Policy Reform to Address Unemployment

Effective policies must draw lessons from global models, while taking into account unique local conditions.

Indonesia faces serious challenges in dealing with unemployment, especially among young people. The gap between education and industrial demand urgently needs to be addressed.

Data from the Central Statistics Agency (BPS) shows a trend of decreasing unemployment rates from 6.49% in 2021 to 5.86% in 2022. It will further decrease to 5.32% in 2023. However, in this trend, the main challenge still lies in youth, especially those aged 18-24 years old.

Analysis of International Labor Organization (ILO) data confirms the high number of NEET (not in education, employment, or training) in 2022, reaching 22.0 percent . This figure shows that many young Indonesians are disconnected from economic and educational activities.

In addition, ILO's statistical data in 2022 shows that youth unemployment rates in Indonesia are the second highest in Southeast Asia after Laos. This indicates a significant gap between the education received by the youth and the skills demanded or required by the industry.

ILO statistical data in 2022 showed that the youth unemployment rate in Indonesia is the second highest in Southeast Asia after Laos.

Thus, stronger efforts are needed to integrate industry-relevant skills into the education curriculum.

Learn from global practices

Germany has succeeded in creating a dual-track education system which is one of its main advantages in overcoming the challenge of unemployment, especially among youth. In this system, students not only receive theoretical education at school, but also engage in practical learning on the job.

This means they have the opportunity to apply the knowledge they learn directly in their daily work environment.

For example, students interested in the field of automotive engineering can spend their study time at school and also at automotive workshops. They can learn practical skills such as mechanics and vehicle maintenance.

This approach not only prepares students with skills relevant to industry needs, but also helps them build professional networks. In addition, it also helps them understand the work processes in the field.

Close cooperation between schools and companies also helps identify industry needs more accurately. Therefore, education programs can be adapted to current market needs.

Aside from Germany, there are other good practices in Asian countries that can serve as inspiration in addressing unemployment, particularly among young people. One of them is South Korea.

South Korea has successfully implemented various programs and policies to increase job opportunities for young people. South Korea has a strong education and training program, with a focus on developing technical and professional skills.

The vocational education system integrated with industry in South Korea is similar to the dual track education approach in Germany. The system allows students to gain practical skills relevant to industry needs during their school years so that they are ready to enter the job market directly after graduation.

In addition, South Korea also has a wide-ranging work placement and internship program. This program provides opportunities for young people to gain work experience and build professional networks.

This program is often organized by the government, private institutions, and educational institutions working together to provide beneficial job opportunities for youth.

South Korea also has a wide range of job placement and internship programs. These programs provide opportunities for young people to gain work experience and build professional networks.

Taiwan also has several successful initiatives to address unemployment, especially among young people. One of them is a government program called the Youth Employment and Internship Program.

The program provides financial support to companies that are willing to recruit young people for internships or permanent jobs. This program has proven to be effective in increasing job opportunities for young people while also benefiting companies in obtaining quality workforce.

Program challenges

Indonesia has implemented initiatives such as the Program Kartu Prakerja. Based on an evaluation conducted by Presisi Indonesia in 2022, this program shows both strengths and weaknesses.

A total of 49 percent of Kartu Prakerja beneficiaries reveal that they have experienced an increase in self-confidence. This empowers them to start or develop their own businesses.

However, the program is considered ineffective in improving the competence, productivity, and competitiveness of the recipients. Statistically, the improvement achieved is only 2.2 percent for competence, 2.7 percent for productivity, and 3.8 percent for competitiveness.

Also read: Vocational Education and Alignment of Future Job Skills

This indicates that there is a need to increase the relevance and application of the skills taught to be more in line with the needs of the working world.

In addition to the preexisting Kartu Prakerja program, Indonesia has also implemented the Job Loss Program (JKP). This program is designed to assist job seekers who have lost their jobs.

An evaluation conducted by the Trade Union Rights Centre (TURC) and Synergy Policy revealed that the quality of training provided in the JKP program is not in line with the needs of the job market. This condition hampers the program's effectiveness in increasing job opportunities for those affected.

There is a need to increase the relevance and application of the skills taught to better suit the needs of the world of work.

In addition, there is a participation requirement that requires JKP participants to be registered in mandatory social security programs such as Jaminan Kematian (JKM), Jaminan Kecelakaan Kerja (JKK), Jaminan Pensiun (JP), Jaminan Hari Tua (JHT), and Jaminan Kesehatan Nasional (JKN). This tends to limit access for informal workers who are not registered in the system.

Considering that job losses are also experienced by informal workers who require similar assistance, it is crucial for programs like JKP to offer more inclusive access and embrace all categories of workers.

Alternative solution

In facing the challenge of unemployment, especially youth unemployment, Indonesia needs to design a comprehensive and integrated strategy. Effective policies should take lessons from global models, while considering unique local conditions.

This requires cooperation between the government, industry, and educational institutions. Thus, it can be ensured that the training provided is in line with the needs of the job market and able to improve skills. This also opens up relevant job opportunities for the unemployed, especially among young people.

KOMPAS/AGUS SUSANTO

Job seekers queue to enter the job vacancy exhibition at Grand Mall Bekasi, Bekasi City, West Java, Monday (4/3/2024).

In the context of the leadership transition from President Joko Widodo to Prabowo Subianto, there is a great opportunity to carry out a deep reform of policies to address unemployment.

One key step is to increase transparency and accountability, as well as integrating all programs such as the JKP and the Kartu Prakerja Program into one coordinated program and institution. The goal is to ensure that the policy implemented can successfully address the issue of unemployment.

In facing the challenge of unemployment, especially youth unemployment, Indonesia needs to design a comprehensive and integrated strategy.

In addition, it is important to strengthen vocational education and training programs. This can be done through close collaboration between educational institutions, industries, and the government in designing a curriculum that is responsive to the development of technology and industrial needs.

There is also a need to expand access to skills training, both through online and offline platforms.

Investment in information and communication technology (ICT) infrastructure is crucial in ensuring the coverage of skill training can reach remote areas and underprivileged communities.

Also read: Vocational Education Shouldn't Be Obsolete

Furthermore, as part of larger reforms, the establishment of a National Vocational Agency could be a strategic step. This agency will be responsible for designing a vocational education model that is relevant and adaptive to the needs of the labor market.

Adopting the successful principles from developed countries such as Germany, the National Vocational Agency will become the driving force in connecting the education world with the industrial world, thus creating graduates who are ready to compete in the job market.

By adopting a solution-based approach and continuously evaluating and improving it, Indonesia can effectively tackle the challenge of unemployment. This will have a significant impact in realizing Indonesia's Golden Vision 2045.

Didit Saleh, Deputy Program Director at Trade Union Rights Center (TURC)