Although Indonesia is blessed with a demographic bonus, meaning that productive-aged people outnumber children and the elderly, many young graduates are having difficulties finding jobs because of a major skills gap.

Youth unemployment for those aged 15 to 24 is a serious problem in Indonesia, according to a study on skilled labor within five Southeast Asian countries released on Tuesday by JP Morgan and Singapore Management University (SMU).

Indonesia faces the most severe youth unemployment problem with close to 20 percent of the country’s youth not being able to find a job, a level that is close to that in the crisis hit eurozone and the highest among the countries surveyed in the report, namely Malaysia, Singapore, Thailand and the Philippines.

Indonesia and the Philippines, which both aim to join the ranks of upper middle-income countries, face the daunting challenge of equipping their workers with basic skills and the knowledge required by key growth industries that need basic science, technology, engineering and mathematics skills.

“In both countries, the public sector is under tremendous pressure to prepare workers to pick up job-specific skills,” the report reads. Indonesia’s youth unemployment rate has consistently trailed the Philippines’ 16 percent for many years, while Thailand has the lowest unemployment rate of 0.9 percent.

The fact that one in three young Indonesians remain unemployed for 12 months, despite having a tertiary education, reflects a mismatch between the skills that Indonesia’s youth possess and the skills that industries require, according to an Asian Development Bank (ADB) report.

To tackle this huge skills gap, the government is trying to create a “national internship roadmap” to link graduates from vocational schools to workplaces.

“We are working on it,” Coordinating Economic Minister Darmin Nasution said on Monday.

Darmin expected that a master plan for the roadmap would be issued at the beginning of next year and would involve four ministries, namely the Research and Technology and Higher Education Ministry, the Culture and Education Ministry, the Manpower Ministry and the Religious Affairs Ministry.

The government would also change the vocational certification system so it allowed students to get certificates every year, as opposed to three years at present, so that students could still find jobs even if they decided to quit during the middle of their studies, he said.

The Manpower Ministry, for one, already has an internship program. The program has collaborated with 2,648 companies since August, the ministry’s labor market development director Roostiawati said.

As internships are already part of vocational school programs and universities, the government needs to do more than just present a roadmap, said Hadi Subhan, a law and manpower expert from Surabaya’s Airlangga University.

“It is not effective. The government should revitalize vocational education instead,” Hadi said.

The JP Morgan-SMU report recommends that the government develop a skills training roadmap, relax rules on skilled foreign workers and expand efforts to raise the youth employment rate. The private sector is also urged to forge a stronger role in leading skills training.

“A large and persistent skills gap in eight key growth sectors will undermine the country’s ambition of graduating into a middle-income country in the medium term,” reads the report, referring to Indonesia’s top sectors, namely agriculture, mining, energy, manufacturing, marine, tourism, telecommunications and the development of strategic areas. (wnd) Indonesia’s top economic sectors, from automotives and tourism to information and communications technology (ICT), still face major challenges in developing skilled workers as most local graduates do not meet the qualifications necessary to work effectively in these fields.

Southeast Asia’s largest economy still faces basic problems in its human resources such as underdeveloped skills training systems in public schools, outdated curriculums and qualified trainers with an understanding of the industry, according to a joint research report between Singapore Management University and J.P. Morgan released on Tuesday.

Insufficient dialogue and coordination among stakeholders regarding skills needed and training as well as inadequate accreditation of training programs are also cited as basic issues affecting Indonesia’s workforce.

“Education and skills training needs to be accorded a much higher priority in Indonesia’s national agenda if the economy is to successfully move up to more technologyintensive and higher value-added industries,” the report reads.

The large and persistent skills gap in key growth sectors will undermine the country’s ambition of graduating into a middle income country in the medium term. Currently, only 16 percent of graduates are studying in fields related to engineering, construction and manufacturing – the core skills needed as the economy industrializes.

The report recommends that the government develop a skills training roadmap, relax rules on skilled foreign workers and push efforts to raise the youth employment rate. The private sector is also urged to forge a stronger role in leading skills training.

In the automotive industry, which directly and indirectly accounts for 7 percent of Indonesia’s gross domestic product (GDP) and is poised to grow 12 percent per year over the next decade, most small and medium enterprises (SMEs) operate only at half of optimal capacity due to a lack of skilled workers, according to the Indonesian Employers Association (Apindo).

“Indonesia’s automotive industry currently suffers from a shortage of skilled and semi-skilled workers across the entire value chain, including engineers, technicians, welders, cutters, mechanics and workers in components factories. This shortage is especially pronounced among local manufacturers and SMEs,” the report reads.

Currently, much of the skills training in the automotive industry is done in-house, usually provided by foreign car manufacturers such as Toyota Indonesia’s Toyota Indonesia Academy and Mercedes Benz.

The ICT sector, which is a strategic driver for both national and regional economic development in Indonesia and is projected to grow at an average of 17 percent per year with an estimated digital economy size expected to expand six-fold to US$130 billion by 2020, is also seeing a major skills gap.

A report by KPMG, a “big four” global auditor, noted that unless skills training was dramatically improved, Indonesia could face a shortfall of about nine million skilled and semi-skilled ICT workers between now and 2030.

“While the government has increased its emphasis in education reform, including integrating more ICT study into the curriculum and encouraging more students to complete tertiary education, this is often hampered by weak infrastructure as well as an insufficient number of suitably qualified teachers,” the report reads.

Intan Ahmad, the Research and Technology and Higher Education Ministry’s director general for learning and student affairs, said on Monday that one of the problems causing a lack of skilled employees in these industries was the mismatch between the skills of unemployed workers and the skills needed for available jobs. (wnd)

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