Despite forecasts of strong labour market growth over the next decade and short-term efforts to boost the economy, Indonesia continues to struggle to create new jobs for its youth, according to new findings from the World Bank and Morgan Stanley.
In its latest East Asia and Pacific Economic Update released on October 7, the World Bank said that while employment rates across the region are 'generally high', young people continue to face difficulties entering the workforce.
"As many as one out of seven people might not have a job when they're young," said Aaditya Mattoo, World Bank's chief economist for East Asia and the Pacific, during a press conference on Tuesday.
Mattoo noted that Indonesia has been 'trying to grow faster than its potential growth rate' by bolstering its food, transportation, and energy subsidies. In September, the government launched a$1 billion '8+4+5' stimulus package to boost economic growth and provide additional support to workers, students, and other key sectors.
The report warned that while these strategies might sustain the country's growth in the near term, they 'may not be conducive to growth tomorrow.' It recommended deeper structural reforms, including simplifying business regulations to improve productivity and create sustainable jobs for citizens.
It noted that Indonesia was among the SEA countries that had yet to experience a productivity-driven transformation, citing the country's relatively unchanged manufacturing employment share over the last three decades.
The findings provide a sobering contrast to the government's optimism about generatingmillions of jobs by 2029 through various initiatives, including training, entrepreneurship development, and expanded access to economic opportunities.
Manpower Minister Yassierli said such initiatives are crucial in boosting the country's productivity, which currently falls behind those of other Southeast Asian countries. This increased output, Yassierli said, is essential in achieving the Golden Indonesia 2045 Vision, which aims to turn the country into a major global economy before its centennial anniversary.