Jobs and the Future of Work

How this country used EdTech to add 14 million jobs during the pandemic

Many of Indonesia's workforce are informal and undocumented. Addressing this through education is improving financial inclusion and increasing wages.

Many of Indonesia's workforce are informal and undocumented. Addressing this through education is improving financial inclusion and increasing wages. Image: REUTERS

Denni P. Purbasari
Executive Director, Kartu Prakerja
Eric S. Darmanto
Senior Advisor, Kartu Prakerja
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Indonesia

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  • By 2025, 85 million jobs will have been disappeared, to be replaced by 97 million new, different roles — education and re-skilling is key to weathering this transition.
  • Indonesia is re-training its workforce through a comprehensive adult digital learning programme that has increased salaries and improved financial inclusion.
  • Programme participants — many of whom hail from rural areas — saw their monthly incomes rise by an average $8.20.

While the COVID-19 pandemic had a catastrophic effect in many economies and job markets worldwide, some weathered the storm better than others. Indonesia weathered it remarkably well — it actually managed to add 14 million jobs.

A significant part of how they did this was by empowering disenfranchised and informal workers, a strategy that is critical for Indonesia as it emerges from the pandemic, and could be followed by many other countries looking to bolster their economies.

Indonesia has maintained an above-average labour force participation rate and, in 2022, that figure almost fully returned to pre-pandemic levels. Its workers also adapted to new ways of working during the pandemic. In the World Economic Forum’s 2020 Future of Jobs Report, over 91% of Indonesian companies surveyed were pivoting to provide opportunities to work remotely, and over 80% were focusing on retraining and on-the-job learning.

Despite these efforts, many of Indonesia’s young population lack the skills that its growing economy needs and, as the world’s fourth largest population, ensuring equitable access across remote areas to new skills and jobs is a challenge.

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A changing jobs landscape

The World Economic Forum predicts that by 2025, 85 million jobs will have been displaced by a shift in the division of labour between machines and humans, but that 97 million new roles will emerge. Weathering this transition will be a challenge for every country.

Youth unemployment is a particular challenge in many regions, and Indonesia is no different. 22% of young people in Indonesia are considered NEETs — not in education, employment or training. Of this group, around 6% have a university-level education. More must be done to bridge the gap between schooling and industry demand to ensure that individuals and companies alike benefit from the investment of formal education.

In addition, most companies do not invest enough time or resources into on-the-job training. This leaves the burden of reskilling and upskilling on the individual, but the workers who are in most need of reskilling and upskilling seldom have the funds to cover training costs or know where to go to receive training.

Most Indonesian firms are informal micro, small and medium enterprises (MSMEs) and most workers are undocumented informal workers on a low income. This makes identifying and communicating with them challenging. Workers who want to learn a new skill often cannot afford the training cost, do not know where to find the right training, or understand how beneficial the training will be to their earning potential.

To address unemployment and increase labour market resilience, pathways to employment along with the benefits of reskilling and upskilling need to be made clear. Governments and companies also need to invest in preparing employed and unemployed citizens for changes in the labour market.

EdTech for digital transformation in Indonesia

To address these challenges, the Indonesian Government launched Kartu Prakerja: a digital adult learning programme for productive employment.

Kartu Prakerja seeks to empower unemployed and low-income 18-64-year-old Indonesians with the skills, knowledge and resources necessary to gain fruitful employment.

Those who pass the online screening and verification receive $67 to spend on online courses and educational institutions. They are then connected to courses from 156 different training institutions across 6 digital platforms, where they can undertake training according to their job searching requirements, current experience and skill level. Beneficiaries receive training recommendations suited to their interests or can search for what is on offer in the training library. After completing the training, they receive a certificate which can be used to apply for jobs in the relevant industry or start their own business.

Alongside the training, Kartu Prakerja beneficiaries can also view hundreds of job opportunities on the website dashboard, which can be customized based on the training that beneficiaries have taken. As an incentive for completing the courses, beneficiaries also receive $41 per month for four months, which acts as a safety net to buy food and other necessities while training.

To date, Kartu Prakerja has reached 14 million people across 34 provinces and 514 cities or towns. Of these, 62% live in villages and 18% have only a primary school education or less, with most never having taken part in any skills training before. Despite this, a large percentage of beneficiaries bought more training with their own money when the initial training credits had expired. This has increased both the demand and supply for reskilling and upskilling initiatives, as EdTech companies added more courses to the portal to respond to training requests.

Upon completion of the programme, 18% of participants had a higher probability of starting a new job and 30% had a higher probability of starting their own business. Participants also became more proficient in job searching and preparation; 172% of participants were more likely to use training certificates during job searches and 10% were more likely to use the internet for work. On average, participants’ monthly incomes rose by $8.20.

Millions of people across Indonesia have benefited from Kartu Prakerja
Millions of people across Indonesia have benefited from Kartu Prakerja Image: Kartu Prakerja Program Management Report 2021

Financial and digital inclusion for the future

The programme has also accelerated financial inclusion. Kartu Prakerja is the first Indonesian Government programme to require beneficiaries to possess either a bank account or e-wallet to transfer the funds, meaning that 65% of the beneficiaries who previously did not have an e-wallet or bank account entered the modern financial system for the first time.

Education for employment is a long-term investment. By promoting digital literacy and increasing financial inclusion along the way, beneficiaries pick up the competencies they need to participate in fast-digitalizing economies, avoiding a widening digital divide. These factors are critical to unlocking Indonesia’s potential and ensuring equal access to educational opportunities as the stepping-stone to a brighter future.

Indonesia's Kartu Prakerja initiative brings together 200 local private companies and public sector agencies to help deal with labour market shocks and induce entrepreneurship. The World Economic Forum is seeking to harness public-private collaboration in multiple countries by bringing together government and business stakeholders in a Jobs Consortium.

The Jobs Consortium is a coalition of leaders promoting good job creation through country-level commitments and global best practice sharing. The Jobs Consortium builds on four key enablers of good job creation: enhancing labour market foresight, crowding in job-creating investments, improving job quality and wages and facilitating job matching and transitions.

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