Investing in Indonesia’s youth and female entrepreneurs to fix training mismatch

With over 250 million people, Indonesia is the world’s fourth most populous nation.  And the youth population makes up around half of the total population – below the age of 30.  This equates to a 21.6% youth unemployment rate – an alarming statistic.Indonesia pic

With key industries including agriculture, mining, manufacturing, construction, transport, community services and restaurants and hotels, Indonesia could benefit from investing in upskiling it’s youth in these trades as well as encouraging more women into entrepreneurship.

Unemployment highest among 15 – 29 year olds

According to the Economic Survey of Indonesia, access to education and the quality of education would improve markedly through the implementation of structural reforms in the education sector.

Both the World Bank and the Organization for Economic Co-operation and Development (OECD) have expressed concern about the high incidence of youth unemployment in Indonesia.  In a recent World Bank report, high youth unemployment is one of the threats currently being faced by Indonesia which can lead to social turmoil in Southeast Asia’s largest economy.

With approximately 20% of Indonesia’s young men and one third of young women being unemployed or not going to school, unemployment among the country’s youth aged 15 to 24 is at an unusually high level.  And for those that do study, the unemployment rate is still high with the former Finance Minister Chatib Basri putting this down to a ‘skill mismatch’.

The disconnect between education system and employers’ demands

It’s hard for Indonesian youth to find jobs.  The lack of relevance of SMK education to the needs of the labour market is the country’s biggest issue. Less than 40% of the Indonesian workforce is working in the “formal” economy, and only 20% of these have a proper work contract.

There’s little cooperation between schools and companies, and teachers don’t know the world of work. So how can Indonesia prepare their students for jobs?

The Indonesian government is attempting to improve the quality, image and attractiveness of Technical Vocational Education Training (TVET) by opening the D1, D2, D3, S (strata) 2 (T: Technique) and S3 (T)[2] programmes, as stated in Indonesian National Qualifications Framework.  This means that vocational students who excel can continue to higher education level, very much like participants of general education.

To this day in Indonesia, the workforce graduating from SMK (vocational and pre-professional senior secondary schools) is still regarded as not having sufficient skills in their field, and are not offered good salaries.  Hopefully in the future, government policies will be implemented, leading to an appropriate remuneration of skilled workers with SMK graduation, so that younger generations will be encouraged to choose their educational pathway via SMK, and eventually the image and attractiveness of TVET will be enhanced.

Skills profiling – an important piece of the TVET puzzle

Employee attraction and retention continues to be a challenge in Indonesia, as companies struggle to recruit skilled people for critical job roles and with critical capabilities.

Creating your own job, being an entrepreneur and makin jobs for others needs to be encouraged, especially for women.

Sustainable engagement requires a strong alignment between business, talent management goals, effective leadership teams, gender equality and successful performance management programmes.

Workforce development strategies, including the design of job skills profiles, can help to address the burgeoning youth unemployment rate, ensuring TVET institutions and businesses understand skill requirements.  If you’d like to solve your skills, TVET, unemployment and workforce puzzles, please contact Wendy Perry via wendy@workforceblueprint.com.au.

December 2015

 

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