IE Foreign Labour

Reported Number of Expat Workers Plummets in Indonesia

Recent data from the Ministry of Manpower shows a dramatic drop in Indonesia’s foreign labour. Rumours about faulty data and illegal immigrants have begun to circulate.

On June 30, Indonesia’s Ministry of Manpower reported that there were 43,816 expatriates working in the country. Meanwhile, the number of reported expats working last year was 69,025, and 77,307 back in 2011.

The public speculates that the ministry doesn’t have an accurate set of data. The main reason to be skeptical is that the ministry’s data has not been made available to the public. It is true that the government recently published a graph that outlined the number of expatriates working in the archipelago. But this graph provides no clear indication as to how the information was sourced.

To work legally in Indonesia, expats must obtain a work permit and a stay permit, says market entry firm Indosight. Whispers have been circulating that more than 10 million illegal workers from China have entered the country. Minister of Manpower Hanif Dhakiri denies this rumour. He said the number of Chinese people who’ve entered the country this year are mostly tourists, according to Merdeka.

A more believable explanation for the recorded drop, however, might be that the government’s increase in work permit regulations has caused large companies to recruit fewer foreigners.

Indonesia claims to not have accepted any unskilled labour this year. “Foreign labour regulations in Indonesia are tight. There are skill and knowledge requirements. The point is, only skilled labourers are allowed to work in Indonesia. As long as they comply and don’t break any laws, it’s okay,” said Dhakiri in a statement.

On-the-books employment of experts from abroad in Indonesia has decreased. Companies that used to fill 80 percent of their senior management departments with expats have now cut that figure down to 20 percent, says Jakarta Globe. The truth is, it is cheaper to hire locals than it is to parachute talent from overseas into the capital. Positions that expats often held in the past like C-level sales, marketing and IT roles are now being filled by locals executives.

Indonesia’s economy is still growing, although at a slower rate than it was in recent years. Some experts think this is a contributing factor to a smaller number of expats. Currently, there are around 400,000 unemployed Indonesians with undergraduate degrees. Some believe that Indonesia’s market is set up in such a way that the economy needs fewer highly educated experts, and more grunt workers.

So, does this also mean that Indonesia needs fewer expats in its workforce? On the contrary. While multinational companies are indeed reducing the number of expats, smaller local businesses (particularly in the online space) are seeking the experience and know-how of people from other markets. They are looking to compete regionally from day one, and often having a foreigner onboard gives them an edge. However, as more businesses begin operating on the internet, more expats may begin working for local companies without actually having to immigrate, and thus not showing up on the ministry’s ledger.

How it will all play out going forward remains a mystery. But it seems unlikely that expats in Indonesia will throw in the towel at work, and strip off their batik shirts any time soon.

Photo by Adam Jones; Video via CNN Indonesia

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