Unemployment is one of the most pressing problems in Indonesia. Although Indonesia’s economy is growing steadily, unemployment remains a major challenge for the country. According to data from the Central Statistics Agency (BPS) in February 2024, the open unemployment rate (TPT) stood at 5.86%. This figure may sound small, but with a population of more than 270 million, the number of unemployed people reaches around 8.4 million. Why are so many people still unemployed? What are the causes, and how can we help solve this problem? This article will explore the problem of unemployment in Indonesia, its causes, and the solutions that we can do.
Why is unemployment still high in Indonesia?
- Gap Between Skills and Industry Needs
One of the main factors of high unemployment in Indonesia is the mismatch between the skills of job seekers and the needs of the industry. Indonesia has around 14 million new workers every year, but unfortunately many of them do not have skills that match the demand of the job market.According to data from the Ministry of Manpower, about 50% of the available workforce are high school graduates who lack technical or vocational skills. Meanwhile, key industries such as information technology, manufacturing, and services require workers with specialized skills such as coding, data management, and machine technicians. As a result, many graduates cannot be absorbed by the job market because their skills do not match what is needed.
- Uneven Economic Growth
Indonesia’s economic growth tends to be concentrated in big cities such as Jakarta, Surabaya, and Bandung, while other regions are still lagging behind. BPS data shows that DKI Jakarta has a high labor force participation rate with relatively low unemployment (around 4.2%). In contrast, provinces in eastern Indonesia such as Papua and East Nusa Tenggara have much higher unemployment rates, reaching 7-8%.This uneven economic growth has led to disparities in the provision of employment. In less developed regions, employment opportunities are limited, and many residents end up migrating to big cities in search of jobs, which they often do not find.
- Lack of Jobs for Unskilled Workers
Along with the development of technology and automation, many industries have shifted to using machines and advanced technology, reducing the need for manual labor. In the manufacturing sector, for example, the use of robots and automation technology has reduced the need for low-skilled workers.According to a 2023 World Bank report, around 30% of jobs in Indonesia’s manufacturing and agriculture sectors are at risk of being replaced by automation in the next 10-20 years. This is bad news for the unskilled workforce, as they will find it increasingly difficult to find jobs in the future.
- Long-term Impact of COVID-19 Pandemic
The COVID-19 pandemic has had a significant impact on the Indonesian economy. At the peak of the pandemic in 2020, around 2.5 million workers in Indonesia lost their jobs, according to data from the Ministry of Manpower. Although the economy is recovering, many workers are still unable to return to their jobs or find new ones, especially in sectors such as tourism, hospitality, and retail that were particularly hard hit by the pandemic.Companies in these sectors have seen a sharp drop in revenue, forcing them to reduce headcount or even close down. Despite vaccinations and the reopening of the economy, the long-term impact of the pandemic is still being felt, especially for workers who have lost their jobs and do not have the skills to transition to other sectors.
How Can We Help Address Unemployment?
Tackling unemployment requires a collective effort from the government, private sector, and society. There are several concrete steps that can be taken to help reduce unemployment in Indonesia:
- Improving Skills through Education and Training
One of the most effective ways to overcome unemployment is to improve the skills of the workforce. Skills training programs that are in line with industry needs are needed. The government has launched the Pre-Employment Card program that aims to provide skills training to job seekers. By the end of 2023, the program has provided training to more than 13 million participants.However, programs like this need to be scaled up and tailored to the specific needs of the industry. Collaboration between the government, industry and educational institutions is crucial to ensure that the training provided is relevant and effective.
- Developing the MSME Sector
Micro, Small, and Medium Enterprises (MSMEs) are a highly potential sector in creating jobs. Data from the Ministry of Cooperatives and SMEs shows that MSMEs account for around 60% of total employment in Indonesia. Therefore, support for MSMEs is very important in an effort to reduce unemployment.This support can be in the form of easy access to capital, business training, and wider market access. With the development of MSMEs, more jobs can be created, especially in areas where economic growth is still lagging behind.
- Utilizing Productive Zakat Program
Another effective way to help reduce unemployment is through productive zakat program. Productive zakat is a form of zakat that is used to help mustahik (zakat recipients) to be economically independent. A clear example of the implementation of productive zakat can be seen from the programs run by Dompet Dhuafa.
Dompet Dhuafa, for example, has launched various productive zakat programs that aim to provide business capital, training, and mentoring to the poor so that they can start businesses and escape poverty. One successful program is the provision of capital assistance to small farmers in rural areas, enabling them to expand their agricultural businesses and increase their income.
According to Dompet Dhuafa’s annual report, by 2023, the productive zakat they distributed had helped more than 50,000 poor families to start their own businesses and reduce dependence on social assistance. This shows that productive zakat not only helps tackle unemployment, but also empowers people to achieve economic independence.
Unemployment in Indonesia is a complex problem caused by various factors, ranging from the skills gap, uneven economic growth, lack of employment for less skilled workers, to the long-term impact of the COVID-19 pandemic. However, with concerted effort, this problem can be overcome.
One effective way to help reduce unemployment is through productive zakat programs, which not only provide short-term assistance, but also help mustahik to achieve economic independence. With support from the community, government, and zakat institutions like Dompet Dhuafa, we can help more people get out of the unemployment cycle and achieve a better life. Let us contribute and be part of the solution to the unemployment problem in Indonesia.
