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Jobless Gen-Z and demographic disaster

Jakarta Post Editorial - June 5, 2024

Jakarta – The news about the country's youth is by no means good, not only because the Education, Culture, Research and Technology Ministry has proposed higher university tuition fees, but also due to the finding that almost 10 million people aged 15 to 24, known as Gen Z, are unemployed.

The staggering figures lead us to wonder what is wrong with our education system and labor market. Are there too few jobs or are these young people simply unqualified? And if many do not meet the required standards, why bother spending more on education?

In fact, the unemployment rate among people aged 15 to 29 has been high for the past five years, according to Statistics Indonesia (BPS). For the 15-19 age group, it was recorded at 29.08 percent in 2022, higher than in previous years, including during the start of the COVID-19 pandemic in 2020, when it amounted to 24.34 percent.

For people aged 20-24, the unemployment rate has fallen 1.69 percent since the pandemic and was recorded at 17.02 percent in 2022.

The figures are also much higher than the annual average rate of unemployment, which stood at around 5 to 7 percent in the same period, meaning there is much less unemployment among other age groups.

Kompas daily highlighted in a recent report that among the causes of the high unemployment rate was the declining number of jobs available in the formal sector. Between 2019 and 2024, the formal sector could only absorb 2 million of the workforce, a free fall from 8.5 million jobs in 2014-2019 and 15.6 million in 2009-2014. Meanwhile, tuition fees at public universities continued to increase by around 1.3 percent per year.

This may contribute to unemployment among Gen-Z. But it is also worth noting that for those in the 15-19 age group, not many jobs are up for grabs in the formal sector for those who only finish high school or less. Creating jobs in the non-formal sector or those emphasizing skills rather than a university diploma might be more effective in solving the unemployment problem.

For those in the 20-24 age group, it seems that the government's Merdeka Belajar Kampus Merdeka (Freedom to Learn, Independent Campus: MBKM) initiative, which includes requiring university students to make a significant effort at internship may help reduce unemployment, but not fast enough.

Since 2015, Indonesia claims to have reaped the benefit of the demographic bonus, a population phenomenon in which the share of people in the productive ages of 15-64 is larger than the non-productive population. It is also called a dividend since it is expected that the economic growth generated by the productive population will overcome the burden caused by the non-productive one.

The tricky part is that it may become a disaster when the productive population fails to deliver the level of productivity required to lift the overall burden.

One of the big challenges for the government at the moment is to create jobs fast enough for the young population as their population keeps growing. Failure to do so may result in a rapidly increasing number of unemployed and a declining economy.

Rather than spending funds on mega infrastructure projects, it may be time for the government to invest in education, especially in programs that can enhance the skills of the young population and enable them to work independently. But more than that, it is important to realize the plans carefully.

The country has experimented with many big ideas to do this, from allocating 20 percent of the annual state budget for education, developing vocational schools and the MBKM. But none of this seems good enough since the government is still struggling to boost efficiency and fight corruption while having to cope with the consequences of a growing young population.

A more thorough review and careful planning in human development is imperative. This should not include desperate, short-term options like raising university tuition fees.

More careful planning and execution of policies to help our youth develop is key, otherwise we will endure a demographic disaster.

Source: https://www.thejakartapost.com/opinion/2024/06/05/jobless-gen-z-and-demographic-disaster.htm