The Adjie Development Plan to Help Indonesian Unemployment Problem

 

 

Introduction

Indonesia is facing big troubles now, most importantly is unemployment problem. For disentangling this matter, Indonesia’s government plans out a proposal that called “omnibus law” which is the aim is to cut in a line the obstacle on regulations (such as Amdal) in order to increase foreign direct investment which has been believed this “shit law” will have an effect to increase employment rate in final destination (they said). Despite about the motives behind it, in this writing, I will elucidate this agenda is wrong and wonky.

 

For the starting statement, I'd like to say that unemployment is a political decision. Some types of countries, despite they have sovereign currency or not, developed or not, they are able to buy everything that’s sold domestically. Moreover, when the government creates new currency for a particular program (for Job Guarantee program) and the money that will have been issued is applied domestically without having relationship with foreign reserves, it will have stable progress. The last unforgettable point to make sure the new currency will be received is, it should be spent first and then subtracted through the taxation. Of course in this case we should know the basic law that “tax drives money”.

 

Today, Indonesian Authority (IA) relies on foreign donor funding to cover almost all of government programs on building infrastructure, broadening opportunity of job vacancy etc. this model has enormous tendency to crowd out the money and downgrading the value of our currency (weakening interest rate) since most of the money which flows in to our country is denominated in foreign currency (such us dollar, yen, yuan, etc). in simple logic, relying on foreign debt or investment to develop our country is unsustainable, we must to find another option to achieve full-employment. This writing offers alternative solution on this problem.

 

Focus Program

The backbone to build up the economy is public services, the legal system, educational facilities, transportation infrastructure, water and sewer infrastructure, and environmental program characterized in modern society are among the prominent worth-works to be done immediately. The Adjie’s proposal presents an out of the box methodological framework to implement public service program that will both provide the essential public services and foster private-sector development and growth. it is internally stable and requires no external financing.

 

The Adjie proposal plan empowers the Indonesian government for providing the public service jobs without limit to anyone who is able and willing to grasp a job. By creating a space to hire all of unemployment people, the government employs all the labour that is currently idle in the public sector until private sector demand for labour increases, a peaceful and prosperous program is promoted. For the simplification it is similar with ‘rice floor price scheme’ which is held by Bulog (Indonesian Bureau of Logistic). That institution will buy every excess output of rice production when the demand is low and will sell it again when demand is high. Undoubtedly, this program brings stability and support the economy to achieve maximum capacity without worrying about market uncertainty, almost similar logic with Job Guarantee (JG) program.

 

Community Service Hours: Program Outline

1. The Indonesian Authority (IA) impose that all residence owners submit receipt for 200 hours of qualifying public service per residence, including both single family and multy family residences. This requirement is to submit receipts for public service, which means that residence owners have the choice of doing public service work themselves or obtaining the receipts from someone who bought or otherwise obtained the receipts. The immediate effect of this requirement is the creation an immediate need for public service receipts by residence owners. This incents them to either apply for public service work with the IA to directly earn the needed receipts, or offer for sale goods and services to other private citizens in exchange for the needed receipts.

2. The IA will offer qualifying public service employment to anyone willing and able to work. The requirement in (1) above caused residents to seek employment that pays them the receipts needed to satisfy their requirement. And by offering employment to anyone seeking it, those who own residents will readily be able to do public service work and earn the receipts necessary to preserve ownership of their property.

3. The IA will issue freely-transferable receipts for the number of hours worked. Paper receipts are to be issued by the IA as evidence of hours worked with the inscription ‘this is a receipt for community service labour’ with denominations of 1, 5 and 10 hours. Additionally, receipts could be further subdivided perhaps into ten ‘6 minute’ coin. The suggested annual liability of receipts for 200 hours of service represents about 4 hours per week, which is about 10% of a typical work year. (The IA, of course, will make the actual decision of the size of the requirement.) IARs (Indonesian Authority Receipts) are freely transferable and can be acquired either directly from the IA through public service or from others who earned them from the IA.

 

The Value of IARs (Indonesian Authority Receipts) will be a function of the difficulty of obtaining IARs from the IA. Value is determined in the marketplace by what other residence owners would pay to buy IARs from someone else, rather than do the public service work themselves. For example, the more difficult the public service tasks, the higher the market value of the IAR. The value of the IAR is therefore independent of the quantity issued or received by the IA, providing that the IA only issues IARs for public service labor and does not refuse to hire anyone willing and able to work. As long as workers must work for an hour to obtain a receipt for one hours work, the value will remain equal to one hour of labor. It will be internally stable without foreign exchange reserves and independent of international trade balances.

 

Another simple option, IARs can be valued one coin hour same like 5000 rupiah or it can be set up depend on the region basic minimum wage, for example, in eastern areas will be more expensive (i.e. 1 hour coin = 10.000) because the price is more expensive there. The idea is to not destroy the informal job which has the payment usually slightly less than minimum standard of payment.

 

The Implication

Based on this program, if Indonesian Authority accepts and applies it there are several benefits will follow as the consequences. The first is automatic full employment and stabilization. Such as rice production, the increase of unemployment people will be absorbed automatically to enter the JG program when economy is shrinking and vice versa when the economy is boom. Shortly, the quantity of IARs is determined by the market and JG program is like shock-absorber to make a car always in stable condition when its facing the bumpy road (economic bust and boom).

 

The second, no risk, burden or even constrain to achieve capital formation. Since the JG program is using the IARs, it has no relation with foreign currency or reserves in which it can be issued or subtracted without affecting the exchange rate. It can be used to maximize all of economic resources (unemployment) in the highest capacity (without wasting the available potency and energy of workers) at once to build up the public infrastructures (such as build highway, bridge, even doing reforestation) which is having beautiful impacts to minimize the cost for doing business, preserving the nature, etc.

 

The third, its flexibility on this program can be used or to be modified to increase social cohesion, protecting people who need it (young, old, or people who have disability), maximize the hidden potency of people (arts program) or perhaps it can be brought to accompany excluded people ‘like people who have problem with their self-esteem that is caused by being victimized or ex criminal or even because of self-limit that they have, hiring beggar groups, etc’ they can actualize themselves through this program (depends on discretionary program that will have been issued by central, local government or even based on community when the government allows it). The last most pivotal thing, JG program is sustainable in which could fulfil the needs on ethic of right and ethic or care that people expected to without causing another problem