youth unemployment (by: mario donald bani)

1

Working Together to Solve Youth Unemployment Problem in Indonesia

by: Mario Donald Bani

SUMMARY

The problem of youth unemployment has become one of the major problems in many

countries in the world, including Indonesia. It is the largest country in South East Asia

region and its total population is number four in the world. In the year 2004, more

than six million unemployed young women and men between the ages of 15 and 29,

representing three-quarters of the total unemployed population, live in Indonesia. The

youth unemployment rate is about 15% in rural and 25% in urban areas. Among those

young people who have jobs, 46% are underemployed, working less than 35 hours a

week. The bad education system in Indonesia failed to prepare young people to enter

the labor market with adequate skills, knowledge, attitude, and experience they need.

Besides that, many young Indonesians are lacking the entrepreneurial culture which is

very important for this country to be more developed in the future. To overcome this

youth unemployment issue, the government of Indonesia must work together with

people from the private sectors, the young people themselves, and many other

organizations in the society. Indonesia must try to make some changes on its basic

education system (9 year schooling), and then reform the higher education.

Furthermore, the government must set up a job centers in every secondary and higher

education institutions in the region to provide job information. Promoting

entrepreneurial culture among youth is one other thing to do.

2

Working Together to Solve Youth Unemployment Problem in Indonesia

by: Mario Donald Bani

1. Introduction

The problem of youth unemployment has become one of the major problems in

many countries in the world. Both developed and developing countries are taking

more efforts to solve this problem because it can lead the world into a more severe

economic problem in the future. When the world’s economic growth is slowing down,

youth unemployment becomes a more serious thread, especially in developing

countries, like Indonesia.

The age group of young people used internationally is 15-24 years old, and it

can be also classified as teenage youth (aged 15-19 years old) and young adults (aged

20-24 years old). However, in Indonesia, the age group of young people is 15-29

years old. Although there are some differences in the operational definitions of age

group among countries, youth unemployment is generally viewed as an important

policy issue for many economies, regardless of their stage of development.1

The developing countries in the world, including Indonesia, are now facing a

complicated combination of huge rural-to urban population movements, the decrease

of agricultural productivity, and growing number of unemployment and

underemployment in urban and rural areas. Significant number of unemployment,

especially in urban areas, affects 10% - 20% of the labor forces in most developing

countries.2 As we know, the population density and growth is still very high in many

developing countries. That is why, many people, including the youth, do not have

good access to public resources in those places because of poverty and

unemployment.

More than one billion young people between the ages of 15 and 24, and 85% of

them, live in developing countries. According to the ILO, 160 million people in the

world today are unemployed. Almost 40% of them who are not employed belong to

1 JILPT International Labor Information Project Meeting. Indonesia – Leading the Way in Tackling the

Youth Employment Challenge: “Policies on Employment and Vocational Training for Young Persons in Asian Countries” Decent Work for Young People. Tokyo, 27-28 September 2004

(www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia.pdf). 2 KILM. 9. Youth Unemployment

(http://www.esds.ac.uk/international/support/user_guides/ilo/kilm09EN.pdf).

3

the group of young people. The youth unemployment level tends to be higher than the

adult’s unemployment. Besides that, many young people who are employed find

themselves in low-paying temporary jobs with few protections.3

Indonesia has the same problem of poverty and youth unemployment like the

other developing countries in the world. It is the largest country in South East Asia

region. Its total population is number four in the world, after China, India, and the

United States of America. In the year 2004, more than six million unemployed young

women and men between the ages of 15 and 29, representing three-quarters of the

total unemployed population, live in Indonesia. The youth unemployment rate is

about 15% in rural and 25% in urban areas. Among those young people who have

jobs, 46% are underemployed, working less than 35 hours a week. The vast majority

of working youth are in the informal economy where they lack adequate income,

social protection, security, and representation. The largest age group of Indonesian

people in the next few years would still be the youth, the teenage youth (15-19) and

young adults (20-24). The number in each age group would always around 20

millions of people, or around 10% of the total population.4

For this reason, youth

unemployment must be solved by the government of Indonesia in cooperation with

people from the private sectors, and young people themselves.

The government of Indonesia has a main responsibility to educate young

people, to ensure equal access to all Indonesian youth and to create a good

environment that will promote youth employment. However, the government alone

cannot be expected to address these important issues on their own. Youth

organizations, employers’ and workers’ organizations, chambers of commerce, non-

governmental organizations, community-based organizations, and other civil society

organizations have a key role to play in helping the Indonesian government to handle

youth unemployment.5

3 World Youth Report: The Global Situation of Young People. United Nations. 2003

(http://www.un.org/esa/socdev/unyin/documents/ch02.pdf). 4 JILPT International Labor Information Project Meeting. Indonesia – Leading the Way in Tackling the

Youth Employment Challenge: “Policies on Employment and Vocational Training for Young Persons in Asian Countries” Decent Work for Young People. Tokyo, 27-28 September 2004

(www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia.pdf). 5 Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth

(http://www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia2.pdf).

4

2. The Education System vs Youth Unemployment in Indonesia

Unemployment is only one dimension of the employment problem faced by

young people. Stagnation and decline of employment opportunities in the formal

sectors of most developing countries have intensified the problem in recent years.6

To

deal with youth unemployment, we must find the root of this complicated issue.

Youth unemployment is not a single problem that stands alone because it has various

relations with other different social aspects in our life. One important aspect is the

education system.

Education plays a very important role to develop the characters of people, to

enrich human knowledge, and to prepare young people with everything they need to

become a member of the society and to enter the labor market. Many people are now

taking more concern for the last reason because they see a very big gap between

education and the job market. The number of unemployed school graduates is

increasing significantly. Many fresh-graduates find difficulties to get better jobs with

high salary and good social protection.

As one of the Indonesian young people, I am now at the end of my

undergraduate years in the University. I have been thinking about the job that I can

find. I realize that the competition to find good jobs is now tighter than before. The

required skills and knowledge for the job seekers are more varied and complex.

Besides, the employers tend to hire people who have got some working experiences. I

might have some skills and knowledge, but it does not seem enough for me to apply

for high salary jobs. In addition to this, I do not have any working experience.

The education system in many less developed countries, including Indonesia, is

very poor. It cannot provide youth with skills, knowledge, and working experiences

they need to enter the labor market. The education system cannot provide students

with vocational qualifications increasingly sought after by employees.7 Some people

even said that education tends to become another major problem instead of becoming

solution for the unemployment problem.

6 KILM. 9. Youth Unemployment

(http://www.esds.ac.uk/international/support/user_guides/ilo/kilm09EN.pdf). 7 JILPT International Labor Information Project Meeting. Indonesia – Leading the Way in Tackling the

Youth Employment Challenge: “Policies on Employment and Vocational Training for Young Persons

in Asian Countries” Decent Work for Young People. Tokyo, 27-28 September 2004

(www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia.pdf).

5

When young people start looking for jobs and they fail to get one, they will be

surprised by that unexpected situation. Some of them may realize their own weakness

caused by the gap between school life and the real life situation, and then try to find

the best solution. But some other youth may be desperate and stop trying; they will be

trapped on the world of unemployment. Thus many young women and men

experience longer spells of unemployment when they look for their first job.

Experiencing unemployment may permanently hamper young people’s productive

potential and future employment opportunities. It generates disappointment,

undermines social cohesion and inevitably becomes an important policy issue for

economies experiencing high youth unemployment. Decent work deficits for young

people are associated with dysfunctional behavior, high levels of crime, violence,

substance abuse, and the rise of political extremism.8

Many school leavers enter the labor market unprepared and with expectations

that are very different from the realities of the labor market. Unsuccessful attempts to

seek work in the formal economy often leads to discouraged youth who eventually

end up in the informal sector, where quality, productivity and security are low. The

majority of young job-seekers rely on informal networks and contacts to search for

jobs whereas the role of public employment services, education and training

institutions and job fairs play a very small role in assisting young women and men to

search for jobs.9

In relation with the education system, the cost for education in Indonesia is also

too high for many people. In 2004, 60% of self employed youth and 40% of job

seekers left school because of financial constraints.10

These young women and men

had to leave school because the average monthly price for school was too expensive

for them; they could not afford it. Many of them must choose between spending

money and time in school and spending time in working places to earn money. Some

young people opined that school could not give them experiences they need to enter

the labor forces. They chose to leave school early and started their own business as

soon as possible; time investment is important for these people. Many young

8 KILM. 9. Youth Unemployment

(http://www.esds.ac.uk/international/support/user_guides/ilo/kilm09EN.pdf). 9 Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth

(http://www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia2.pdf). 10 Ibid.

6

employees gave their main reason for abandoning school as being that they did not

see the purpose of continuing their education. They argued that schools in Indonesia

had low quality and inappropriateness of the skills acquired.

For ensuring young people’s successful transition to the labor market and their

access to career oriented employment, we must try to develop their employability.

Before entering the job market, youth need to acquire the skills, knowledge, and

attitudes that will help them to find work and deal with unpredictable labor market

changes. The education system plays a crucial role in preparing youth for the labor

market. However, the main obstacle young people face in finding their first job is

inadequate education and skills. The importance of relevant education and training is

also the biggest concern for employers and managers.11

Evidence suggests that the learning outcomes in Indonesia at primary and

secondary levels are poor when compared to other countries in the ASEAN region. A

major reason for this is that overall investment in education as a proportion of GDP in

Indonesia remains one of the lowest in the region and of countries with similar levels

of national income. In 2000, only 1.2% of the GDP went to education, one third less

than that of other countries in the region (China, India, the Philippines and

Thailand).12

3. Indonesian Young People are Lacking the Entrepreneurial Culture

If you ask the Indonesian elementary students about what do they want to be in

the future, they will answer that they want to be doctors, nurses, school teachers,

soldiers, civil servants, and many other kinds of jobs. The same answers will also be

found among the Senior High School and the University students in Indonesia. It will

be difficult to find some of these young people who will answer that they want to be

an entrepreneur.

Actually, one best option for young people who are unable to get into the formal

labor market is to go into self-employment or become entrepreneurs. However,

entrepreneurship is often considered a last resort. Most school graduates prefer to

work on public sector employment, multi-national companies, and large domestic

firms. Only some of the youth are interested in starting their own business. These

11 Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth


7

preferences show a gap between the expectations of youth and the realities of the job

market where the majority of opportunities exist in small and medium-sized

enterprises and the informal economy.13

Entrepreneurship is the best way to express young people’s idea and creativity.

They can create whatever they want and then try to sell it to other people. Many

Indonesian young women and man have various amazing ideas that can be created as

new inventions. However, the regulatory system made by the government seems to

avoid those creative young inventors to have benefits from what they created. The

official registering process for new business and inventions, for example, takes a very

long time.

Another big problem that avoids young people to be entrepreneurs in Indonesia

is the lack of funding resources and networks. Many times, young people find great

difficulties of getting access to credit (they are considered a high-risk group by

financial institutions due to lack of collateral or experience). Young people are

therefore concentrated in low-productivity and survival-type activities in the informal

economy. Many young people are also lack representation and voice. They are often

not organized, they are rarely members of trade unions and employers’ organizations

and have few channels by which to voice their concerns and needs.14

As the concept of national boundary becomes blurred, competition is becoming

fiercer in every facet of our society, and the market is compelling all members of

society to change for their own survival. Globalization and competition may bring

material abundance to mankind by enhancing economic efficiency. However,

globalization, emphasizing efficiency only, would end up benefiting certain classes,

and fail to improve quality of life for all. For that reason, the government of Indonesia

must pay more attention to the efforts that young people do to survive. Government

must try to support and help them to improve creativity that may create job market for

other fellow youth.

4. Working Together to Solve the Problem

Particularly, globalization may have greater impact on youths trying to enter the

labor market for the first time after graduation. Youths would fail to find their place in



8

fierce competition, due to lack of vocational ability and labor market information.

This is why we need to tackle the problems of globalization and issues related to

youth employment at the same time. Short-term measures such as large-scale public

works project, support for self-employed to start a small business, internship

programs for youths, et cetera, were carried out to provide jobs to the unemployed.

Along with these short-term solutions, mid-to-long term measures were also

implemented. They include creating jobs by fostering small and medium-sized

enterprises and venture companies, expanding social safety network such as

expanding the coverage of employment insurance, building infrastructures that

stabilize employment, and strengthening vocational training.15

4.1 Some Changes in Indonesian Basic Education

To prepare the Indonesian youth for work, there must be some changes on the

education system. The new education system must be able to provide the young

Indonesians with skills, knowledge, and attitudes they need to enter the labor market.

The quality of basic education years (nine year schooling) for all young men and

women must be improved because most young people in Indonesia will at least try to

learn about how to read the letters and how to calculate the numbers. Some basic

skills like foreign languages and computer knowledge must also be taken into the

curricula of the Indonesian basic education.

Completion of basic education is a necessary pre-condition for successful entry

to the labor market. To achieve the universal basic education, efforts are needed to

improve the access of the poor to junior secondary education. To reduce drop-out

rates at the primary level and increase the enrolment rate at junior and secondary

school levels the key issues are to make education affordable to the poor and improve

the quality of schooling in the context of decentralization.16

Making education affordable for the poor can simply be done by eliminating

hidden fees, such as school entrance fees, and lower uniform and book costs; reduce

the educational costs for the poor through targeted scholarships; provide incentives to

encourage local communities, charitable organizations and private sector companies

15 Shin Young Chul. Policy and Measures for Youth Employment and Human Resources Development

in Asia – The Republic of Korea (http://www.mhlw.go.jp/english/topics/globalization/dl/17.pdf). 16 Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth


9

to set up foundations that provide grants and scholarships for needy students and their

families. The government of Indonesia must also try to invest more in educational

infrastructure. The school teachers’ salaries must be gradually increased combined

with substantial improvements in teacher status, professional competency and

teaching materials.17

However, the government cannot work alone to do all those changes. People

from the private sectors must take their own action, especially to support Indonesian

schools’ financial constraints. In addition to this, parents of the students must try to

prepare a committee that can collect some amount of money to help the students. The

alumni of each school can also be asked to take part on the fundraising activities in

each school. Money will no longer be problem for schools that have enough financial

resources from alumni, parents, and private sectors.

4.2 Higher Education Reform

Many university students said that the subjects they got were too abstract.

Students do not find any links between the theories they got in the university and the

social problems around them (or the students are not being taught about how to use

the theory in their real life). It proved that the Indonesian universities had long been

called a gigantic tower of knowledge that could not provide any access for the people

out of the tower to go and see anything inside it. Most people in the society will never

think about finding helps from the university lecturers who are experts on their field

of study; that happens because of the bad opinion about the university.

The pedagogical techniques and tools in the university must also be upgraded

with the feedback from the employment sector, like information about some specific

skills that are expected of the young students. There must be some new combination

of the books’ theory and the real life situation which are put together as one revision

of students’ textbooks.18

To improve students’ knowledge, each faculty must have regular schedule for

the guest lecture by industry leaders. It will create a possible interaction session

between the industry leaders and students. Besides that, there must be some

17 Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth (http://www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia2.pdf). 18 Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment Opportunity in

India. CIPE International Essay Competition

(http://www.cipe.org/programs/women/EssaysForWeb/Education_Sarkar.pdf).

10

arrangements of the industrial internship for students to exposure to hands-on job

experience. The interaction between students and targeted industry will generate a

mutual trust between the academic environment and the industry houses. This mutual

relationship can be the best channel for information exchange process.19

4.3 Job Centers in Every Secondary and Higher Education Institutions in

Indonesia

In fact, building human capital means not only basic education and skills

development. It also means the empowerment of young people, so that they can take

advantage of labor market opportunities. Better preparation of school-leavers for labor

market entry could facilitate the job matching process and reduce the period of

unemployment.20

Many fresh-graduates in Indonesia do not have access to the information about

specific jobs that can be well-matched to their educational background. Most young

job seekers enter the labor market without any counseling about the jobs they are

applying for. It happens in many places, especially in small cities in Eastern

Indonesia, because there are no institutions that can provide good information about

job market in Indonesia.

The labor market information and gender sensitive career guidance can be

offered to the youth through the education and training system, the public media, and

job centers. However, this in turn requires the strengthening of in-school career

guidance services, which must be available in most secondary and higher education

institutions in Indonesia. The information provided by the job centers can assist

students to think about their future goal and how they can manage their time

effectively to be ready for the job.

Moreover, the job centers in each higher education institutions in Indonesian

can also provide the information for the other people who are unemployed. This job

centers must be available for all people who need the information, but it must focus

more to the young people. This career centers can charge some amount of money for

them who need its advice. Besides, this center can also charge the companies that

19 Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment Opportunity in India. CIPE International Essay Competition

(http://www.cipe.org/programs/women/EssaysForWeb/Education_Sarkar.pdf). 20 Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth


11

want to put their information on its job information list. However, the real purpose of

this board is to provide information instead of earning money.

4.4 Entrepreneurship for Students

Innovation and entrepreneurial activity are key drivers for increased

competitiveness, growth, and the creation of sustainable jobs of higher productivity

and better quality. Fostering youth entrepreneurship depends on better regulatory and

administrative frameworks made by the government and an improving access to

finance for young people.21

However, it can also be done it the government can work

together with people from the private sector to support youth’s ideas and creativity.

The potential of young entrepreneurs and informal workers to enhance their

productivity will depend on an enabling legal and regulatory framework. Therefore it

is important to remove unnecessary legal and institutional obstacles to the creation

and growth of small enterprises. The government of Indonesia, both central and

regional government, must try to improve system that would reduce time and cost for

starting up new businesses. The new simplified system must also consider a new

business registration system that may be cheaper and more efficient.

The new policies made by government must be discussed first with the business

community, including young people. The absence or weakness of representation is

also a major reason for the marginalization of young women and men particularly

those working in the informal economy. Therefore strengthening the capacity of small

and informal enterprises to participate in policy development and to represent their

interest is essential.

Access to finance is often the most crucial factor for starting, sustaining and

expanding an enterprise, and creating jobs. Because of that, the government can work

together with some private sectors to provide the financial support for the students

who can recommend a creative viable business plans. Funding activities can help the

students to learn how to manage their money and to earn more money from the assets

they have. Moreover, the students can also get mentor support. In the future, there will

be more efforts to introduce enterprise-focused curricula in every school nationwide.



12

However, the entrepreneurship program will not be working well if young

people do not have any intention to start their own business. That is why the

entrepreneurial culture must be promoted through the education and training programs

and the awareness raising campaigns. The promotion of entrepreneurial culture will

reduce the negative perception of many young people to entrepreneurship, which is

often perceived as informal sector work. It will build a new culture of

entrepreneurship that favors initiative, enterprise creation, productivity, and good

working conditions and labor relations.

5. Conclusion

Economic growth has recently been slowing worldwide, while in many

developing economies, including Indonesia, the young population continues to

expand rapidly. As a result, pressure on the youth labor market is likely to increase in

these regions, leading to higher youth unemployment rates unless preventive

strategies are implemented. Some preventive strategies that can be implemented in

Indonesia are the changes of basic education system, reformation of higher education

institutions, providing labor market information through job centers in every

secondary and higher education institutions, and promoting the entrepreneurial culture

among students.

13

Works Cited

Harefa, Andrias. School is Never Enough (Sekolah Saja Tidak Pernah Cukup).

Gramedia Pustaka Utama. Jakarta, 2007.

Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of

Youth.


JILPT International Labor Information Project Meeting. Indonesia – Leading the Way

in Tackling the Youth Employment Challenge: “Policies on Employment and

Vocational Training for Young Persons in Asian Countries” Decent Work for

Young People. Tokyo, 27-28 September 2004

(www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia.pdf).

KILM. 9. Youth Unemployment

(http://www.esds.ac.uk/international/support/user_guides/ilo/kilm09EN.pdf).

Pora, Yusran. Goodbye School (Selamat Tinggal Sekolah). Media Presindo.

Yogyakarta, 2007.

Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment

Opportunity in India. CIPE International Essay Competition

(http://www.cipe.org/programs/women/EssaysForWeb/Education_Sarkar.pdf).

Shin Young Chul. Policy and Measures for Youth Employment and Human Resources

Development in Asia – The Republic of Korea

(http://www.mhlw.go.jp/english/topics/globalization/dl/17.pdf).

World Youth Report: The Global Situation of Young People. United Nations. 2003

(http://www.un.org/esa/socdev/unyin/documents/ch02.pdf).

youth unemployment (by: mario donald bani)

Documents