PERMASALAHAN KETENAGAKERJAAN DI INDONESIA

Summary

Indonesia's economy has grown rapidly in recent years, with a reduction in poverty and a rise in the middle class. However, over 50% of new jobs created in the last two decades are low-productivity, low-wage, and unsuitable for sustaining a middle-class lifestyle. While the agricultural sector has diminished, the service sector has seen growth, yet it often provides low-quality jobs. The country's workforce struggles with low education levels, and the mismatch between educational output and industry needs hampers productivity. Foreign investment remains limited, and there is a lack of high-quality job opportunities, making it difficult for many Indonesians to reach the middle class.

Takeaways

• 😀 Indonesia's economy has experienced rapid growth in recent years, with a decline in poverty and the expansion of the middle class.
• 😀 More than 120 million jobs have been created in Indonesia, with increased productivity and income levels.
• 😀 The labor force participation rate has increased, and unemployment has decreased, but challenges remain in creating quality jobs.
• 😀 50% of jobs created in the last two decades are low productivity jobs with wages below the minimum needed for a decent living.
• 😀 Only 13 million out of 85 million people in the middle class can afford a middle-class lifestyle for a family of four.
• 😀 Since 2000, Indonesia has seen a shift away from agriculture, with the sector contributing less to GDP and employing fewer people.
• 😀 The shift from agriculture has resulted in many new jobs being created in the low-value service sector, which has not improved productivity or wages.
• 😀 Many low-quality jobs are a result of low entry requirements, which attract workers from agriculture with limited skills.
• 😀 Indonesia's labor force faces low competitiveness, with wages for low-skilled workers being high relative to their productivity.
• 😀 Despite greater openness to global competition, Indonesia's economic integration and export market share remain low compared to other ASEAN countries.

Q & A

What has been the recent economic trend in Indonesia?

Indonesia's economy has experienced significant growth in recent years, accompanied by a decline in poverty rates and the development of the middle class.

How many jobs exist in Indonesia today, and how has productivity changed?

Currently, there are over 120 million jobs in Indonesia, with increased productivity and income, partly due to a shift from the agricultural sector.

What challenges does Indonesia still face in job creation?

Despite growth, Indonesia struggles with creating quality jobs, especially those in higher income brackets. Around 50% of jobs created in the last two decades have low productivity and incomes below the minimum living standard.

How does the middle class in Indonesia compare to the overall population?

Only 13 million of the 85 million people earning middle-class income can sustain a four-person family with a middle-class lifestyle. The rest are considered 'aspiring middle class,' still transitioning from agriculture.

What role does the agricultural sector play in Indonesia's economy?

In 2000, the agricultural sector contributed 16% of the country's GDP while employing 45% of the workforce. However, by 2018, its contribution decreased significantly as the economy shifted towards other sectors.

Why is the shift from agriculture to the services sector problematic?

The majority of new jobs created in the services sector are low-value, and despite contributing to economic activity, they do not improve productivity or wages.

What is required for someone to join the middle class in Indonesia?

To be considered middle class in Indonesia, an individual needs a monthly income of at least IDR 3.8 million.

What is the skill gap in Indonesia's workforce?

There is a significant skill gap in the Indonesian workforce, with many workers having low education levels. Nearly half of the workforce has only completed junior high school or less.

Why is the return on education in Indonesia low compared to other countries?

Despite a relatively high average level of education, the return on education in Indonesia is low due to a structural mismatch between educational curricula and industry needs, meaning the skills acquired in school are not valued by employers.

What is the role of foreign investment in Indonesia's economy?

Foreign investment in Indonesia is relatively low and mostly focused on natural resource extraction or accessing the local market. Investments focused on export-oriented industries are more likely to drive innovation and create quality jobs.