Sunday, June 16, 2024 | 13:07 WIB

Amidst Indonesia’s Unemployment Crisis Youth encounters peril of escaping low-skilled labor trap


Jakarta, IO – Recently, the Education, Culture, Research and Technology Ministry (Kemdikbudristek) made an intriguing statement with regard to higher education as a tertiary need, implying that it is not mandatory for people to pursue a college/university degree. The statement instantly sparked a public debate, because Indonesia is experiencing serious problems in its education sector, starting from inequality to burdensome tuition fees that put the middle and lower class at a disadvantage. 

In fact, the single tuition fees (UKT) policy for state universities is being slammed by students and parents because it is considered too high. The most alarming impact going forward is that Indonesian youth will be caught in a low-skilled labor trap, in which they have poor skills, few job opportunities and low income. In the Indonesian context, these are workers who were only able to afford to complete elementary school or junior high school. 

Figure 1 shows the Indonesian population pyramid in 2020, where the productive age group (15-64) is larger than the non-productive one (0-14 and 65-and-above). Each age range in the productive group (20- 24, 25-29, and 30-34) represents more than 10 million people. This shows that Indonesia is enjoying a demographic dividend with a bonus predicted to end no later than 2040. Although the size of the young age group (0-14) is also significant, it is smaller than the productive age group. Meanwhile, the population elderly group (65 and above) is relatively small, although a rising trend should be anticipated. 

The young population is a vital component in the national demographic structure to support economic and social development. They are the future workforce who will determine the direction of the country’s development. As the generation that will take over the baton of leadership and management of the country, they play a strategic role in realizing a long-term national development vision. They are wouldbe innovators who can drive change through fresh ideas and creativity. Thus, it is paramount to ensure that the young population receives sufficient educational attainment, skills training and equitable employment opportunities. A quality education will provide a solid knowledge base, while skills training will allow them to adapt to a changing job market. 

The youth dividend provides great opportunities for economic growth if the productive age population can have access to good education, training and jobs. However, demographic dividend is a double-edge sword; it can be a blessing or disaster. In the latter case, the young population is not engaged in productive activities, falling under the NEET (Not in Education, Employment, or Training) category – and thus poses a negative impact on the economy and social stability. Gender gap in education and employment may also diminish the potential bestowed by the demographic dividend. 

In addition, an increase in the number of elderly without adequate preparation could place a huge burden on healthcare and pension systems. Therefore, the quality of education and workforce skills must be improved if we are to take advantage of the demographic bonus. Rapid and poorly-planned urbanization can also cause problems such as congestion, unemployment, and poor quality of life in cities. Even though Indonesia is currently enjoying a demographic dividend, the Government needs to pay serious attention to the issue, to harness its potential so it does not turn into a disaster. Strategic measures need to be taken to increase access to education and skills development and sufficient employment opportunities. On the other hand, the Government needs to prepare for a rising ageing population by strengthening the healthcare and pension systems. With the right policies, Indonesia can reap a demographic bonus. (FIGURE 1.) 

The NEETs 

NEET, an acronym for “Not in Education, Employment, or Training”, signifies a working-age person who is unemployed and not receiving a formal education or vocational training. The International Labor Organization (ILO) specifically defines them as young people in the 15-24 age group. The Organization for Economic Co-operation and Development (OECD) often uses NEET as an indicator to assess the integration of youth into the labor market, public life and society – or the absence thereof. 

An ILO-published report titled “Global Employment Trends for Youth 2013: A Generation at Risk” reveals the state of youth employment across the world. In 2013, an estimated 73.4 million (12.6 percent) young people were estimated to be unemployed. Long-term trends show an increase in youth unemployment coinciding with the global economic crisis of 2008, especially in developed and developing countries. Many young people are trapped in low-quality jobs with poor pay, benefits and working conditions, especially in developing countries, where 90 percent of the population work in the informal sector. Low-quality jobs often offer minimal opportunities to learn new skills or gain valuable experience. A gender gap in labor force participation and unemployment are also significant. High levels of unemployment and economic inactivity among youth can lead to dissatisfaction, social instability and waste of economic potential. Effective policy interventions, such as education, training and social protection, are necessary to address the youth unemployment challenge. 


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