November 7, 2014 – Youth unemployment in Indonesia is alarmingly high – 22% of Indonesians between 15 and 24 years old cannot find a job. There is pressure on the newly installed Widodo government to provide more jobs for youths in labour-intensive sectors.
Vocational school students in Indonesia play an important role in providing growth in the country’s manufacturing sector. Each year, 1.3 million students graduate from vocational schools and many have job offers even before they graduate.
However a fifth of young men and almost a third of young women in Indonesia cannot seem to land a job. There are worries rampant unemployment could lead to an erosion of social values, and often, violence. But, employers said Indonesia’s rigid laws make it hard to hire people.
Indonesian Chamber of Commerce’s Vice-Chairman of Trade and International Economic Cooperation, Chris Kanter, said: “You must be able to provide a situation where it is easy hiring and easy firing. What we have, our law here, is not the case. Severance payment is one of the highest. Minimum wage now is double and it is not based on productivity.”
Business owners said rising minimum wage has led to greater overheads. That has hampered business growth and led to low job creation. Experts said the onus should not just be on business but on the government to create labour-intensive sectors that can accommodate more workers.
Asian Development Bank’s Education Officer, Sutarum Wiryono, said: “I think the government needs to provide some kind of incentive for the industry, so that they are willing to work with the schools or polytechnics, for example, because at the end of the day they are the customers, they are the users of the graduates.”
Vocational schools teach the basic technical skills that students need to apply for jobs in local industries. But school officials said they need more updated equipment. So far, they have had to rely on internships to expose students to state-of-the-art technology.
Ateng Sutisna, Vice-Principal of SMK 5 Vocational School, said: “Some automotive companies donate their machines to us, which can help teach basic skills to students. But what we really need are assembled products, either machines or cars, that students can use for practice.”
Solving Indonesia’s high youth unemployment requires a multi-dimensional approach across government, industry and education. Until then, the country will not be able to tap its own assets – an abundant youth population and a growing manufacturing sector.