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NEWS UPDATES Asean Affairs        28  March 2011

High youth unemployment in Indonesia

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Youth unemployment in Indonesia is five times higher than average, presenting a clear challenge to the government, according to the World Bank.

“In every country, the youth unemployment rate is usually two or three times as high as the average population. In Indonesia, however, it is five times higher,” said Tamar Manuelyan Atinc, vice president for human development at the World Bank.

Atinc spoke to the Jakarta Globe at the East Asia Conference on Skills Development for Productivity, which took place at the Shangri-La hotel in Jakarta from Wednesday to Friday.

Indonesia, which averages between 7 and 8 percent unemployment, has more than 30 percent of its population between 19 and 24 years old.

“[Indonesia] has wealth in terms of this very young population,” Atinc said. “If it uses it wisely, invests in them so they become productive individuals, it will bring tremendous impact. If not, it could be a drag,” she said.

She added that high unemployment could eventually create social tension, especially among young people who graduate from school without the experience employers demand of new hires.

In her presentation on the first day of the conference, Atinc said skills are one of the main factors in developing a country’s economy, in addition to good macroeconomic policies and a positive investment environment.

“Ensuring there is a skilled workforce that can deliver and be productive is just as important,” she said, referring to a chart that showed countries with good access to quality secondary and tertiary education do better in terms of global competitiveness.

Fasli Jalal, the deputy education minister, told the Globe the government had started a scheme called Program Wirausaha Mahasiswa, or Entrepreneurship Program for University Students, in which the government prepares around $10 million each year to allow university students in their sixth semester to bid for reimbursement to fund their business proposal.

“We have an independent panel that determines if a proposal is good enough. Once it is agreed by the panel, they can set up a start-up business,” Fasli said.

The program, launched last year, gives students two years to pass entrepreneurship courses in their universities.

“We have about Rp 100 trillion [$11.5 billion] in funds for the new businesses, but they are required to have at least two years of experience, so it would be difficult for fresh grads,” he said. The program has received more than 35,000 proposals this year, Fasli said.

Increasing the number of entrepreneurs in Indonesia has been a goal of the government for some time. Possible reasons for a lack of entrepreneurial spirit include educated youth aspiring to be salaried employees, difficulty in accessing financing, a lack of business skill and confusing regulations, Atinc said.

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