Post on 11-May-2020
GENDER, EDUCATION AND LABOUR MARKET IN INDONESIA: SOME ISSUES AND CHALLENGES
Raden Muhammad Purnagunawan
CEDS - Padjadjaran University
Universitas Padjararan
15 Agustus 2018
Outline • Introduction
• Structure and Key Features
of Indonesian Labor Market
• What should we do?
Introduction
‘Window of Opportunity” of Demographic Bonus is closing in
2015 - 2030
Estimated period of Demographic Dividend• UN ‘World Population Prospect’: 2015 -2030 • Dorojatun KuncoroYakti: 2010 - 2035 • Sri Moertiningsih : 2020 - 2030
Source: Worldbank (2009, p.30)
2015-2030
Indonesia is a country with young population
Source: Population Census, 2010
Population by Gender and Age Group
Indonesia, 2010
Age Group
Gender
Male Female TotalSex
Ratio
0-4 11,662,369 11,016,333 22,678,702 1.06
5-9 11,974,094 11,279,386 23,253,480 1.06
10-14 11,662,417 11,008,664 22,671,081 1.06
15-19 10,614,306 10,266,428 20,880,734 1.03
20-24 9,887,713 10,003,920 19,891,633 0.99
25-29 10,631,311 10,679,132 21,310,443 1.00
30-34 9,949,357 9,881,328 19,830,685 1.01
35-39 9,337,517 9,167,614 18,505,131 1.02
40-44 8,322,712 8,202,140 16,524,852 1.01
45-49 7,032,740 7,008,242 14,040,982 1.00
50-54 5,865,997 5,695,324 11,561,321 1.03
55-59 4,400,316 4,048,254 8,448,570 1.09
60-64 2,927,191 3,131,570 6,058,761 0.93
65-69 2,225,133 2,468,898 4,694,031 0.90
70-74 1,531,459 1,924,872 3,456,331 0.80
75-79 842,344 1,135,561 1,977,905 0.74
80-84 481,462 661,708 1,143,170 0.73
85-89 182,432 255,529 437,961 0.71
90-94 63,948 106,951 170,899 0.60
95+ 36,095 68,559 104,654 0.53
Total 119,630,913 118,010,413 237,641,326 1.01
But, still dominated by low educated population
Source: Population Census, 2010
Only 5,2 % of the population have tertiary degree
Education and Training in Indonesia
• Indonesia’s formal education system is not yet capable of producing
workers with even basic skills, such as literacy and numeracy
(Suryadarma, 2011; Di Gropello, 2013; OECD, 2016)
• Indonesia is the only ASEAN country (out of the five) where the
correlation between the educational attainment of the workforce
and enterprise productivity is small and statistically insignificant
(Vandenberg and Trinh, 2016)
• The performance of Indonesian students in international science and
mathematics assessments is 0.4 to 1.9 standard deviations lower
than Malaysia, Singapore, and Thailand (Suryadarma 2011)
• Indonesia will reach the 2009 OECD average reading skills in 2037
and the 2009 average mathematics skills in 2078 if it continue to
progress at the rate they did between 2000 and 2009 (Beatty and
Pritchett 2012)
Structure and Key Features of Indonesian Labor Market
Labor productivity increased
significantly in all sector
0
10
20
30
40
50
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Share of Employment by Sector (%)
Agriculture Manufacture Services
Significant structural
shift in employment,
but with slow growth in
manufacturing
0
5
10
15
20
25
30
35
40
45
50
Agriculture Manufacturing Services All Industries
5
38
16 15
10
47
2927
2001
2015
Most jobs created are in low productivity service sectors
Agriculture 35.1%
Mining 1.4%
Manufacturing 13.9%
Electricity, gas 0.2%
Construction 6.1%
Trade & retail 20.9%
Transport 4.5%
Finance 2.4%
Soc. & pers. services 15.4%
R² = 0,3327
-60
-40
-20
0
20
40
60
80
100
120
140
-20 -10 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140
Sectorial relative to Total Value added per worker growth rate 2001-2012 (%)
Employment growth rate 2001-2012 (%)
Employment and labor productivity growth by sector(bubble area = sector share in total employment in 2012)
Benchmark: Total economy value added growth rate 2001-2012
Total employment growth rate 2001-2012
(Alatas, 2014)
Most jobs created are in low productivity service sectors
Agriculture 35.1%
Mining 1.4%
Manufacturing 13.9%
Electricity, gas 0.2%
Construction 6.1%
Trade & retail 20.9%
Transport 4.5%
Finance 2.4%
Soc. & pers. services 15.4%
R² = 0,3327
-60
-40
-20
0
20
40
60
80
100
120
140
-20 -10 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140
Sectorial relative to Total Value added per worker growth rate 2001-2012 (%)
Employment growth rate 2001-2012 (%)
Employment and labor productivity growth by sector(bubble area = sector share in total employment in 2012)
Benchmark: Total economy value added growth rate 2001-2012
Total employment growth rate 2001-2012
(Alatas, 2014)
Labor force participation was stagnant
Source: Calculated from the Indonesian Labor Force Survey (Sakernas).
0
10
20
30
40
50
60
70
80
90
China Indonesia Malaysia Philippines Thailand Viet Nam
Female Male Male and female
Labour Force Participation Rates by Gender, 2001-2015
Labour Force Participation in selected countries, 2015
Quite the same compare to
Malaysia and Philippines
Education and Skill Trends
• Still dominated by
low educated
workers
• Increasing
demand for higher
education
0
2
4
6
8
10
12
14
Manufacturing Services
3
12
4,8
12,22009
2015
Source: World Bank Enterprise Survey
Firms Identifying an Inadequately Educated Workforce as a Major Constraint by Sector (%)
• More than 10% of firms have difficulties in finding adequately educated employees
• Similar to the Philippines , but worse than Viet Nam (8.1%) and Thailand (2.1%)
Unemployment rate is declining but youth unemployment is still high
Source: Calculated from the Indonesian Labor Force Survey (Sakernas).
• Increasing the last 3 years
• 4-7 times higher than adult
• 7 times higher than Thailand
• 4 times higher than Vietnam
• 2 times higher than Malaysia
and India
0
5
10
15
20
25
30
35
Primary Junior High SeniorHigh
SeniorVocational
Diploma University
2010
2015
Source: Calculated from the Indonesian Labor Force Survey (Sakernas).
Significant shortage for specific
skills in labor market (Di Gropello
et all., 2011) but high youth
unemployment, especially among
better educated youth
Unemployment rate is higher for female, in urban area,
youth and for senior secondary educated person
2001 2006 2011 2015
Gender
Male 6.59 8.52 5.90 6.07
Female 10.55 13.35 7.62 6.37
Location
Urban 10.99 12.94 8.23 7.31
Rural 6.09 8.39 4.96 4.93
Age Group
15-24 24.08 30.59 19.99 22.59
25-49 4.12 5.48 3.92 3.57
50-64 2.88 3.05 2.53 1.48
65+ 5.67 3.57 4.28 0.07
Education attainment
Less than Primary 3.77 4.38 3.74 2.16
Primary 5.30 6.91 3.42 3.09
Junior Secondary 10.60 12.94 8.37 6.22
Senior Secondary 15.65 17.82 10.59 11.16
Tertiary 11.01 10.23 7.71 6.68
Total 8.10 10.28 6.56 6.18
Underulitizationis still a major
problem
Less than 35 hours/week
Less than 40 hours/week
2001 2015 2001 2015
GenderMale 26.6 23.7 38.4 33.0
Female 45.3 40.4 56.6 51.2
LocationUrban 19.4 19.2 29.6 27.8
Rural 42.8 41.3 55.4 52.5
Age Group
15-24 34.0 29.8 43.2 37.8
25-49 30.1 26.1 42.1 35.9
50-64 41.8 36.3 54.7 47.6
65+ 53.1 52.5 64.5 62.8
Sector
Agriculture 52.4 53.4 65.6 65.7 Manufacture 15.1 14.1 21.5 19.9
Services 20.7 20.4 33.2 30.5
Edu
cati
on
a
tta
inm
ent
Less than Primary 46.7 45.1 58.3 56.3
Primary 35.8 36.2 46.8 46.3 Junior Secondary 27.5 28.5 37.4 36.8 Senior Secondary 18.6 18.6 30.9 26.7
Tertiary 24.9 20.4 45.2 34.4
Total 33.5 29.9 45.2 39.7
Informal sector still has
a dominant role,
especially in rural area, in agriculture
sector and for workers with low level of education
2001 2006 2011 2015
Gender
Male 58.2 61.8 53.2 50.1
Female 67.7 65.7 58.3 56.0
Location
Urban 39.0 42.0 37.4 36.0
Rural 76.6 77.3 71.6 69.6
Age Group
15-24 56.8 58.7 48.6 42.1
25-49 59.0 60.2 52.0 48.6
50-64 72.0 73.0 66.4 64.3
65+ 83.6 84.1 80.0 78.5
Sector
Agriculture 90.7 92.0 89.7 87.1
Manufacture 28.8 36.8 33.3 34.3
Services 44.3 44.8 37.1 35.6
Education attainment
Less than Primary 81.6 84.8 79.6 78.4
Primary 71.8 77.0 70.2 69.8
Junior Secondary 57.6 63.5 54.0 56.3
Senior Secondary 30.8 34.9 32.7 32.8
Tertiary 9.7 9.5 7.7 9.3
Total 61.7 63.1 55.2 52.3
Labor policies
Labor Regulations and Policies
• Manpower Law 13/2003Main regulation on Labor
– Continuously challenged in Constitutional Court
– at least 7 constitutional court decision that ruled
out or partially ruled out some articles and clauses
of the Manpower Law
• New Government Regulation on Wages (PP 78/2015)
Large Variation and Growth of Minimum Wages
ratio of the highest to the lowest district's minimum wage in each province
0,00
0,50
1,00
1,50
2,00
2,50
3,00
2001200220032004200520062007200820092010201120122013201420152016
tahun
Rat
io o
f M
axim
um
/Min
imu
m M
Ws
West Java Central Java East Java
Banten National*
Non-compliance with Minimum Wage laws is still high and has not been declining.
PP 78 /2015
• It has been delayed for more than 12 year
• Complementing the Labor Law No 13/2003
• Specifically include the formula to calculate MW
National Real GDP
growth
National Inflation
rate
Next Year Minimum wage in
province i
MWt+1 = MWt + MWt * (inflationt + % GDPt)
Current Minimum wage in
province i
What should we do?
Improvement the quality of Human Resources
1) improve the quality of education
2)create a skills development system that would allow
workers to continually acquire new skills, both general and
firm-specific skills, through non-formal or on-the-job
training or apprenticeship
3) Better support the movement of labour across the ASEAN
region.
4)Controlling population growth and improving health
services
Nevertheless, attempting to improve competitiveness through
improvement of Human Resources will only start to bear fruit in
the medium to long term
Improved Access to
employment for women and Youth
• The government can make
policies/incentives for companies that
hire young people
• Employment policy transformation
from 'passive' to 'active‘
Sustainable Employment
Creation and
Expansion
• Encouraging the growth of new
entrepreneurs and empowering the
Micro, Small and Medium Enterprises
• Improving coordination between
ministries/agencies in the employment-
related programs and MSMEs