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Young Indonesians wary of election promises as jobs boom eludes them

Reuters - February 9, 2024

Jakarta – Mr Adrian graduated from an Indonesian auto mechanic trade school in 2023, but since then has only worked a few weeks in one job: serving fruit juice at a kiosk in downtown Jakarta.

The 19-year-old, a first time voter in next week's election in Indonesia, is seeking work with electric vehicle companies he knows are investing in his country but has little confidence in the economic policies of the presidential candidates.

"I hope the factory will open... so there will be plenty of jobs," said Mr Adrian, who, like many Indonesians, goes by just one name.

In this election, finding jobs and improving the quality of life are among the biggest concerns of millennial and Gen Z voters, who make up more than half of Indonesia's electorate of 205 million people, a survey by pollster Populix showed.

Creating well-paid jobs for the workforce is essential for South-east Asia's largest economy and its young population if it wants to achieve a self-set target of becoming a high-income nation by 2045, when it celebrates 100 years of independence.

Contenders in the presidential race are promising upwards of 15 million jobs in the next five years, in a country where about three million people enter the job market annually.

Like many, Mr Adrian chose vocational education amid a drive to improve the skill sets of young Indonesians by the government of outgoing President Joko Widodo.

Mr Widodo's policy was intended to complement his push to invite investment in industries downstream from the country's rich natural resources.

Billions of dollars poured into nickel smelting while battery and electric vehicle makers such as China's CATL and South Korea's LG and Hyundai struck deals to set up shop locally.

While this helped define Mr Widodo's 10-year term as a period of steady economic growth and low inflation, the new investment went more into machinery and technology than headcount.

As a result, job creation has plunged, economists say.

Officially, Indonesia's unemployment rate is 5.32 per cent, but analysts say this understates the problem, with many people considered employed working just a few hours a week.

Nearly 60 per cent of workers are in the informal sector. Young people aged 15 to 24 made up 55 per cent of the 7.86 million unemployed in 2023, up from 45 per cent in 2020.

"Creating employment should be the key indicator of a government's success, not investment," said Mr Bob Azam, a senior official with the Indonesian Employers Association (Apindo).

"Investment should not be oriented at growing GDP (gross domestic product) without any impact to the real sector and employment."

Apindo said around 1,000 jobs were created for every trillion rupiah (S$86.2 million) of investment in 2022, compared with 4,500 jobs in 2013.

Investment in nickel mining and refining has created a limited number of jobs and still relies heavily on foreign labour, particularly from China, for some skills.

Mr Widodo's vocational education policy was modelled on Germany's, but skills taught by the Indonesian schools often do not align with private-sector needs. The unemployment rate is highest among vocational school graduates.

The current education and industrial policies are heading in different directions, Apindo's Mr Azam said, arguing that the sprawling archipelago still needs labour-intensive industries, such as textile and footwear.

"Capital-intensive industries are important for workers with higher education, but it doesn't mean we abandon the labour-intensive sectors," Mr Azam said. "For a nation as big as Indonesia, we need both."

Of the three presidential contenders, only former Jakarta governor Anies Baswedan has pledged to revive labour-intensive sectors.

Focusing his campaign on tackling inequality, Mr Anies has pledged to review Mr Widodo's flagship jobs creation law to strengthen labour protection and called for an audit of the nickel industry, although he also wants to maintain the downstreaming policy.

Defence Minister Prabowo Subianto, the favourite in the race, and former Central Java governor Ganjar Pranowo have both pledged to expand Mr Widodo's downstreaming policy to other commodities.

Middle-income trap

The economic benefits of Indonesia's young demographics are expected to peak between 2030 and 2040.

After that time, the population gets older, making it harder for the nation to avoid a middle-income trap and keep its per capita economic growth from stalling.

Economists say Indonesia needs 7 per cent economic growth annually to churn out enough jobs for its population.

With the next administration governing the country until 2029, the responsibility for the next leg of growth will fall on Mr Widodo's successor.

A big challenge for the new president is the increasing use of automation and robots, none of which was addressed in detail by the candidates, said Mr David Sumual, an economist with major lender BCA.

Central bank governor Perry Warjiyo said policymakers must think about the quality of Indonesia's economic growth going forward.

"We have to think about how we define what our goal of becoming an advanced economy means," he told reporters last weekend, raising concerns about the widening income disparity.

Source: https://www.straitstimes.com/asia/young-indonesians-wary-of-election-promises-as-jobs-boom-eludes-the