The Future of Work 						 for the Asian YouthCountry Profile: Indonesia
Catherine SETIAWAN and Tri Indah OKTAVIANTIThe Future of Work for the Asian YouthContents

Country Profile: Indonesia

Contents
I.

Introduction										1II. Indonesian Young People 								2A. Demography										

2B. Level of Education 									

5C. Labor Force Activities									

6III. Future of Work 										14A. Potential for Indonesia									

15B. Challenges for Indonesia								

16IV. Policy Responses and Recommendations						18A. Government Initiatives									

18B. Policy Recommendations								

21References											22iiiThe Future of Work for the Asian Youth

I. Introduction

Country Profile: Indonesia

I.

Introduction
The future of work is now. For years, the technological changes of the Fourth Industrial
Revolution have sparked radical shifts in how we live and work. The COVID-19 pandemic
has sped up that transformation and has presented us the opportunity and responsibility
to pursue a great reset of work. The World Economic Forum (2018)1 finds that more than 80% of employers expect to make wider use of remote work and to digitize work processes,
and about half of all employers are also preparing to automate some work. McKinsey(2019) further predicted that 60 % of all jobs globally contained up to 30 % of tasks that canbe automated.
Figure 1. Automation scenario in Indonesia

			
			

Source: McKinsey Report (2019)

Despite all uncertainties with future of work impacts in Indonesia, McKinsey (2019)2
has a good projection (see Figure 1) noting that even automation will destroy up to 23
million jobs, it will simultaneously create additional 27 to 46 million new jobs in Indonesia

1
2

World Economic Forum, Future of Jobs Report (2018), http://www3.weforum.org/docs/WEF_Future_of_Jobs_2018.pdf.
McKinsey, Automation and the future of work in Indonesia: Jobs lost, jobs gained, jobs changed, (2019) https://www.
mckinsey.com/~/media/mckinsey/featured%20insights/asia%20pacific/automation%20and%20the%20future%20of%20
work%20in%20indonesia/automation-and-the-future-of-work-in-indonesia-vf.pdf.

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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

by 2030.3 According to Mckinsey, predictable and repetitive physical tasks, as well as
data processing and data collection, are some examples that have high potential to be
automated. Unfortunately, those who are currently being displaced from the labour
market are on average more likely to be female and younger people with a lower wage.
That said, to fully capture the productivity boost of automation, Indonesia’s government,
business, community, and educational institutions must work together in a concerted way
to address skills transitions.
This country profile is meant to give readers an understanding about the future of workin Indonesia. The first part will provide information about Indonesian young people,
looking through the demographic, education and employment trends. The second partwill analyze future of work opportunities and challenges for Indonesian young people. The
last part will be policy responses and recommendations to further support young people
in transitioning to their work in the future.

II. Indonesian Young People
The UN Secretariat uses the terms “youth” and “young people” interchangeably to mean
people aged 15-24 years old.4 The definition of youth perhaps changes with circumstances,
especially with the changes in demographic, financial, economic and socio-cultural settings.5
For instance, the Indonesian Law on Youth of 2009 defines ‘youth’ as including persons in the
16 to 30 year age range. Following the Indonesian Law, the term youth in this report will referto people age 16-30 years old, unless otherwise specified.
A. Demography
Size
With a population of almost 270 million, Indonesia is the fourth most populous country
in the world after China, India and the United States. Indonesia Central Statistics Agency(BPS) (2019) mentioned that Indonesia comprised of around 64.19 million young people,
spreading across west to east Indonesia.6 Table 1 below shows that the number of young
people in Indonesia makes up almost a quarter of population (24.01 %), meaning 1 out of
4 Indonesian people are youth.

3
4
5
6

McKinsey, Automation and the Future of Work in Indonesia, (2019) < https://www.mckinsey.com/featured-insights/
asia-pacific/automation-and-the-future-of-work-in-indonesia>.
UN DESA, Website of the Focal Point on Youth; <http://undesadspd.org/Youth.aspx>.
UNFPA Indonesia, Youth in Indonesia (2014), <https://indonesia.unfpa.org/sites/default/files/pub-pdf/BUKU_Monograph_No2_Youth_in_Indonesia_ENG_05_Low-res.pdf>
BPS, Indonesia youth Statistic (2019).

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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Table 1. Percentage of Indonesian Citizen based on Age in 2019
Age range(Years)Demographic Characteristic (%)
GenderArea of Residence

Total

Male

Female

Urban

Rural

<16

28,76

27,71

27,41

29,29

28,24

16-30

24,25

23,77

24,90

22,89

24,01

>30

46,98

48,53

47,70

47,82

47,75

Total

100,00100,00100,00100,00100,00Source: BPS Susenas (2019)
Figure 2. Total Youth Percentage based on Gender

Source: BPS, 2019
While looking through gender, Figure 2 shows that out of 64.19 million of youth, there are
more male (50.78 %) than female (49.22 %) in Indonesian youth distribution.
Geographical Distribution
Based on Island distribution, we can see in Figure 3 below, from 2004 to 2019, that morethan half of the youth were concentrated in Java Island (55.28 %). We can also see that thepercentage of youth in other Indonesia nislands has slightly increased in the last decadeand a half.

3The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Figure 3. Indonesian Youth Distribution based on Island in 2004 and 2019 (%)

Source: BPS, 2019
Further, Figure 4 below shows that the percentage of youth in urban areas was greaterthan in rural areas (57.94 % compared to 42.06 %) in 2019.
Figure 4. Total Indonesian Youth Percentage based on Area, 2019

Source: BPS, 20194

The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

B. Level of Education
Conventional Education
As we can see in Table 2 below, the two highest educational attainment for the Indonesian
youth are high school graduate or equivalent (37.59 %) and junior high school graduate orequivalent (34.87 %), respectively. There are still 0.85 % youth who never go to school, andonly 9.98 % have completed tertiary education.
Table 2. Educational attainment of youth by area, gender, disability status inIndonesia (%), 2019
Demographic Characteristic

Never goto scholNo graduated fromPrimary
SchoolPrimary
School(SD)

JuniorHigh
School(SMP)

SeniorHigh
School(SMA)

University

0,85

3,54

13,17

34,87

37,59

9,98

Total

Area
Urban

0,33

2,98

9,02

32,12

42,93

12,63

Rural

1,56

4,31

18,90

38,66

30,24

6,32

Gender
Male

0,81

3,88

14,07

34,05

38,74

8,45

Female

0,89

3,19

12,25

35,72

36,41

11,55

Houshold Income Level
Below 40%

1,26

4,46

20,07

40,79

29,84

3,59

Medium
40%

0,68

3,41

11,79

35,63

39,68

8,80

Upper 20%

0,48

2,27

4,46

23,89

46,43

22,48

Source: BPS, 2019
When viewed according to area, it can be seen that the percentage of youth in urban
areas who have completed tertiary education is higher than the youth in rural areas (12.63% compared to 6.32 %). The same trend can be observed at the high school educationlevel (42.93 % versus 30.24 %). Looking through gender, the percentage of young women
who completed tertiary education is higher than men (11.55 % compared to 8.45 %).
Meanwhile, for the other levels of education, there is no big difference between maleand female youth. Also, it can be seen that the gap in education is also influenced by the
economic status of the household. The percentage of youth who have completed seniorhigh school education and tertiary education is seen to be dominated by the top 20 % ofhousehold expenditure groups, namely 46.43 % and 22.48 %. Meanwhile, the bottom 40% of household expenditures mostly dominate youth who complete education at a lower
level.

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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Technology Usage and Digital Literacy
From Table 3 below, we can see that Indonesian youth is mostly using handphones. Only
16.34 % using computer in rural area and 33.48% in urban area. The usage of internet ishigher in urban areas (89.62 %) compared to rural areas (69,66 %). The disparity in accessto technology can also be seen from the economic status of the youth. A real difference
can be seen from the use of the internet in the top 20 % of youth expenditure (96.16 %)compared to the lowest 40 % the expenditure group (67.06 %).
Table 3. Indonesian Youth Using Handphone, Computer and Internet (%)
Demographic
Characteristic

Usage ofHandphone(from 100%)

Usage of Computer(from 100%)

Usage of Internet(from 100%)

Area
Urban

96,26

33,48

89,62

Rural

90,36

16,34

69,66

Gender
Male

94,33

25,21

82,61

Female

93,20

27,37

79,80

Houshold Income Level
Below 40%

88,62

11,82

67,06

Medium 40%

95,76

24,35

85,70

Upper 20%

98,56

53,23

96,16

Source: BPS, 2019
C. Labor Force Activities
The World Bank (2019)7 noted that Indonesia has a huge labor potential, considering thatmany Indonesians are currently in their productive age (15-64 years old). Table 4 below
shows that in 2019, the total labor force8 for Indonesian young people is more than half of
all labor activities (61.97 %), comprising of 53.89 % working youth and 8.08 % youth who
are unemployed. The rest were active in school, took care of households, and were busy
looking for and preparing for jobs. Also, more than half of the working youth are in the agegroups of 19-24 years (55.88%) and 25-30 years (70.78%). There are still around 18.51 % ofyouth aged 16-18 years who are working, even though this group should be considered in
to be part of the in school age.

7
8World Bank, Data on Population Ages 15-64 (% of population), Indonesia (2019), https://data.worldbank.org/indicator/
SP.POP.1564.TO.ZS?locations=ID.
Labor Force = Number of Employed + Number of Unemployed (World Bank Website).

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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Table 4. Percentage of Indonesian Youth Activities in 2019
Demographic
Characteristic
Total

Labor Activities
Working

Unemployed

53,89

8,08

In School

TakingCare ofHousehold

Others

Total

18,52

16,68

2,83

100,00

Area
Urban

53,36

8,85

20,52

14,66

2,62

100,00

Rural

54,61

7,02

15,78

19,46

3,14

100,00Gender
Male

65,49

9,63

18,19

2,60

4,10

100,00Female

41,89

6,47

18,87

31,25

1,53

100,00Range of Age
16-18

18,51

7,24

61,86

8,29

4,11

100,00

19-24

55,88

11,40

13,31

16,01

3,42

100,00

25-30

70,78

5,10

0,70

21,87

1,56

100,00Source: BPS, 2019
There is also an unequal participation between men and women in the labor market.
Based on gender, youth activity shows that the percentage of male youth working is muchhigher than that of women (65.49 % compared to 41.89 %). On the other hand, more
female youth are in charge of managing the household (31.25 %) compared to their malecounterparts. This cannot be separated from the conservative and traditional culture ofIndonesian society where men are responsible for providing family support and womenare more directed to be smart in managing the household.
Employment Based on Education Level
Based on the level of education (see Table 5 below), the working youth is dominated byyouth who have graduated from senior high school (SMA) at 46.36 %, while the percentageof working youth who have graduated from college is only 15.36 %. When viewed by areaof region, there are clear differences in the pattern of education levels between urban andrural youth workers. In urban areas, the majority of youth workers are secondary school
graduates and above. While the majority of youth who work in rural areas are only juniorhigh school graduates and below.

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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Table 5. Percentage Working Youth based on Demographic and Education Level
Demographic
Characteristic

Education Level
No graduated fromPrimary
SchoolPrimary
School(SD)

JuniorHigh
School(SMP)

SeniorHigh
School(SMA)

University

Total

4,77

13,18

20,34

46,36

15,36

100,00

Total

Area
Urban

2,82

9,23

16,75

51,92

19,28

100,00

Rural

7,38

18,49

25,15

38,88

10,09

100,00Gender
Male

5,58

15,16

21,47

47,09

10,70

100,00Female

3,45

9,98

18,50

45,18

22,90

100,00Range of Age
16-18

5,97

15,83

42,69

35,42

0,08

100,00

19-24

3,88

10,82

17,43

57,65

10,22

100,00

25-30

5,32

14,73

19,58

38,69

21,68

100,00Source: BPS, 2019

Employment Sectors
The Indonesian Institution of Social Security employment (BPJS)9 define “formal worker”
as an individual who works and receives salary, wage or other compensation forms froman employer. For example, employees who work in government administration, defense,and social security; as well as in education services, health services, transportation andwarehousing, etc. On the other hand, “informal worker” is a worker engaged in activities
or any economic efforts independently to obtain income. Informal workers are those whoare self-employed and are free workers in the agricultural and non-agricultural sectors.
Examples of informal workers include street vendors, public transportation drivers, etc.
Table 6 below shows that in general, the employment status of the formal sector youth
is higher than the informal sector. More than half of youth workers (60.30 %) work in theformal sector, and the rest (39.70 %) in the informal sector. The composition looks notmuch different according to gender. However if differentiate by area, more urban youth
work in the formal than in the informal sector (72.59 % versus 27.41 %). In contrast in
the rural areas, there are more youth workers who are employed in the informal sector
compared to the formal sector (56.22 % versus 43.78 %).

9

BPJS Ketenagakerjaan website <https://www.bpjsketenagakerjaan.go.id/en>.

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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Table 6. Indonesian Youth Percentage based on Status of Work and Main Business
Field, 2019
Demographic Characteristic

FactorStatus of Work

Main Business Field

FormalWorkerInformalWorker

Total

Agriculture

Manufacture

Services

Total

60,30

39,70

100

18,43

26,37

55,20

100

Total

Area
Urban

72,59

27,41

100

4,76

28,57

66,66

100

Rural

43,78

56,22

100

36,78

23,41

39,80

100

Gender
Male

59,11

40,89

100

21,88

29,54

48,57

100

Female

62,22

37,78

100

12,84

21,24

65,92

100

Education Level
No graduated fromPrimary
School

30,66

69,34

100

50,92

23,76

25,32

100

Primary
School
(SD)

38,38

61,62

100

36,17

31,02

32,81

100

Junior HighSchool
(SMP)

44,51

55,49

100

25,85

31,97

42,18

100

Senior HighSchool
(SMA)

67,82

32,18

100

11,90

27,77

60,13

100

University

86,53

13,47

100

3

11,53

85,46

100

16-18

42,80

57,20

100

28,16

22,54

49,30

100

19-24

64,41

35,59

100

17,02

27,77

55,22

100

25-30

59,40

40,60

100

18,22

25,77

56,01

100

Range of Age

Source: BPS, 2019
Dividing business field classifications into three sectors is useful for looking at thestructure of the economy based on natural resources (agriculture), the production process(manufacturing), and human resources (services). Table 6 shows that the services sector
dominates youth employment by age, area and gender. Meanwhile, youth in 16-18 years
age group (school age) who are working in agriculture sector is greater compared to otherage groups. If we link the level of education and the business field of youth workers, mostyouth with elementary education and below are dominating the agriculture sector; and incontrast, only 3 % of youth graduated from tertiary education are in the sector.

9The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Unemployment
Open Unemployment Rate (TPT) is the percentage of the total unemployed (8.08 %) against
the total labor force (61.97 %). BPS (2019) noted that the TPT of Indonesian youth in 2019was 13.03 %, indicating that out of every 100 youth in the workforce, there are around 13
youth who are not working and are preparing a business or looking for work.
Figure 5. Indonesian Youth Open Unemployment Rate (%), 2019

Male 12,82%
GenderFemale 13,37%

Unemployment
Percentage(13,03%)

Urban 14,22%
Area
Rural 11,39%
Source: BPS, 2019
Figure 5 shows that the TPT of youth in urban areas was higher than in rural areas (14.22% compared to 11.39 %), and by gender, the TPT for female youth was slightly higher thanthat of male youth (13.37 % compared to 12.82 %). Based on education level (see Table 7),
the 2019 TPT score of youth with secondary school education was the highest (16.27%),
followed by tertiary education (12.18 %), then junior high school (9.83 %).
Table 7. Indonesian Youth Open Unemployment Percentage based on Educational
Attainment in 2019
Demographic
Characteristic

Education Level
No graduated fromPrimary
SchoolPrimary
School(SD)

JuniorHigh
School(SMP)

SeniorHigh
School(SMA)

University

Total

7,36

8,66

9,83

16,27

12,18

13,03

Total
Source: BPS, 201910

The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

The ASEAN Secretariat (2018) reported that compared to other Southeast Asian countries,
the unemployment rate in Indonesia is still considerably higher. As we can see in Figure
6, Indonesia’s unemployment rate (5.3 %) is still in the top three, after Brunei Darussalam(9.2%) and the Philippines (5.4%).
Figure 6. ASEAN unemployment rate (2005-2018)

Source: ASEAN Secretariat, ASEANstats database (2005-2018).
Worse, the current prolonged economic downturn due to the COVID-19 pandemic did
impact the rate of unemployment in Indonesia massively. The National Development
Planning Agency (Bappenas) announced that 3.72 million people have been laid off since
the pandemic outbreak started in March 2020.10
Income Level
In general, Table 7 below show that the average income of working youth is around 2
million rupiah per month. Based on the type of area, it can be seen that the pattern ofincome distribution is uneven between rural and urban areas. More than half of youth
workers in rural areas earn an income of less than 2 million IDR per month, while morethan half of youth workers in urban areas earn more than 2 million IDR per month.

10

The estimate does not include workers whose wages are cut due to reduced working hours.

11The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Table 7. Income Level for Indonesian Working Youth per Month, 2019
Demographic Characteristic
Working
Youth

Income (%)
Below
1 Million
IDR

1 Million –1,9 Million
IDR

2 Million –2,9 Million
IDR

3 Million
IDR and
More

Total

19,88

31,05

23,45

25,61

100,00

Area
Urban

13,96

28,60

24,33

33,11

100,00

Rural

30,23

35,34

21,91

12,52

100,00

Male

14,93

31,94

25,91

27,22

100,00Female

28,46

29,52

19,19

22,83

100,00Gender

Education Level
No graduated fromPrimary
School

31,99

37,65

21,25

9,12

100,00Primary
School
(SD)

28,21

38,82

22,76

10,21

100,00Junior HighSchool
(SMP)

24,19

37,76

24,37

13,67

100,00Senior HighSchool
(SMA)

15,55

30,08

25,17

29,20

100,00

University

19,09

20,11

18,71

42,09

100,00Source: BPS, 2019
The 2020 Global Gender Gap Index (GGGI)11 shows that Indonesian women earn less thanthe men‘s estimated income. Consistent with GGGI, Table 7 also shows that for salary
above 3 Million IDR/ month, most female youth workers (22.83 %) also earn less thanmale youth workers (27,22 %). Further, according to the highest education completed, it
can be seen that most of the youth with the qualifications of tertiary education are able toearn more than 3 million per month. However, there were still 19.09 % of youth with thesame educational qualifications, earning less than one million. This means that there arestill workers who do not receive a reciprocal income in accordance with their educational
qualifications. This shows a gap for income and education mismatch in graduatescompetency and job demand. This gap eventually forces youth to be willing to do any work
even with an income that does not match their educational qualifications.
11World Economic Forum, 2020 Global Gender Gap Index (January 2020).
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The Future of Work for the Asian YouthII. Indonesian Young People

Country Profile: Indonesia

Dream Job and Recruitment Trend
LinkedIn (2017)12 released its first Childhood Dream Jobs survey findings. Based on thesurvey, close to 60% of young professionals in Indonesia are in completely different roles
from their dream jobs. More than 55% of them highlighted that they do not have theopportunity to follow their childhood dreams due to their education qualification andskill sets. The other obstacles for not following their dream jobs are not having the rightfinancing and access to the right network.
Below, Figure 7 shows the ten most desirable jobs based on recruitment trends inIndonesia. As a result, the most desired job in the country as of August 2020 is in retailsale jobs. The second most desired job is in relation to Information and Technology (IT),with accountant and marketing jobs following in the third and fourth place, respectively.
Figure 7. Ten most desirable jobs in Indonesia based on survey by Jobstreet.com

Source: Pre-employment card’s web portal, Feb 2020.

12

Lee, Linda, “What was your childhood dream job?” (2017) Retrieved from https://www.linkedin.com/pulse/what-yourchildhood-dream-job-linda-lee/.

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The Future of Work for the Asian Youth

III. Future of WorkCountry Profile: Indonesia

III. Future of WorkData, decentralisation and automation are the defining concepts of the future of work.13
Further, Deloitte (2019) defines the future of work as “the growing adoption of Artificial
intelligence (AI) in the workplace, and the expansion of the workforce to include both on- andoff-balance-sheet talent”.14 Automation and AI are different concepts and will have varying
impacts on the future of work.
Automation is a broad category describing an entire class of technologies rather than just one.
A report from Brooking Institute (2020) mentioned that AI is part of automation, like robotics
and software.15 Automation substitutes human labor in both physical and cognitive tasks,
especially those that are predictable and routine like machine operators, food preparers, clerks,
or delivery drivers; and activities that seem secure including management and developmentof people, applying expertise to decisionmaking, planning and creative tasks, interfacing withpeople, and the performance of physical activities and operating machinery in unpredictablephysical environments.
AI on the other hand focuses on machine learning, or using algorithms to find patterns inlarge quantities of data. The technology’s relevance to the workplace is less about tasks
and more about intelligence. AI theoretically substitutes more interpersonal duties such as
human planning, problem-solving, or perception, instead of the routine tasks mentioned in
automation. That said, some topline occupations exposed to AI’s effects are related to planningand creative tasks, interfacing with people, management and development of people, applying
expertise to decisionmaking. Although much of AI technology is still in development, tasks thatinvolve human cognition can theoretically be replaced in the future by AI.
Our socioeconomic system is entering a phase of accelerated transformation. Automation
and AI will bring changes to the nature of work. However, it is important to distinguish that the
impact of automation will vary across occupations, and unemployment may increase among
low wage, low education roles in occupations characterized by rote work. On the other hand,
AI’s potential economic disruption may be felt by better-paid and better-educated white-collar
workers in the formal sector.

13
14
15

Rijmenam Mark, 3 Concepts that Define the Future of Work: Data, Decentralisation and Automation, (2020) https://vanrijmenam.nl/3-concepts-that-define-future-of-work/
Deloitte, Future of Work (2019) <https://www2.deloitte.com/us/en/insights/focus/technology-and-the-future-of-work.
html>.
Gaynor Michael, Automation and AI sound similar, but may have vastly different impacts on the future of work¸(2020) <https://www.brookings.edu/blog/the-avenue/2020/01/29/automation-and-artificial-intelligence-sound-similar-but-may-have-vastly-different-impacts-on-the-future-of-work/#:~:text=Artificial%20intelligence%20can%20be%20
a,the%20automation%20report%20focused%20on.&text=In%20the%20more%20recent%20AI,in%20large%20quantities%20of%20data>

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The Future of Work for the Asian Youth

III. Future of WorkCountry Profile: Indonesia

A. Potential for Indonesia
The public debate about automation in Indonesia, as elsewhere, often focuses on the risks
for the future of work. However, Indonesia is actually poised for growth. The Indonesian
youth are among the most confident in facing automation (OECD, 2019), McKinsey (2019)
reported that automation can create twice as many new jobs than jobs lost. The creationof new jobs will primarily be driven by automation in infrastructure and consumer
spending.16 From an income level perspective, Figure 8 shows an additional positive effectof automation in Indonesia. It shows that income growth can be seen in automation taskchange, especially for younger, higher skilled and formal workers.
Figure 8. The impact of automation depends on the age group, gender, job type,industry or sector type, and skill-set

Source: Prospera & AlphaBeta, 2019.
From an employment sector perspective, we can see in Figure 9 that automation ispredicted to increase employment in mostly all sectors. The highest employment benefit
is seen to impact services sectors the most.

16

Jakarta Globe, Automation to Create More Jobs for Indonesia Than It Destroys by 2030: McKinsey, (2019) <https://jakartaglobe.id/news/automation-to-create-more-jobs-for-indonesia-than-it-destroys-by-2030-mckinsey/>

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The Future of Work for the Asian Youth

III. Future of WorkCountry Profile: Indonesia

Figure 9. Net Impact of Automation and Seven Catalysts Drivers by Sector, 2014-2030

Source: McKinsey (2019)

B. Challenges for Indonesia
Despite Bappenas (2020) prediction of demographic bonus from 2020 to 2035- as Indonesia
working age group is expected to reach 70 % of the total population by 2030- there is a
growing concern about the sluggish economic growth in the last few years. As mentioned
in the previous chapter, Indonesian labor has low productivity and low added value17. The
combination of low labor productivity and low value added labor can lead to the middle
income trap. To avoid the middle income trap, economic growth of at least 5 percent eachyear (until 2045) need to be mantained and supported by improving human capital andboosting infrastructure development in Indonesia.
Further, as the world and the nature of work are increasingly reshaped by technologicalchanges, related skills development and human capital are playing an even greater rolein the country’s future economic development. Unfortunately, human capital remains an
issue in Indonesia. LinkedIn (2019)18 mentioned that creativity and critical thinking skills
are very much needed in advancing technology and automation. However, as shown in
Figures 10 below, Indonesian youths are lacking some basic skills, especially in mathematics
and logic, which are fundamental in developing an ability for critical thinking in adopting
technology.

17
18

Middle Income Trap: a situation in which a country suffers economic slowdown after achieving middle-income status
and is unable to move to a high-income level
Marr, Bernard, The 10 Vital Skills You Will Need for the Future of Work (2019), https://www.linkedin.com/pulse/10-vital-skills-you-need-future-work-bernard-marr/.

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The Future of Work for the Asian Youth

III. Future of WorkCountry Profile: Indonesia

Based on the OECD Pisa Report (2018)19 Indonesian students score among the lowest,
ranked 73rd in mathematics, 74th in reading and 71st in science among 79 assessed countries.
These rangkings were even lower than in 2015. According to the report, the Indonesianstudents’ mean reading performance score of 371 in 2018 marks a 21-point decrease fromthe 2015 score and puts Indonesians far below the OECD average of 487. In mathematics,
meanwhile, the study gives Indonesian students a score of 379, a 7-point decrease from2015, while the mean science score decreased slightly, dropping to 396 points from 403
achieved in 2015. Both scores were also significantly below the OECD average of 489.20
Figures 10 demonstrates that Indonesia’s PISA (2015) score in mathematics is also among
the lowest in ASEAN.
Figure 10. Education Outcome in ASEAN by Investment, 2015

Source: Prospera & AlphaBeta (2019)
Indonesian young people need to improve its level of educational attainment to be
successful in facing the future of work. As previously shown in Table 2, there are only
9.98 % youth who have completed tertiary education. Unfortunately, Figure 11 below
demonstrates that in 2030, the greatest opportunities will be way higher for people withcollege or advanced education (66 %). Employment growth will probably change the sector

19

20

The triennial 2018 OECD Program for International Student Assessment (PISA) report is a triennial study of theworld’s education systems carried out by the Organisation for Economic Co-operation and Development (OECD). It
assesses 15-year-olds from 79 countries in maths, science and reading.
Tehusijarana Karina, Not even mediocre? Indonesian students score low in math, reading, science: PISA report (2019),
https://www.thejakartapost.com/news/2019/12/04/not-even-mediocre-indonesian-students-score-low-in-math-readingscience-pisa-report.html.

17

The Future of Work for the Asian Youth

IV. Policy Responses and Recommendations

Country Profile: Indonesia

composition of Indonesia’s economy as a whole, with nearly half of all Indonesian workers
in need of reskilling.21
Figure 11. An Increasing Percentage of Jobs will Require College and Advanced
Degrees

Source: McKinsey (2019

IV. Policy Responses and Recommendations
Under President Joko Widodo, the government is determined to transition to theIndustry 4.0 economy. Below are some government initiatives and programs, also somerecommendations that can improve the proposed strategies and ongoing programs.
A. Government Initiatives
Government Strategies
As mentioned by the previous Minister of Labor, Hanif Dhakiri (2019), the Indonesian
government has developed six strategies for the future of work:22
1. Implementing a massive vocational training (in the form of hard and soft skills) basedon industry needs, and is planned to be provided regardless of age and educational
21
22World Economic Forum (WEF), Future of Jobs (2019), http://www3.weforum.org/docs/WEF_Future_of_Jobs_2020.pdf.
JPNN.com, Menaker Hanif Dhakiri Beber 6 Strategi Indonesia Hadapi Future of Work, (2019) https://www.jpnn.com/
news/menaker-hanif-dhakiri-beber-6-strategi-indonesia-hadapi-future-of-work.

18

The Future of Work for the Asian Youth

IV. Policy Responses and Recommendations

Country Profile: Indonesia

background to ensure skilling, upskilling, and reskilling for Indonesian human resources
to increase the employability of the Indonesian workforce.
2. Ensuring that all workers (including Indonesian migrant workers in all placement
countries) are protected through social security and health insurance.
3. Expanding a flexible labor market that is still able to absorb Indonesian humanresources to work productively and contribute to inclusive and sustainable economic
development.
4. Minimizing the work participation gap between women and men in Indonesia’slabor climate through the promotion and implementation of equal employment
opportunity (EEO) at the provincial, district and city levels to ensure that there is no
gender discrimination in the workplace at all levels.
5. Providing domestic and international scholarship schemes in supporting young
people to enhance their innovation, creativity and productivity skills, which are neededin this digital economy era.
6. Strengthening the implementation of occupational safety and health (OSH) in allindustrial sectors, to ensure that the realization of labor law is in compliance and isaligned with the principles of decent work and labor standards, both domestic andinternational standards, in supporting a conducive employment climate for foreign
investment in Indonesia.
Government Programs
Nationwide training programs are necessary to better prepare the country’s workforce
for a changing job market in the future of work. Table 8 summarizes the Indonesian
government programs that support the future of work.

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The Future of Work for the Asian Youth

IV. Policy Responses and Recommendations

Country Profile: Indonesia

Table 8. Some Government of Indonesia Programs to Support the Future of WorkNo

Programs

Information

1.

Pre- employment card

• The pre-employment cards aim to aid job seekers,
laid-off workers and small businesses by granting
them access and funding to a broad range oftraining. It aims to address skill shortages, whichhave become a real problem in the country’s
workforce, as the education system has fallen shortof producing graduates with the skills needed by
the industry.
• The government has allocated Rp 10.3 trillion(US$752.24 million) this year for the program,targeting 2 million people to join it.
• The government has also been seeking
partnerships with education technology start-ups
and e-commerce platforms to allow participants
to take part in various training especially coding,marketing and hospitality.
• The government launched the program on April11, earlier than the initial schedule in November, toassist people laid off or furloughed because of theeconomic impacts of the COVID-19 outbreak.
• As many as 223 training institutions are involved in
the program, providing more than 2,000 courses
on various subjects through eight online learning
platforms.

2.

Digital Talent
Scholarship 23

		• The Communications and Information Ministry(Kominfo) provides an annual Digital Talent
Scholarship (DTS) program that aims to address thecountry’s digital talent gap.
• Recipients of the scholarship will get training
on data analysis, artificial intelligence (AI), cloudcomputing and cybersecurity, as well as criticalthinking, creativity and communication.
• It is intended to cater to fresh graduates fromuniversities and vocational schools, as well teachersand entrepreneurs.
• To conduct the training, the ministry has partneredwith more than 90 universities and polytechnics,
local start-ups, as well global technology companies
such as Cisco, Google and Microsoft, among others.
• The first digital scholarship in 2018 was awarded
to 1,000 recipients. The numbers increased into
25,000 participants in 2019 and it aims to train
50,000 participants this year.

23

Jakarta Post, Ministry Offers Scholarships Program to Address Digital Talent Gap (2020), https://www.thejakartapost.
com/news/2020/06/16/ministry-offers-scholarship-program-to-address-digital-talent-gap.html.
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The Future of Work for the Asian Youth

IV. Policy Responses and Recommendations

Country Profile: Indonesia

HERfuture 24

		3.

• The Women's Empowerment and Child Protection
Ministry in partnership with UK-Indonesia Tech
Hub -a technology and innovation hub initiated by
the British Embassy in Jakarta- initiated a training
program for Indonesian women who own microand ultra-micro enterprises, called HERfuture.
• The program aims to increase digital literacy among
women entrepreneurs and to help them maximize
the use of technology to support their businesses
through the two-month online training courses.
• The program was launched to help small andmedium enterprises (SMEs) cushion the economic
impact brought by the coronavirus pandemic.

Source: Jakarta Post, 2019-2020.

B. Policy Recommendations
Below are some recommendations to ensure the effectiveness in the implementation of
the government’s responses:
1. Technical Education and Vocational Training (TVET)•

Most government trainings and programs are implemented in central and urban
areas. Rural areas also need to be included in the program implementation toensure all young people will be given the same opportunities.

•

Additional training and reskilling programs supportinng the participation of more
women,25 disabled, and26 old people also need to be implemented.

•

The trainings provided should meet the demands of industry. Close cooperation
with industry and business is necessary.

•

The capacity of teachers and trainers also need to be strengthened and improved.

2. Social Security and Health Insurance for Infomal Sector
The informal sector is an important part of the country’s workforce amid the pandemic,
accounting for 56.5 % of nationwide employment in February and hiring a total of
74.04 million workers in 2020 ( there is a 0.77 % increase from the February 2019
estimates). Unfortunately, informal workers remain invisible to policymakers andare rarely included in social and health security policies. Policies addressing income
24
25
26

Jakarta Post, Indonesia Launching Program for Women, (2020) https://www.thejakartapost.com/news/2020/11/11/indonesia-ukteam-up-to-launch-training-program-for-women-entrepreneurs.html.
Asriani Desintha and Ramdlaningrum, Examining Women’s Roles in the Future of Work in Indonesia, (2019) <http://library.fes.de/pdf-files/bueros/indonesien/15754.pdf>.
Fundación ONCE and the ILO Global Business and Disability Network, Making the future of work inclusive of people
with disabilities, (2019) <http://www.businessanddisability.org/wp-content/uploads/2019/11/PDF_acc_FoW_PwD.
pdf>.

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The Future of Work for the Asian Youth

References

Country Profile: Indonesia

insecurity and and reducing poverty and occupational risks will be useful in managing
the risks faced by this sector.
3. Flexible Labor Regulations
Indonesian regulations and policies, especially those related to the future of work need
to be flexible, responsive and updated based on the current situation and dynamic.
4. Increased Promotion of Government Initiatives and Programs
The Government will need to promote its initiatives and programs to a wider audience,as many people are still not aware of them, and only several groups who normally get
the same benefit.
5. Ensuring Equal Participation for WomenThe ILO (2020) surveyed 400 companies in Indonesia and found that 80 % supported
gender diversity in the workplace. However, there is still an unequal treatment
between men and women in the labor market. There is also a lack of women in senior
management and on boards of directors of Indonesian companies. In addition, theunsupportive work environment and employment practices tend to limit women’s
career progression. There is a high hope that future of work can give better treatment
and more opportunities for women in work force if Government can really ensure thesupport is implemented effectively.

References•

Asriani Desintha and Ramdlaningrum, Examining Women’s Roles in the Future of Work inIndonesia, (2019) <http://library.fes.de/pdf-files/bueros/indonesien/15754.pdf>.

•

BPJS Ketenagakerjaan website <https://www.bpjsketenagakerjaan.go.id/en>.

•

BPS, Indonesia youth Statistic (2019).

•

Deloitte, Future of Work (2019) https://www2.deloitte.com/us/en/insights/focus/technologyand-the-future-of-work.html•

Gaynor Michael, Automation and AI sound similar, but may have vastly different impacts on the
future of work¸ (2020) https://www.brookings.edu/blog/the-avenue/2020/01/29/automationand-artificial-intelligence-sound-similar-but-may-have-vastly-different-impacts-on-thefuture-of-work/#:~:text=Artificial%20intelligence%20can%20be%20a,the%20automation%20
report%20focused%20on.&text=In%20the%20more%20recent%20AI,in%20large%20
quantities%20of%20data.

22

The Future of Work for the Asian Youth

References

Country Profile: Indonesia•

Fundación ONCE and the ILO Global Business and Disability Network, Making the future of work
inclusive of people with disabilities, (2019) < http://www.businessanddisability.org/wp-content/
uploads/2019/11/PDF_acc_FoW_PwD.pdf>.

•

ILO, Bridging Indonesia’s skills gap through partnership between industry - vocational educationand training, (2019), https://www.ilo.org/jakarta/info/public/pr/WCMS_711886/lang--en/index.
htm.

•

Jakarta Globe, Automation to Create More Jobs for Indonesia Than It Destroys by 2030: McKinsey,(2019)
https://jakartaglobe.id/news/automation-to-create-more-jobs-for-indonesia-than-itdestroys-by-2030-mckinsey/.

•

Jakarta Post, Ministry Offers Scholarships Program to Address Digital Talent Gap (2020), https://www.thejakartapost.com/news/2020/06/16/ministry-offers-scholarship-program-to-addressdigital-talent-gap.html•

Jakarta Post, Indonesia Launching Program for Women, (2020) https://www.thejakartapost.
com/news/2020/11/11/indonesia-ukteam-up-to-launch-training-program-for-womenentrepreneurs.html.

•

JPNN.com, Menaker Hanif Dhakiri Beber 6 Strategi Indonesia Hadapi Future of Work, (2019) https://www.jpnn.com/news/menaker-hanif-dhakiri-beber-6-strategi-indonesia-hadapi-future-ofwork.

•

Lee, Linda, What was your childhood dream job?, (2017), https://www.linkedin.com/pulse/whatyour-childhood-dream-job-linda-lee/.

•Marr, Bernard, The 10 Vital Skills You Will Need for the Future of Work (2019), https://www.
linkedin.com/pulse/10-vital-skills-you-need-future-work-bernard-marr/.

•

McKinsey, Automation and the future of work in Indonesia: Jobs lost, jobs gained, jobs changed,(2019) https://www.mckinsey.com/~/media/mckinsey/featured%20insights/asia%20pacific/
automation%20and%20the%20future%20of%20work%20in%20indonesia/automation-andthe-future-of-work-in-indonesia-vf.pdf.

•

McKinsey, Automation and the Future of Work in Indonesia, (2019) < https://www.mckinsey.com/
featured-insights/asia-pacific/automation-and-the-future-of-work-in-indonesia>.

•

Rijmenam Mark, 3 Concepts that Define the Future of Work: Data, Decentralisation and Automation,(2020) https://vanrijmenam.nl/3-concepts-that-define-future-of-work/.

•

Tehusijarana Karina, Not even mediocre? Indonesian students score low in math, reading, science:
PISA report (2019), https://www.thejakartapost.com/news/2019/12/04/not-even-mediocreindonesian-students-score-low-in-math-reading-science-pisa-report.html.

•

UN DESA, Website of the Focal Point on Youth; http://undesadspd.org/Youth.aspx.

•

UNFPA Indonesia, Youth in Indonesia (2014), https://indonesia.unfpa.org/sites/default/files/
pub-pdf/BUKU_Monograph_No2_Youth_in_Indonesia_ENG_05_Low-res.pdf

23

The Future of Work for the Asian Youth

References

Country Profile: Indonesia•

World Economic Forum, Future of Jobs Report (2018), http://www3.weforum.org/docs/WEF_
Future_of_Jobs_2018.pdf.

•

World Economic Forum (WEF), Future of Jobs (2019), http://www3.weforum.org/docs/WEF_
Future_of_Jobs_2020.pdf.

•

World Economic Forum, 2020 Global Gender Gap Index (January 2020).

•

World Bank, Data on Population Ages 15-64 (% of population), Indonesia (2019), https://data.
worldbank.org/indicator/SP.POP.1564.TO.ZS?locations=ID.

24