Low-Quality Workforce Poses Challenge

About 41 percent of some 124 million working people in Indonesia have only elementary school education. The decline in the official unemployment rate over the past year presents a new challenge in the form of improving the quality of Indonesian workers.

KOMPAS/RADITYA HELABUMI

Applicants queue to sit a test for entry into the civil service at the West Jakarta mayoralty office on Monday (5/11/2018). According to Statistics Indonesia (BPS), the national workforce in August 2018 reached 131.1 million people, up 2.95 million from August 2017. BPS also recorded a decrease of 40,000 in the number of unemployed people over the past year.

JAKARTA, KOMPAS —  About 41 percent of some 124 million working people in Indonesia have only elementary school education. Therefore, the competitiveness of the national workforce remains low.

The decline in the official unemployment rate over the past year presents a new challenge in the form of improving the quality of Indonesian workers. The competitiveness of the workforce remains low, because it is dominated by workers with only elementary school education.

According to data from Statistics Indonesia (BPS), the number of unemployed people fell to 7 million in August 2018, down 40,000 from August 2017. The official unemployment rate dropped from 5.5 percent in August 2017 to 5.34 percent in August 2018.

However, the quality of the workers needs improving, as 50.46 million of the 124.01 million people working across the country in August, or 40.69 percent, are only elementary school graduates.

The dean of the Economy and Business School of the University of Indonesia, Ari Kuncoro, said on Tuesday (6/11/2018) that the poor quality of Indonesian workers had an impact on their performance in the field. He cited as an example that the workers were frequently hard-pressed to comprehend work manuals or express themselves, thereby causing misunderstanding with the leadership.

“They find it difficult to compete in the Industrial Revolution 4.0 era because of the difficulties in comprehending terms, processing data and understanding symbols,” Ari said.

Improving the quality of the workers should not require much time, given that the state allocates 20 percent of the state budget to education.

In the 2019 state budget, this amounts to education funds of Rp 492.5 trillion. The education budget continues increasing every year. In 2007, the education budget reached Rp 406.1 trillion, and it increased to Rp 432 trillion in 2018.

The education funds have been disbursed through central government expenditure amounting to Rp 163.1 trillion, transfers to regional administrations of Rp 308.4 trillion, investment financing for national education development of Rp 20 trillion and perpetual research funds of Rp 990 billion.

“The priority of budget [spending] should be a focus on improving capabilities, not on routine operational activities,” Ari said.

Even though the workforce is dominated by elementary school graduates, Ari said, the quality of Indonesian workers could be improved. Language skills – especially English – and the management of workers with elementary school and junior high school education could be improved through training courses. They were needed in the service sector, both in the domestic market and overseas.

A policy analyst from the Indonesia Services Dialogue Council, M Syarif Hidayatullah, said employment in the service sector was consistently rising, but this trend was facing challenges, especially in the form of increasing demands with regard to the qualification of workers.

Rural areas

Vice President Jusuf Kalla pointed to the rising unemployment rate in villages. “Productivity can only [rise] if mechanization [is implemented well]. Here we know that in the last two or three years, the government has supported mechanization at the village level, in paddy fields, and so on,” he said.

The ownership of smaller lands in villages also leads to fewer jobs in the agricultural sector. Villagers increasingly change profession to become industrial workers. This, Kalla said, was happening everywhere.

The unemployment rate in cities fell from 6.79 percent in August 2017 to 6.45 percent in August 2018. Meanwhile, the official unemployment rate in villages rose from 4.01 percent to 4.04 percent over the same period.

Villages, Disadvantaged Regions and Transmigration Minister Eko Putro Sandjojo said there were many jobs in the formal and permanent sectors in the cities, while in villages there were a greater number of informal or part-time jobs and seasonal work.

“During the planting and harvesting seasons, the unemployment rate is very low. Meanwhile, in the period between the planting season and the harvest season, as well as in the dry season, the unemployment rate increases,” Eko said.

The government, Eko said, had increased labor-intensive programs in villages that are carried out after the planting season and before the harvest season. The government has also encouraged programs for superior products of rural areas and the establishment of economic clusters, which has now been carried out in 128 regencies.

“I believe that, with the massive development in rural areas, labor-intensive programs through cash payments, village-owned enterprises and superior products in rural areas as well as various programs by other ministries in the villages, the unemployment rate in rural areas will fall again,” Eko said.

Institute for Development of Economics and Finance executive director Enny Sri Hartati said the unemployment rate in villages had increased due to the fact that most young workers did not want to work in the agricultural sector. However, the agricultural sector continued to provide jobs.

Enny said a diversification of employment in rural areas was needed, so as to attract young people, for example, through the addition of technological elements.

(KRN/INA/NAD)