JAKARTA – Many people have said that the palm oil industry only absorbs a small number of national workers. But the following facts will prove them wrong.
The capability of an economic sector to absorb workers depends on its characteristics of technology and raw materials being used. The palm oil industry is relatively labor intensive. It is also based on domestic resources, which make its growth is always accompanied with absorption of local workers.
The palm oil industry is one of the strategic sectors in Indonesia, which contributes significantly to absorption of workers. The oil palm plantations are able to create job opportunities and directly absorb the workers in rural areas and cities (Rifin, 2011; PASPI, 2014; Syahza et al., 2019; Syahza and Asmit, 2019). The oil palm plantations have employment multiplier index at 2.6 (PASPI, 2014). It means the oil palm plantations can create job opportunities in the national economy at 2.6 times of the number of workers absorbed in the palm oil industry.
In the plantations, people of rural areas directly involve as smallholders or workers of plantation companies. Besides, the people of rural areas are also absorbed in other economic sectors, which have direct or indirect connections with the palm plantations, such as trading, transportation, food and beverages and others.
Generally, the number of workers absorbed in the palm oil industries increased from 12.5 million workers in 2015 to 16.5 million workers in 2021 (Photo-4).
About 9.7 million workers of the total 16.5 million workers absorbed in Indonesia’s oil palm plantations in 2021 are those directly absorbed in the palm plantations. The 9.7 million workers consist of 5.2 million workers in the smallholders’ plantations and 4.5 million workers in the state-owned and private plantation companies. The other 8.0 million workers are those indirectly employed in the palm oil sector through the sectors of palm oil transportation, suppliers of fertilizers and plantation equipment, suppliers of office tools and equipment, and other business activities related to the oil palm plantations.
The worker absorption is separated from those absorbed in the sectors of upstream, downstream and services related to the system and the palm agribusiness (PASPI Monitor, 2017a). The downstream palm oil activities, such as the manufacture of oleo-foods, oleochemical, biofuel/bioenergy, and their trading activities from distribution to retailing, certainly absorb a quite large number of workers.
The above facts show that the palm oil industry absorbs a great number of workers from the level of villages, districts, regencies/mayoralties, provinces and national along the supply chains of palm oil. Its characteristics of labor intensive and its basis on domestic resources have enabled the palm oil industries to create job opportunities in large numbers, variety, and wide range. (*)
Source: Mitos dan Fakta Kelapa Sawit – 4th Edition (4-03)
