Jun 19, 2018 Last Updated 7:44 AM, Jun 18, 2018

Making their way

Published: Apr 07, 2015

 Michele Ford

The last day of school is a milestone in any young person’s life. In Indonesia, as elsewhere, it’s a time of celebration, as students graffiti each other’s uniforms and celebrate on the streets. Some leave the school yard confident of a place at university. Others have a job waiting for them in a family business. But for many young Indonesians, celebration quickly turns to uncertainty, as they ponder what they are going to do next. 

University degrees and post-school qualifications are too often not enough to secure a good job in Indonesia’s broken labour market. But they’re better than a senior high school certificate – in fact, in Indonesia, senior high school has become the new primary school, when it comes to credentialling yourself. 

Steady jobs in offices and factories are extremely hard to get for young people fresh out of school. Alternatives to these mainstream occupations may be much more interesting, but they come with a high level of insecurity, which may be fine for a few years – or forever, if you make it big or your family has money. But they are hard to move on from if stability and a living wage becomes important at some point.

Struggling to keep up

Indonesia is by far the largest economy in Southeast Asia, and an increasingly prosperous one at that. But while it is now recognised as a middle-income country, it lags behind many of its neighbours on a number of measures of prosperity, including youth employment. 

The youth unemployment rate is far higher in Indonesia than any other country in the region, and almost 10 per cent higher than the average for ASEAN. Indonesia might be climbing up the international league tables, but 17 per cent of the 43.5 million Indonesians aged 15-24 are not in education, training or a job. 

Young people are much more likely than other Indonesians of working age to be looking for a job. In fact, over half of all unemployed people in Indonesia are aged between 15 and 24. These figures are even more telling when you take into account the fact that a proportion of people between the ages of 15 and 24 are still at school or at university or some other tertiary education institution.

Open Unemployment by Age Group as a Proportion of all Open Unemployment, 2014

 

Source: Raw data was obtained from the Ministry of Manpower website

The open unemployment rates hide a yet grimmer story for young women because of the huge differential in labour participation rates by sex. Young females are still much less likely to be in a job or looking for work than young men. At 21.64 per cent, the gap in the labour force participation rate for young women is lower than the average gap over the life-cycle of 31.67 per cent. But it’s extremely serious, especially when you take into account that young women are at least as educated as young men.

Percentage of Labour Force Participation rate by Age Group, 2014

Age Group Male Female Total
15-24 60.47 38.83 49.79
25-34 97.32 57.36 77.29
35-44 98.51 64.17 81.42
45-54 97.80 66.15 82.00
55+ 74.99 43.61 58.72
Total 85.04 53.37 69.17 

Source: Raw data was obtained from the Ministry of Manpower website

The statistics also hide a significant urban-rural divide. Cities act as magnets for young people looking for work. Yet, ironically, young people are more likely to find themselves unemployed in cities – and especially in Greater Jakarta – than in rural areas. 

Part of the problem is that cities are attractive because they hold the promise of a good ‘modern’ job. But while it is true that good jobs are generally found in cities, they’re actually very hard to find. So, like their parents and older siblings, the vast majority of young Indonesians end up eking out a living – or sometimes, making it big – in the informal sector, where wages tend to be lower, job security poorer and social security harder to access.

A second-rate education

One of the reasons young people have difficulty transitioning successfully to work is because of serious limitations in Indonesia’s education system. The educational qualifications of workers in Indonesia are much lower than in Singapore, Malaysia and the Philippines, though that’s much less of a problem for young people than for older Indonesians. 

Once you take into consideration the fact that a substantial group of 15-18 year olds are still in education, young people are considerably more likely to have a senior secondary education, diploma or university degree than older workers. High school graduates are less likely than university graduates to be unemployed, but they are 18 times more likely to end up in the informal economy, where job security is much lower and their income much less certain.

Working-age Population by Educational Level, 2014

Age Group Primary Junior Secondary Senior Secondary 1,2 or 3 Year Diploma University Degree Senior Secondary or more
15-24 26% 40% 31% 2% 3% 36%
25-34 32% 24% 32% 4% 9% 45%
35-44 46% 19% 26% 3% 7% 36%
45-54 61% 12% 18% 2% 7% 27%
55+ 79% 8% 9% 2% 2% 13%

Source: Raw data was obtained from the Ministry of Manpower website

There are some excellent schools in Indonesia, but on the whole, educational outcomes are poor. There are still schools without electricity or running water on the fringes of provincial capital cities. Things are much harder in hard-to-reach areas of the archipelago. And even where kids do have relatively good access to schooling in a general or vocational school, there is no guarantee that they’ll be work-ready. Indonesia’s curriculum is notoriously misaligned with the kinds of things employers need workers to know.

According to a study published by the International Labour Organization in 2010, programs in senior high schools aimed at getting students ready to enter the labour market – such as life skills and careers advice – simply don’t prepare them for the world of work. Generic skills are also badly taught. A World Bank Employer Skills Survey conducted in 2008 suggested that only seven per cent of employers consider the skills of school leavers to be 'very good'. Five times as many rate them as 'poor' or 'very poor'. 

In recognition of this, Indonesia now spends 20 per cent of its annual national budget on education. There have been moves for curriculum reform, with a major reworking of the regular school curriculum in 2013. Efforts have also been made to improve wages and working conditions for teachers, and to encourage them to engage in professional development. But there’s a long way to go. There have also been attempts to improve the international competitiveness of Indonesia's tertiary education sector, though Indonesian universities also struggle to produce job-ready graduates.

Yet the realities of the labour market are not always obvious to students leaving the school yard or the university lecture hall for the last time. Dreams of fancy, white-collar careers are abundant, even though opportunities are not. Graduating students tend to have unrealistic expectations of the kind of work they can and should do. Indonesia’s world of work is a highly stratified one. Most children from even lower middle-class families would rather be unemployed than doing work they felt was beneath them – a fact that at least partly explains high levels of graduate unemployment, but also the demand for low-paying civil service jobs.

Serious consequences 

The harsh reality is, however, that even good blue-collar jobs in the formal sector are relatively few and far between. And Indonesia is a country that offers few second chances to young people who don’t immediately land on their feet – unless, of course, mummy and daddy, an uncle or aunty, or a family friend or two are standing by to pick up the pieces. Less fortunate Indonesians who fail to find a good job as a ‘fresh graduate’ are too often condemned not only to disappointment, but to a life on the margins: in some cases, involving long-term dependence on families that can’t really afford to support them; in others, a life of grinding poverty.

This all-too familiar pattern has serious consequences not only for the individual concerned, but for their communities – and, indeed, for the well-being of Indonesia as a nation. An individual’s failure to find a good job can lead to inter-generational poverty, the ultimate squandering of human resources.  

The lack of reliable pathways from school to good quality jobs is a ticking time bomb. There is simply no point throwing money at the education system if that money is not spent well, or if educational reform is not accompanied by the other changes necessary such as developing better job search services or requiring more transparent hiring processes. Indonesia’s future depends on finding a solution, and time is running out.

Michele Ford (michele.ford@sydney.edu.au) holds an ARC Future Fellowship at the University of Sydney, where she also directs the Sydney Southeast Asia Centre. Her research focuses on work, labour relations and labour migration in Southeast Asia.


Inside Indonesia 120: Apr-Jun 2015

Comments  

#2 +1 v neelakantan 2015-04-14 05:24
Interesting piece.
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#1 +1 Antony 2015-04-14 03:37
Another issue is the appalling pay that professional receive. Indonesian's are increasingly obsessed with qualification attainment and many families are making enormous sacrifices to support their children to study at university in the hope that they can get good jobs, however the financial trade offs are a joke. The sad truth is work in the informal sector often in sales can pay multiple's of the average professional wage.
Engineers, teachers, dentists and doctors earn far less than Australian's on unemployment benefits and contrary to popular Australian belief living in many parts of Indonesia is expensive. Housing prices in Jakarta and parts of Bali are now on par with Australia.
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