Menjadi Pekerja di Indonesia: Kerja Terus, Kaya Enggak

Summary

Indonesia’s rapid economic growth has helped reduce poverty and expand the middle class, but it struggles to escape the middle-income trap. Despite improvements, over 50% of jobs remain low in productivity and wages, with many Indonesians unable to afford a middle-class lifestyle. This stems from an over-reliance on low-value service sectors and a mismatch between education and industry needs. To overcome these challenges, strategies suggested by the World Bank include boosting competitiveness, prioritizing high-potential sectors, and developing a more skilled workforce, while focusing on enhancing MSME productivity and connecting them to global markets.

Takeaways

• 😀 Indonesia was upgraded to an upper middle-income country in 2019 but was downgraded a year later due to declining income figures.
• 😀 Despite the pandemic, Indonesia's economy has shown resilience, with rapid growth, reduced poverty, and a growing middle class.
• 😀 The majority of jobs in Indonesia are low-quality, with half of the jobs created in the last two decades offering low productivity and wages.
• 😀 50% of jobs in Indonesia are not sufficient for a family of four to live a middle-class lifestyle, with only 13 million earning enough to afford this.
• 😀 Although Indonesia is shifting away from agriculture, the growth of low-value services sector jobs has kept productivity and wages low.
• 😀 The labor force participation rate continues to rise, but low-skill workers transitioning from agriculture face challenges in finding quality jobs.
• 😀 Despite increased openness to global competition, Indonesia's export-import market share remains lower than other ASEAN countries.
• 😀 Indonesia's low productivity and high labor costs make the country uncompetitive globally, limiting opportunities for economic expansion.
• 😀 A significant challenge in creating middle-class jobs is the mismatch between the education system and industry needs, leaving many workers underprepared.
• 😀 The manufacturing sector holds greater potential to provide quality jobs compared to other sectors, as it can absorb workers with lower education levels.
• 😀 The World Bank recommends three strategies: improving competitiveness and productivity, prioritizing sectors capable of absorbing productive jobs, and focusing on developing skilled human resources.

Q & A

What led to Indonesia's downgrade from an upper middle-income country status by the World Bank?

Indonesia's status was downgraded by the World Bank in 2020 due to declining income figures, which was further exacerbated by the COVID-19 pandemic.

How has Indonesia's economy performed in recent years?

Indonesia's economy has seen rapid growth, with a decline in poverty rates and a growing middle class. However, challenges remain in creating quality middle-class jobs.

Why are many of Indonesia's jobs considered low quality?

Many of the jobs in Indonesia are low-quality because they have low productivity and wages that are insufficient to support a middle-class lifestyle.

What proportion of Indonesia's workforce earns enough to afford a middle-class lifestyle?

Only 13 million out of the 85 million income earners in Indonesia earn enough to support a family of four with a middle-class lifestyle.

What is the main challenge Indonesia faces in transitioning away from agriculture?

While Indonesia has shifted away from agriculture, most of the new jobs have been created in low-value-added services, which don't significantly improve productivity or wages.

Why are new jobs in Indonesia often of low quality?

The low barrier to entry in the low-value-added service sector, where many workers from the agricultural sector transition, results in the creation of low-quality jobs.

How does Indonesia's labor competitiveness compare to other countries?

Despite paying lower wages, Indonesia's labor competitiveness is low due to low productivity, making it less competitive compared to other countries.

What is the issue with education in Indonesia in terms of job market alignment?

There is a structural mismatch between the education system and the needs of industries, meaning that the skills acquired in schools are not aligned with market demands.

What role does foreign direct investment (FDI) play in Indonesia's economy?

Foreign direct investment (FDI) can help improve innovation and job creation in Indonesia. However, the country has seen limited foreign investment, particularly in export-oriented sectors.

What strategies does the World Bank suggest for improving Indonesia's economy?

The World Bank suggests increasing productivity and competitiveness across sectors, prioritizing high-potential sectors for middle-class job creation, and developing higher-quality human resources to attract foreign investment.