by: Agung Purwadi
Centre for Policy Research and Educational Innovation, Ministry of National Education, Indonesia
Indonesia is one the most populuous nations in the world. Her population was about 219 million with 67 percent of them were under the productive, 15-64 years, age in 2005 (CBS, 2005 inter-cencal survey results). About 106 million were considered as labor force with an employment rate of about 89.7 percent. It is easily understandable that this huge number made the national policy makers thought in the past that the number alone may be used as the basis of the main international strategy. They thought that low cost and abundant labour is the comparative advantage of the national economy in the region.
Educational qualification of the population is quite low and so as the labour force. The average years of schooling of the population was only about 7 years or approximately grade I of the junior secondary schooling. About 64 percent of the labor force received lowest level of education in 2000. They were either graduated from primary school only, dropped out from primary school, or even have no schooling at all. Only 18 percent of them were graduated from senior secondary schools and less than 5 percent were university graduates of all levels.
Low educational attainment is one of the important factors that explain the low productivity of the Indonesia labour force as seen by the regional business and industry. A survey of 12 countries in the region put Indonesia at the bottom of productivity measure. Recently several internasional factories move out from the country with labour productivity as one of the main reasons.
On the other hand, availability of a good number of competent labour forces in India, China and at some degree also Thailand, supported by condusive investment policies, may attract overseas investors to move in their business to those countries. Hewlett-Packard, Dell, Lenovo, and Acer are among industries that will add the mumber of overseas companies that open their factories in India (Business Week Indonesia, no. 28/2007). BMW and SAAB are among the prestigiuous names in automotive that have their factories in China. Ford chose Thailand for their basis of automotive market in South East Asia.
Indonesia should find the best way to improve its labour competitiveness. The paradigm for economic competitivenss had changed from quantity alone to quality human resources. Formal education will provide the labour market with competent labour force in the future. Efforts to increase productivity of the existing labour force, may be through some informal education or innovation of formal education, should also be made.
Full of his article can be downloaded here: policy-on-open-agung-purwadi
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Notes from Prof. yusufhadi