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Jakarta Post

Acute lack of skilled labor

  • Editorial Board

    The Jakarta Post

Jakarta   /   Tue, March 19, 2019   /   08:49 am
Acute lack of skilled labor Students of a vocational school assemble parts of a computer during a competition in East Java. (Kompas/Bahana Patria Gupta)

The concepts and programs of action to bridge the gap between supply and demand for skilled workers elaborated on by both vice-presidential candidates during their debate on Sunday night were by and large similar.

Incumbent Joko “Jokowi” Widodo’s vice-presidential candidate, Ma’ruf Amin, and challenger Prabowo Subianto’s running mate, Sandiaga Uno, fully realize that skill mismatching has been among main barriers to employment in the country. Both candidates emphasized the importance of expanding well-targeted vocational education or training so that the skill profiles of jobseekers matched the demands of the labor market.

Better designed, well-targeted vocational training to meet the demand of companies seems to be imperative after the recent revelation by Statistics Indonesia that over 60 percent of vocational school graduates remained unemployed.

Ma’ruf explained a new program incumbent Jokowi planned to implement next year, whereby jobseekers would be issued pre-employment cards to enter vocational training and would be given living allowances for up to one year until they gained employment. Sandiaga mentioned a link-and-match program also designed to custom tailor training according to the demands of the labor market.

While this program may be appropriate because skills development will play a more important role in future economic development, while the world and nature of work has been increasingly reshaped by technological changes, funding by the state budget alone will not be enough to fulfill the needs of the unemployed.

Hence, the expansion of vocational training should be implemented in cooperation with the private sector. It is encouraging to learn that the Finance Ministry is preparing a scheme that will allow companies to double the deduction of their expenditures on vocational training and apprenticeships from taxable incomes.

Communications and information exchange between local labor offices, business associations and the Investment Coordinating Board would also be able to keep vocational schools and other training centers well posted on the market demand of skills. The whole process should be well-targeted, right down from planning to identifying the need for specific skills, as technology has been changing the skills being rewarded in the labor market.

Unfortunately, the vice-presidential debate, which also discussed health, education, culture and social issues, did not touch on the demand side of unemployment.

Neither candidate mentioned any plan to improve manpower regulations, which most domestic and foreign companies consider too rigid as they are not given any flexibility to hire and fire workers as the job landscape has been reshaped by technological changes.

The government has legislated employment protection rules on hiring and dismissals to enhance workers’ welfare and to provide stability by moderating employment fluctuations over the business cycle. They protect workers’ rights, reduce the risks of job loss and support equity and social cohesion.

But what we have now is seen as overregulation, which discourages job creation and hinders the movement of workers from low to high productivity jobs. Stringent employment protection rules seemed to have segmented the labor market into formal and informal sector workers, and permanent and contingent workers.