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The many roads to job creation
Job creation is not just about equipping people with new skills, but also ensuring that the skilled people can be organized and employed in productive enterprises. In order to do so, we can consider three options that are not mutually exclusive.
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On the hunt: Job seekers crowd the Education and Career Fair at the Smesco building in Jakarta on Feb. 14, 2014. The ongoing COVID-19 pandemic is projected to increase the unemployment rate by 5.5 million people this year. (JP/Nurhayati)
“If there are people giving out food packages, I’ll chase them down.” That is how Fahmi — who recently lost his job and was forced to live in the alley of Tanah Abang Market — is coping with the post-COVID-19 reality.
Fahmi is not alone. According to the National Development Planning Agency (Bappenas), around 4 million more Indonesians will be unemployed due to the pandemic. While flattening the curve must be our utmost priority, we cannot shrug off the devastating economic hardships that many are struggling with.
The government is undertaking various efforts to tackle this predicament, including the job creation omnibus bill and the preemployment card program, both of which are now mired in controversy. Instead of being embroiled in internecine name-calling, we need to expand our horizon and explore other policy avenues.
For some, the alternative is clear: fix education. Improving our human resources’ quality is indeed important, but extensive research shows that education alone is not enough. In the 1980s, when China’s economy started to soar rapidly, its secondary education participation was still behind Ghana’s.
In the latest Program for International Student Assessment (PISA), Estonian students scored much better in math and science than their Norwegian counterparts, but on average, Norwegians are three times richer than Estonians.
Ricardo Hausmann from Harvard even argued that the notion that education is everything for development is a “myth”. We must improve our education, but doing so in itself will not resolve the unemployment conundrum. Job creation is not just about equipping people with new skills, but also ensuring that the skilled people can be organized and employed in productive enterprises. In order to do so, we can consider three options that are not mutually exclusive.
First, if labor costs are a constraint, we can earnestly develop Special Economic Zones (SEZs) outside of Greater Jakarta to attract investments where the labor cost is lower (the minimum wage in Sei Mangkei and Kendal is half of Bekasi’s in West Java).
