The poor quality of education in Indonesia is constraining its growth and continues to a matter of concern, according to the Asian Development Bank (ADB).
One in four of Indonesia’s young people aged 15-24 years old have not completed the full 12-year cycle of schooling before university, although most have completed nine years, The ADB noted in its recently released “Asian Development Outlook 2017” report.
The Manila-based multilateral development lender also called on the Indonesian government to pay priority attention to the quality of education and the mismatch between the skills that employers seek and those that graduates possess.
“To leap to [the status of] higher middle-income countries, Indonesia needs to seriously address the education and skills gap,” ADB economist Emma Allen said at a news conference held on April 6.
The other two keys that would enable the country to make the leap are innovation and infrastructure development, in which Indonesia also lags many of its peers.
“Human resources and infrastructure are the main problems,” Arif Budimanta, the deputy chairman of the National Economic and Industry Committee (KEIN) said during the launch of a book that compiles thoughts of 100 Indonesian economists, organised by the Institute for Development of Economics and Finance (Indef) two days earlier at the Indonesia Stock Exchange.
He added that few regions in Indonesia have a high human development index (HDI). Overall, the country ranks 113th out of 188 countries, the United Nations Development Programme (UNDP) said in its latest HDI report released in late March.
In terms of education, the 2016 HDI said that on average, Indonesians go to school for only 7.9 years, out of the 12.9 expected years of schooling, and there is only one teacher available for every 17 primary school students in a given school year.
The ADB report also cited an assessment from the Organization for Economic Cooperation and Development (OECD) in 2015 which showed that Thai and Vietnamese students still outperformed their Indonesian peers in science, mathematics and reading, although Indonesia’s educational performance has improved over the past decade or so. The government in 2002 committed to spending 20% of its annual budget on education, or 3.4% of gross domestic product (GDP). This year’s education budget totals 416.1 trillion rupiah (US$31.2 billion).
However, the allocation is lower compared with those of neighbouring Southeast Asian countries, such as Malaysia and Vietnam which spend 6% of their GDP on education.
Low educational attainment in Indonesia is reflected in the fact that half of the people employed today can be considered underqualified for their jobs, Ms Allen said.
The government acknowledged there was a mismatch between the skills that Indonesian students have and what industries require.
“Only 15% of Indonesia’s vocational high schools produce graduates in accordance with industry’s needs,” Industry Ministry Secretary-general Haris Munandar said during the Indef book launch.
In addition, he said, only 22% of teachers have the right qualifications for the subjects they teach in vocational schools, and the mismatch has resulted in a high unemployment rate among high-school level graduates.
“We will establish more vocational schools to generate more productivity and increase competitiveness so that Indonesia’s workforce will have more specialised skills,” Deputy Finance Minister Mardiasmo said at the same forum.
Winfried Wicklein, the ADB country director for Indonesia, said that other solutions could include a commitment by Indonesian employers to invest more in skills development on the job, while spending on public education could be made more efficient.
“Close engagement with the private sector is needed to ensure that graduates meet evolving skill needs as Indonesia moves toward higher middle-income status,” Mr Wicklein said.
The ADB recommends that in order for graduates to meet the demands of a labour market in a middle-income country, the educational reform programme should promote much greater engagement among government, employers and training providers, with a particular focus on technical and vocational education training.
Industry associations also need to play a stronger role by developing good collaboration models that can evolve into industry-wide skills development programmes, if they want to ensure that Indonesia’s economy can expand by 5.1% this year and 5.3% next year as the ADB projects.
“A sustained growth path will require continued efforts to improve the infrastructure, deepen structural reform and address skill gaps,” Mr Wicklein said.
Some sectors seem to have geared up to address the problem, with the Indonesian Chamber of Commerce (Kadin) setting a target to enlist 5,720 participants from the manufacturing, maritime, retail, tourism and banking sectors in vocational training programmes this year.
Kadin chairman Rosan P Roeslani said the programme would be conducted with IHK Trier, the chamber of commerce in Trier, Germany, and aimed to involve 2,640 companies.
“For the moment, we will focus on 15 specialised economic zones as we consider them to be more feasible [for conducting the programmes],” said Miftahudin, the human resources committee head at Kadin, during the inauguration in March of a programme to provide trainers for the vocational training programmes.