Youth Unemployment (By: Mario Donald Bani)

Working Together to Solve Youth Unemployment Problem in Indonesia
by: Mario Donald Bani
SUMMARY
The problem of youth unemployment has become one of the major problems in many
countries in the world, including Indonesia. It is the largest country in South East Asia
region and its total population is number four in the world. In the year 2004, more
than six million unemployed young women and men between the ages of 15 and 29,
representing three-quarters of the total unemployed population, live in Indonesia. The
youth unemployment rate is about 15% in rural and 25% in urban areas. Among those
young people who have jobs, 46% are underemployed, working less than 35 hours a
week. The bad education system in Indonesia failed to prepare young people to enter
the labor market with adequate skills, knowledge, attitude, and experience they need.
Besides that, many young Indonesians are lacking the entrepreneurial culture which is
very important for this country to be more developed in the future. To overcome this
youth unemployment issue, the government of Indonesia must work together with
people from the private sectors, the young people themselves, and many other
organizations in the society. Indonesia must try to make some changes on its basic
education system (9 year schooling), and then reform the higher education.
Furthermore, the government must set up a job centers in every secondary and higher
education institutions in the region to provide job information. Promoting
entrepreneurial culture among youth is one other thing to do.
1
Working Together to Solve Youth Unemployment Problem in Indonesia
by: Mario Donald Bani
1. Introduction
The problem of youth unemployment has become one of the major problems in
many countries in the world. Both developed and developing countries are taking
more efforts to solve this problem because it can lead the world into a more severe
economic problem in the future. When the world’s economic growth is slowing down,
youth unemployment becomes a more serious thread, especially in developing
countries, like Indonesia.
The age group of young people used internationally is 15-24 years old, and it
can be also classified as teenage youth (aged 15-19 years old) and young adults (aged
20-24 years old). However, in Indonesia, the age group of young people is 15-29
years old. Although there are some differences in the operational definitions of age
group among countries, youth unemployment is generally viewed as an important
policy issue for many economies, regardless of their stage of development. 1
The developing countries in the world, including Indonesia, are now facing a
complicated combination of huge rural-to urban population movements, the decrease
of agricultural productivity, and growing number of unemployment and
underemployment in urban and rural areas. Significant number of unemployment,
especially in urban areas, affects 10% - 20% of the labor forces in most developing
countries. 2 As we know, the population density and growth is still very high in many
developing countries. That is why, many people, including the youth, do not have
good access to public resources in those places because of poverty and
unemployment.
More than one billion young people between the ages of 15 and 24, and 85% of
them, live in developing countries. According to the ILO, 160 million people in the
world today are unemployed. Almost 40% of them who are not employed belong to
1
JILPT International Labor Information Project Meeting. Indonesia – Leading the Way in Tackling the
Youth Employment Challenge: “Policies on Employment and Vocational Training for Young Persons
in Asian Countries” Decent Work for Young People. Tokyo, 27-28 September 2004
(www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia.pdf).
2
KILM. 9. Youth Unemployment
(http://www.esds.ac.uk/international/support/user_guides/ilo/kilm09EN.pdf).
2
the group of young people. The youth unemployment level tends to be higher than the
adult’s unemployment. Besides that, many young people who are employed find
themselves in low-paying temporary jobs with few protections.3
Indonesia has the same problem of poverty and youth unemployment like the
other developing countries in the world. It is the largest country in South East Asia
region. Its total population is number four in the world, after China, India, and the
United States of America. In the year 2004, more than six million unemployed young
women and men between the ages of 15 and 29, representing three-quarters of the
total unemployed population, live in Indonesia. The youth unemployment rate is
about 15% in rural and 25% in urban areas. Among those young people who have
jobs, 46% are underemployed, working less than 35 hours a week. The vast majority
of working youth are in the informal economy where they lack adequate income,
social protection, security, and representation. The largest age group of Indonesian
people in the next few years would still be the youth, the teenage youth (15-19) and
young adults (20-24). The number in each age group would always around 20
millions of people, or around 10% of the total population.4 For this reason, youth
unemployment must be solved by the government of Indonesia in cooperation with
people from the private sectors, and young people themselves.
The government of Indonesia has a main responsibility to educate young

people, to ensure equal access to all Indonesian youth and to create a good
environment that will promote youth employment. However, the government alone
cannot be expected to address these important issues on their own. Youth
organizations, employers’ and workers’ organizations, chambers of commerce, non-
governmental organizations, community-based organizations, and other civil society
organizations have a key role to play in helping the Indonesian government to handle
youth unemployment.5
3
World Youth Report: The Global Situation of Young People. United Nations. 2003
(http://www.un.org/esa/socdev/unyin/documents/ch02.pdf).
4
5
Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of Youth
(http://www.jil.go.jp/event/itaku/sokuho/documents/20040924/indonesia2.pdf).
3
2. The Education System vs Youth Unemployment in Indonesia
Unemployment is only one dimension of the employment problem faced by

young people. Stagnation and decline of employment opportunities in the formal
sectors of most developing countries have intensified the problem in recent years. 6 To
deal with youth unemployment, we must find the root of this complicated issue.
Youth unemployment is not a single problem that stands alone because it has various
relations with other different social aspects in our life. One important aspect is the
education system.
Education plays a very important role to develop the characters of people, to

enrich human knowledge, and to prepare young people with everything they need to
become a member of the society and to enter the labor market. Many people are now
taking more concern for the last reason because they see a very big gap between
education and the job market. The number of unemployed school graduates is
increasing significantly. Many fresh-graduates find difficulties to get better jobs with
high salary and good social protection.
As one of the Indonesian young people, I am now at the end of my

undergraduate years in the University. I have been thinking about the job that I can
find. I realize that the competition to find good jobs is now tighter than before. The
required skills and knowledge for the job seekers are more varied and complex.
Besides, the employers tend to hire people who have got some working experiences. I
might have some skills and knowledge, but it does not seem enough for me to apply
for high salary jobs. In addition to this, I do not have any working experience.
The education system in many less developed countries, including Indonesia, is

very poor. It cannot provide youth with skills, knowledge, and working experiences
they need to enter the labor market. The education system cannot provide students
with vocational qualifications increasingly sought after by employees. 7 Some people
even said that education tends to become another major problem instead of becoming
solution for the unemployment problem.
6
7
4
When young people start looking for jobs and they fail to get one, they will be
surprised by that unexpected situation. Some of them may realize their own weakness
caused by the gap between school life and the real life situation, and then try to find
the best solution. But some other youth may be desperate and stop trying; they will be
trapped on the world of unemployment. Thus many young women and men
experience longer spells of unemployment when they look for their first job.
Experiencing unemployment may permanently hamper young people’s productive
potential and future employment opportunities. It generates disappointment,
undermines social cohesion and inevitably becomes an important policy issue for
economies experiencing high youth unemployment. Decent work deficits for young
people are associated with dysfunctional behavior, high levels of crime, violence,
substance abuse, and the rise of political extremism. 8
Many school leavers enter the labor market unprepared and with expectations
that are very different from the realities of the labor market. Unsuccessful attempts to
seek work in the formal economy often leads to discouraged youth who eventually
end up in the informal sector, where quality, productivity and security are low. The
majority of young job-seekers rely on informal networks and contacts to search for
jobs whereas the role of public employment services, education and training
institutions and job fairs play a very small role in assisting young women and men to
search for jobs. 9
In relation with the education system, the cost for education in Indonesia is also
too high for many people. In 2004, 60% of self employed youth and 40% of job
seekers left school because of financial constraints.10 These young women and men
had to leave school because the average monthly price for school was too expensive
for them; they could not afford it. Many of them must choose between spending
money and time in school and spending time in working places to earn money. Some
young people opined that school could not give them experiences they need to enter
the labor forces. They chose to leave school early and started their own business as
soon as possible; time investment is important for these people. Many young
8
9
10
Ibid.
5
employees gave their main reason for abandoning school as being that they did not
see the purpose of continuing their education. They argued that schools in Indonesia
had low quality and inappropriateness of the skills acquired.
For ensuring young people’s successful transition to the labor market and their
access to career oriented employment, we must try to develop their employability.
Before entering the job market, youth need to acquire the skills, knowledge, and
attitudes that will help them to find work and deal with unpredictable labor market
changes. The education system plays a crucial role in preparing youth for the labor
market. However, the main obstacle young people face in finding their first job is
inadequate education and skills. The importance of relevant education and training is
also the biggest concern for employers and managers.11
Evidence suggests that the learning outcomes in Indonesia at primary and

secondary levels are poor when compared to other countries in the ASEAN region. A
major reason for this is that overall investment in education as a proportion of GDP in
Indonesia remains one of the lowest in the region and of countries with similar levels
of national income. In 2000, only 1.2% of the GDP went to education, one third less
than that of other countries in the region (China, India, the Philippines and
Thailand).12
3. Indonesian Young People are Lacking the Entrepreneurial Culture
If you ask the Indonesian elementary students about what do they want to be in
the future, they will answer that they want to be doctors, nurses, school teachers,
soldiers, civil servants, and many other kinds of jobs. The same answers will also be
found among the Senior High School and the University students in Indonesia. It will
be difficult to find some of these young people who will answer that they want to be
an entrepreneur.
Actually, one best option for young people who are unable to get into the formal
labor market is to go into self-employment or become entrepreneurs. However,
entrepreneurship is often considered a last resort. Most school graduates prefer to
work on public sector employment, multi-national companies, and large domestic
firms. Only some of the youth are interested in starting their own business. These
11
12
Ibid.
6
preferences show a gap between the expectations of youth and the realities of the job
market where the majority of opportunities exist in small and medium-sized
enterprises and the informal economy. 13
Entrepreneurship is the best way to express young people’s idea and creativity.
They can create whatever they want and then try to sell it to other people. Many
Indonesian young women and man have various amazing ideas that can be created as
new inventions. However, the regulatory system made by the government seems to
avoid those creative young inventors to have benefits from what they created. The
official registering process for new business and inventions, for example, takes a very
long time.
Another big problem that avoids young people to be entrepreneurs in Indonesia

is the lack of funding resources and networks. Many times, young people find great
difficulties of getting access to credit (they are considered a high-risk group by
financial institutions due to lack of collateral or experience). Young people are
therefore concentrated in low-productivity and survival-type activities in the informal
economy. Many young people are also lack representation and voice. They are often
not organized, they are rarely members of trade unions and employers’ organizations
and have few channels by which to voice their concerns and needs. 14
As the concept of national boundary becomes blurred, competition is becoming

fiercer in every facet of our society, and the market is compelling all members of
society to change for their own survival. Globalization and competition may bring
material abundance to mankind by enhancing economic efficiency. However,
globalization, emphasizing efficiency only, would end up benefiting certain classes,
and fail to improve quality of life for all. For that reason, the government of Indonesia
must pay more attention to the efforts that young people do to survive. Government
must try to support and help them to improve creativity that may create job market for
other fellow youth.
4. Working Together to Solve the Problem
Particularly, globalization may have greater impact on youths trying to enter the
labor market for the first time after graduation. Youths would fail to find their place in
13
14
Ibid.
7
fierce competition, due to lack of vocational ability and labor market information.
This is why we need to tackle the problems of globalization and issues related to
youth employment at the same time. Short-term measures such as large-scale public
works project, support for self-employed to start a small business, internship
programs for youths, et cetera, were carried out to provide jobs to the unemployed.
Along with these short-term solutions, mid-to-long term measures were also
implemented. They include creating jobs by fostering small and medium-sized
enterprises and venture companies, expanding social safety network such as
expanding the coverage of employment insurance, building infrastructures that
stabilize employment, and strengthening vocational training. 15
4.1 Some Changes in Indonesian Basic Education
To prepare the Indonesian youth for work, there must be some changes on the
education system. The new education system must be able to provide the young
Indonesians with skills, knowledge, and attitudes they need to enter the labor market.
The quality of basic education years (nine year schooling) for all young men and
women must be improved because most young people in Indonesia will at least try to
learn about how to read the letters and how to calculate the numbers. Some basic
skills like foreign languages and computer knowledge must also be taken into the
curricula of the Indonesian basic education.
Completion of basic education is a necessary pre-condition for successful entry

to the labor market. To achieve the universal basic education, efforts are needed to
improve the access of the poor to junior secondary education. To reduce drop-out
rates at the primary level and increase the enrolment rate at junior and secondary
school levels the key issues are to make education affordable to the poor and improve
the quality of schooling in the context of decentralization. 16
Making education affordable for the poor can simply be done by eliminating
hidden fees, such as school entrance fees, and lower uniform and book costs; reduce
the educational costs for the poor through targeted scholarships; provide incentives to
encourage local communities, charitable organizations and private sector companies
15
Shin Young Chul. Policy and Measures for Youth Employment and Human Resources Development
in Asia – The Republic of Korea (http://www.mhlw.go.jp/english/topics/globalization/dl/17.pdf).
16
8
to set up foundations that provide grants and scholarships for needy students and their
families. The government of Indonesia must also try to invest more in educational
infrastructure. The school teachers’ salaries must be gradually increased combined
with substantial improvements in teacher status, professional competency and
teaching materials. 17
However, the government cannot work alone to do all those changes. People
from the private sectors must take their own action, especially to support Indonesian
schools’ financial constraints. In addition to this, parents of the students must try to
prepare a committee that can collect some amount of money to help the students. The
alumni of each school can also be asked to take part on the fundraising activities in
each school. Money will no longer be problem for schools that have enough financial
resources from alumni, parents, and private sectors.
4.2 Higher Education Reform
Many university students said that the subjects they got were too abstract.
Students do not find any links between the theories they got in the university and the
social problems around them (or the students are not being taught about how to use
the theory in their real life). It proved that the Indonesian universities had long been
called a gigantic tower of knowledge that could not provide any access for the people
out of the tower to go and see anything inside it. Most people in the society will never
think about finding helps from the university lecturers who are experts on their field
of study; that happens because of the bad opinion about the university.
The pedagogical techniques and tools in the university must also be upgraded
with the feedback from the employment sector, like information about some specific
skills that are expected of the young students. There must be some new combination
of the books’ theory and the real life situation which are put together as one revision
of students’ textbooks.18
To improve students’ knowledge, each faculty must have regular schedule for
the guest lecture by industry leaders. It will create a possible interaction session
between the industry leaders and students. Besides that, there must be some
17
18
Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment Opportunity in
India. CIPE International Essay Competition
(http://www.cipe.org/programs/women/EssaysForWeb/Education_Sarkar.pdf).
9
arrangements of the industrial internship for students to exposure to hands-on job
experience. The interaction between students and targeted industry will generate a
mutual trust between the academic environment and the industry houses. This mutual
relationship can be the best channel for information exchange process.19
4.3 Job Centers in Every Secondary and Higher Education Institutions in

Indonesia
In fact, building human capital means not only basic education and skills
development. It also means the empowerment of young people, so that they can take
advantage of labor market opportunities. Better preparation of school-leavers for labor
market entry could facilitate the job matching process and reduce the period of
unemployment.20
Many fresh-graduates in Indonesia do not have access to the information about

specific jobs that can be well-matched to their educational background. Most young
job seekers enter the labor market without any counseling about the jobs they are
applying for. It happens in many places, especially in small cities in Eastern
Indonesia, because there are no institutions that can provide good information about
job market in Indonesia.
The labor market information and gender sensitive career guidance can be
offered to the youth through the education and training system, the public media, and
job centers. However, this in turn requires the strengthening of in-school career
guidance services, which must be available in most secondary and higher education
institutions in Indonesia. The information provided by the job centers can assist
students to think about their future goal and how they can manage their time
effectively to be ready for the job.
Moreover, the job centers in each higher education institutions in Indonesian

can also provide the information for the other people who are unemployed. This job
centers must be available for all people who need the information, but it must focus
more to the young people. This career centers can charge some amount of money for
them who need its advice. Besides, this center can also charge the companies that
19
Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment Opportunity in
India. CIPE International Essay Competition
20
10
want to put their information on its job information list. However, the real purpose of
this board is to provide information instead of earning money.
4.4 Entrepreneurship for Students
Innovation and entrepreneurial activity are key drivers for increased

competitiveness, growth, and the creation of sustainable jobs of higher productivity
and better quality. Fostering youth entrepreneurship depends on better regulatory and
administrative frameworks made by the government and an improving access to
finance for young people. 21 However, it can also be done it the government can work
together with people from the private sector to support youth’s ideas and creativity.
The potential of young entrepreneurs and informal workers to enhance their

productivity will depend on an enabling legal and regulatory framework. Therefore it
is important to remove unnecessary legal and institutional obstacles to the creation
and growth of small enterprises. The government of Indonesia, both central and
regional government, must try to improve system that would reduce time and cost for
starting up new businesses. The new simplified system must also consider a new
business registration system that may be cheaper and more efficient.
The new policies made by government must be discussed first with the business
community, including young people. The absence or weakness of representation is
also a major reason for the marginalization of young women and men particularly
those working in the informal economy. Therefore strengthening the capacity of small
and informal enterprises to participate in policy development and to represent their
interest is essential.
Access to finance is often the most crucial factor for starting, sustaining and
expanding an enterprise, and creating jobs. Because of that, the government can work
together with some private sectors to provide the financial support for the students
who can recommend a creative viable business plans. Funding activities can help the
students to learn how to manage their money and to earn more money from the assets
they have. Moreover, the students can also get mentor support. In the future, there will
be more efforts to introduce enterprise-focused curricula in every school nationwide.
21
11
However, the entrepreneurship program will not be working well if young
people do not have any intention to start their own business. That is why the
entrepreneurial culture must be promoted through the education and training programs
and the awareness raising campaigns. The promotion of entrepreneurial culture will
reduce the negative perception of many young people to entrepreneurship, which is
often perceived as informal sector work. It will build a new culture of
entrepreneurship that favors initiative, enterprise creation, productivity, and good
working conditions and labor relations.
5. Conclusion
Economic growth has recently been slowing worldwide, while in many
developing economies, including Indonesia, the young population continues to
expand rapidly. As a result, pressure on the youth labor market is likely to increase in
these regions, leading to higher youth unemployment rates unless preventive
strategies are implemented. Some preventive strategies that can be implemented in
Indonesia are the changes of basic education system, reformation of higher education
institutions, providing labor market information through job centers in every
secondary and higher education institutions, and promoting the entrepreneurial culture
among students.
12
Works Cited
Harefa, Andrias. School is Never Enough (Sekolah Saja Tidak Pernah Cukup).
Gramedia Pustaka Utama. Jakarta, 2007.
Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of

Youth.
JILPT International Labor Information Project Meeting. Indonesia – Leading the Way
in Tackling the Youth Employment Challenge: “Policies on Employment and
Vocational Training for Young Persons in Asian Countries” Decent Work for
Young People. Tokyo, 27-28 September 2004

Pora, Yusran. Goodbye School (Selamat Tinggal Sekolah). Media Presindo.

Yogyakarta, 2007.
Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment

Opportunity in India. CIPE International Essay Competition
Shin Young Chul. Policy and Measures for Youth Employment and Human Resources
Development in Asia – The Republic of Korea
(http://www.mhlw.go.jp/english/topics/globalization/dl/17.pdf).
World Youth Report: The Global Situation of Young People. United Nations. 2003
(http://www.un.org/esa/socdev/unyin/documents/ch02.pdf).
13

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Youth Unemployment (By: Mario Donald Bani)

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Working Together to Solve Youth Unemployment Problem in Indonesia

by: Mario Donald Bani

by: Mario Donald Bani

The government of Indonesia has a main responsibility to educate young

Unemployment is only one dimension of the employment problem faced by

Education plays a very important role to develop the characters of people, to

As one of the Indonesian young people, I am now at the end of my

The education system in many less developed countries, including Indonesia, is

Evidence suggests that the learning outcomes in Indonesia at primary and

3. Indonesian Young People are Lacking the Entrepreneurial Culture

Another big problem that avoids young people to be entrepreneurs in Indonesia

As the concept of national boundary becomes blurred, competition is becoming

4. Working Together to Solve the Problem

4.1 Some Changes in Indonesian Basic Education

Completion of basic education is a necessary pre-condition for successful entry

4.2 Higher Education Reform

4.3 Job Centers in Every Secondary and Higher Education Institutions in

Many fresh-graduates in Indonesia do not have access to the information about

Moreover, the job centers in each higher education institutions in Indonesian

4.4 Entrepreneurship for Students

Innovation and entrepreneurial activity are key drivers for increased

The potential of young entrepreneurs and informal workers to enhance their

Indonesia Youth Employment Action Plan 2004-2007. Unlocking the Potential of

KILM. 9. Youth Unemployment

Pora, Yusran. Goodbye School (Selamat Tinggal Sekolah). Media Presindo.

Sarkar, Tirthajyoti. Higher Educational Reforms for Enhancing Youth Employment

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