Interactive Discussion on Youth Employment - The Future is Yours: Bridging the Gap of Work for Indonesian Youth

Background

Indonesia is currently weathering the global decline in commodity prices and corresponding slowdowns among its major trading partners. These factors have weighed heavily on the growth outlook with severe ramifications for the labour market. Many of which, in terms of unemployment and job quality, are likely to compound pre-existing challenges that include high youth unemployment and persistent informality.

In February 2016, the labour force stood at 127.1 million, but the number of people in the labour force had declined from 128.3 million a year earlier. Correspondingly, the labour force participation rate fell from 69.5 in February 2015 to 68 per cent in February 2016. As a result, more than 7 million people were unemployed in Indonesia.

In February 2016, the youth unemployment rate in Indonesia stood at 17.8 per cent, down from 20.6 per cent a year earlier. Youth unemployment in Indonesia is relatively high in comparison with other countries in the region. For example, in China the youth unemployment rate in 2015 was 12.1 per cent.

According to ILO regional estimates, in 2015, the average youth unemployment rate for Eastern Asia was 11.7 per cent and for South-Eastern Asia it was 13.1 per cent. Moreover, the ratio of youth to adult unemployment in Indonesia – 5.8 times as high as the adult rate – was considerably higher than the regional average. The youth-to-adult unemployment ratio for Eastern Asia was 3.2, while for South-Eastern Asia it was 5.1.

One of the ongoing labour market challenges facing Indonesia is the high incidence of informality. Based on the latest global estimates, informal employment, as a per cent of total non-agricultural employment, was estimated at 72.5 per cent in Indonesia. Given the prevalence of informality, vulnerable employment (sum of own account and unpaid family workers) out of total employment is also relatively high in Indonesia

In the medium to long-term, Indonesia needs to find new engines of growth to support job creation and productivity. In this regard, policies will need to focus on manufacturing and high-end services to ensure that future growth is more inclusive and employment friendly. This is particularly true for manufacturing, which has yet to return to a similar level of growth experienced before the financial crisis in 1997.

Without growing manufacturing employment, the challenge of ‘leapfrogging’ from low skill agrarian to high skill service sector economies is daunting for Indonesia, where the majority of employment is still agricultural. According to a recent study, the share of Indonesia’s global exports in manufacturing has remained stagnant at 0.6 per cent. Moreover, while the share of employment in the trade and services sector has grown over the years, this has happened mainly at the low-end of the value chain, resulting in jobs that are not very productive.

Objectives

Main objectives of this interactive discussion are as follows:

• To share youth employment related information as an effort to raise the awareness of Indonesian students and college students about the outlook of the youth, particularly related to youth employment, in the country.
• To share experiences and information to inspire the participants on how to smooth the transition from school-to-the world of work.
• To promote better understanding and inspire the participants about entrepreneurship and innovations when entering the world of work.
• To raise the awareness about challenges and opportunities faced by the youth as well as ways to take advantages from them.
• To have a better understanding about diversity in life and the world of work, particularly related to disability.