Between Education and Skills in the Labour Market
Dewi Rahmawati Nur Aulia
Social Researcher at The Indonesian Institute, Center for Public Policy Research (TII)
The pandemic and slowing economic growth have impacted Indonesia’s economic recovery. In addition, the discovery of technological advancements such as artificial intelligence is now a new threat that can lead to increased unemployment globally. Therefore, with this, a solution is needed to face the various challenges of modernization.
Labor Market Data in Indonesia 2022-2023
The Work Employment and Social Outlook Trends 2023 report states that global employment growth will only reach 1.0 less than half the rate in 2022. Meanwhile, global unemployment is expected to rise (with the unemployment rate reaching 5.8 percent), which marks a reversal of the decline in unemployment seen between 2020-2022 (industrialrelationsnews.ioe-emp.org, 2/2023).
Through the same report in 2024, the International Labor Organization (ILO) gave its predictions about the impact of the economic slowdown on the global labor market. The results of the report provide an overall picture related to various crises and continuing international conflicts. The report also shows that the current situation tends to force more workers to accept lower-quality, lower-paid jobs, and lack job security and social protection, thus emphasizing the inequality exacerbated by the Covid-19 crisis (industrialrelationsnews.ioe-emp.org, 2/2023). The labor situation can also be supported by the country’s unstable political climate.
Based on the report on Indonesia’s employment situation in February 2023, the number of labor force based on the National Labor Force Survey (Sakernas) was 146.62 million people, an increase of 2.61 million people compared to February 2022 while the Labor Force Participation Rate (TPAK) increased by 0.24 percentage points. In addition, the open unemployment rate in February 2023 was 5.45 percent, a decrease of 0.38 percentage points compared to February 2022. Even so, there are still many people who work in the informal sector where there are 83.34 million people (60.12 percent), an increase of 0.15 percentage points compared to February 2022 (bps.go.id, 21/1/2024). With the description of the data that has been mentioned, it can be concluded that post-pandemic employment figures in Indonesia have diverse dynamics.
The increase in the labor force participation rate can be caused by several factors such as years of education, gender, marital status, and others. In addition, the open unemployment rate, which fell by 0.38 points, also shows a positive relationship between the two. Open unemployment is a type of unemployment that occurs due to a mismatch between education and work. Ideally, individuals work following their educational background and competition standards. However, many individuals or communities are trapped in jobs that are different from their scientific background, so they need to improve their knowledge and skills through education and training. Not a few of these education graduates take the type of work that is in the informal sector. Therefore, it is necessary to align the field of education with the competency base so that graduates are expected to be quickly absorbed into the labor sector.
The sections below will explain further about the importance of education and skills in the labor market.
Education and Skills in the Labor Market
Education in general can be interpreted as a systematic conscious effort made to transfer knowledge to change individual behaviour. In addition to changing behavior, education is still considered the best gateway to changing the degree of a more prosperous community life.
According to Law Number 20 of 2003 concerning the National Education System, education is a conscious and planned effort to create a learning atmosphere and learning process so that students actively develop their potential to have religious spiritual strength, self-control, personality, intelligence, noble character, and skills needed by themselves, society, nation and state (Kosim, 2021). Concerning Outcome, in general, education (especially formal and higher education) is expected to produce better quality human resources. The graduates who come out are expected to have minimum skills such as being able to manage information, analyze, draw conclusions, and make decisions wisely.
In addition, there are other types of education held in shaping the expertise/skills of human resources who are ready to work such as vocational education. Vocational education is a special form of education held by education providers to prepare expertise and skills through a training process. Even so, the number of vocational education organized today is still smaller. Referring to this, the Ministry of Education and Culture (Kemendikbud) continues to strive to carry out the vision-mission of education development set at the beginning of the Jokowi-JK government. Three things that have become the government’s priority programs in the field of education at this time are the Smart Indonesia Program (PIP), Strengthening Character Education (PPK), and the revitalization of vocational education at the upper secondary level (SMK / Vocational Education) (Kemdikbud.go.id, 19/5/2017).
Furthermore, based on data from the Central Bureau of Statistics in early November 2023, the open unemployment rate as of August 2023 was 5.32 percent, a decrease of 0.54 percent compared to August 2022. Compared to the conditions in February 2023, the unemployment rate also fell by 0.13 percent (Kompas. id, 27/11/2023). The decline in the open unemployment rate is positively appreciated as an indicator of the recovery of the economy after the pandemic. However, if it is further detailed, unemployment among scholars with higher education levels has increased.
Source: Kompas.id, 27/1/2024.
Bachelor’s degree graduates with a skill outcome as an analyst have a smaller chance of finding a job quickly. College graduates tend to have a longer time to obtain employment following their skills. Conversely, education with a diploma level is still considered faster to get the opportunity to work. This is because some sectors of economic growth, especially in the industrial sector, require human resources who are ready to work immediately.
Some sectors such as industry (including labour-intensive activities) require skilled people. These skills can only be obtained through a process of education and training. Training is the learning and technical familiarisation in doing a job, For example, the textile and textile products (TPT) industry. One type of manufacturing industry that prioritizes export-oriented labor-intensive sectors, this industry has become a sector that contributes significantly to the national economy. In January-April 2022, the textile industry became a foreign exchange earner through its export achievements with a value of USD 5.36 billion. However, the national textile industry still suffers from a significant shortage of ready-to-use manpower (HR) supply of 135,000 people per year (Kemenperin.go.id, 27/8/2022). Therefore, to bridge this need, the Industrial Human Resources Development Agency (BPSDMI) of the Ministry of Industry continues to run various programs, including the construction of an industrial vocational education unit at the Surakarta Textile and Textile Products Industry Community Academy in 2015. With the development of vocational-based education units carried out by BPSDMI, human resources will be more easily absorbed, especially to fulfill the industrial sector.
In addition, the quality of skills is obtained from repeated practice activities. The result of this technical habituation is expected to increase not only the quantity but also the quality of production. A skilled workforce is expected to work effectively and efficiently and avoid unnecessary costs. This also explains that the more skilled human resources will also be able to increase the value of the degree of wages that will be achieved. Furthermore, Vocational education, in this case, is still considered by some observers as the only type of education that can fulfill the industrial labor market. In fact, in the context of the world of work in any field, there are other important variables needed such as the ability to solve problems. This of course can only be obtained if the individual has been in an academic education environment.
The next section below will explain the intersection between education, skills, and the labor market.
Discovering the Intersection between Education, Skills and the Labour Market
Higher education institutions should be able to read the needs of the labor market in the future. In time, the industrial labor market for both goods and services that were previously carried out by humans will be replaced by modern technology. In this case, modernization is a necessity that cannot be avoided. There are cases of termination of employment that occur globally today due to industrial modernization. On the other hand, advanced technology also enables efficiency and promotes innovation which also contributes to human progress and welfare. It also creates other opportunities for market labor, including in the creative industry.
Modernization of agriculture during the rice harvesting process, for example. The agricultural sector, especially in processing the results of planting (harvesting) rice, has now experienced rapid progress. This progress can be observed from the harvesting process that no longer uses human labor (manually) but has been assisted by a machine called a Combine harvester. Based on how to control the harvesting machine when operating, this machine can be divided into walking type and riding type combined harvester. Walking type combine harvester is a combined rice harvesting machine when operated by the operator walking behind the machine. While riding type combine harvester is a combined rice harvesting machine which when operated by the operator rides on the machine being controlled (Sulaiman et al., 2018). The growing sophistication of technology today, will make the process of processing rice crops more effective and efficient. Similarly, the development of technology through artificial intelligence such as (Artificial Intelligence). The existence of AI can be a potential opportunity as well as a challenge in replacing the type of work done by humans.
Therefore, it is imperative to promote education because it is essential as the basis for introducing literacy and numeracy to humans. In addition, without education, humans will live in ignorance and shallowness. Education is not only a source of knowledge but also a place to implement various experiential values into meaningful life learning, in various issues and contexts. Hence, although skill demands are still prioritized in the domain of industrialized societies, without knowledge and literacy, human beings are just regulated pieces of machinery or objects of development rather than enlightened and empowered resources. This means that the demands of education become as important as the mastery of skills.
In the following section, we will explain the importance of digital learning as an effort to improve the quality of human resources.
The Importance of Upgrading Skills through Digital Learning
The technological disruption that has occurred in recent years is considered capable of changing all patterns of human activity, technological developments can make almost all work activities can be carried out without being limited by place and time. This includes efforts to improve skills in meeting labour market needs are also getting easier.
For example, remote work is developing today. After the pandemic, this form of work has become a type of work that is carried out by various people around the world. Work carried out through an internet connection network allows everyone to be able to interact without being hindered by the limits of space and time. In addition, the learning process through digitalization makes it easier to gain knowledge without having to face the teacher directly.
Furthermore, the digital learning process makes it easy for everyone to gain new knowledge and skills. It also provides opportunities for creative and innovative learning and teaching methods. This is because technology and digitalization are tools to help humans obtain global information quickly and to make our jobs easier. Therefore, mastery of technology is an important prerequisite for accessing the digital world.
References
Books
Kosim, Muhammad. 2021. Introduction to Education Science. Depok: PT Raja Grafindo Persada.
Sulaiman, et al., 2018. Indonesia’s Agricultural Mechanisation Revolution. Jakarta: IAARD Press.
Journals and Reports
BPS. 2023. State of Indonesian Labour in February 2023. Accessed on 21 January 2024, at 14.00 PM, from https://www.bps.go.id/id/publication/2023/06/09/5ce5c75f3ffabce2d6423c4a/keadaan-angkatan-kerja-di-indonesia-februari-2023.html.
Directorate General of Higher Education. 2020. Higher Education Statistics. Accessed on 24 January 2024 at 15.00 PM, from https://pddikti.kemdikbud.go.id/asset/data/publikasi/Statistik%20Pendidikan%20Tinggi%202020.pdf.
ILO. 2024. Work Employment and Social Outlook Trends 2024. Accessed on 18 January 2024, at 10.00 AM, from https://www.ilo.org/global/research/globalreports/weso/WCMS_908142/lang–en/index.htm.
IOE. 2023. World Employment and Social Outlook: Trends 2023 (an ILO report). Accessed on 18 January 2024, at 10.00 AM, from https://industrialrelationsnews.ioe-emp.org/industrial-relations-and-labour-law-february-2023/news/article/world-employment-and-social-outlook-trends-2023-an-ilo-report.
Websites
Gianie. 2023. Unemployment of College Graduates Increases. Accessed on 27 January 2024 at 09.00 AM, from https://www.kompas.id/baca/riset/2023/11/27/pengangguran-lulusan-perguruan-tinggi-pascapandemi-meningkat.
Kementerian Pendidikan dan Kebudayaan (the Ministry of Education and Culture). 2017. As Mandated by Nawacita, Smart Indonesia Programme Encourages Out-of-School Children to Return to School. Accessed on 27 January 2024 at 09.00 AM, from https://www.kemdikbud.go.id/main/blog/2017/05/sesuai-amanat-nawacita-program-indonesia-pintar-dorong-anak-tidak-sekolah-kembali-ke-sekolah.
Ministry of Industry of the Republic of Indonesia. 2022. Textile Industry Needs 135,000 Workers, Ministry of Industry Ready to Supply. Accessed on 30 January 2024, at 10.00 WIB, from https://kemenperin.go.id/artikel/23493/Industri-TPT-Butuh-135.000-Tenaga-Kerja,-Kemenperin-Siap-Pasok.