With 10 million jobless youths, Indonesia’s demographic dividend is at risk

Southeast Asia’s most populous country may miss its Golden Indonesia 2045 goal if a segment of its huge GenZ populations remains idle, analysts warn.
Tria Dianti
With 10 million jobless youths, Indonesia’s demographic dividend is at risk Indonesians throng a job fair in Surabaya, Sept. 10, 2019.
[Juni Kriswanto/AFP]

Benedictus Cahyo Kuncoro, a 23-year-old Indonesian who graduated last August with an IT degree, has been unable to find a job since then because he says he has far fewer skills than companies demand. 

He is one of the  nearly 75 million people in the age group called Gen Z – born between 1997 and 2012 – who represent Indonesia’s vaunted demographic dividend – the large working-age group dominating the country’s population and potentially giving it a huge economic boost.

So far, Benedictus isn’t contributing to the economy. He fills his days with volunteer work and part-time gigs while he waits for his diploma.

He is one of a staggering 10 million people between the ages of 15 and 24 within Gen Z – or a quarter from that particular age bracket within Gen Z in Indonesia – who are neither employed nor training or studying, a situation that threatens to undermine the nation’s much-touted demographic dividend.

“Companies demand too many skills compared to what we have,” Benedictus lamented, citing unrealistic job descriptions and inadequate salaries. 

For years, the Indonesian government has promoted the idea that its youthful population would propel the nation to developed status in a little over 20 years – what it calls Golden Indonesia 2045. However, this demographic dividend is at risk of becoming a demographic disaster if the youth unemployment crisis remains unaddressed, experts said.

Muhammad Faisal, executive director of the Center for Reform of Economics (CORE), said the 2045 goal might not be achieved when the demographic bonus ends.

“If Generation Z remains unemployed, it throws a wrench in the works for achieving high economic growth,” he told BenarNews. “This will certainly be a threat in the future when the demographic bonus is over.”

The demographic bonus, a period when the working-age population outnumbers the non-working age, is a golden opportunity for economic growth. 

Indonesia’s youth unemployment crisis casts a long shadow over the country’s future, experts said.

The repercussions extend beyond the individual level, for instance, said Tauhid Ahmad, executive director of the Institute for Development of Economics and Finance (INDEF).

“Not only do they not drive the economy because they don’t produce anything, but they also become a burden on the economy,” he told BenarNews.

Educational institutions slow to adapt

The reasons behind this crisis are multifaceted.

Experts point to a mismatch between the skills young people acquire through education and the demands of the rapidly evolving job market. 

The economy is struggling to generate enough jobs, and the government and educational institutions have been slow to adapt to the changing nature of work, they said.

Students attend a public dialogue by then-Presidential candidate Anies Baswedan during his campaign rally at Bina Bangsa University in Serang, Indonesia, Dec. 21, 2023. [Yasuyoshi Chiba/AFP]

Jaya Darmawan, a researcher from the Center of Economic and Law Studies (CELIOS), blamed the government for a lack of focus on creating quality jobs and the shortcomings of the vocational education curriculum as key contributors to the problem. 

“Quality vocational education should produce a workforce that is linked and matched with the industry,” he said.

President Joko “Jokowi” Widodo said in March that the government was determined to make the most of the demographic bonus.

“Our country Indonesia has a big opportunity, big potential,” Jokowi said.

He also acknowledged that setbacks may occur, citing the threats of climate change, geopolitical conflicts, and technology disruption, but said that Indonesia’s industries, such as nickel, EV battery and electric car manufacturing were prepared.

The unemployment crisis can be fixed – somewhat, for now – experts say.

They suggest several solutions, including improving education and vocational training to better align with industry needs, stimulating job creation, and embracing the green economy, which has the potential to create millions of new jobs.

“To address the gap, collaboration between the private sector and educational institutions is essential,” said Triyono, a researcher specializing in labor relations and industrial matters at the National Research and Innovation Agency (BRIN).

“It’s not just about finding jobs; it’s also about creating new employment opportunities. Leveraging the internet can enhance these efforts.” 

Manpower Minister Ida Fauziyah acknowledged the challenge. 

“What the government continues to encourage is building vocational education and training so that it connects with the job market, creating a match between education and the job market,” she told CNBC Indonesia recently.

As Indonesia grapples with this crisis, the dreams of young people like Benedictus hang in the balance. 

“I hope companies will make the recruitment process easier,” he said.


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