The NEET problem in Indonesia is worse than that of neighboring countries. It is estimated that in 2022 the number of NEETs here reached 22.34 percent of the total population aged 15-24. Compared to Asean’s average of 17.75 percent, this presents a major challenge for Indonesia. Regionwide, Singapore has the most productive youth, with a NEET share of just 6.62 percent, followed by Malaysia (10.22 percent), Vietnam (11.32 percent), the Philippines (12.76 percent), and Thailand (13.35 percent). In terms of youth productivity and their contribution to the national economy, Indonesia is a clear laggard in Asean. (FIGURE 2.)
Figure 3 shows the NEET growth trend in Indonesia from 2015 to 2023. It indicates a fluctuation, with a significant decline at the beginning of the period, a sharp increase in the middle due to the impact of the pandemic, and a still unstable recovery in succeeding years. In 2015, the percentage of NEET in Indonesia was recorded at 24.77 percent. It decreased to 23.19 percent in 2016 and was down further to 21.41 percent in 2017.
In 2020, it increased significantly, surging to 24.28 percent, attributed to the impact of the Covid-19 pandemic which severely disrupted the economy, labor absorption and education. In 2021, it again decreased to 22.4 percent. In 2022 there was a slight increase to 23.22 percent, but it dipped again to 22.25 percent in 2023. Still, it was still higher than the 2017 rate. (FIGURE 3.)
To put it in a clearer perspective, 1 in 5 young people in Indonesia do not gain additional skills through education, work or training. Indonesian youth are less competitive than their Asean counterparts. It is feared that this will further lead to higher youth unemployment. The latest BPS data revealed that the open unemployment rate (TPT) among young people has reached 16.42 percent in February 2024, only slightly lower than the 16.46 percent reported in 2023. Considering the relatively strong economic recovery, the youth unemployment rate should have gone down substantially.
Furthermore, working-age youth are pushed into sectors that do not require higher education qualification or highly specialized skills. It is estimated that half of young people aged 15-19 work in the informal sector, up from 37 percent in 2015. Likewise, the number of informal sector workers aged 20-24 increased from 25.76 percent in 2015 to 30.3 percent in 2022.
According to BPS, they earn only Rp2 million per month on average. Young people living in urban areas earn relatively more (Rp2.3 million) than those in rural areas (Rp1.6 million). This figure is three times less than the highest provincial minimum wage (UMP) in Indonesia. Those holding informal jobs are also more vulnerable, because they do not receive financial aid from the Government.
Urban-rural gulf
Urban youth usually have better economic opportunities than their rural counterparts due to better access to higher-paying jobs in cities, where businesses and industries are concentrated. By contrast, well-paying jobs in rural areas are harder to come by as most of the jobs available are in the agricultural or informal sectors.
Access to education is also a key factor that create this gap. Urban youth generally have better access to quality educational institutions, from primary to tertiary level. Better educational infrastructure in urban areas also allows them to acquire the skills and knowledge instrumental in securing high-paying jobs.
On the contrary, rural youth often face obstacles in accessing quality education. School are often far and between, with inadequate facilities, and a shortage of qualified teachers. This explains why many young people in rural areas are unable to continue their education to a higher level, thereby limiting their chances of getting better jobs.
In addition, because urban youth earn higher incomes, they tend to have better access to healthcare services, recreational facilities, and a more vibrant social life, thus enjoying better quality of life and opportunities for personal and professional advancement. Conversely, rural youth face greater social challenges, with lack of access to health care services, decent housing, and meaningful social activities. This can lead to social problems such as higher poverty rate, poorer health, and low community engagement.