Coordinating Minister for Human Development and Culture (Menko PMK) Muhadjir Effendy assessed that capital intensive investment is a threat to Indonesian workers. This is because economic or industrial activities are built with large capital and supported by high technology, so they do not require high labor absorption.
“This capital-intensive investment is indeed like a double-edged sword. On the one hand, it is very much needed to increase efficiency and productivity, but on the other hand, it is also like a cancer that eats away at the potential of the workforce,” he said at the 2024 BPJS Ketenagakerjaan Paritrana Award at the BP Jamsostek Plaza in Jakarta, Thursday (12/9).
Muhadjir also warned against the rise in capital-intensive investments using robotic process automation (RPA) in several industrial sectors, especially manufacturing. This is considered to be able to affect the absorption of labor in the country.
“The automation process with robotics in the manufacturing industry, if not closely monitored, is very dangerous for the absorption of our workforce in Indonesia,” he said.
The Coordinating Minister for Human Development and Culture is of the view that there is no guarantee that the increase in investment is directly proportional to the absorption of the national workforce. Citing data from the Ministry of Investment/Investment Coordinating Board (BKPM), investment realization data throughout the period January-June (Semester I) 2024 reached IDR 829.9 trillion or increased by 22.3% compared to the same period in 2023. However, the absorption of workers in the first semester of this year was relatively small, namely 1,225,042 people.
“If we cannot control the transfer of automation technology, especially with artificial intelligencethen this (capital-intensive investment) will be dangerous,” he added.
Muhadjir also highlighted the problem of low labor productivity in Indonesia due to the obesity of informal workers. Based on data from the Central Statistics Agency (BPS), the number of informal sector workers in Indonesia continues to increase after the Covid-19 pandemic. In June 2024, informal workers rose to 84.13 million people or 59.17% of the total working-age population. Informal sector workers are workers in business sectors that are not regulated by government regulations, such as labor laws, taxes, or regulations related to protection and job security rights.
“Because there are so many jobs in Indonesia, it is actually more focused on how to eradicate unemployment, but it has not really talked about how everyone who works is indeed a productive worker,” concluded Muhadjir. (Ins/M-4)
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– How does capital-intensive investment affect labor absorption in Indonesia?
Table of Contents
The Dark Side of Capital-Intensive Investment: A Threat to Indonesian Workers
As Indonesia continues to attract foreign investment, a growing concern has emerged about the impact of capital-intensive investment on the country’s workforce. According to Coordinating Minister for Human Development and Culture, Muhadjir Effendy, this type of investment is like a “cancer” that eats away at the potential of the workforce. In this article, we will explore the risks associated with capital-intensive investment and its implications for Indonesian workers.
The Rise of Capital-Intensive Investment
Capital-intensive investment refers to economic or industrial activities that require large amounts of capital and are supported by high technology. While this type of investment can increase efficiency and productivity, it does not require high labor absorption. In recent years, Indonesia has seen a significant increase in capital-intensive investments, particularly in the manufacturing sector. However, this trend has raised concerns about the impact on the country’s workforce.
The Impact on Labor Absorption
Muhadjir Effendy warned that the rise in capital-intensive investments using robotic process automation (RPA) in several industrial sectors could affect labor absorption in the country. The automation process with robotics in the manufacturing industry, if not closely monitored, can be very dangerous for labor absorption in Indonesia. According to data from the Ministry of Investment/Investment Coordinating Board (BKPM), investment realization data throughout the period January-June 2024 reached IDR 829.9 trillion or increased by 22.3% compared to the same period in 2023. However, the absorption of workers in the first semester of this year was relatively small, namely 1,225,042 people.
The Risk of Automation
One of the main concerns about capital-intensive investment is the risk of automation. With the increasing use of artificial intelligence (AI) and robotics, many jobs are at risk of being replaced by machines. If Indonesia cannot control the transfer of automation technology, this could lead to significant job losses and increased unemployment. Muhadjir Effendy emphasized that if the country cannot regulate this process, it will be “dangerous” for the workforce.
Low Labor Productivity
Another issue highlighted by Muhadjir Effendy is the problem of low labor productivity in Indonesia due to the dominance of informal workers. According to data from the Central Statistics Agency (BPS), the number of informal sector workers in Indonesia continues to increase after the Covid-19 pandemic. This trend is concerning, as it indicates that many workers are not receiving the necessary training and skills to compete in the modern economy.
The Need for Regulation
To address these concerns, it is essential to regulate the transfer of automation technology and ensure that capital-intensive investments benefit the Indonesian workforce. The government must work to create policies that promote labor-intensive investment and provide support for workers who may be displaced by automation. Additionally, there is a need to invest in education and training programs that equip workers with the skills required to compete in the modern economy.
Conclusion
Capital-intensive investment is a double-edged sword. While it can bring economic benefits, it also poses significant risks to the Indonesian workforce. To mitigate these risks, it is essential to regulate the transfer of automation technology and promote labor-intensive investment. By doing so, Indonesia can ensure that its workforce is equipped to compete in the modern economy and benefit from the country’s economic growth.
Keyword List:
Capital-intensive investment
Labor absorption
Automation
Artificial intelligence
Robotics
Labor productivity
Informal workers
Regulation
Investment policies
Education and training programs
How does capital-intensive investment affect job availability for Indonesian workers?
The Dark Side of Capital-Intensive Investment: A Threat to Indonesian Workers
As Indonesia continues to attract foreign investment, a growing concern has emerged about the impact of capital-intensive investment on the country’s workforce. According to Coordinating Minister for Human Development and Culture, Muhadjir Effendy, this
