Skills for the Labor Market in Indonesia (Directions in Development)

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It also reflects the way that a range of elite actors, including bureaucrats, political leaders, and business people, have often stymied efforts to improve the quality of the education system. They also spawned the emergence of major domestic business conglomerates, many owned by family or friends of senior bureaucratic figures, [33] the competitiveness of which rested on their political connections. This alliance of forces maintained its political and social dominance under the New Order by securing control over parliament, the bureaucracy, and the courts; restricting opportunities for independent organisations; promoting economic development; lubricating patronage networks; and harshly repressing dissent.

Skills mismatch

The implosion of the New Order system saw its principal patron, President Suharto, resign from office. However, these developments did not eliminate the role these forces played in politics and business. These elements have had little interest in the development of a high-quality education system producing strong learning outcomes. Their focus has accordingly been on expanding the scope or reach of the education system rather than improving its quality.

They have also had an interest in limiting the public funding consumed by the education system to ensure that government resources are concentrated in areas of public spending such as infrastructure that offer them better opportunities to accumulate rents. Indonesian businesses have long complained of difficulty in recruiting skilled local workers to fill professional and management positions.

However, their lobbying efforts have tended to focus on promoting more flexible labour regulations and securing various forms of government largesse rather than on education quality. But such pronouncements have been the exception rather than the rule. Early in the New Order period they were pushed aside in favour of bureaucrats who bought their positions at schools in exchange for the opportunity to make money through corruption and fees or were given them as a payoff for support to higher political or bureaucratic officials.

Ambitious teachers or academics have accordingly focused on securing senior administrative positions that provide opportunities to supplement their income through corruption or consulting and outside teaching work, rather than upgrading their qualifications, improving the quality of their teaching, or producing traditional research outputs. At the same time, schools and HEIs have become vehicles through which political elites have mobilised votes at election time and exercised control. The collapse of the New Order saw the removal of some of these requirements.

However, the PGRI has remained the dominant institution for teacher representation and has remained closely connected to government, especially at the regional level. The transition to democratic rule increased the scope for these forces to influence government policy by removing key obstacles to political organisation, opening up new entry points into the policymaking process, and creating an incentive for politicians and political parties to promote redistributive policies for electoral reasons.

To the extent that the Indonesian Government has sought to enhance education quality in the post-New Order period it has done so primarily through the adoption of reforms aimed at enhancing corporatisation, accountability, and competition in the education sector. During the New Order, government technocrats and their allies in the donor community exercised little influence on education policy.

This allowed technocrats to introduce a range of education reforms that emphasised more autonomy for educational institutions, academic freedom, and openness to investment by foreign educational institutions. This clash between reformers and those forces resistant to change left the country without a viable strategy for improving the quality of the education system.

The underlying philosophy of the law was that educational institutions needed not just academic freedom but also managerial and financial autonomy in order to improve educational standards and quality. Well-connected elements — specifically the owners of private HEIs — mobilised in opposition to the law because of fear that the change in legal status would mean they had less control over their HEIs and the revenues they generated. In their case, the concern was that greater autonomy for public HEIs and public schools would entail higher fees at these institutions and reduced access for the poor.

The government responded to this decision by enacting a new higher education law two years later that offered a broader array of options in terms of the legal status of HEIs. However, efforts to promote better education quality and learning outcomes through changes to the legal status of these institutions were otherwise effectively stymied.


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The policy on international standard schools attracted opposition from a range of public groups including anti-corruption activists, education activists, trade unionists, and parents. In January , the Constitutional Court ruled in their favour, ending the international standard schools policy. Perhaps most importantly, political resistance to reform also derailed efforts to implement a new teacher certification program in a way that served to enhance teacher quality.

This program was established following recommendations by a World Bank—Bappenas Task Force in the late s that the government link future pay raises for teachers to improvements in teacher skills and knowledge and PGRI demands to introduce new legislation in order to improve teacher welfare. Led by the PGRI, they lobbied the national parliament — which had control over the budget for implementation of the competency tests — to have this element of the model thrown out, presumably threatening to mobilise the teacher vote against politicians who stood in their way.

A compromise system that involved preparation of teacher portfolios and a hour training program proved to be problematic in practice as corrupt behaviour on the part of teachers, education agency officials, and staff at teacher education institutions undermined both forms of assessment. These political dynamics and their effects have important implications for Australian education providers, especially universities and vocational education and training VET providers, both of which are heavily engaged in international education.

In recent decades, Australian universities and VET providers have sought to improve the quality of their offerings, enhance competitiveness, and maintain financial viability. They have done this by, among other things, attracting international students, creating new overseas study opportunities for Australian students, forging international research linkages, and establishing overseas campuses.

However, political obstacles to improved education quality and reform in Indonesia impose constraints on the extent to which they can pursue these endeavours through engagement with Indonesia.

International students : Australian universities and VET providers have been extremely successful in attracting full fee-paying international students in recent years including from Indonesia. In , Indonesia ranked ninth as a source of international students in Australia, accounting for 2. This has in part reflected the fact that Indonesians have a lower capacity to pay for international education than people in wealthier countries. But it is also due to the lower quality of Indonesian graduates: with weak academic skills, prospective Indonesian students have often found it difficult to meet entry requirements at Australian universities and VET providers, especially English language proficiency requirements.

If Indonesia is unable to resolve the political challenges surrounding education quality, Australian universities and VET providers will likely continue to look elsewhere in recruiting international students, although there may be greater scope for VET providers to recruit Indonesian students given their generally lower entry requirements. Overseas study opportunities for Australian students: Although Australian students at Australian universities and VET providers are increasingly spending time overseas as part of their studies, only a small number choose to study at Indonesian educational institutions.

The reasons for this are complex but relate in part to negative perceptions among Australian students about the quality of Indonesian educational institutions.


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  5. The Australian Consortium for In-country Indonesian Studies, a major provider of Indonesia-based study programs for Australian university students, has experienced solid demand for its in-country language and short course practicum-based programs in professional and applied fields in recent years, in the latter case because these tap into growing student demand for work-integrated learning opportunities. It is possible that such programs will continue to grow in future. However, it is harder to see Australian universities and VET providers investing significant resources in the development or expansion of regular, classroom-based study options outside language training in the absence of significant improvements in education quality.

    Research linkages : In recent years, Australian universities have dramatically expanded collaborative research endeavours with foreign HEIs, particularly in the Asia-Pacific. As long as Indonesian HEIs lack the capacity to produce world-class research, Australian universities will have little incentive to engage in joint research activities except through Australian Government initiatives specifically aimed at funding such activities such as the Australia—Indonesia Centre. However, no Australian university has so far established a campus in Indonesia.

    This is because the Indonesian Government has baulked at passing regulations implementing the relevant provisions of the higher education law in the face of strong political opposition from HEIs and public actors — opposition that has been part of the wider resistance to market-oriented education reform discussed above.

    In November , President Joko Widodo stated that he wished to see foreign universities operating in Indonesia. One month later Vice-President Jusuf Kalla said that the government intended to allow them to do so. Nasir has already indicated that it will not be open slather for foreign universities; they will be required to partner with domestic private universities and the Indonesian Government will determine what they teach and where they build their campuses.

    This Analysis examined the reasons why Indonesia has so far failed to develop a high-quality education system capable of producing strong learning outcomes. It argued that this outcome has not simply been a matter of inadequate funding, human resource deficits, perverse incentive structures, and poor management. It has fundamentally been a matter of politics and power.

    Specifically, it reflects the dominance of political, bureaucratic, and corporate elites during the New Order and their continued control over the state apparatus in the post-New Order period, including the education bureaucracy and public educational institutions. It also reflects the fact that public groups such as progressive NGOs and parent, teacher, and student groups have had greater opportunity to participate in education policymaking since the fall of the New Order, making reform more difficult.

    The implication of this argument is that improved educational quality and learning outcomes in Indonesia require more than just better resourcing for schools and HEIs, and better teacher training programs. It requires more than policies providing for institutional autonomy and decentralisation of managerial responsibility — the sorts of interventions that have been the focus of technocratic and donor-sponsored education policy reforms over the past two decades.

    In the absence of such a shift, interventions aimed at promoting educational quality are likely to be stymied by political and social forces opposed to reform, for either ideological or material reasons. Such links are unlikely to emerge, however, unless Indonesia is able to resolve the political barriers to improved educational quality that it currently faces.

    I wish to thank Anthony Bubalo, Matthew Busch and Lydia Papandrea, and three anonymous reviewers for very helpful comments on an earlier draft of this paper. Based in the Asia Research Centre, his research there focused on analysing the politics of economic liberalisation in Indonesia during the New Order and early post-New Order periods and the causes and consequences of the — Asian Financial Crisis.

    He subsequently worked at the University of Sydney, AusAID, the Institute of Development Studies Sussex , and the University of Adelaide, building an interest in the political economy of development, policy-oriented research, and social policy. Between and , he was an Australian Research Council Future Fellow, carrying out research on the relationship between law, politics and social rights in Indonesia. For the sake of simplicity, I refer to it as the Ministry of Education and Culture throughout except when citing official documents. In the latter case, I use the name of the ministry at the time.

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