Creating employment for over 200 thousand in Jakarta

Indonesia’s capital – Jakarta – is facing mass unemployment. Between 100 and 150 thousand Jakartans are believed to be unemployed, and an additional 350 thousand informal workers do not receive the protections of formal employment, such as income stability, job security and career progression. Inequality, poverty, inadequate housing, poor access to education and a lack of social mobility are everyday experiences for these half million individuals. Without opportunities to find secure employment, those living in marginalised communities in Jakarta will likely remain trapped in a cycle of depravation.

 

GIFT partnered with the Municipal Government of Jakarta (DKI) for the immersive component of the ASEAN Young Leaders Programme (held in November 2018), where participants were tasked with producing an operational business plan to tackle these issues. To achieve this, they engaged with a diverse range of stakeholders, including members of marginalised communities, officials from government agencies, micro-entrepreneurs, and representatives from some of Jakarta’s most successful businesses (e.g. Go-Jek). They then balanced these interests to produce an ambitious business model that catered to the different stakeholders’ needs.

 

Throughout the project, participants recognised that improving the delivery of education is one of the most sustainable paths to alleviating general unemployment and encouraging employment in the formal sector. DKI has deployed considerable resources to improve and broaden education options across socio-economic status and age ranges: in addition to traditional education, vocational training is available at over 700 locations around Jakarta. The government has also introduced schemes such as One District, One Centre For Entrepreneurship: an initiative that enables entrepreneurs to set up and expand business ideas with funding and support from the government.

However, the results of these efforts have been mixed. One of the fundamental causes of unemployment in Jakarta is the low completion of youth education. Young people are encouraged to drop out of school so they can add to their household’s income by working in the informal sector. Culturally, they are not convinced of the long-term benefits that education can deliver for them, as immediate income is much more tangible. Additionally, despite the options on offer from DKI, the current schemes are not universally accessible: many classes are run during working hours, meaning those with jobs cannot participate and cannot leave their jobs to upskill because of financial burden. Lastly, the lack of qualifications makes a later jump to formal employment impossible, leading to a stagnation at low-level income.

Bearing in mind the views of different stakeholders, previous government initiatives, and barriers to formal employment, participants produced a business model that centres on the creation of ‘Skills Hubs’: one-stop centres that provide vocational education for up to 25 courses that range from hairdressing to welding to computing, all at low cost. The Hubs will be purpose-built for upskilling, and will be outfitted with modern facilities that deliver quality vocational education, efficiently, and will be positioned to service marginalised communities across Jakarta, although they will be open for all to attend.

 
 

The Hubs, and the entity that will be created to run them – Jakarta Terampil (‘Skilled Jakartans’) – will be public-private partnerships, pairing government resources with the efficiency of the private sector. Partner companies will help Hubs tailor their curriculums to surrounding industries by providing experienced private-sector trainers. Partner companies will also employ a certain percentage of graduates, ensuring that trainees see practical results from their education. All trainees will get a Jakarta Terampil identification card that will log course details like achievement and hours worked that will act as proof of certification to potential employers. The Hubs will also act as community centres to encourage use and participation in the long-term.

The project will be financed by an endowment fund of USD$100 million that will be sourced from government, private companies, and multilaterals. Part of the fund will be absorbed into the capital expenditures of setting up Jakarta Terampil and its Skills Hubs, with the remainder placed into investments to provide returns for the long-term sustainability of the Hubs.

 
 

Of course, the problems of job creation are not limited to Jakarta, or even Indonesia. Developing countries are seeing their working age populations increase dramatically, and will need to ensure that these new entrants have access to well-paying, stable and secure employment. For example, over 90% of India’s workforce is employed in the informal sector, yet the country needs over 340 million skilled personnel to staff India’s high-growth sectors. GIFT tackled the problem of skills training in the Indian context in its 2018 India Global Leaders Programme.

GIFT is in talks with the Governor of Jakarta, Mr Anies Baswedan, to advise on how this project can be carried into the future, and we are excited to see how it develops.

If you’re interested in the outcomes of this project, the full business report is available here and an executive summary is available here.

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