter estimates how many dependents a worker has, i.e. how many mouths every worker has to feed. 8 The projection is based on the 2010 Census data and age group specific activity rates and does not take into account migration or other factors influencing the size of the population.

7

Source: BPS (2010b)

Source: Projections based on activity rates by age groups calculated from various rounds of SAKERNAS, by

EMP/CEPOL and EMP/ANALYSIS. 2007-2009 are from the August rounds of SAKERNAS

2. Labour Force Characteristics

An overview of the main dynamics and patterns of the labour force and employment – represented by the activity rate and employment and unemployment rates - broken down by age groups, by sex and area of residence (rural and urban) provide an initial understanding of the situation on the labour market.

0 - 45 - 9

10 - 1415 - 1920 - 2425 - 2930 - 3435 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 74

75 +

Figure 3. Population pyramid, Maluku, 2010

Women Men

821917

1,058

1,2061,331

481.4

651.3716

816912.7

0

200

400

600

800

1,000

1,200

1,400

2005 2010 2015 2020 2025

Tho

usan

ds

Figure 4. Projections of the working age population and the labour force (aged 15-64) 2005-2025

Working age population Labour force

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2.1. Labour Force Participation

The province of Maluku is lagging behind the country as a whole on almost all labour market indicators: Activity rates are lower and unemployment rates are higher than the national average. Due to relatively low labour force participation rates, the actual dependency ratio in the province is fairly high at 1.61, meaning every 100 people have to provide for an additional 161 people. However, if we exclude those who are likely to be in school (15-19 year olds) as well as those of old age (65 years of age and over) the activity rate will appear higher than reported (76 per cent in 2009).

Breaking down the activity rates by sex reveals significant gender differences in labour force participation rates (Figure 5). For men aged 20-64 activity rate was 92 per cent 2009 and for women it was 61. The total activity rates (15+ year olds) of around 80 per cent for men are normal for an economy dominated by agriculture. However, the difference in labour force participation rates of 30 percentage points between men and women deserves a special attention. The problem seems to be systemic as there has been little change in the composition of labour force participation rates over time (Figure 6).

Source: Calculated from various rounds of SAKERNAS, by EMP/CEPOL and EMP/ANALYSIS, 2009.

Figures are from the August rounds of SAKERNAS

Source: SAKERNAS (2009a, 2002)

2.2. The Employed and the Unemployed

Employment rates in Maluku have been volatile in the past decade, mirroring the unstable situation in the province: it dropped sharply from 60.3 per cent in 2002 to 51.3 in 2006 as an aftermath to a wave of inter-communal violence in 2005. The employment

78

93 96 98 96 97 9689

80

5057 60

66 65 66 67 66

50

0

50

100

20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Figure 5. Activity rate by age group and sex, 2009. Percentage

Active Men Active Women

82 79

49 51

0

20

40

60

80

100

2002 2009

Figure 6. Activity rates in Maluku, by sex. Percentage

men women

9

rate had recovered by 2010 to 59.9 per cent, which is however lower than the national average of 62.8 per cent (Table 2). The sectoral structure and the dynamics of employment in the province will be looked into in greater detail in the following sections.

Unemployment is a major problem in Maluku. The unemployment rate reaches double digits at 10 per cent and is higher than the country average of 7.4 per cent. Although mainly urban phenomenon, unemployment is also high in rural areas, which is unusual for an agrarian economy.

Table 2. Participation in the labour force by area of residence. Maluku. Percentage Indonesia

Year 2002 2009 2010 2010

Activity rate 65.6 65.4 66.5 67.8

urban 57 59 60.4

rural 69 68 69.6

Employment rate 60.3 58.5 59.9 62.8

urban 46.2 49.6 51.7

rural 65.3 62.3 64.1

Unemployment rate 8.1 10.6 10.0 7.4

urban 18.7 16.0 14.5

rural 5.0 8.6 8.0

Dependency ratio, actual 1.61 1.19

Source: SAKERNAS (2010h, 2009a, 2002)

Unemployment rates by age groups and sex and by area of residence are presented in Figure 7 below. Several conclusions can be drawn from the figures: i) Unemployment among women is consistently higher than among men in most age groups; ii) Unemployment is concentrated in urban areas, but it is also fairly high in rural areas; iii) Unemployment is high not only among the youth aged 15-24 who often struggle to get their first job, but also among adults aged 25 to 49. Thus, unemployment mainly affects young women in urban areas, but is also high among adult population both in urban and rural areas, which is rather uncommon in Indonesia.

Figure 7. Unemployment rates by age group, by sex and area of residence, Maluku, 2009

Source: SAKERNAS (2009a)

To sum up, in Maluku activity rates are somewhat lower and unemployment rates are higher than the national average. Overall activity rates are heavily influenced by

18.2

7.2

3.3 1.3

24.9

13.0

4.2

0.6

0

10

20

30

15-24 25-49 50-59 60+

Unemployment rates, by age group, by sex

menwomen

39.7

13.0

3.70.0

15.4

7.93.6

1.3

0

10

20

30

40

50

15-24 25-49 50-59 60+

Unemployment rates, by age group, by area of residence

urbanrural

10

lower activity among women and the young. Whereas, some are inactive because they are in school, the majority reported housekeeping as the main reason for not participating in the labour force – the role that is traditionally assigned to women.

3. The Level of Development of Human Resources

Maluku is a top performer, compared to Indonesia as a whole, when it comes to levels of education attainment. Only 2.6 per cent of the population over 15 years of age were illiterate in 2009, which is much lower than the national average of 7.4 per cent (Figure 8). The education enrolment ratio was also among the highest in the country. More than a half of the labour force in Maluku has completed at least a junior high school. Even in rural areas education attainment levels of the population are quite high (45 per cent of the labour force have graduated from junior high school or a higher level of education).

Source: SAKERNAS, (2006, 2009a)

There is a strong commitment to education in the province. Completion of eight-years of school is compulsory and Moluccans receive at least 8.5 years of schooling on average.9 Realisation of the nine-year compulsory school education is made difficult by the fact that the school infrastructure has been severely damaged during the inter-communal violence in the early 2000s, buildings require renovation and there is a shortage of school teachers. Nevertheless, the education enrolment ratio in Maluku is among the highest in the country. The net enrolment ratio (NER)10 at all levels of education in 2009 stood at 75 per cent, as opposed to 69 per cent in Indonesia as a whole. The highest net enrolment ratio is observed among children of 6-12 years of age in elementary school (94 per cent); it falls sharply among children of 12-15 years of age in junior high school (72 per cent) and further down to 60 per cent among 15-18 year-olds enrolled in senior high school level.

Gross enrolment rates (GER)11 are much higher than net enrolment rates at all levels of education (Table 3). There could be several reasons behind this inconsistency.

9 Mid-term development strategy 2008-2013, Bappeda Maluku. 10 Net primary enrolment rate is the number of children of official school age (according to ISCED971) who are enrolled in their relevant level of education expressed as a percentage of the total children of the official school age population. Total net enrolment rate also includes children of given school age enrolled in a level of education not relevant to their age. 11 GER is the number of pupils enrolled in a given level of education regardless of age expressed as a percentage of the population in the theoretical age group for that level of education.

3.02.2

3.8 3.5 3.2 2.7 2.6

10.29.6 9.1 8.6 8.1 7.8 7.4

0

4

8

12

2003 2004 2005 2006 2007 2008 2009

Figure 8. Illiteracy rates among the population aged 15+, 2003-2009. Percentage

Maluku Indonesia

11

On the one hand, it may be due to high repetition rates, which imply that pupils spend more years at school than intended, which in this case would point to inefficiency and poor quality of the educational system. However, it may also be due to increased possibilities for adults to have a second chance to get an education that they missed out on when they were young.

Table 3. Gross and net enrolment ratio in Maluku and Indonesia as a whole. Percentage.

2009 Primary school Junior high school Senior high school

Maluku

GER 114.5 84.5 89.9

NER 94.4 71.5 59.6

Indonesia

GER 110.4 81.3 62.6

NER 94.4 67.4 45.1

Source: BPS, Education data: http://dds.bps.go.id/eng/aboutus.php?tabel=1&id_subyek=28

Almost 60 per cent of Maluku’s labour force have completed at least a junior high school. Such high incident of junior high school graduation in particular in rural areas, where almost a half of the labour force have a junior high school education, is positive compared to the rest of the country. In urban areas, most of the workers have completed a senior high school. It is noteworthy, however, that more than a half of Maluku’s unemployed have finished a senior high school (Table 4).

Table 4. Education attainment rates of the labour force by area of residence, 2010, Maluku. Percentage.

Primary or less

Junior high school

Senior high school

Higher education

All levels

In the LF 41.1 18.5 29.7 10.7 100

urban 15.3 17.3 46.4 20.9 100

rural 52.6 19.0 22.2 6.2 100

Employed 43.5 18.9 27.2 10.4 100

urban 16.5 18.4 43.7 21.4 100

rural 54.6 19.1 20.5 5.8 100

Unemployed 19.4 14.5 51.8 14.3 100

urban 8.1 11.1 62.8 18.0 100

rural 28.5 17.4 43.0 11.2 100

Source: SAKERNAS (2010h)

Thus, on the whole, the labour force in Maluku is well educated by Indonesian standards. As elsewhere in Indonesia, those with a senior high school level of education have the highest rate of unemployment, although unemployment affects other segments of the labour force as well. Almost a half of the unemployed in rural areas and as much as 63 per cent of the urban unemployed have completed a senior high school. The high education levels of the local population imply that the human resources have a strong potential to be productive; yet, the high unemployment rates indicate that this potential remains untapped. Unemployment among the high school graduates and a fairly high unemployment incident among the higher education graduates might be due to high job

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expectations and a lack of attractive employment opportunities, and/or a mismatch between the education on offer and the labour market needs. It is also possible that high education is a preserve of the economically privileged, for whom working is not a matter of survival and who can afford to spend some time looking for the job they would like; conversely, the persons with lower levels of education cannot afford to be out of work.

The joint analysis with the local social partners concluded that despite the high education attainment levels, the human resources remained underutilised because they lacked technical skills relevant to the labour market requirements. Secondly, the investment in the institutional infrastructure for education and vocational training was deemed inadequate, especially in rural areas and at the districts level. Although the access to formal education is adequate both in urban and rural areas (up to higher education), the quality and relevance of education is questionable – it is not in tune with the present and future needs of the economy as envisaged in the provincial development strategy (2008-2013). Skills-training in the strategic sectors (agriculture, fishery and tourism) is largely lacking. Very few people in the rural areas have a specialised training in agriculture and fishery as the university that offers such courses is located in the city of Ambon (University of Patimura). The lack of specialised training in agriculture may result in lower levels of productivity. There is a lack of high quality vocational schools in the centres of administrative clusters that Maluku islands are grouped into. There is no tourism school which could prepare the young graduates for the labour market, make them more competitive and employable. The workshop participants strongly believed that there was a need to build up and expand the vocational education and training programmes to improve employability and productivity of the labour force, especially in rural areas.

4. Employment Structure

The sectoral employment structure reflects the agrarian nature of Maluku’s economy. As a dominating sector of economy, agriculture absorbed 51 per cent of the working population in 2010. The second largest employer in Maluku was the services sector that provided jobs to almost 40 per cent of workers, mainly women working in wholesale and retail trade, restaurants and hotels, as well as in public services. Men on the other hand were dominant in transportation and communication services. Within the services sector, social and personal services (that is public, domestic and healthcare services) alone accounted for 18 per cent of all workers in Maluku with a somewhat higher representation of women (Table 5).

In rural areas agriculture, forestry, hunting and fishing are the dominant sources of employment, accounting for almost three quarters of all employed. Manufacturing, too, is primarily a rural activity. Roughly six per cent of the rural labour force derive their main source of living from manufacturing, as opposed to less than four per cent of the urban labour force. This reflects the pre-industrial nature of Maluku’s economy. Small scale cottage industry and crafts, rather than mechanised and large scale production, still dominate the manufacturing sector.

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Table 5. Workers by main sector of employment by sex, 2010, Maluku. Percentage.

Men Women Total

Agriculture, forestry, hunting, fishery 53.8 47.6 51.4

Industry 11.4 5.2 9.0

Mining and quarrying/electricity, gas etc 1.1 0.2 0.8

Manufacturing 5.1 4.8 5.0

Construction 5.1 0.2 3.2

Services 34.8 47.2 39.6

Wholesale/retail trade, restaurant and hotels 9.1 23.4 14.6

Transportation, storage, communication 9.5 0.9 6.2

Finance, insurance, real estate etc. 1.1 0.6 0.9

Social and personal services 15.1 22.4 17.9

All industries 100 100 100

Source: SAKERNAS (2010h)

The lack of industrialisation is also reflected in the fact that 81 per cent of the urban employment is concentrated to the services sectors. The public sector appears to be a main source of employment in urban areas with 37 per cent employed in social and personal services. Trade, restaurants and hotels provide employment to an additional 29 per cent and transport and communication 14 per cent of workers in urban areas (Table 6).

Table 6. Workers by main sector of employment and area of residence, 2010, Maluku. Percentage.

Urban Rural Total

Agriculture, forestry, hunting, fishery 8.9 69.0 51.4

Industry 10.1 8.5 9.0

Mining and quarrying/electricity, gas etc 1.1 0.6 0.8

Manufacturing 3.7 5.6 5.0

Construction 5.4 2.3 3.2

Services 81.0 22.5 39.6

Wholesale/retail trade, restaurant and hotels 28.5 8.9 14.6

Transportation, storage, communication 13.5 3.2 6.2

Finance, insurance, real estate etc. 2.2 0.3 0.9

Social and personal services 36.8 10.1 17.9

All sectors 100 100 100

Source: SAKERNAS (2010h)

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5. The Dynamics of Economic Growth and Employment

The economy of Maluku grew at an average rate of about 5 per cent during the past decade, that is at approximately the same pace as Indonesia’s economy as a whole. Growth picked up during the latter part of the decade, reaching 6.5 per cent in 2010. Still, the overall performance of the economy in terms of growth can hardly be considered to have been satisfactory. High population growth implied a per capita growth of less than 3 per cent per year, on average, and growth was not sufficient to reduce the gap in the level of economic development between Maluku and the rest of Indonesia. About 70 per cent of the growth was due to employment growth, while the remaining 30 per cent resulted from productivity growth. Given the need to create productive employment opportunities for the large number of entrants into the labour force over the period as well as to raise the level of productivity and incomes of the large number of working poor, at first sight this overall structure of growth would appear to have been appropriate. However, as elaborated below there were weaknesses in the structure of growth.

Comparing the sector composition of GDP against that of employment casts light on the economic and labour market dynamics in the province. The economy of the province is predominantly agrarian, although there has been a noticeable shift from agriculture to other sectors of the economy. Still, by 2010 agriculture accounted for almost a third of GDP and for more than half of all employment. The share of agriculture in GDP has declined more slowly (by 4.2 percentage points between 2002 and 2010) than its share in total employment, which dropped by almost 15 percentage points (Table 7). This signals an increase in productivity in agriculture, albeit from a rather low level. The services sectors dominate the non-farm economy entirely, a dominance that has increased over the past decade. By 2010 services accounted for over 60 per cent of GDP and for 40 per cent of all employment. Trade, restaurants and hotels services account for over a quarter of GDP, while social and personal services sector, which is dominated by public sector services, accounted for slightly less than a fifth of the GDP. The industrial sector remains quite insignificant. Manufacturing accounted for no more than 5 per cent of either GDP or employment and there is no indication that these shares are increasing.

Table 7. Contributions of sectors to GDP and employment, Maluku. Percentage.

% share of GDP % of employment

Year 2002 2010 2002 2010

Agriculture 35.5 31.3 66.3 51.4

Industry 7.5 7.8 8.2 9.0

Mining and quarrying/electricity, gas etc 1.4 1.2 0.6 0.8

Manufacturing 4.9 4.8 5.2 5.0

Construction 1.2 1.8 2.3 3.2

Services 57.0 60.9 25.5 39.6

Trade, restaurants 24.0 25.7 8.3 14.6

Transport & communication 7.9 10.9 4.9 6.2

Social and personal services 19.5 18.9 10.6 17.9

All sectors 100 100 100 100

Source: SAKERNAS (2010h, 2002); Bank of Indonesia (2010e), GDP 2010 data provided by BPS Maluku

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5.1. Contribution of Sectors to Growth in Value Add ed and Employment

An analysis of the contribution of the different sectors to growth in GDP and employment puts the structural patterns of the development in a stark light and brings out some weaknesses as well as strengths (Table 8). Agriculture accounted for almost a quarter of the economic growth between 2002 and 2010, however growth in employment in agriculture was by no means commensurate and accounted for less than five per cent of the new jobs over the period. This development should be considered as positive. Growth in agriculture war primarily attributed to increases in productivity and such increases are crucial in view of the high incidence of working poor in rural areas. A continued strong development of agriculture deserves to be encouraged, based on intensified production, application of new technologies, increased market-orientation and use of yield-enhancing cash inputs. However, the focus will need to be on increasing productivity and incomes rather than on increasing employment in agriculture. Further development of agriculture and the envisaged rapid development of aquaculture, in particular seaweed cultivation, would greatly benefit from a development of agro-processing and manufacturing based on local resources, at the same time as it would create a basis for, and fuel such a development. However, at present manufacturing continues to play a rather insignificant role in the economy, reflected in its small contribution to growth of GDP (4.5 per cent) and employment (4.3 per cent) (Table 8).

Most of the economic growth took place in the services sector, which accounted for over two thirds of the growth between 2002 and 2010. Trade, restaurants and hotels accounted for almost 30 per cent of the GDP growth, increasing its share of the economy slightly. Social and private services, i.e. primarily public sector services, and transport and communications each accounted for 17 of the growth of GDP. The predominant role of the services sectors was even more pronounced as a source of employment growth. In the absence of a strong manufacturing sector and with virtually no employment growth in agriculture, the increase in employment was largely confined to the services sectors, which accounted for 84 out of every 100 new jobs created over the period. A third of the total increase in employment took place in trade, restaurants and hotels while two out of five new jobs were in social and private services, i.e. mostly publicly funded.

Table 8. Contribution of sectors to growth in GDP and employment, Maluku. Percentage.

2002-2010 GDP growth Employment

Agriculture & fishing 22.8 4.5

Industry 8.4 11.5

Mining and quarrying/electricity, gas etc. 0.9 1.3

Manufacturing 4.5 4.3

Construction 3.1 6

Services 68.7 84

Trade & restaurants 29.3 34.6

Transport & communications 17 10.3

Social and private services 17.7 41

All sectors 100 100

Source: SAKERNAS (2010h, 2002); Bank of Indonesia (2010e), GDP 2010 data provided by BPS Maluku

The very rapid growth of employment in the services sectors took generally place at the expense of productivity. The very high employment elasticities in trade, restaurants

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and hotels (2.20) and in public and private services (2.76) implied that employment grew two to three times faster than value added in these sectors. As a consequence, productivity fell by 31 and 35 per cent, respectively, in these sectors and by 22 per cent in the services sectors overall, at the same time as it increased by 29 per cent in agriculture (Table 9a). In view of the very large differences in productivity between agriculture on the one hand and the services sectors on the other hand, this may be considered as a natural and positive development. Labour shifted from a low productivity sector (agriculture) to services sectors where productivity was much higher. As a consequence, GDP grew as productive resources were shifted from areas of low productivity to areas of high productivity, incomes from labour increased and the number of working poor presumably fell. However, there is reason to caution and to question the sustainability of this development. First, most of the employment growth in social and private services resulted from an expansion of public sector services and employment and was largely funded by transfers of fiscal resources from Jakarta to the province. While this expansion was no doubt welcome, it can hardly provide the basis for continued sustainable growth and extrapolated into the future. Second, it is questionable if the growth of employment in trade, hotels and restaurants can continue unabated without unacceptable losses in productivity unless new sources of economic growth of this sector, such as tourism, are developed. Third, the growth dividend from shifting labour from low productivity sectors to sectors with higher productivity will inevitably decline as the productivity gaps are reduced. Productivity growth within sectors, based on technological development, intensified production and a gradual shift to products with a higher value added will need to assume a larger role in the years to come to sustain economic and employment growth. Agriculture12 and manufacturing stand out as the sectors with the greatest scope for such a development, while the scope for major increases in productivity in the services sectors tends to be much more limited. So far, such a development is only noticeable in agriculture, while development of manufacturing remains very feeble indeed.

Table 9. Labour productivity by sectors, Maluku. Thousand Rupiahs (at constant 2000 prices).

2002 2010

Agriculture & fishing 3421 4412

Industry 5871 6303

Mining and quarrying/electricity, gas etc. 14614 11461

Manufacturing 5976 6894

Construction 3395 4162

Services 14307 11149

Trade & restaurants 18561 12778

Transport & communications 10322 12761

Financial, real estate, business services 20278 43575

Social and private services 11838 7670

All sectors 6398 7250

Source: SAKERNAS (2010h, 2002); Bank of Indonesia (2010e), GDP 2010 data provided by BPS Maluku

12 Interpreted broadly to include fishing and aquaculture.

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Table 9a. Productivity growth and employment elasticity by sectors, Maluku. Percentage.

2002-2010 Productivity growth Employment elasticity

Agriculture 29 0.07

Industry 7 0.81

- Manufacturing 15 0.57

- Mining, Electricity, Gas & Water -22 2.16

- Construction 23 0.66

Services -22 1.76

- Trade, hotels & restaurants -31 2.20

- Transport & communication 24 0.63

- Financing, insurance, real estate, business 115 -0.82

- Public and private services -35 2.76

All sectors 13 0.64

Source: SAKERNAS (2010h, 2002); Bank of Indonesia (2010e), GDP 2010 data provided by BPS Maluku

The economic dynamics differ greatly between urban and rural areas, and between Ambon and the rest of the province. While only 20 per cent of Maluku’s population currently reside in Ambon, the provincial capital accounts for 42 per cent of the economic production in the province (Table 10). The per capita income in Ambon is more than twice as high as the Maluku average, while the per capita income of some districts, such as Maluku Tengah, Seram Bagian Timor and Pulau Buru is only about 60 per cent of the provincial average. Except for agriculture, economic activity is concentrated in the main urban centres, and there is a risk that economic development will bypass many areas in the province.

Table 10. Differences in the level of economic development between districts in Maluku.

2010 Share of

population, %

Share of GDP, % GDP/capita. Index

Maluku = 100

Maluku Tenggara Barat 6.5 6.9 106

Maluku Barat Daya 4.8 4.6 96

Maluku Tenggara 7.2 5.2 73

Kota Tual 3.7 3.5 94

Aru 5.6 5.2 93

Maluku Tengah 25.6 14.6 57

Seram Bagian Barat 11.0 7.5 68

Seram Bagian Timur 5.9 3.5 60

Pulau Buru 6.5 4.1 63

Buru Selatan 3.6 3.0 84

Kota Ambon 19.5 41.8 214

Source: Calculated from BPS GDRP data, 2010

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Poor infrastructure and insufficient investments affect the dynamics of the economy and the labour market. Wage employment is limited and confined to a few cities and towns; non-wage employment is widespread and is closely associated with informality and poverty.

To sum up, the pattern of economic and employment growth in Maluku over the past decade displays both strengths and weaknesses. The main strength has been the rapid growth of value added in agriculture. The fact that value added has increased at a much faster rate than employment implies that productivity has gone up. This is a very positive development as a majority as poverty is concentrated to rural areas and there is a large number of working poor in agriculture. One might have expected that the rapid growth in productivity in agriculture would have resulted in a stronger reduction of poverty than appears to have been the case. In the absence of more detailed information and analysis, one can only speculate on why poverty has not fallen more. It may be because the benefits of productivity increases have not been distributed equally within the sector as there are geographic differences in the population to land ratio, access to land and in rainfall and other natural factors influencing the conditions for agriculture. Indeed, the joint analysis suggested that inequality in access to land and unclear and often contested ownership and user rights of land might offer an explanation. However, it may also be due to errors in the data and inconsistencies over time in the collection of data or in definitions.

The major weakness of Maluku’s economy is the insignificant development of manufacturing. Development of manufacturing with a focus on processing of local resources would increase the value added of these resources and create a much needed additional engine of growth in the economy. A strong, combined development of the three strategic sectors – agriculture, aquaculture and tourism – and of manufacturing linked to these sectors to create strong value added chains, will be necessary to achieve the twin goal of continued increases in productivity to reduce the number of working poor, and a rapid generation of productive employment opportunities outside agriculture, in a situation where the public sector can no longer be relied upon as a main source of employment growth. The persisting high rates of poverty in rural areas, despite significant increases in agricultural production also suggest a need for an in-depth examination of the apparent failure of agricultural growth to translate into rapid reduction of the number of working poor.

II. Poverty Reduction and a Projection of the Need to Increase Productive Employment

The inter-communal conflict a decade ago exerted a very heavy economic and social cost on Maluku. At the end of the conflict the economic situation was a great deal worse than it had been in 1995 when the Millennium Development Goals had been established. Poverty was rampant and with the fabrics of the economy and of the society severely damaged, economic and social recovery and meeting the MDG goal of halving extreme income poverty by 2015 became a daunting challenge.

Creating productive employment opportunities is by far the most important way of reducing income poverty. Productive employment is employment that yields sufficient income to permit a worker and his or her dependants to enjoy an income and consumption level above the poverty line. The deficit of productive employment consists

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of those who are in the labour force, but who do not have productive employment. This deficit takes two forms: Working poor and unemployed. The working poor are people who are working and belong to households whose members have a level of income and consumption below the established poverty line. Either because the productivity is too low or because the person does not have enough work, that is he or she would like to work more hours. Hence, there is a direct link between poverty and working poor.

However, the way working poor and productive employment are defined implies that there are also other factors influencing the status of a worker as working poor or productively employed. The intra-household actual dependency ratio, which is the number of mouths each breadwinner has to feed, matter. The higher the actual dependency ratio, or the larger the number of people depending on a worker’ income, the larger the income needed to escape poverty. Furthermore, the labour income of other working members of the same household also matters, as does non-labour related incomes, such as public and private transfers. Hence, one important conclusion with a bearing on the situation in Maluku is that increasing the activity rate by bringing more women into the labour force can be an important complementary measure to reduce poverty and to increase productive employment, along with increasing the productivity and income of those who are already working.

1. The Characteristics of Poverty

Maluku’s poverty rate (27.7 per cent in 2010, Table 11) is among the highest in Indonesia and twice as high as the national average (13.3 per cent in 2010). In addition to that, it seems that in Maluku employment does not always permit an escape from poverty. Low productivity, rather than unemployment, is the main cause of income poverty. From the conclusions gathered earlier in the paper it can be deduced that education does not guarantee employment, and employment does not guarantee prosperity.

Unlike elsewhere, poverty is not linked to unemployment in Maluku. As evident from Table 11, only a small portion of the poor are unemployed. In 2009, when poverty rate was 28.2 per cent, a mere 2.2 per cent of the poor did not have a job at the time of the survey. As much as 97.8 per cent of the poor were working, and almost 82 per cent of all poor were working in agriculture. Knowing that agriculture is the main source of employment for the rural population – as much as 70 per cent of rural working population was employed in agriculture in 2010 – it can be concluded that in rural areas the primary manifestation of the deficit of productive employment is working poverty due to low productivity in agriculture. In fact, it is estimated about a half of those working in agriculture find themselves living below the poverty line.13

Table 11. Labour force and poor people by sector and labour market status, 2009. Percentage.

Unemployed

Working in agriculture

Working in

non-agriculture

Total

LF 10.6 50.3 39.1 100

Poor 2.2 81.7 16.1 100

Source: SAKERNAS (2009a); BPS (2010g,Table 3.2)

13 Estimates are based on the data provided in Table 3.2, Data and Information on Poverty: District/City 2009, BPS, 2009. An assumption is made that the labour force participation rate among the poor is the same as the total activity rate.

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Indeed, poverty in Maluku is mainly rural. As much as 90 per cent of the poor are found in rural areas, as opposed to about 65 per cent in Indonesia as a whole. This may be explained by the lower level of urbanisation and lack of economic diversification in the province. There is a high pressure on agricultural sector and land to support the population in rural areas. A greater access to non-farm employment opportunities would decrease such pressure.

The gap between the poorest strata of Maluku population and the average income of the poor is very large. This gap, as measured by the Poverty Gap Index (PGI),14 is more than two times wider in Maluku than in Indonesia as a whole (see Table 12). However, the overall PGI for Maluku fell from 6.38 per cent in 2007 to 5.23 per cent in 2010. The economic growth that has been taking place in Maluku might have helped reduce the severity of poverty but has not yet managed to deliver larger numbers of people in need out of poverty. It would require a stronger and sustained inclusive growth to make such an impact.

Table 12. Poverty Gap Index, 2010. Percentage.

Maluku Indonesia

Rural 6.59 2.8

Urban 1.36 1.57

Total 5.23 2.21

Source: BPS, Poverty data: http://www.bps.go.id/aboutus.php?tabel=1&id_subyek=23

Poverty is closely linked to education levels: the higher the education level of the head of a household, the lower the incidence of poverty (Figure 9). Those who have completed at most primary school make up a majority of the poor - 66 per cent or about 270’000 people, whereas the high school graduates in Maluku comprised less than 2 per cent of the poor in 2007 (or 7’100 people). However, it is noteworthy that in Maluku even those with high school education are sometimes poor (one third of the poor households were headed by a person who completed at least junior high school).

Poverty is often inherited from one generation to the next. The 2007 statistics on drop-out rates show that pupils from poor households are much more likely to drop out from school than pupils from households living above the poverty line. For instance, in 2007, 5.2 per cent of students from poor households dropped out of junior high school, which is higher than 1.9 per cent dropout rate from junior high school among students from non-poor households.15 Fortunately, overall dropout rates in Maluku are among the lowest in Indonesia.

Therefore, it can be safely concluded that poverty is most widespread among those with little education, working on low productivity jobs in agriculture in rural areas. While low levels of education can partly explain the persistence of poverty in Maluku, they do not quite provide a full answer.

14 UN Statistical Division defines the poverty gap as the mean shortfall of the total population from the poverty line (counting the non-poor as having zero shortfall), expressed as a percentage of the poverty line. This measure reflects the depth of poverty as well as its incidence. The indicator is often described as measuring the per capita amount of resources needed to eliminate poverty, or reduce the poor’s shortfall from the poverty line to zero, through perfectly targeted cash transfers. 15 See BPS (2009c)

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Source: BPS, 2009

2. The Need to Increase Productive Employment

Productive employment and decent work provide the main link between economic development and reduction of income poverty. Integrating economic planning with employment planning, aimed at achieving productive employment and decent work for all, offers an effective way of creating a strong link between economic development and poverty reduction. Together with the integration of human resources development planning with economic development planning, with which it is closely related, it provides a strong basis for a comprehensive development planning. To this end, forecasts need to be made of the requirement for productive employment creation, which in their turn should be cast against the current and envisaged capacity of the economy to generate productive employment.

In order to quantify the magnitude of the challenge of productive employment creation in Maluku a rough estimation of the deficit of productive employment in the province and a forecast of the need for creation of productive employment in the coming five years was made. 16 It is estimated that about 162,700 people who work, presently find themselves in poverty. The working poor and the unemployed together make up the deficit of productive employment. This deficit is estimated to have grown somewhat in the past decade, from 193,900 in 2002 to 227,600 in 2010 (Table 13). The apparent increase in the number of working poor is surprising considering that productivity has increased in agriculture in the past years.

16 These calculations follow the methodology laid out in a brief methodological guide on Understanding deficits of productive employment and setting targets (Ronnas, Kwong, 2011). The figures should be seen as approximations as they are based on the assumption that the intra-household dependency ratio is the same for poor and non-poor household. More detailed analysis would be needed to relax this assumption.

Primary or less66%

Junior high school17%

Senior high school15%

Higher education2%

Figure 9. Poverty by the level of education of the head of household, 2007

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Table 13. Working poor & productive employment deficit in Maluku17

2002 2007 2009 2010

Labour force 484,205 552,729 596030 651,339

Rural 375,536 407,803 434,529 450,751

Urban 108,669 144,926 161,501 200,588

Employed 445,097 485,308 533,015 586,430

Rural 356,720 363,658 397,341 414,884

Urban 88,377 121,650 135,674 171,546

Poverty rate (%) 34.8 31.1 28.2 27.7

Rural - 37.02 34.3 33.9

Urban - 14.49 10.2 10.2

Productively employed 290,292 334,183 382,545 423,754

Rural 356,720 229,032 261,053 274,072

Urban 88,377 104,023 121,835 154,048

Working poor 154,805 151,125 150,470 162,676

Rural - 134,626 136,288 140,812

Urban - 17,627 13,839 17,498

Unemployed 39,108 67,421 63,015 64,909

Rural 18,816 44,145 37,188 35,867

Urban 20,292 23,276 25,827 29,042

Deficit of productive employment 193,913 218,546 213,485 227,585

Rural - 178,771 173,476 176,679

Urban - 40,903 39,666 46,540

Source: Authors’ calculations based on BPS data: http://dds.bps.go.id/eng/aboutus.php?tabel=1&id_subyek=23 accessed

Rough estimates of the regional distribution of the deficit of productive employment are shown in Table 14. Once again, evidently the primary manifestation of the deficit of productive employment in rural areas is working poverty and low productivity, whereas in urban areas it is high unemployment. In rural areas those are people with low education that are mainly affected, whereas in urban areas there are fairly educated men and especially women and the young who struggle to find a decent job.

Table 14. Deficit of productive employment by status and area of residence, Maluku. Percentage.

2010 Rural Urban Total

Working poor 79.7 37.6 71.5

Unemployed 20.3 62.4 28.5

Total deficit 100 100 100

Source: BPS http://dds.bps.go.id/eng/aboutus.php?tabel=1&id_subyek=23 accessed; SAKERNAS (2010h, 2002); Authors’ calculations

17 Poverty line is the value of per capita expenditure per month to provide basic food and non-food needs, needed by a person to enjoy proper living conditions.

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A first attempt to make a rough estimate of the need for productive employment creation over the 2010 to 2015 period was made as an input into the workshop on employment diagnostic analysis in Ambon, April, 2011. A summary of the results of this exercise is provided in Table 15. These initial estimates highlight the magnitude of the development challenge ahead. They suggest that the number of productive jobs will need to increase by at least 154,000 between 2010 and 2015. Somewhat more than half of this increase (74,000) will have to be in the form of new jobs for the large number of young entrants into the labour force and, to a lesser extent, to reduce unemployment. In addition, the number of working poor will need to be reduced by some 80,000, either through an increase of the productivity and incomes in their present jobs or by creating opportunities for them to move to other and better jobs. As the vast majority of the working poor live in rural areas and derive their living from agriculture, a continued increase in agricultural productivity and incomes is essential. A shift of the working poor to new and better remunerated occupations and economic sectors is much needed. The 90,000 or more new jobs will mainly have to be created outside the agricultural sector. As it will not be possible to continue to rely on the public sector as a main source of employment creation and as the past trend of rapid employment creation at the expense of productivity in trade and other services will need to be broken, new sources of employment and economic growth are very much needed. Another, complementary measure would be to increase the activity rate of women, particularly in poor households. With two income earners instead of one in a household, the income needed by each one to bring the household out of poverty could be significantly reduced. However, this would imply a need for additional job creation on top of the 154,000 productive jobs already needed, while the pressure to increase labour productivity would somewhat reduce.

Table 15. Estimates and forecasts of the deficit of productive employment in Maluku

2002 2010 2015 Change 2002-2010

Change 2010-2015

Labour force 484,200 651,300 716,380 167,100 65,000

Employed 445,100 586,400 659,790 141,300 73,400

Unemployed 39,100 64,900 56,600 25,800 -8,300

Poverty rate 34.8 27.7 12.5 - 7.1 -15.2

Productively employed 290,300 423,700 577,300 133,400 153,600

Working poor 154,800 162,700 82,500 7,900 -80,200

Deficit of productive employment

193,900 227,600 139,100 33,700 -88,500

Source: BPS (2010b); BPS Poverty data, http://dds.bps.go.id/eng/aboutus.php?tabel=1&id_subyek=23 accessed SAKERNAS (2010h, 2002); Authors’ calculations

Remarks: All figures are based on BPS data. Targets for 2015 were based on the MDG target of halving poverty by 2015 and assuming a target to reduce unemployment to the national average by 2010. The deficit of productive employment is calculated as the working poor plus the unemployed, which is those in the labour force who lack productive employment. Productive employment is defined as employment that yields a sufficiently large income to allow the worker and his/her dependents an income above the poverty level.

Rural78%

Urban20%

Figure 10. Total deficit of productive employment by area, Maluku, 2010

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Although indicative of the magnitude of the employment challenges facing Maluku, the estimates above are mainly provided here for the purpose of exemplification and could, and would need to, be further refined and elaborated in greater detail, for instance by districts. They can also be recalculated to reflect the more ambitious targets for reduction of poverty and unemployment in the 2008-2013 development strategy. They would also need to be cast against the past performance of the economy, sector by sector, and against the likely outcome of the current economic development plans and forecasts in terms of employment and income generation. Analysis of the depth of poverty would also allow estimates of the productivity and income increases needed to reduce the number of working poor.

III. Identifying Priority Areas for Increasing Prod uctive Employment

Once the first phase of the employment diagnostic analysis had been completed, which provided a general understanding of what had happened in the province, the study moved into its second phase – the participatory workshop that would help understand why, or the causes leading to the current state of affairs as per statistics. Some of the conclusions were easy to identify, whereas others required extensive discussions among the participants guided by the employment diagnostic ‘tree’ with a range of factors that may affect growth and employment, in order to reach consensus on the core constraints.

Maluku saw an annual economic growth of about 5 per cent over the past ten years. Growth has been strong in agriculture but employment has not, which implies a growth in productivity. Economic growth has been strong in services, though employment growth here was even stronger, resulting in falling productivity. As explained earlier in the text growth in public and private services is unlikely to be sustainable in the long term. On the other hand, manufacturing which is a sector that could be both productive and sustainable, has been stagnating for the past decade. Although growing, the economy is still at an initial stage of industrialisation. Agrarian in its essence, it has not yet developed sophisticated value chains.

Despite the sustained growth, poverty rates in Maluku remain high. Over a quarter of the population presently find themselves below the poverty line and the provincial poverty rate is two times higher than the national average. The labour market participation rates are comparatively low, mainly because of the high occurrence of inactivity among women; unemployment rates are high at 10 per cent, and again, higher among women. Yet in the specific case of Maluku poverty hardly affects the unemployed but mainly those who do work in low productivity jobs. The link between economic growth and welfare of the population seems to be weak.

The participatory workshop served as a panel for discussion and a form of a “structured brainstorming” that helped distil the core constraints and the degree of their urgency. Having acknowledged the weaknesses in the provincial development pattern, the workshop participants with the assistance of facilitators and resource persons identified nine core constraints to increasing productive employment and grouped these into three main areas (see Appendix I):

Human and other productive resources: 1. Qualitative aspects of human resources development2. Investment in human resources3. Access to land Opportunitiesgrowth: 4. Access to5. Social returns to investment (especially infrastructure)6. Access to market7. Quality of b8. Rent extraction Sustainability aspect:9. Environmental sustainability

1. Human and Other Productive Resources

When examining the pattern of growth, it is crucial to characteristics of productive resources, in particular resources like land and sea. Heconomic growth and not just of human resources together with improved opportunities to enhance the economic returns to these resources make up natural resources possess quantitative and qualitative characteristics that must be considered. The qdevelopment, determineturn determines the yieldcomes to land and sea, the to labour, where better access mabelow provides a structure for the analysis of productive resources.

The demographic structure andthe economy to generate productive employment.of the population is

Quantity

Human and other productive resources: Qualitative aspects of human resources development Investment in human resources Access to land

Opportunities for productive employment – The rate and quality of economic

to / cost of finance Social returns to investment (especially infrastructure) Access to market / market failures Quality of business environment Rent extraction

Sustainability aspect: 9. Environmental sustainability

Other Productive Resources

When examining the pattern of growth, it is crucial to start by lookingproductive resources, in particular human resources

resources like land and sea. Human resources and the labour force are creators of economic growth and not just its beneficiaries. Investments in a qualitative development of human resources together with improved opportunities to enhance the economic

these resources make up the foundation of job-rich growth. possess quantitative and qualitative characteristics that must be

The quality of human resources and the level of human resources determine their employability and productivity. The quality of land in its

turn determines the yield and the potential for intensification of the land usecomes to land and sea, the accessibility of these resources has a strong bearing on

, where better access makes it possible to achieve higher returns.below provides a structure for the analysis of productive resources.

The demographic structure and its dynamics shape the necessitythe economy to generate productive employment. In Maluku the demographic structure

is favourable with two thirds of the population currently in the working

Productive resources

Labour

Quantity Quality

Land and sea

Quantity Quality

Accessibility

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rate and quality of economic

start by looking at the main human resources but also natural

uman resources and the labour force are creators of beneficiaries. Investments in a qualitative development

of human resources together with improved opportunities to enhance the economic rich growth. Both human and

possess quantitative and qualitative characteristics that must be uality of human resources and the level of human resources

productivity. The quality of land in its and the potential for intensification of the land use. When it

has a strong bearing on returns kes it possible to achieve higher returns. The diagram

necessity and the ability of the demographic structure

wo thirds of the population currently in the working

Quality

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age, and a large share of the population in pre-working age and soon to enter productive age and therefore further improve the age-based dependency ratio.18

The qualitative attributes that determine employability – education, skills, health, cognitive abilities etc. – set the parameters for the individual persons’ ability to access productive employment as well as for the scope for technological advancement, increased labour productivity and returns to labour at the aggregate level. As established in the previous sections, the quality of human resources in Maluku overall is relatively high at the first glance – illiteracy rates are low and education attainment rates are high even among the rural population. However, as concluded from the previous sections, higher education levels do not always translate into better employability of the individuals. In contrast, those with only primary education or lower, make up the majority of workers in rural areas and often end up as the working poor. In a way, this situation reflects an early stage of development of Maluku’s economy that employs low-skilled labour.

Source: SAKERNAS (2010h)

Basing on the findings of the initial analysis the workshop participants tried to answer two main questions, why do the human resources remain underutilised, and what prevents Maluku from making the most of its natural resources? The participants of the workshop concluded that the potential of human resources in Maluku is not fully utilised due to the fact that despite being educated, the labour force lacks skills to work productively and to support specific sectoral development as indentified in the provincial development strategy. The participants strongly believed that the training received by the students is not sufficiently in tune with the market requirements. Unemployment rates are high among the senior high school graduates because their education does not match job opportunities or they tend to be selective in taking up a job, and in the absence of attractive employment opportunities stay out of job. In addition, educated women often do not participate in the labour force at all, either due to an absence of economic incentives to work or due to a conservative attitude towards women in the community in general.

Several factors were identified as restraining the optimal use of human resources, including poor quality and relevance of education and skills training. It was noted that there was as yet no constructive policy to close the gap between the education system and the labour market. There is a lack of high quality vocational schools, collection and dissemination of labour market information was inadequate and attractive productive employment opportunities are scarce. The investment in the institutional infrastructure for education and vocational training was believed to be wanting, especially in the rural areas and at district level.

18 The dependency ratio has a direct impact on the number of working poor; it also exerts an influence on savings and investments not least in human resources and on participation rates in the labour force.

Primary or less41%

Junior High18%

Senior High30%

Higher Education11%

Figure 11. Labour force by level of education, Maluku, 2010

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Considering the labour force is generally fairly well educated, there is a scope for a technological advancement and increased labour productivity in the economy. It was suggested that a specialised training be provided to women and men to support the priority sectors of economy, namely agriculture, seaweed cultivation, fishing and tourism, as well as in quality control of production. A better coordination between the market demand and supply and between the economic development strategy and human resources development, via schools accessible to everyone, vocational education and trainings (VET) and life-long learning (LLL) programmes is necessary. It was emphasised that the training provided by these institutions must specialise in the priority sectors.

As to the natural resources, Maluku is rich in land and sea resources. Land is generally fertile and benefits from sufficient rainfall, and the sea is abundant in fish and other marine resources. Yet the rich potential of the natural resources is not being fulfilled. The underutilisation of natural resources was widely believed to have been caused by an uneven access to land across the province and unclear and insecure ownership and user rights, which is reflected in a poorly developed land registry and land certification. The latter problem has also often become the cause of inter-communal friction. The problem of underutilisation of natural resources is exacerbated by the insufficient or obsolete infrastructure, which is a major challenge in a “province of a thousand islands” as Maluku is often referred to. In order to boost production in agriculture that the economy and population would benefit from, the use of land in Maluku must be intensified. A fair, secure and equal access to land and other natural resources must be ensured. To address the issues with access to land and other productive resources constructively, a capacity building for managers in spatial planning and resources management needs to be provided. In addition to that, agriculture extension services must be offered to farmers to inform them of the potential of the land cultivation and of the up-to-date technology available.

2. Creating Productive Employment Opportunities – A Focus on the Rate and Quality of Economic Growth

The forecasts of the need for creation of productive employment in the coming years that result from the very ambitious targets to reduce income poverty imply a formidable challenge for the economy in the coming years quantified in the previous section. Achieving these targets will require a continued productivity growth in agriculture to reduce the number of working poor, and a rapid generation of new productive jobs in the next years, the vast majority of which will have to be created outside agriculture and outside the public sector. It will also require a higher rate of growth than in the past, although the precise rate of growth needed to meet the targets will depend on the structure and nature of growth. To achieve higher and sustainable economic growth will require a structural change of the economy and a transformation of its productive capacity. This process should be characterised by a continuous building of human resources and capabilities, adoption of more sophisticated technologies and knowledge and diversification into non-traditional and higher value added goods and services. It will require intensification and market-orientation of agriculture, fishing and aquaculture; diversification of the economy, with priority to develop linkages to and from agriculture, value added chains and modern manufacturing; identification and development of export niches and niches where Maluku’s economy can achieve excellence; and last but not least a growth with equity – development must be inclusive and pro-poor.

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The analytical and diagnostic session on economic development was structured as a sequential review and assessment of a range of different aspects and factors known to influence the rate and quality of growth (Appendix I), with a view to identify the core constraints and issues that need to be addressed in order to increase both the rate and quality of economic development. Some of these factors are by nature such that the provincial authorities cannot exercise much influence over them and hence they have to be taken as given. However, most factors and issues can be influenced at the provincial level. The task at hand was to identify problematic areas and make an informed decision on which of these should receive priority attention because of their fundamental importance in the context of Maluku.

Integration in the global economy. Being a small part of a large country – Indonesia – which in its turn is part of a larger economic region – ASEAN – implies that Maluku is a small open economy integrated in a much larger one. The degree of integration can be measured as the share of trade in the economy, but also labour migration, remittances and FDI are part of the picture. There is very little scope for Maluku to influence the terms of its integration in the larger economies of Indonesia and the ASEAN region. Maluku can only make the best possible use of a given situation. A quick look at statistics clearly shows that despite access to a national market of 250 million people and a much larger ASEAN market, the level of integration with these external markets is low. The potential to develop exports to the rest of Indonesia and abroad remains largely untapped due to the low level of development of the domestic economy.

Macroeconomic policies is another area where the main decisions are taken in Jakarta and not in Ambon, and over which Maluku can only exercise very limited influence. Macroeconomic stability is necessary, but not sufficient to achieve growth. However, policies aiming at macroeconomic stability can at times be designed and implemented at the expense of competitiveness and economic growth. Policies aimed at reducing inflation or reducing the budget deficit can have a negative impact on growth, for instance through high interest rates, appreciation of the exchange rate or reduction of government spending during economic recessions. A review of the situation in Maluku suggests that macroeconomic instability is not an issue. However, there has been a real appreciation of the Indonesian Rupiah over the past years, which may have served to undermine international competitiveness. A main conclusion must be that Maluku needs to focus on improving competitiveness and on identifying export niches that are not very price sensitive.

Access to finance. Economic development requires investments. These can come from abroad, from other parts of Indonesia or from within the province. Investments require savings and a financial system which serves as an efficient intermediary between those who save and those who need to borrow money to invest. Experience shows that a high rate of saving and of investment as well as a banking system that is efficient in mobilising savings and in providing credits for investments are both prerequisites to achieve high rates of growth over a long period of time. A review of the situation in Maluku reveals a rather grim picture. According to official statistics, gross fixed capital formation was only 4.5 per cent of GDP in Maluku in 2010, compared to 25 per cent for Indonesia as a whole. If this figure is correct, the investments are clearly far too low to sustain high growth. So far Maluku has attracted very limited amounts of foreign direct investments (FDI). Bank credits have expanded rapidly in Maluku in recent years, but about 60 per cent of all loans are for consumption, an additional 30 per cent for working capital of enterprises, and only 10-13 per cent of the credits given out are long term loans for investments. The difference between lending and borrowing rate appears to be approximately the same as in the rest of Indonesia – that is about 5 per cent – which can hardly be considered excessive. It would appear that the main problem is not a high cost

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of capital, but difficulties for firms to access bank loans, or possibly a lack of demand for credits. It should be noted that restricted access to land identified by the participants as a constraint to inclusive growth in agriculture, may also limit the use of land as collateral for credit. That said access to and cost of finance was identified as a significant constraint, deserving a priority attention.

Social returns to investments. Social returns to investments have to do with the ability of economy as a whole to make use of private investments, and of the innovations, technology and knowledge that follows from such an investment. For example, say that a multinational company wishes to establish a factory in Maluku. If there is plenty of well-educated and skilled labour, then the factory will be able to use local labour rather than bringing in skilled labour from other parts of the country. With lots of highly trained people, it will also be easier to make a wider use of the technology and know-how that the factory brings with it. Local engineers can set up local firms that supply the factory with different parts, so that these do not have to be imported, etc. With good physical infrastructure, it will also be possible for other towns than the one where the factory is built to benefit in different ways. At the more general level, it has to do with the development of capabilities, along with actual economic development. It can easily be argued that Maluku is handicapped in this regard by its geographic location. As it consists of a large number of islands scattered over a vast area of sea, transport costs of both people and goods are inevitably high within the province as well as between the province and the rest of Indonesia. The tyranny of distance in terms of both cost and time of transport makes it difficult to achieve spread effects whereby the growth in primary economic regions may benefit the periphery through increase in demand for raw materials and adoption of advanced technologies. As noted earlier (Chapter III: 1) the education levels are quite high, however, there are concerns about the quality and relevance of the knowledge and skills provided by the educational system. Lastly, a generally low level of economic development implies that the social returns to individual investments are likely to be low, as most factors that contribute to social returns to investments develop in tandem with the expansion and increasing sophistication of the economy. The participatory workshop concluded that low social returns to investment, especially infrastructure were a major hindrance to development in the province. It is a chicken and egg dilemma which requires concerted development efforts to overcome.

Efficiency and functioning of markets. Poorly functioning markets can be a major constraint on economic development as they result in high costs of transaction, uncertainty and risks. Geography, population density, level of economic development and the transport and communication system are all important factors – all disadvantageous for Maluku. However, other factors matter too, such as the institutional legal and regulatory framework. Three dimensions of the efficiency and functioning of markets need to be explored:

1. The ease of access to markets for inputs, credit, labour, services and for sale of production. That is the cost of market access in terms of both time and money;

2. The reliability and predictability of markets. Will the buyers / sellers be there when I need them? Can I predict the price I will get for my produce or will have to pay for what I need to buy?

3. The efficiency of the markets: Are there many competing buyers and sellers? Is it easy to get price information and to compare prices?

The functioning of markets is inherently difficult to quantify and measure. Often, the best sources of information may be the local economic actors themselves, who depend on the functioning of markets in their daily activities. One way to examine the functioning of markets is through the prism of a value added chain, by following a

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product from the inputs needed to produce it to the final consumer in order to assess the strength and efficiency of the linkages and to identify weak links.

The functioning of markets can also be seen from the perspective of geographic market integration. The establishment of a diversified and integrated economy through the creation of linkages between different sectors in the economy and of strong value added chains need to be complemented by a geographic integration of the economy of Maluku. Rural areas need to be linked to markets in small towns where farmers can sell their produce and buy the inputs and other goods they need. These small market towns in their turn depend on the development of agriculture and the rural economy to prosper. These small towns in their turn need to be linked to other. A strong and well-functioning network of towns and cities needs to be created, that makes it easy to trade between different towns and parts of the province and which makes it possible for all areas of the province to become integrated parts of the provincial economy and to contribute to its development.

During the workshop the participants deducted that poorly functioning markets are a major constraint on economic development in Maluku. Much of the economic activities in the province are confined to the capital city, Ambon, and local markets elsewhere tend to be poor and poorly connected with each other. Costs of transport are high and a prevalence of small and largely disconnected markets also suggest that there are reasons to suspect low and unpredictable prices.

The quality of the business environment. A wide range of factors exerts influence on the quality of the business environment. These may for the purpose of analysis be divided into three main groups: (i) peace, political stability and respect for human rights, (ii) the legal and regulatory environment, and (iii) the quality of governance and prevalence of corruption. The quality of the business environment affects both the rate and the quality of economic growth. It also has an important bearing on equality and the establishment of a level playing field for both large and small businesses, as small businesses tend to suffer more than large ones from a poor business environment.

Indonesia scores fairly well on political freedoms and human rights indicators and there is no reason to believe that Maluku differs from the rest of the country in this respect. The level of crime and physical violence is low by any standard. However, there is a history of communal conflict, which may continue to cast a shadow over the province.

There is no separate independent study on the legal and regulatory environment for businesses in Maluku. Studies on Indonesia as a whole result in a mixed picture. The Doing Business ranks Indonesia rather poorly, as the 155th country out of a total of 183 countries.19 According to this survey, the cost of setting up a business, of enforcing contracts and of closing down a business is particularly high in Indonesia. Another survey by the World Bank Group, the Enterprise Survey, offers a slightly different and more positive picture.20 According to this survey, Indonesia scores better than its neighbouring countries when it comes to taxes and tax regulations, difficulties in obtaining permits and licences, crime, and barriers to foreign trade. However, poor infrastructure appears as a more serious problem in Indonesia.

Corruption is a recognised problem in Indonesia as in most countries in the world. The negative impact of corruption on economic development is well-known. Corruption also tends to worsen inequality as it affects those without power and influence and who

19 IFC 2011 20 Enterprise surveys (2009)

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are economically weak tend to be much more exposed to corruption and are less able to defend themselves against such malpractices. Transparency International gives a fairly low score to Indonesia, a mere 2.8 on a scale from 0 to 10; below Thailand and Malaysia, but slightly above the Philippines. The Enterprise Survey, which measures corruption exclusively from a business perspective, arrives at a slightly more positive picture. According to this survey, 14 per cent of the firms in Indonesia consider corruption to be a major constraint, as against 29 per cent of the countries in the region as a whole.

In the absence of hard evidence, and relying on the local experiences of the workshop participants coming from diverse backgrounds, it was concluded that quality of business environment in Maluku is inadequate. The district and provincial authorities can do a fair amount to improve the regulatory and institutional environment for local businesses by simplifying rules and administrative procedures etc. Such measures often cost little to implement, but may be very effective in terms of increasing the attractiveness of Maluku as a destination for investments and businesses and creating more conducive for economic development. A dialogue between provincial authorities and the representatives of the private sector would probably go a long way towards establishing what and where the main problems are and what the priority measures for improving the business climate should be.

Labour market institutions and social dialogue Unionisation of workers and respect for the principles of collective bargaining can help overcome unequal power relations on the labour market and enhance the returns to labour in the form of higher wages. Trade unions can also help protect individual workers against intimidation and discrimination at the work place. Minimum wages and labour regulations may serve as instruments for enhancing the employment content of growth and productive employment. The questions posed to the participants undertaking the growth diagnostic analysis in the workshop was therefore how to develop social dialogue further and use it as an instrument to underpin more forceful development strategies, and what aspects of labour market institutions needed to be improved most.

Regional concentration of growth. A strong regional concentration of growth reduces the quality of growth and ultimately the rate of growth as well. A mismatch between the spatial distribution of the labour force and of the location of economic activities has a negative impact on access to productive employment and tends to increase inequality. To achieve a sustainable and inclusive development all parts of Maluku need to be well integrated in the provincial economic and the economic development will need to include all parts of the province. Combining structural change and rapid economic development with regionally balanced development is a major challenge for Maluku, which is an archipelago of islands spread over a very large area. A pronounced regional concentration of growth is highly visible in the province. The capital city Ambon produces 42 per cent of the GDP of the province, although only 20 per cent of the population lives there. There are large differences in physical infrastructure across the province and the cost of transport is high for geographic reasons.

The participants concluded that in Maluku, the economic development has not created adequate employment opportunities: Natural resources – especially marine and forestry – are not fully utilised, and there is a vast untapped potential in agriculture. Inadequate infrastructure was identified as one of the most critical constraints to economic and productive employment growth. Infrastructure plays a vital role in providing access to markets, in production and realisation of high quality agricultural and marine products. The workshop participants advocated for a construction of seaports to better connect the islands, and equip them with storage facilities and fridges to store marine products before shipment. Roads and regular public transportation are needed to move products from the point of production to the marketplace. There was a general

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agreement on the need to achieve a regionally balanced development. At present poor infrastructure reduces the level of investments in the economy as well as the benefits to the economy as a whole of the investments that do take place. The state should facilitate for a more enabling business environment through simplifying administrative procedures and improving the general business climate. Business development service centres must be put in place in each cluster to support new business start-ups as well as the existing SME’s. It is crucial to improve market information dissemination across the province. The participants strongly believed that investment in infrastructure should be boosted. It was suggested to start a cooperative in each cluster centre to support local producers and manage the processing and marketing of products.

3. Making Development More Inclusive and Sustainabl e

Inequality weakens the link between economic growth and poverty reduction. It also reduces the quality and sustainability of growth. Experience tells us that economic development accompanied by structural change, such as a market orientation of agriculture and a diversification of the economy often leads to increased inequality. Maluku is still at a very early stage of development. It is always easier to prevent inequality before it develops rather than reverse it afterwards. Aspects of equality therefore need to be forcefully integrated into the development strategy and policies of the province now in order to achieve development with equity.

Broadly speaking, one can identify four main causes for unequal access to productive employment:

• Unequal employability that stems from unequal access to productive resources, such as education, skills and other forms of human capital as well as to land;

• Unequal opportunities to access productive employment and to make productive use in the form of employment of the employability and resources a person possesses;

• Insecurity and vulnerability; • Inequality in the availability of time to work.

Unequal resources / employability pertains to differences in education and skills, health and nutrition, as well as to access to educational and training facilities and health care. It also covers inequality in access to other productive resources than human resources, such as land, capital and technology. A quick review suggests that there are large differences in education between people living in rural and in urban areas. For instance, 54 per cent of the rural labour force, but only 17 per cent of the urban, have no more than primary education. The differences in education between men and women do not on the whole appear to be very significant. Slightly more women than men have no more than primary education, but on the other hand, more women than men have higher education. There is a strong link between poverty and low levels of education. Those with low education are much more likely to remain poor. In this vicious circle children living in poor households are less likely to get a good education than those living in more affluent households. Lack of adequate education, in its turn increases the likelihood that the child will remain poor as an adult.

Unequal opportunities. Endowment with resources to engage in productive work (employability) needs to be matched with equal opportunities to make use of these

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resources through productive employment. Unequal opportunities to access productive employment, despite more or less equal levels of employability may arise for a number of reasons.

There may be obstacles to geographic, occupational and social mobility. Mobility is important as the present and future opportunities for good jobs are seldom found in the fields and places where the working poor are found. Growth invariably implies structural change. For the working poor to be able to benefit from growth and structural change they must be able to move occupationally and geographically to the sectors and places where new jobs are appearing. If good job opportunities cannot be developed in the occupations and places where the working poor are found, then the working poor must be able to move to the occupations and places where productive jobs can be found. Large geographic differences in economic development further underscore the need for mobility.

Poorly functioning labour market and discrimination against those who do not have the necessary contacts or do not have the necessary information or who are perceived to have the wrong gender for a particular job may often be other important causes of unequal opportunities.

There is limited statistical information on aspects that may or may not result in inequality of opportunities to access productive employment in Maluku. However, the picture that emerges from the scattered pieces of evidence that are easily available suggests that there are both gender-based and location determined causes of inequality. As pointed out earlier, women sometimes have better education than men, yet they are much less likely than men to be economically active; unemployment and in particular youth unemployment is much higher among women; yet when women do work, they are less likely than men to have wage-employment.

Location too, matters. There are large differences in the level of economic development within the province along two lines: First, there is a large difference between the capital city of Ambon on the one hand and the rest of the province on the other hand. Second, there are large differences between poor and rich districts within the province. Some districts, notable Maluku Tengah, Seram Bagian Timur and Pulau Buru, are far behind the rest of the province in terms of per capita GDP.

Insecurity and vulnerability can be other important causes of inequality in access to productive employment opportunities. This is primarily because mobility, entrepreneurship and investments aimed at increasing productivity and returns to labour by farmers and other entrepreneurs inevitably entails a certain amount of risk. Those living in poverty with no economic margins and without basic social security often cannot afford to take even calculated and seemingly worthwhile risks because the failure might have catastrophic consequences. Hence, they tend to be very risk adverse. Basic social protection for all, in the form of a social security floor, is therefore not only warranted on grounds of social justice, but also to promote inclusiveness of economic development and as an investment in an economic development for all.

Unequal availability to work is a common cause of gender-based inequality in availability to access productive employment. Household and reproductive work tends to be very time consuming, particularly in situations where tasks like fetching water and firewood, cooking, washing clothes etc. take up a lot of time. In the absence of day-care facilities for children, reproductive work and rearing of children may also be a full-time task. As these tasks tend to be unequally shared between husband and wife and between female and male members of a household, women tend to end up at a disadvantage in terms of availability to work. Addressing various constraints that make it difficult for

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women to participate fully and on an equal footing in the labour market and in the economy are important not only in order to reduce gender-based inequality in access to productive employment, but also to increase the pace of economic development and make it more inclusive, reduce poverty and the number of working poor.

In this light, the workshop participants were asked to identify main forms of inequality, the ways inequality manifests itself in the province and the probable causes. The participants acknowledged several aspects of inequality present in Maluku and two main dimensions of inequality between men and women and between rural and urban areas (between the city and periphery). Inequality takes form of unequal access to productive resources (education, skills, knowledge as well as access to land and natural resources, resulting in unequal employability), and unequal opportunities, including unequal availability to work between men and women. In Maluku the gender roles are strongly pronounced and often it is hard for women to undertake employment in male-dominated sectors and/or away from their families. The participants advocated that women should be provided training as entrepreneurs or in the priority sector-specific professions in order to boost the development in these sectors in an inclusive manner.

Reducing inequality between cities and districts would require support by the state in districts development through targeted policies and budget allocations, especially in the area of infrastructure improvement. In order to reduce the economic inequality between urban and rural areas, the productivity of jobs in rural areas must be increased and more productive jobs created. This should be done through expansion of processing industry to increase the value added of the local products.

IV. Concluding Remarks

The Government of Maluku has set very ambitious goals and targets for the development of the province in the coming years. The incidence of poverty is targeted to be reduced from 27.7 per cent in 2010 to 12.5 per cent in 2013, effectively achieving the MDG of halving severe poverty by 2015 two years in advance. The target to reduce unemployment is similarly ambitious. Over the past few years unemployment has fallen from a record level of 18 per cent in 2004 to 9.1 per cent in 2010, and is targeted not to exceed 5.8 per cent by 2013. In order to achieve these ambitious targets, economic growth will need to increase significantly, the quality of growth in terms of its employment content will need to be high and it will need to be genuinely inclusive and pro-poor. The Provincial Mid-term Development Strategy for 2008-2013 reflects an awareness of these challenges and spells out a plan for addressing them. Growth is targeted to increase from an average of little more than 5 per cent per year in the past years to 8.5 per cent by 2013.

A strategic concentration of development efforts – sectorally and geographically – provides a conceptual cornerstone for the strategy. Sectorally, agriculture, aquaculture (including seaweed) and tourism are identified as priority sectors for economic development. This focus needs to be accompanied by an emphasis on the development of processing and, manufacturing more generally, to promote the development of value added chains, strong multiplier effects within the province and a gradual move up the technological ladder and the development of an increasingly sophisticated economy.

A cluster-based development approach has been chosen as a way to address the need for a certain geographic distribution of production concentrating in cluster centres

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in order to achieve necessary economies of scale and agglomeration effects and to optimise the developmental impact of scarce resources available for investments in physical and other infrastructure. It may also serve as an effective way to counter-balance an inevitable tendency towards increasing economic concentration to the provincial capital – Ambon.

This strategic development approach has considerable merits. The relatively early stage of economic development – Maluku still remains a predominately agrarian economy – and the dispersion of the population and of economic activities on a large number of islands over a vast area, combined with the need to maximise the development impact of scarce resources for investments provide strong arguments for the chosen development approach. Support for this development approach can also be found in economic theory as well as in empirical experiences of development elsewhere.

The workshop on employment diagnostic analysis in Ambon identified three core constraints and challenges to increasing productive employment through enhanced job-rich growth, as well as a number of other ‘second-rank’ challenges that will need to be addressed.

Problems with the development and quality of the human resources were identified as one of the three core challenges. The identified problems have more to do with the relevance and quality of education and skills development than with the levels of education attainment, which are high by Indonesian standards. The importance of this issue should be seen in the light of the formidable challenges of equipping the large numbers of young entrants into the labour force with the education, skills and knowledge needed not only to be gainfully employed today, but also to play an active role in a rapid structural change and productive transformation that will be a main feature and engine of the economic development of the province in the years to come.

Insufficient social returns to investments were identified as another core constraint. Social returns to investments refer to the ability of the economy as a whole to maximise the development impact of (individual) private investments and of the know-how and technology that are embedded in such investments. The present low level of social returns to investments, identified by the participants in the analytical workshop as a core development constraint, is in many ways an inevitable consequence of a low level of economic development. The low level of economic development together with adverse geographic factors result in low social returns to economic investments, at the same time as such investments are very much needed to increase the level of economic development.

Poorly functioning and underdeveloped markets, resulting in poor market access and high transaction costs were identified as a third core constraint by the participants in the workshop. This problem has the same roots as the low social returns to investment in the low level of economic development and the dispersion of the population and the economy on a large number of islands. The problem takes a variety of forms and expressions. Rural – urban economic linkages are insufficiently developed. As a result, farmers lack access to secure and predictable markets and often have no choice of buyers to sell to. They often also lack access to up-to-date and comprehensive market information and easy access to inputs. A long sequence of middlemen results in a large difference between the price that the farmer receives for his produce and the price that the urban consumer ultimately pays for the same product. High costs of inter-island transport in terms of both time and money are an obstacle to an internal integration of the economy of the province. A strong and well-functioning network of small and medium-sized towns is needed to facilitate trade between all parts of the province, to develop strong value added chains and multiplier effects and to make possible a regionally

36

balanced economic development. At a different level, the export potential of Maluku and the potential to use export and trade as an engine of economic development are severely constrained by lack of access to markets in other parts of Indonesia and abroad.

There are strong linkages between the problem of insufficient social returns to investment, and of poorly functioning and under-developed markets. Both of them have their roots in a low level of economic development, at the same time as they impede an economic development that might gradually solve them. They are also strongly interlinked. Neither of these problems can be assumed to disappear by themselves. The significance of these two core development constraints underscores the appropriateness of the cluster-based approach to economic development as well as the strategic focus on a few economic sectors. However, while there can be little doubt that this strategic approach has very strong merits, it should also be remembered that it is equally important to ‘do the right things right’.

The ambition must be to increase the rate of growth and to achieve a growth that is sustainable, job-rich, pro-poor and inclusive of the vulnerable groups of the population such as the youth and women through well-designed and forceful policies. Putting the economy on a path of sustainable and rapid growth needed to ensure productive employment for all and an elimination of poverty will require:

• Intensification and increased market-orientation of agriculture and a forceful development of fishing and aquaculture (especially seaweed)

• Diversification of the economy, through development of linkages and value added chains from agriculture and the other strategic sectors – aquaculture (seaweed) and tourism – and the development of a modern manufacturing sector based on local resources

• Creation of conditions for further development of agriculture and fishing and processing to maximise the value added and trigger productive employment growth

• Increasing the value added of exports from Maluku through identification of export niches and a shift from export of raw material to export of processed goods with a high value added, thus achieving economic growth both through growth of exports and domestic demand

• Strengthening the technological base of the economy, thus increasing productivity of labour and creating a stronger demand for the skilled and educated labour force

Developing manufacturing is crucial to increase the rate of economic growth and employment creation in a sustainable manner. This sector has the potential to create conditions for further development of agriculture and fishing and to maximise the value added and employment growth from such a development, as well as increase the value added of exports from Maluku, thus achieving economic growth both through growth in exports and in domestic demand. And finally, this sector could strengthen the technological base of the economy thus creating stronger demand for the skills and education of the labour force. A development of manufacturing should go hand in hand with the intensification of the agricultural and aqua-cultural production, as well as tourism. At the same time, further development of agriculture and the envisaged rapid development of aquaculture, in particular seaweed cultivation would greatly benefit from a development of agro-processing and other manufacturing, based on local resources at the same time as it would create a basis for and fuel such a development.

A strong, combined development of the three strategic sectors – agriculture, aquaculture and tourism – and of manufacturing linked to these sectors to create strong value added chains, will be necessary to achieve the twin goal of continued increases in productivity to reduce the number of working poor, and a rapid generation of productive

37

employment opportunities outside agriculture, in a situation where the public sector can no longer be relied on as a main source of employment growth. The persisting high rates of poverty in rural areas, despite significant increases in agriculture production also suggest a need for an in-depth examination of the apparent failure of agricultural growth to translate into rapid reduction of the number of working poor. Elaborating a value chain starting in agriculture and aquaculture and investing into strengthening every link of the chain would be a way to connect together the priority sectors of economy, boost economic and productive employment growth and create a sophisticated economy developing in a sustainable manner.

38

References

International Labour Office (ILO). 2006. Implementing the Global Employment Agenda: Employment strategies in support of decent work, “Vision” document (Geneva). Also available at: http://www.ilo.org/gea [19 Aug. 2011].

Badan Pusat Statistik, National Statistics Office (BPS), official website: http://www.bps.go.id/index.php [19 Aug. 2011].

Badan Pusat Statistik Provinsi Maluku, Maluku Provincial Statistics Office (BPS Maluku), 2010. Berita Resmi Statistik, Official Statistics http://maluku.bps.go.id/file/produk176.pdf [19 Aug. 2011]

Kementerian Tenaga Kerja dan Transmigrasi, Manpower and Transmigration ministry, official website:

http://pusdatinaker.balitfo.depnakertrans.go.id/?province=30#gotoPeriod [19 Aug. 2011].

—. 2011. Ronnas, Kwong. Understanding Deficits of Productive Employment and Setting Targets, A brief Methodological Guide. Employment Sector, International Labour Office (ILO), Geneva, 2011

—. 2010a. Indonesia: Critical Development Constraints, Asian Development Bank (ADB), ILO and Islamic Development Bank (IDB). Mandaluyong City, Philippines

—. 2010b. Hasil sensus penduduk 2010, Data Agregat per Provinsi, Population Census Results 2010, Aggregate data by Province, BPS. Jakarta, Indonesia

—. 2010c. Education, Training and Labor Market Outcomes for Youth in Indonesia, Human Development Department, East Asia and Pacific Region, Jakarta, Indonesia

—. 2010e. Kajian Ekonomi Regional Provinsi Maluku, Maluku Provincial Economic Studies, Triwulan III, Bank of Indonesia. Ambon, Indonesia

—. 2010f. Statistik Ekonomi Keuangan Daerah Provinsi Maluku, Financial Statistics of Maluku Province, Vol. 15 N0 10 October, 2010, Bank of Indonesia. Ambon, Indonesia

—. 2010g. Data dan Informasi Kemiskinan Kabupaten/Kota 2009, Data and Information on Poverty by Districts/Cities 2009,BPS, 2010

—. 2010h. Labor Force Situation in Indonesia August 2010, SAKERNAS, National Labour Force Survey, BPS. Jakarta, Indonesia

—. 2009a. Labor Force Situation in Indonesia August 2009, SAKERNAS, National Labour Force Survey, BPS. Jakarta, Indonesia

—. 2009b. Maluku in Figures, BPS Maluku. Ambon, Indonesia

—. 2009c. Trends of the Selected Socio-Economic Indicators of Indonesia, BPS. Jakarta, Indonesia

—. 2009d. Gross Regional Domestic Product of Provinces in Indonesia by Industrial Origin 2004-2008, BPS. Jakarta, Indonesia

39

—. 2009e. Gross Regional Domestic Product of Provinces in Indonesia by Expenditure 2004-2008, BPS. Jakarta, Indonesia

—. 2008a. Provincial Mid-term Development Strategy (draft), Bappeda Maluku. Ambon, Indonesia

—. 2008b. Labor Force Situation in Indonesia August 2008, SAKERNAS, National Labour Force Survey, BPS. Jakarta, Indonesia

—. 2007a. Key Indicators of Indonesia, Special Edition, BPS. Jakarta, Indonesia

—. 2007b. Statistical yearbook, BPS. Jakarta, Indonesia

—. 2006. Labor Force Situation in Indonesia August 2006, SAKERNAS, National Labour Force Survey, BPS. Jakarta, Indonesia

—. 2003. Working out of poverty, Report of the Director-General, International Labour Conference, 91st Session, Geneva, 2003 (Geneva). Also available at: http://www.oit.org/public/english/standards/relm/ilc/ilc91/pdf/rep-i-a.pdf [1 Feb. 2011].

—. 2002. Labor Force Situation in Indonesia August 2002, SAKERNAS, National Labour Force Survey, BPS. Jakarta, Indonesia

—. 2001. Reducing the decent work deficit: A global challenge, Report of the Director General, International Labour Conference, 89th Session, Geneva, 2001 (Geneva). Also available at: http://www.ilo.org/public/english/standards/relm/ilc/ilc89/rep-i-a.htm [1 Feb. 2011].

—. 1999. Decent work, Report of the Director-General, International Labour Conference, 87th Session, Geneva, 1999 (Geneva). Also available at: http://www.ilo.org/public/english/standards/relm/ilc/ilc87/rep-i.htm [1 Feb. 2011].

IFC (2011). International Finance Corporation, Doing Business 2011: http://www.doingbusiness.org

Transparency International (2010) Corruption Perception Index 2010: http://www.transparency.org

World Bank (2009). Enterprise Surveys: http://www.enterprisesurveys.org.

Appendix I. Workshop Results: S elected

Incr

ea

se p

rod

uct

ive

em

plo

ym

en

t a

nd

En

ha

nce

in

clu

siv

e jo

b-r

ich

gro

wth

1. Productive resources /

employability

1.1 Demographics

1.2 Qualitative aspects

1.3 Investments in human resources

1.4 Access to land

2. Opportunities

for and returns to

employment

2.1 Economic

growth

2.2 Quality of

growth

2.3 Unequal resource

endowment, access

and opportunities

3. Sustainability

3.1 Environmental sustainability / climate change

3.2 Investment in the young

3.3 Vulnerability to external shocks

elected Factors Affecting Inclusive G rowth in Maluku

1.1 Demographics

1.2 Qualitative aspects

1.3 Investments in human resources

1.4 Access to land

2.1 Economic

growth

2.2 Quality of

growth

2.3 Unequal resource

endowment, access

and opportunities

3.1 Environmental sustainability / climate change

3.2 Investment in the young

3.3 Vulnerability to external shocks

2. Opportunities for and returns to

employment

2.1 Economic growth

2.1.1 Integration in global economy

2.1.2 Cost of finance

2.1.3 Social returns to

investments

2.1.4 Macroeconomic

policies

2.1.5 Institutional factors

2.1.6 Market failures

2.2 Quality of growth

2.2.1 Sector composition /

technology

2.2.2 Quality of

environment

2.2.3 Domestic terms of trade

2.2.4 Rent Extraction

2.2.5 Labour

Institutions

2.2.6 Regional concentration of

2.2.7.Terms of trade/ Cyclical

In addition to the factors listed in

the employment diagnostic tree,

technology and marketing have

been acknowledged to affect the

quality of growth in Maluku.

40

rowth in Maluku

2. Opportunities for and returns to

employment

2.2 Quality of growth

2.2.1 Sector composition /

technology

2.2.2 Quality of business

environment

2.2.3 Domestic terms of trade

2.2.4 Rent Extraction

2.2.5 Labour Market

Institutions

2.2.6 Regional concentration of

growth

2.2.7.Terms of trade/ Cyclical

factors

2.3 Unequal resource endowment access

and/or opportunities

2.3.1 Unequal employability

2.3.2 Access to labour markets &

opportunities

2.3.3 Social security

2.3.4 Availability

41

Appendix II. List of Workshop Participants

No Name F/M Institution Position

1 Dr. Sangadji M Bappeda Prov. Maluku Head of Bappeda

2 Anton Lailosa M Bappeda Prov. Maluku Head of Economics Unit

3 Zeth A.J. Pattinaya, AMD M Maritime Training Centre (BLKK) Planning Officer

4 Jacob Leunufna M Bank of Indonesia Junior Analyst

5 Fitria Karepenia F Department of Sea and Fisheries Head of the Planning Unit

6 Talakua M Employers’ Organisation Maluku Chairman, Member of Development

7 Matheys E Kailota M DPD KSPSI Promal

8 J Manuputty, S.Sos M Department of Education, Youth & Sports Maluku Prov

Head of Planning Unit

9 Fransisca Henny Miraningtyas

F Bank of Indonesia Junior Analyst

10 Nj. A. de Fretes F Bureau of Human Resources Quality Improvement SDM

11 Ir. Charles G Anidlah, Msi

M Statistical Agency of Maluku Prov. Head of Regional Account and Analysis

12 John L. Maakewe S, Pt M Office of Manpower

and Transmigration Prov. Maluku

Head of Planning Unit

13 Robertho de Quesoe, SE M Cooperative Office for Micro, Small & Medium Enterprises

Planning staff

14 Rabin Limahelu, SPt M Bappeda West Seram Plt Kasubbid Ekonomi

15 Ny. Farida N. Sampessy, SE

F Bappeda Central Maluku Kasubbid

16 Jani Anis, S Hut F Maluku Provincial Forestry Office Head of Planning Unit

17 Ir. Martha B Pattinama F Maluku Provincial Agriculture Office Head of Planning Unit

18 Achmad Tuharea, SP M Bakorluh Provinsi Maluku Head of Planning Unit

19 J. Apono S Sos F Bappeda Ambon City Kasubbid Sosial

20 Ny. Erni Rahman, SP. Msi

F Bappeda Central Maluku Kabid Sosial Budaya

21 Sitri Magrib M BPMD Prov Maluku Kasubbag Perencanaan

22 F Malitaputty M LED Ambon City Vice Chairman

23 Ilham Tauda M Bappeda Prov. Maluku Kasubbid Ekonomi

24 Salma Matdoan F Bureau of Economic Secretariat Maluku Prov

25 M. Arief Hussein M Bappeda Prov. Maluku Kasubbid Kesra

42

Employment Working Papers

A complete list of previous working papers can be found on: http://www.ilo.org/employment

2008

1 Challenging the myths about learning and training in small and medium-sized enterprises: Implications for public policy; ISBN 978-92-2-120555-5 (print); 978-92-2-120556-2 (web pdf) David Ashton, Johnny Sung, Arwen Raddon, Trevor Riordan

2 Integrating mass media in small enterprise development: Current knowledge and good practices; ISBN 978-92-2-121142-6 (print); 978-92-2-121143-3 (web pdf) Gavin Anderson. Edited by Karl-Oskar Olming, Nicolas MacFarquhar

3 Recognizing ability: The skills and productivity of persons with disabilities. A literature review; ISBN 978-92-2-121271-3 (print); 978-92-2-121272-0 (web pdf) Tony Powers

4 Offshoring and employment in the developing world: The case of Costa Rica; ISBN 978-92-2-121259-1 (print); 978-92-2-121260-7 (web pdf) Christoph Ernst, Diego Sanchez-Ancochea

5 Skills and productivity in the informal economy; ISBN 978-92-2-121273-7 (print); 978-92-2-121274-4 (web pdf) Robert Palmer

6 Challenges and approaches to connect skills development to productivity and employment growth: India; unpublished C. S. Venkata Ratnam, Arvind Chaturvedi

7 Improving skills and productivity of disadvantaged youth; ISBN 978-92-2-121277-5 (print); 978-92-2-121278-2 (web pdf) David H. Freedman

43

8 Skills development for industrial clusters: A preliminary review; ISBN 978-92-2-121279-9 (print); 978-92-2-121280-5 (web pdf) Marco Marchese, Akiko Sakamoto

9 The impact of globalization and macroeconomic change on employment in Mauritius: What next in the post-MFA era?; ISBN 978-92-2-120235-6 (print); 978-92-2-120236-3 (web pdf) Naoko Otobe

10 School-to-work transition: Evidence from Nepal; ISBN 978-92-2-121354-3 (print); 978-92-2-121355-0 (web pdf) New Era

11 A perspective from the MNE Declaration to the present: Mistakes, surprises and newly important policy implications; ISBN 978-92-2-120606-4 (print); 978-92-2-120607-1 (web pdf) Theodore H. Moran

12 Gobiernos locales, turismo comunitario y sus redes: Memoria: V Encuentro consultivo regional (REDTURS); ISBN 978-92-2-321430-2 (print); 978-92-2-321431-9 (web pdf)

13 Assessing vulnerable employment: The role of status and sector indicators in Pakistan, Namibia and Brazil; ISBN 978-92-2-121283-6 (print); 978-92-2-121284-3 (web pdf) Theo Sparreboom, Michael P.F. de Gier

14 School-to-work transitions in Mongolia; ISBN 978-92-2-121524-0 (print); 978-92-2-121525-7 (web pdf) Francesco Pastore

15 Are there optimal global configurations of labour market flexibility and security? Tackling the “flexicurity” oxymoron; ISBN 978-92-2-121536-3 (print); 978-92-2-121537-0 (web pdf) Miriam Abu Sharkh

16 The impact of macroeconomic change on employment in the retail sector in India: Policy implications for growth, sectoral change and employment; ISBN 978-92-2-120736-8 (print); 978-92-2-120727-6 (web pdf) Jayati Ghosh, Amitayu Sengupta, Anamitra Roychoudhury

44

17 From corporate-centred security to flexicurity in Japan; ISBN 978-92-2-121776-3 (print); 978-92-2-121777-0 (web pdf) Kazutoshi Chatani

18 A view on international labour standards, labour law and MSEs; ISBN 978-92-2-121753-4 (print);978-92-2-121754-1(web pdf) Julio Faundez

19 Economic growth, employment and poverty in the Middle East and North Africa; ISBN 978-92-2-121782-4 (print); 978-92-2-121783-1 (web pdf) Mahmood Messkoub

20 Global agri-food chains: Employment and social issues in fresh fruit and vegetables; ISBN 978-92-2-121941-5(print); 978-92-2-121942-2 (web pdf) Sarah Best, Ivanka Mamic

21 Trade agreements and employment: Chile 1996-2003; ISBN 978-92-121962-0 (print); 978-92-121963-7 (web pdf)

22 The employment effects of North-South trade and technological change; ISBN 978-92-2-121964-4 (print); 978-92-2-121965-1 (web pdf) Nomaan Majid

23 Voluntary social initiatives in fresh fruit and vegetable value chains; ISBN 978-92-2-122007-7 (print); 978-92-2-122008-4 (web pdf) Sarah Best, Ivanka Mamic

24 Crecimiento económico y empleo de jóvenes en Chile: Análisis sectorial y proyecciones; ISBN 978-92-2-321599-6 (print); 978-92-2-321600-9 (web pdf) Mario D. Velásquez Pinto

25 The impact of codes and standards on investment flows to developing countries; ISBN 978-92-2-122114-2 (print); 978-92-2-122115-9 (web pdf) Dirk Willem te Velde

26 The promotion of respect for workers’ rights in the banking sector: Current practice and future prospects; ISBN 978-92-2-122116-6 (print); 978-2-122117-3 (web pdf) Emily Sims

45

2009

27 Labour market information and analysis for skills development; ISBN 978-92-2-122151-7 (print); 978-92-2-122152-4 (web pdf) Theo Sparreboom, Marcus Powell

28 Global reach - Local relationships: Corporate social responsibility, worker’s rights and local development; ISBN 978-92-2-122222-4 (print); 978-92-2-122212-5 (web pdf) Anne Posthuma, Emily Sims

29 Investing in the workforce: Social investors and international labour standards; ISBN 978-92-2-122288-0 (print); 978-92-2-122289-7 (web pdf) Elizabeth Umlas

30 Rising food prices and their implications for employment, decent work and poverty reduction; ISBN 978-92-2-122331-3 (print); 978-92-2-122332-0 (web pdf) Rizwanul Islam, Graeme Buckley

31 Economic implications of labour and labour-related laws on MSEs: A quick review of the Latin American experience; ISBN 978-92-2-122368-9 (print); 978-92-2-122369-6 (web pdf) Juan Chacaltana

32 Understanding informal apprenticeship – Findings from empirical research in Tanzania; ISBN 978-92-2-122351-1 (print); 978-92-2-122352-8 (web pdf) Irmgard Nübler, Christine Hofmann, Clemens Greiner

33 Partnerships for youth employment. A review of selected community-based initiatives; ISBN 978-92-2-122468-6 (print); 978-92-2-122469-3 (web pdf) Peter Kenyon

34 The effects of fiscal stimulus packages on employment; ISBN 978-92-2-122489-1 (print); 978-92-2-122490-7 (web pdf) Veena Jha

35 Labour market policies in times of crisis; ISBN 978-92-2-122510-2 (print); 978-92-2-122511-9 (web pdf) Sandrine Cazes, Sher Verick, Caroline Heuer

36 The global economic crisis and developing countries: Transmission channels, fiscal and policy space and the design of national responses; ISBN 978-92-2-122544-7 (print); 978-92-2-122545-4 (web pdf) Iyanatul Islam

46

37 Rethinking monetary and financial policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction; ISBN 978-92-2-122514-0 (print); 978-92-2-122515-7 (web pdf) Gerald Epstein

38 Promoting employment-intensive growth in Bangladesh: Policy analysis of the manufacturing and service sectors; ISBN 978-92-2-122540-9 (print); 978-92-2-122541-6 (web pdf) Nazneen Ahmed, Mohammad Yunus, Harunur Rashid Bhuyan

39 The well-being of labour in contemporary Indian economy: What’s active labour market policy got to do with it? ISBN 978-92-2-122622-2 (print); 978-92-2-122623-9 (web pdf) Praveen Jha

40 The global recession and developing countries; ISBN 978-92-2-122847-9 (print); 978-92-2-122848-6 (web pdf) Nomaan Majid

41 Offshoring and employment in the developing world: Business process outsourcing in the Philippines; ISBN 978-92-2-122845-5 (print); 978-92-2-122846-2 (web pdf) Miriam Bird, Christoph Ernst

42 A survey of the Great Depression as recorded in the International Labour Review, 1931-1939; ISBN 978-92-2-122843-1 (print); 978-92-2-122844-8 (web pdf) Rod Mamudi

43 The price of exclusion: The economic consequences of excluding people with disabilities from the world or work; ISBN 978-92-2-122921-6 (print); 978-92-2-122922-3 (web pdf) Sebastian Buckup

44 Researching NQFs: Some conceptual issues; ISBN 978-92-2-123066-3 (print), 978-92-2-123067-0 (web pdf) Stephanie Allais, David Raffe, Michael Young

45 Learning from the first qualifications frameworks; ISBN 978-92-2-123068-7 (print), 978-92-2-123069-4 (web pdf) Stephanie Allais, David Raffe, Rob Strathdee, Leesa Wheelahan, Michael Young

46 International framework agreements and global social dialogue: Lessons from the Daimler case; ISBN 978-92-2-122353-5 (print); 978-92-2-122354-2 (web pdf) Dimitris Stevis

47

2010

47 International framework agreements and global social dialogue: Parameters and prospects; ISBN 978-92-2-123298-8 (print); 978-92-2-122299-5 (web pdf) Dimitris Stevis

48 Unravelling the impact of the global financial crisis on the South African labour market; ISBN 978-92-2-123296-4 (print); 978-92-2-123297-1 (web pdf) Sher Verick

49 Guiding structural change: The role of government in development; ISBN 978-92-2-123340-4 (print); 978-92-2-123341-1 (web pdf) Matthew Carson

50 Les politiques du marché du travail et de l'emploi au Burkina Faso; ISBN 978-92-2-223394-6 (print); 978-92-2-223395-3 (web pdf) Lassané Ouedraogo, Adama Zerbo

51 Characterizing the school-to-work transitions of young men and women: Evidence from the ILO school-to-work transition surveys; ISBN 978-92-2-122990-2 (print); 978-92-2-122991-9 (web pdf) Makiko Matsumoto, Sara Elder

52 Exploring the linkages between investment and employment in Moldova: A time-series analysis ISBN 978-92-2-122990-2 (print); 978-92-2-122991-9 (web pdf) Stefania Villa

53 The crisis of orthodox macroeconomic policy: The case for a renewed commitment to full employment; ISBN 978-92-2-123512-5 (print); 978-92-2-123513-2 (web pdf) Muhammed Muqtada

54 Trade contraction in the global crisis: Employment and inequality effects in India and South Africa; ISBN 978-92-2124037-2 (print); 978-92-2124038-9 (web pdf) David Kucera, Leanne Roncolato, Erik von Uexkull

55 The impact of crisis-related changes in trade flows on employment: Incomes, regional and sectoral development in Brazil; Forthcoming Scott McDonald, Marion Janse, Erik von Uexkull

48

56 Envejecimiento y Empleo en América Latina y el Caribe; ISBN 978-92-2-323631-1 (print); 978-92-2-323632-8 (web pdf) Jorge A. Paz

57 Demographic ageing and employment in China; ISBN 978-92-2-123580-4 (print); 978-92-2-123581-1 (web pdf) Du Yang, Wrang Meiyan

58 Employment, poverty and economic development in Madagascar: A macroeconomic framework; ISBN 978-92-2-123398-5 (print); 978-92-2-123399-2 (web pdf) Gerald Epstein, James Heintz, Léonce Ndikumana, Grace Chang

59 The Korean labour market: Some historical macroeconomic perspectives; ISBN 978-92-2-123675-7 (print); 978-92-2-123676-4 (web pdf) Anne Zooyob

60 Les Accords de Partenariat Economique et le travail décent: Quels enjeux pour l’Afrique de l’ouest et l’Afrique centrale?; ISBN 978-92-2-223727-2 (print); 978-92-2-223728-9 (web pdf) Eléonore d’Achon; Nicolas Gérard

61 The great recession of 2008-2009: Causes, consequences and policy responses; ISBN 978-92-2-123729-7 (print); 978-92-2-123730-3 (web pdf) Iyanatul Islam, Sher Verick

62 Rwanda forging ahead: The challenge of getting everybody on board; ISBN 978-92-2-123771-6 (print); 978-92-2-123772-3 (web pdf) Per Ronnås (ILO), Karl Backéus (Sida); Elina Scheja (Sida)

63 Growth, economic policies and employment linkages in Mediterranean countries: The cases of Egypt, Israel, Morocco and Turkey; ISBN 978-92-2-123779-2 (print); 978-92-2-123780-8 (web pdf) Gouda Abdel-Khalek

64 Labour market policies and institutions with a focus on inclusion, equal opportunities and the informal economy; ISBN 978-92-2-123787-7 (print); 978-92-2-123788-4 (web pdf) Mariangels Fortuny, Jalal Al Husseini

65 Les institutions du marché du travail face aux défis du développement: Le cas du Mali; ISBN 978-92-2- 223833-0 (print); 978-92-2-223834-7 (web pdf) Modibo Traore, Youssouf Sissoko

49

66 Les institutions du marché du travail face aux défis du développement: Le cas du Bénin; ISBN 978-92-2-223913-9 (print); 978-92-2-223914-6 (web pdf) Albert Honlonkou, Dominique Odjo Ogoudele

67 What role for labour market policies and institutions in development?Enhancing security in developing countries and emerging economies; ISBN 978-92-2-124033-4 (print); 978-92-2-124034-1 (web pdf) Sandrine Cazes, Sher Verick

68 The role of openness and labour market institutions for employment dynamics during economic crises; Forthcoming Elisa Gameroni, Erik von Uexkull, Sebastian Weber

69 Towards the right to work: Innovations in Public Employment programmes (IPEP); ISBN 978-92-2-124236-9 (print); 978-92-2-1244237-6 (web pdf) Maikel Lieuw-Kie-Song, Kate Philip, Mito Tsukamoto, Marc van Imschoot

70 The impact of the economic and financial crisis on youth employment: Measures for labour market recovery in the European Union, Canada and the United States; ISBN 978-92-2-124378-6 (print); 978-92-2-124379-3 (web pdf) Niall O’Higgins

71 El impacto de la crisis económica y financiera sobre el empleo juvenil en América Latina: Medidas des mercado laboral para promover la recuperación del empleo juvenil; ISBN 978-92-2-324384-5 (print); 978-92-2-324385-2 (web pdf) Federio Tong

72 On the income dimension of employment in developing countries; ISBN: 978-92-2-124429-5 (print);978-92-2-124430-1 (web pdf) Nomaan Majid

73 Employment diagnostic analysis: Malawi; ISBN 978-92-2-123101-0 (print); 978-92-2-124102-7 (web pdf) Per Ronnas

74 Global economic crisis, gender and employment: The impact and policy response; ISBN 978-92-2-14169-0 (print); 978-92-2-124170-6 (web pdf) Naoko Otobe

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2011

75 Mainstreaming environmental issues in sustainable enterprises: An exploration of issues, experiences and options; ISBN 978-92-2-124557-5 (print); 978-92-2-124558-2 (web pdf) Maria Sabrina De Gobbi

76 The dynamics of employment, the labour market and the economy in Nepal ISBN 978-92-2-123605-3 (print); 978-92-2-124606-0 (web pdf) Shagun Khare , Anja Slany

77 Industrial policies and capabilities for catching-up: Frameworks and paradigms Irmgard Nuebler

78 Economic growth, employment and poverty reduction: A comparative analysis of Chile and Mexico ISBN 978-92-2-124783-8 (print); 978-92-2-124784-5 (web pdf) Alicia Puyana

79 Macroeconomy for decent work in Latin America and the Caribbean ISBN 978-92-2-024821-8 (print); 978-92-2-024822-5 (web pdf) Ricardo Ffrench-Davis

80 Evaluation des emplois générés dans le cadre du DSCRP au Gabon ISBN 978-92-2-223789-0 (print) ; 978-92-2-223790-6 (web pdf) Mohammed Bensid, Aomar Ibourk, Ayache Khallaf

81 The Great Recession of 2008-2009: Causes, consequences and policy responses ISBN 978-92-2-123729-7 (print); 978-92-2-123730-3 (web pdf) Iyanatul Islam, Sher Verick

82 Growth, economic policies and employment linkages: Morocco ISBN 978-92-2-123777-8 (print; 978-92-2-123778-5 (web pdf) Omar Aloui

83 Growth, economic policies and employment linkages: Israel ISBN 978-92-2-123775-4 (print); 978-92-2-123778-5 (web pdf) Roby Nathanson

84 Growth, economic policies and employment linkages: Turkey ISBN 978-92-2-123781-5 (print); 978-92-2-123782-2 (web pdf) Erinc Yeldan, Hakan Ercan

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85 Growth, economic policies and employment linkages: Egypt ISBN 978-92-2-123773-0 (print); 978-92-2-123774-7 (web pdf) Heba Nassar

86 Employment diagnostic analysis: Bosnia and Herzegovina ISBN 978-92-2-125043-2 (print); 978-92-2-2125044-9 (web pdf) Shagun Khare, Per Ronnas, Leyla Shamchiyeva

87 Should developing countries target low, single digit inflation to promote growth and employment ISBN 978-92-2-125050-0 (print); 978-92-2-125051-7 (web pdf ) Sarah Anwar, Iyanatul Islam

88

Dynamic Social Accounting matrix (DySAM): concept, methodology and simulation outcomes: The case of Indonesia and Mozambique ISBN 978-92-2-1250418 (print); 978-92-2-1250425 (web pdf) Jorge Alarcon, Christoph Ernst, Bazlul Khondker, P.D. Sharma

89

Microfinance and child labour ISBN 978-92-2-125106-4 (print) Jonal Blume and Julika Breyer

90

Walking on a tightrope: Balancing IMF financial sustainability and poverty orientation in Mali ISBN 978-92-2-124906-1 (print); 978-92-2-124907-8 (web pdf) Renata Serra and Fabrizio Botti

91

Macroeconomic policy “Full and productive employment and decent work for all”: Uganda country study ISBN 978-92-2-125400-3 (print); 978-92-2-125401-0 (web pdf) Elisa van Waeyenberge and Hannah Bargawi

92

Fiscal and political space for crisis response with a focus on employment and labour market: Study of Bangladesh ISBN 978-92-2-125402-7 (print); 978-92-2-125403-4 (web pdf) Rizwanul Islam, Mustafa K. Mukeri and Zlfiqar Ali

93

Macroeconomic policy for employment creation: The case of Malawi ISBN 978-92-2-125404-1 (print); 978-92-2-125405-8 (web pdf) Sonali Deraniyagala and Ben Kaluwa

94

Challenges for achieving job-rich and inclusive growth in Mongolia ISBN 978-92-2-125399-0 (print); 978-92-2-125398-3 (web pdf) Per Ronnas

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95

Employment diagnostic analysis: Nusa Tenggara Timur, Indonesia ISBN 978-92-2-125412-6 (print); 978-92-2-125413-3 (web pdf) Miranda Kwong and Per Ronnas

96 What has really happened to poverty and inequality during the growth process in developing countries? ISBN 978-92-2-125432-4 (print); 978-92-2- 125433-1 (web pdf) Nomaan Majid

97 ROKIN Bank: The story of workers’ organizations that successfully promote financial inclusion ISBN 978-92-2-125408-9 (print): 978-92-2-125409-6 (web pdf) Shoko Ikezaki

98 Employment diagnostic analysis: Maluku, Indonesia ISBN 978-92-2-12554690 (print); 978-92-2-1254706 (web pdf) Per Ronnas and Leyla Shamchiyeva

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Employment Sector

For more information visit our site: http://www.ilo.org/employment

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