Indonesia has charted impressive economic growth since overcoming the Asian financial crisis of the late 1990s. It has become the largest economy in the ASEAN community with a GDP per capita of USD 3’603 in 2016. Today, Indonesia is a key player on the global stage as the world’s 4th most populous nation, the world’s 10th largest economy and a member of the G-20. Poverty has been halved since 1999 to 10.9% in 2016 (World Bank, 2017).
While this is good news in principle the poverty rate decline has slowed down since 2012: 28 million Indonesians still live below the poverty line today, while 40% of the total population are considered vulnerable of falling back into poverty with incomes only marginally above the poverty line.
One of the major challenges the country faces today is the structure and dynamics of its labour market. On the one hand, the 1.7 million youth who enter the workforce each year outpace the growth in the number of jobs and result in a demand supply mismatch and people ending up in informal employment. On the other hand, technological progress: the complexity and nature of skills required on the labour market are not adequately matched with the qualifications and experiences obtainable through the national skills development system and result in a skills mismatch.
