Closing workers’ skills gap through industry engagement

The roles of industries and businesses are crucial in skills development programmes to effectively address labour market mismatches.

News | Jakarta, Indonesia | 16 August 2021
The collaboration between vocational school and industry in skills development at one of Indonesia's vocational schools (c)ILO/F. Latief
Skills development is one of the means to equip workers with skills to match the needs of industries or also known as link and match. Unfortunately, the term only stays as a jargon as the industry has not yet engaged as much as it should be to produce competent and skilled workforce.

The steps included industry-based training to optimize apprenticeships, promotion of establishing Sectoral Skills Bodies as collaborative forums among relevant stakeholders in skills development led by the industry to identify competencies needed for workers in each industrial sector and tax incentive programme for companies that carry out competency-based HR development."

Rudy Salahuddin, Deputy IV of the Coordinating Ministry for Economic Affairs
Ineffective skills development programmes have led to skills mismatch between labour supply and demand. “The main reason for the skills mismatch is still very classic, including the lack of coordination and inadequate involvement of the industry," said Deputy IV of the Coordinating Ministry for Economic Affairs, Rudy Salahuddin, at Ngobrol@Tempo webinar titled ‘‘Industry Engagement: The Answer to Labour Market and Skills Mismatch?’ on Tuesday, 10 August.

Rudy agreed that industry engagement was the priority issue to reduce the ongoing labour market mismatches. He indicated that the industry involvement should begin from the development of competency standard onwards. “Today’s process of competency standard development is mostly initiated and carried out by the government. Industries and businesses should play a greater role,” he continued.

The government, Rudy added, has encouraged the industry to play a greater role in national skills development process through number of steps. The steps included industry-based training to optimize apprenticeships, promotion of establishing Sectoral Skills Bodies as collaborative forums among relevant stakeholders in skills development led by the industry to identify competencies needed for workers in each industrial sector and tax incentive programme for companies that carry out competency-based HR development.

To address the mismatch issue, the strategic framework for skills development should include job creation that is linked with our demographic structure through the creation of labour-intensive jobs that can be absorbed by the MSMEs."

Hariyadi Sukamdani, Chair of the Indonesian Employers' Association (Apindo)
Chair of the Indonesian Employers' Association (Apindo), Hariyadi Sukamdani, highlighted that main cause of labour mismatches was the unsynchronized skills development programmes with real conditions of the society. "The 2018 data shows that around 100 million Indonesians are the recipients of contribution subsidies. This is a reflection of their limited capabilities," he said.

He further emphasized the significance of utilizing demographic data and involvement of industries, especially micro, small and medium enterprises (MSMEs) as the vast majority of Indonesian businesses. "To address the mismatch issue, the strategic framework for skills development should include job creation that is linked with our demographic structure through the creation of labour-intensive jobs that can be absorbed by the MSMEs," he continued.

Meanwhile, Yunus Triyonggo, HR&GA Director of PT Bridgestone Tire Indonesia, explained that his Company has committed to support Indonesia’s skills development programme. Bridgestone has established a Vocational Training Center since 1983, focusing on “on-the-job training” in the mechanical and electrical fields. To date, the programme has produced a total of 848 skilled workers. Around 424 of them were recruited by Bridgestone in which some of them are now in managerial positions. The rest, who did not get recruited, found job in labour market as qualified employees.

“We strongly support link and match programmes between vocational education and training institutions and industries through apprenticeships. We also support the idea of establishing a national vocational institution. It is a good idea. All vocational activities in Indonesia will be centralized within the institution and may be even better," he said.

The Sector Skills Bodies will bring industries closer to skills development processes. In addition to support from the government, the Council should be directly managed and led by the industry who really understands skills needed and changes in specific industrial sectors."

Paul Comyn, ILO’s Senior Skills and Employability Specialist
In the occasion of the webinar, Paul Comyn, ILO’s Senior Skills and Employability Specialist, underlined that industrial engagement is a long-standing challenge that needs to be pushed forward to resolve skills mismatch. The ILO supports a sectoral approach through the development of the Sector Skills Bodies that has become an integral part of the national skills development strategy, designed by the Indonesian government to engage industries more effectively in building competencies of workers based on the needs of industries.

“The Sector Skills Bodies will bring industries closer to skills development processes. In addition to support from the government, the Council should be directly managed and led by the industry who really understands skills needed and changes in specific industrial sectors," he said.

He also emphasized the need for a strong collaboration between the industry and education institution. Both parties play an important role in delivering programmes and services that promote skills developments that are able to keep up with fast changing of world of work and business. “We need the flexibility of the educational institutions to respond to business needs,” he said.

Furthermore, Paul expressed that it is important for employers to understand that investment in employees’ skills development is connected to improved business performance. Therefore, he urged industry associations to play a greater role in supporting cultural change in their business processes. “Industry should be encouraged to promote capacity building for their workers.”

The live streaming of the webinar can be viewed at ILO TV Indonesia