Why Indonesia’s green jobs initiative and vocational training revival matter now

Many parents in Indonesia expect their children to find jobs quickly following graduation, with decent pay and workplaces. That is why many are sent to vocational schools – Sekolah Menengah Kejuruan (SMK) – so that they are better prepared to enter the world of work than their peers.

However, statistics counter the popular belief that this approach is likely to deliver success. As of August 2023, vocational school graduates have the country's highest unemployment rate, triple that of elementary-level graduates. Therefore, longer school years and vocational tracks do not correlate with employment chances, showing a mismatch between education and employment.

Indonesia has ambitiously sought to enhance workforce capabilities in recent years, ensuring its labour market becomes responsive, sustainable and equipped to face modern challenges. Central to this strategy is the fostering of green jobs, promoting a demand-driven approach and revitalizing technical and vocational education and training (TVET).

These initiatives integrate key policies such as the development of the labour market information system, among other key strategies stipulated by the country's leadership regarding TVET revitalization and the National Strategy for TVET Reform (Strategi Nasional/Stranas Vokasi).

These strategic policies have been in play since 2022 when the National Team for TVET Coordination – Tim Koordinasi Nasional Vokasi (TKNV) – was established. To ensure the workforce is rapidly absorbed by industry, representatives from the Indonesia Chamber of Commerce are on TKNV’s steering committee. Inputs from employers, the “demand side”, are expected to better align and update TVET policies. This notion can address the problem of mismatch.

Green jobs are those attempting to preserve or restore environmental quality. In the Indonesian context, as an archipelago state with high vulnerability to climate change, the shift towards green jobs is not just a policy preference. It is vital for mitigating the effects of climate disasters, reducing greenhouse gas emissions and ensuring sustainable development.

The push for green jobs coincides with global movements towards sustainability, helping to meet environmental targets and positioning the country as a competitive player in the global green economy. The Ministry of National Development Planning (Bappenas) has held the Indonesia Green Jobs Conference twice in 2022 and 2023.

Both events were attended by stakeholders and policymakers in the realms of job creation and environmental sustainability. Bappenas has also published the Occupation Map for green jobs, which encompasses strategic sectors such as renewable energy, manufacturing, agriculture, construction and services.

The demand-driven approach to workforce development focuses on aligning skills training with market needs, for which the labour market information system is pivotal. Collecting, analyzing and publishing data related to job vacancies, skills requirements and employment trends helps bridge the gap between labour supply and industry demand.

The system ensures that training programmes are relevant and tailored to the economy’s evolving needs, enhancing job placement rates and productivity.

To help build a world-class labour market information system, the World Bank supports the Ministry of Manpower through the Labour Market and Skills System Transformation for Labour Market Flexibility project, operational from 2024 to 2027.

Before the project’s inception, the World Bank assisted the Government of Indonesia with several labour demand surveys and analyses to lay out the information system’s blueprint.

The Indonesian Chamber of Commerce, as a demand-side representative within TKNV, has started building capacity to empower its network at the regional level. The Chamber is also creating a digital platform with labour unions to offer training for workers and job seekers.

Stakeholders have also made significant progress, making labour supply meet demand. The Ministry of Education and Culture, since 2019, has been pushing its flagship programme, SMK-PK (Sekolah Menengah Kejuruan – Pusat Keunggulan), which aims to improve selected vocational middle schools to initiate cooperation between schools and surrounding industries.

This programme has been complemented by transforming vocational schools from public schools into local enterprises called BLUD (Badan Layanan Usaha Daerah).

This transformation enables vocational schools to implement the “teaching factory” concept and generate income through commercial cooperation with industries. They can also tap the “matching fund” provided by the Ministry.

The programme comes with a new measurement called “social returns of investment,” encompassing broader expected outcomes, such as funds generated through cooperation and improved students’ skills.

Vocational training has also seen several innovations. Since 2017, the Ministry of Manpower has been developing community training centres (BLK Komunitas) in regions with limited TVET facilities. In this programme, the Ministry of Manpower selects community proposals, such as construction projects or training packages, and assists.

The implementation of BLK Komunitas until 2023 has resulted in 4,282 workshop buildings. However, less than 300 units have been considered sustainable as business entities, allowing them to operate without government support.

Community-based TVET facilities can broaden the scope of opportunity to garner public funds and collective support. BLK Komunitas Panasonic Gobel is an example of cooperation between employer and labour union in establishing a training facility with the support of the Ministry of Manpower.

In 2022, Indonesia enacted Presidential Regulation Number 68 of 2022, underscoring its commitment to revamping its TVET system. The details of this commitment are laid out in Stranas Vokasi.

These regulations aim to upgrade the quality of vocational training and education, ensuring it meets international standards and addresses the specific skill sets required in the workforce.

The policy supports establishing TVET centres of excellence, enhances the quality of vocational educators and promotes partnerships between industry and educational institutions. More importantly, it aims to convene stakeholders.

The TVET National Team was established as a strategic body to oversee and coordinate vocational training nationwide. Its role is to ensure that vocational training programmes are efficiently executed and align with national economic goals.

This strategic focus on green jobs, a demand-driven approach and TVET revitalization is now crucial due to several pressing factors:

1. Economic recovery post-COVID-19: As Indonesia recovers from the economic disruptions caused by the pandemic, there is a significant need to reskill and upskill the workforce to tackle the new economic environment.

2. Technological advancements: Rapid technological changes have reshaped industries and workers must train in these new technologies to remain competitive.

3. Demographic shifts: Indonesia’s current demographic dividend is both an opportunity and a risk. A skilled workforce means this demographic advantage can be effectively utilized, whereas a skills mismatch could exacerbate unemployment and underemployment.

Indonesia’s efforts to improve the state of work through the development of green jobs, a demand-driven approach and TVET revitalization are not just timely but imperative for the nation’s sustainable development and competitive edge in the global marketplace.

By aligning educational outcomes with market demands and focusing on sustainability, Indonesia is paving the way for a resilient and prosperous future. These initiatives can provide a roadmap for other nations to emulate.

To maximize the impact of these initiatives, Indonesia is collaborating with the World Economic Forum to launch an Indonesia Jobs Accelerator, joining a network of over 35 countries in the Forum’s Global Learning Network working to increase high quality economic opportunities and share best practice solutions.

Indonesia's Jobs Accelerator will focus on creating a robust, accessible and interoperable labour market information system, improving wages, labour protection and labour relations and upgrading job training to be demand and industry-driven.