Indonesia Strengthens Skills-Based Labor Market to Meet Industry Needs

The Indonesian government is strengthening its policy to build a skills-based labor market to respond to the rapid changes and diverse needs of domestic industries. This initiative aims to address the talent shortage, particularly in the manufacturing and digital economy sectors, and enhance the international competitiveness of workers. Specifically, vocational training programs will be expanded and their quality improved. Curricula designed to efficiently acquire the specific skill sets demanded by companies are expected to be developed. Furthermore, by closely collaborating with educational institutions and industries, and increasing opportunities for internships and on-the-job training (OJT), the aim is to cultivate talent that can immediately contribute in the field after graduation. Indonesia has achieved remarkable economic growth in recent years, but at the same time, the demand for talent with new skills is increasing with the advancement of its industrial structure. In particular, the progress of digital transformation (DX) is driving up demand for professionals such as IT engineers and data scientists. However, it is also pointed out that the current education system is not keeping pace with the speed of industries. To resolve such mismatches, the government is also focusing on investing in vocational school facilities and supporting the skill enhancement of instructors. Moreover, incentives to promote reskilling and upskilling for workers are being considered. This aims to create an environment where workers can continuously build their careers in today's rapidly changing society. The government emphasizes that this transition to a skills-based labor market is an essential element for Indonesia's sustainable economic growth and for strengthening its competitiveness in the international community.