GENDER, EDUCATION AND LABOUR MARKET IN INDONESIA: SOME ISSUES AND CHALLENGES

Transcription

1 GENDER, EDUCATION AND LABOUR MARKET IN INDONESIA: SOME ISSUES AND CHALLENGES Raden Muhammad Purnagunawan CEDS - Padjadjaran University Universitas Padjararan 15 Agustus 2018

2 Outline Introduction Structure and Key Features of Indonesian Labor Market What should we do?

3 Introduction

4 Window of Opportunity of Demographic Bonus is closing in Source: Worldbank (2009, p.30) Estimated period of Demographic Dividend UN World Population Prospect : Dorojatun KuncoroYakti: Sri Moertiningsih :

5 Indonesia is a country with young population Population by Gender and Age Group Indonesia, 2010 Age Group Gender Male Female Total Sex Ratio ,662,369 11,016,333 22,678, ,974,094 11,279,386 23,253, ,662,417 11,008,664 22,671, ,614,306 10,266,428 20,880, ,887,713 10,003,920 19,891, ,631,311 10,679,132 21,310, ,949,357 9,881,328 19,830, ,337,517 9,167,614 18,505, ,322,712 8,202,140 16,524, ,032,740 7,008,242 14,040, ,865,997 5,695,324 11,561, ,400,316 4,048,254 8,448, ,927,191 3,131,570 6,058, ,225,133 2,468,898 4,694, ,531,459 1,924,872 3,456, ,344 1,135,561 1,977, , ,708 1,143, , , , , , , Source: Population Census, ,095 68, , Total 119,630, ,010, ,641,

6 But, still dominated by low educated population Source: Population Census, 2010 Only 5,2 % of the population have tertiary degree

7 Education and Training in Indonesia Indonesia s formal education system is not yet capable of producing workers with even basic skills, such as literacy and numeracy (Suryadarma, 2011; Di Gropello, 2013; OECD, 2016) Indonesia is the only ASEAN country (out of the five) where the correlation between the educational attainment of the workforce and enterprise productivity is small and statistically insignificant (Vandenberg and Trinh, 2016) The performance of Indonesian students in international science and mathematics assessments is 0.4 to 1.9 standard deviations lower than Malaysia, Singapore, and Thailand (Suryadarma 2011) Indonesia will reach the 2009 OECD average reading skills in 2037 and the 2009 average mathematics skills in 2078 if it continue to progress at the rate they did between 2000 and 2009 (Beatty and Pritchett 2012)

8 Structure and Key Features of Indonesian Labor Market

9 Labor productivity increased significantly in all sector Agriculture Manufacturing Services All Industries Share of Employment by Sector (%) Agriculture Manufacture Services Significant structural shift in employment, but with slow growth in manufacturing

10 Sectorial relative to Total Value added per worker growth rate (%) Most jobs created are in low productivity service sectors Agriculture 35.1% Employment and labor productivity growth by sector (bubble area = sector share in total employment in 2012) Transport 4.5% Trade & retail 20.9% Manufacturing 13.9% Total employment growth rate Soc. & pers. services 15.4% Benchmark: Total economy value added growth rate Construction 6.1% Electricity, gas 0.2% R² = 0, Mining 1.4% Finance 2.4% Employment growth rate (%) (Alatas, 2014)

11 Most jobs created are in low productivity service sectors Sectorial relative to Total Value added per worker growth rate (%) Employment and labor productivity growth by sector (bubble area = sector share in total employment in 2012) Agriculture 35.1% Transport 4.5% Trade & retail 20.9% Manufacturing 13.9% Total employment growth rate Soc. & pers. services 15.4% Benchmark: Total economy value added growth rate Construction 6.1% Electricity, gas 0.2% Mining 1.4% R² = 0,3327 Finance 2.4% Employment growth rate (%) (Alatas, 2014)

12 Labour Force Participation Rates by Gender, Labor force participation was stagnant Labour Force Participation in selected countries, 2015 Source: Calculated from the Indonesian Labor Force Survey (Sakernas) China Indonesia Malaysia Philippines Thailand Viet Nam Female Male Male and female Quite the same compare to Malaysia and Philippines

13 Education and Skill Trends Still dominated by low educated workers Increasing demand for higher education , ,2 Manufacturing Services Source: World Bank Enterprise Survey Firms Identifying an Inadequately Educated Workforce as a Major Constraint by Sector (%) More than 10% of firms have difficulties in finding adequately educated employees Similar to the Philippines, but worse than Viet Nam (8.1%) and Thailand (2.1%)

14 Unemployment rate is declining but youth unemployment is still high Increasing the last 3 years 4-7 times higher than adult 7 times higher than Thailand 4 times higher than Vietnam 2 times higher than Malaysia and India Source: Calculated from the Indonesian Labor Force Survey (Sakernas) Significant shortage for specific skills in labor market (Di Gropello et all., 2011) but high youth unemployment, especially among better educated youth Primary Junior High Senior High Senior Vocational Diploma University

15 Unemployment rate is higher for female, in urban area, youth and for senior secondary educated person Gender Male Female Location Urban Rural Age Group Education attainment Less than Primary Primary Junior Secondary Senior Secondary Tertiary Total

16 Education attainment Underulitization is still a major problem Less than 35 Less than 40 hours/week hours/week Gender Male Female Location Urban Rural Age Group Agriculture Manufactu Sector re Services Less than Primary Primary Junior Secondary Senior Secondary Tertiary Total

17 Informal sector still has a dominant role, especially in rural area, in agriculture sector and for workers with low level of education Gender Male Female Location Urban Rural Age Group Sector Agriculture Manufacture Services Education attainment Less than Primary Primary Junior Secondary Senior Secondary Tertiary Total

18 Labor policies

19 Labor Regulations and Policies Manpower Law 13/2003 Main regulation on Labor Continuously challenged in Constitutional Court at least 7 constitutional court decision that ruled out or partially ruled out some articles and clauses of the Manpower Law New Government Regulation on Wages (PP 78/2015)

20 Ratio of Maximum/Minimum MWs Large Variation and Growth of Minimum Wages 3,00 ratio of the highest to the lowest district's minimum wage in each province 2,50 2,00 1,50 1,00 0,50 0,00 West Java Central Java East Java Banten National* tahun

21 Non-compliance with Minimum Wage laws is still high and has not been declining.

22 PP 78 /2015 It has been delayed for more than 12 year Complementing the Labor Law No 13/2003 Specifically include the formula to calculate MW MW t+1 = MW t + MW t * (inflation t + % GDP t ) Next Year Minimum wage in province i Current Minimum wage in province i National Inflation rate National Real GDP growth

23 What should we do?

24 Improvement the quality of Human Resources 1) improve the quality of education 2)create a skills development system that would allow workers to continually acquire new skills, both general and firm-specific skills, through non-formal or on-the-job training or apprenticeship 3) Better support the movement of labour across the ASEAN region. 4)Controlling population growth and improving health services Nevertheless, attempting to improve competitiveness through improvement of Human Resources will only start to bear fruit in the medium to long term

25 Improved Access to employment for women and Youth The government can make policies/incentives for companies that hire young people Employment policy transformation from 'passive' to 'active

26 Sustainable Employment Creation and Expansion Encouraging the growth of new entrepreneurs and empowering the Micro, Small and Medium Enterprises Improving coordination between ministries/agencies in the employmentrelated programs and MSMEs