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Indonesia – Failing to harness its management potential

24 September 2013

Indonesia is moving toward a USD 1 trillion economy, but the rapid economic growth and industrialisation has created a huge demand for high-quality human capital which the country is currently unable to meet, a regional recruitment firm has warned, reports the Jakarta Globe.

Karen Cariss, chief executive of PageUp People, a multinational talent management firm, said: “The shift in the economic focus of Indonesia from agriculture and production to service industries, which typically require more highly skilled workers, is compounding the talent shortage.”

A recent Boston Consulting Group study on the Indonesian labour market demonstrated the challenge of meeting the significant gap in middle management within the country.

It projects that by 2020, Indonesia will lack between 40% and 60% of the middle management required to fill existing positions; and 55% of that will be higher-skilled administrative or managerial jobs compared to the 36% today.

According to Purbaya Yudhi Sadewa, analyst at finance firm Danareksa, Indonesia will lose its competitiveness in the global market if it has to “attract high-skilled labour and is unable to send quality workers overseas.”

Therefore the positions created in the Indonesian economy, due to the expanding business sector, will cause an opposing economic slowdown in the future because the talent gap will not be met by the Indonesian workforce, according to Ms Cariss.

Currently, private-sector, especially multinational companies, are playing a leading role in efforts to enable Indonesians to fill the talent gap.

Ms Cariss added: “Multinational organizations are trying to bring their regional and global development programs to Indonesia and train managers and technical experts in order to meet their demand.”

While there are no quick solutions in filling this talent gap, two issues need to be addressed, experts have said, reports the Jakarta Globe. The first is how to boost the quality of education in Indonesia, and the other is enhancing the accessibility of jobs to Indonesians across the country’s 33 provinces.

Indonesia’s education system has been criticised for its failure to produce students that can compete globally. A 2009 Program for the International Student Assessment (PISA), which examined students’ competency based on several subjects; such as science, mathematics and reading, had ranked Indonesia below the Organization of Economic Cooperation and Development (OECD) average.

The government is instituting changes to the school curriculum, emphasising religious studies, nationalism, and Indonesian language ahead of English language and science, raising concerns that Indonesians will become less globally competitive. In 2013, the government has allocated RUP 287 trillion (USD 30 billion), or 20% of the state budget, for education.

PageUp People recently launched its “Apply Anywhere” program in order to tap into the opportunities provided by the mobile market in Indonesia. The program is a mobile-based recruitment solution designed to help global organisations reach job applicants anywhere, anytime via their mobile devices. As of June 2011, mobile phone subscriptions in Indonesia had reached 250 million, representing 105% of the population.

However, Cariss added, “there is no quick or magical fix, but by making future talent development a priority, Indonesia will slowly close the talent gap and achieve the success it should.”

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