Bridging the Gap between Education and Employability :

Indonesia’s Agenda on Development of Human Resources

Jakarta, March 𝟐𝟏𝒔𝒕 2017

Deputy Minister for Creative Economy, Entrepreneurship, and Cooperative & SMEs Competitiveness

Coordinating Minister for Economic Affairs

OUTLINE

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The Current Condition of Indonesia’s TVET

Indonesia’s Government Effort on handling the skill mismatch, Including Strong Coordination, Budget Changes and VET Institution and Mechanisms

Indonesia’s TVET Sector Priority

The Importance of PPP in developing TVET and Incentives For The Industry

< SD : 1.479.146 (21,04%)

SMP : 1.294.483 (18,41%)

SMA : 1.950.626 (27,74 %)

SMK : 1.520.549 (21,62%)

DIPLOMA I/II/III : 219.736 (3,12 %)

UNIVERSITAS : 567.235 (8,07%)

< SD : 51.445.972 (41,01 %)

SMP : 22.652.513 (18,06 %)

SMA : 22.364.039 (17,83%)

SMK : 13.690.816 (10,91 %)

DIPLOMA I/II/III : 3.635.855 (2,90 %)

UNIVERSITAS : 11.654.553 (9,29 %)

THE CURRENT CONDITION OF WORK FORCE IN INDONESIA

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Indonesia has a population of around 250 million people.

Working 118,4 million people

Unemployment 7 million people

Work Force Population

125,4 million people

Source: National Statistic Berau, August 2016

PROBLEMS OF TVET IN INDONESIA

** Data based on The Ministry of Industry (February 2017) *** Research by Lee Kuan Yew School of Public Policy (August 2016)* Data by the Indonesian Central Berau of Statistics (August 2016)

Unsuitable curriculum of TVET institutes with the skill demands of the industry

Obsolete training equipment

The low quality of teachers

Inadequate funding and the high cost on building and maintaining

and uneven distribution of TVET institution across Indonesia (around 60% locatedon Java and Sumatera Island).

There is a mismatch between the skills of workers and the skills needed by the industry, which is caused by several

reasons, among others*:

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CONFIGURATION OF REGULATIONS ON EQUITABLE ECONOMY IN SOME SECTORS THAT IS URGENT

Some assestments

and establishments

of new regulations

based on fairness is

needed to achieve

optimal efficiency in

sectors that give

impact in fulfillling

the needs of the

community

Land

Opportunity

HR Capacity

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B

C

Retail and Markets

Funding and

Government Budgets

Manufacture

& ICT

Fishermen &

Seaweed Cultivation

Urban Poor &

Affordable Housing

Plantation

Farming

(Landless Farmer)

Synchronize Social

Forests in to Agrarian

Reform

Vocation,

Entrepreneurship and

the Labour Market

Equitable Tax

System

CONFIGURATION

OF REGULATIONS

BASED ON

EQUITABLE

ECONOMY

• Establishment of LP2B to prevent farming land acquisitions by non-farmers

• Land consolidation for farm fields

• Research on seeds, post harvest utilities, synergies of logistics, the seed market, farming tools and

machinery and rice production utilities

• Social Housing• Housing financing• Land bank and affordable land prices• To enforce regulations on spatial regulations

• Data collecting and enforcement of palm oil land laws which includes data collecting of land banks• Data collecting and establishing regulations on replanting other plantation commodities• To corporate cooperations supported by the private sector and state enterprises to increase value• Support of research, market synergy, plantation off-taker, and the downstream value chain

• To develop industry based on natural resources and value chains• Minimize the gap between the interest for funding of large companies and small companies.• Protect certain market segments from integrated businesses and strong capitals

• Restructuring and data collecting of traditional/modern markets and traditional and modern stores• Regulate distance, location and zonation of modern markets and stores• Obligation to absorb local products• Fair access to the distribution system

• Improvement of the KUR system towards non-bankable funding

• Procurement program that is accessible for SME entrepreneurs

• Integration of fishermen and seaweed

• Aquaculture and the fishermen value chain

• Private investment for seaweed processing and off-takers

• Identification and priority for sectors, sub-sectors and flagship industries and professions

• Job matching schemes between the industry and VET

• Focus on skills, collaboration, flexibility and impact

• Early childhood intervention

• Progressive Tax, capital gain tax and unutilized asset tax

• Equitable government spending

• A fair distribution to access of land for all communities

• To determine priority receivers of TORA based on land gini ratio, poverty and land necessity.

• Development of land businesses with agglomeration and cluster methods

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Plans for Development of Human Resource Capacity - 1

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Create a mapping of profession demands and supplies that is linked and matched with

the industry:

i. Reclassify professions (KBJI) and businesses (KBLI) into GICS and ISCO

ii. Verify obsolete and prospective professions

iii. Prioritize professions and businesses that are prospective and have interesting

wages

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Create a VET Roadmap that is based on the needs of the industry, among others:

i. Man Power Planning

ii. Determine Government Priority Sectors

iii. Accelerate Drafting of Competency Standards

iv. Revitalize VET Institutes

v. Strengthen Accreditation Institutes

vi. Accelerate Certification and Recognition of Workers

vii. Create a Strong Job Market Information System

viii. Apprenticeship and Placement System for Workers

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Plans for Development of Human Resource Capacity - 2

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3 Development of VET, which includes :

a.Transformation for 60% of the workforce, among others:

i. Transformation of Subsistence Farmers;

ii. Transform Cleaners, Housekeepers, Baby Sitters and Caregivers;

iii. Transform Mining, Construction and Manufacture Workers;

iii. Transform General Clerks.

b. Government priority programs, among other:

i. The 35.000 MW electricity program.

ii. Land based programs.

iii. Program for 70.000 instructors in the farming sector.

c. Development of VET programs to support Industrial Zones and Exclusive

Economic Zones (EEC) to fulfill the demand of workers that are recruited

from VET institutes around these zones

Plans for Development of Human Resource Capacity - 3

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3 d. Program for sectors that have (i) Strong Companies and Industrial

Association, (ii) Good operating VET systems and (iii) Sectors with High

Labour Demand, among others:

The Health Sector;

Manufacture Sector;

Tourism Sector;

Transportation Sector.

Transformation of Labour in the Agriculture Sector

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Large farm between 2.000-20.000 Ha is planned through output and input: fertilizers, seeds and water pupuk, bibit, water availability and post harvest technology to

create an efficient production line. Efficient farm size for all commodities must also be noticed.

The Agriculture Sector has the largest workforce in Indonesia, but with a low welfare rate. Transformation into a subsistence farmer needs to be done to

increase welfare.

Subsistence Farmers

(28.985.183 people)

Market Oriented

Skilled Farmers

Convert from Aid

Programs into the rights to

choose program in order

to create seed, fertilizer,

farming machines (dryer

and crusher) and

sparepart markets and

also repair shops

Farming based on Agri-business values

Farm Input

Suppliers

Farmers

(Production)Harvesting Collector

MerchantFood

Processing

Wholesale

and Trade

Seed

Fertilizers

Machinery

Tools

Drying

Crushing

Sorting

Retailer

Consumer

Converstion to all agribusiness values especially farm input suppliers and harvesting

Farmers with extra

skills

Construction

Worker

Transform into the

Manufacture Sector

High Labour

Intensive Agriculture

Carving Craftmanship Drawing Creative Industry

Permanent Construction Worker

Temporary Construction WorkerTraining Standarization Specialization

Migrate to urban/ industrial locations

Migrate to fruit commodities/ horticulture

Shifting from low labor intensive farming to high labor intensive horticulture or

fruit farming

Enhancing labour competance is done through apprenticeship at companies. Currently there are 2660 companies that have joined

this program.

MoU Between The Ministry of Manpower and The Indonesian Chamber of Commerce

About the Development of Labour CompetenceApril 26, 2016

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The purpose of the MoU is to produce a knowledgable, skillfull and a good working attitude human resources

which is suitable for the needs of the industry.

MoU between 5 MinistersAbout The Development of Vocational Education which

is linked and matched with the industryNovember 29, 2016

MoU between 49 companies with 219 Vocational High Schools

In the East Java Province

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RECENT POLICIES ON TVET

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DEVELOPMENT OF INDONESIA’S HUMAN RESOURCE CAPACITY THROUGH DEVELOPMENT OF TVET

• Those programs in government work plan emphasize (i) the transformation of around 60%

of our workforce into a more skilled and competitive labour (ii) supporting workforce

involvement on government priority programs, such as infrastructure, tourism, energy (iii)

utilization of the workforce in supporting development industrial and Exclusive Economic

Zones and (iv) increasing the role of workforce to the sector that already have strong

companies and industrial associations.

• To successfully implement these programs, coordination between stakeholders must be

done. Through coordination between government institutes and the industry, each sector

would then have grounds to create an effective and efficient budget plan and strategy in

development of the TVET system.

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• Currently the government has focused on development of Indonesia’s human resource

capacity through coordinating government institution in facing the 2018 government work

plan. The work plan should include the program of TVET revitalization system.

THANK YOU