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Regional Differences in Indonesia’s Job Market

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Regional Differences in Indonesia’s Job Market

2020-09-08T11:17:09+08:00November 5th, 2019|0 Comments

Employment prospects in each region of Indonesia differ. Each region of Indonesia is also dominated by specific industries. Knowledge of these regional differences will help those who are seeking a job understand the easiest ways to get one in each major region of the country.

Regional Job Market Differences

Indonesia is home to the 16th-largest economy in the world. Approximately 53% of the population produces nearly 74% of the gross domestic product (GDP) of the country. There are almost 55 million skilled workers in the Indonesian economy. According to experts, Indonesia will become the seventh-largest economy in the world by 2030. At that time, around 71% of the population will contribute nearly 86% of the country’s GDP. Despite these facts, there are nevertheless job differences in Indonesia’s job market depending on the location in which one searches for a job. The main reasons for such differences are differences in educational qualifications as well as the provision of education in cities and rural areas.

Regional job market differences are affected by the educational achievements of the people. Highly educated people can find a job quickly and earn suitable income. Firms are also more likely to lay off less educated and unskilled workers. The pattern of labor force distribution across different regions is a significant factor that contributes to the unequal distribution in Indonesia’s job market.

Thus, people who have lower educational qualifications do not make particularly significant contributions towards economic growth. This in turn leads to varying rates of unemployment in various regions. Major cities such as Jakarta and Denpasar are the primary contributors towards the Indonesian GDP when compared to other areas of Indonesia because Jakarta is the economic and political capital of Indonesia while Denpasar is the largest city of Bali, a popular tourist destination. In the Denpasar area, a large number of people working there are expatriates; in terms of proportion, there are many more expatriates working in Denpasar than there are in Jakarta. There are more skilled and white-collar job workers in Jakarta and Denpasar as compared to other Indonesian cities.

 

Differences in Unemployment Rates Across Indonesia

The unemployment rates are different in various parts of Indonesia because of the growth of one or two regions as compared to the country as a whole. Although the year 2019 has seen a fall in the unemployment rate because of the employment of people in the trade sector, there are sectors such as fishery, agriculture, and manufacturing which have faced difficulties.

The unemployment rate is high in rural areas when compared to that of urban areas because of educational differences. Vocational high school graduates and diploma holders mainly contribute towards the unemployed workforce in parts of Indonesia other than Bali and Jakarta. While the trade and food & beverage industries have increased their employment rates, the agriculture and fishery industries as well as government sectors have experienced a decline in employment rates.

The International Labor Organization (ILO) has issued statements and reports in which it has asked the government to increase the employment rate in all of Indonesia’s regions that are willing to work. This will reduce regional inequalities which are present in Indonesia as well as salary differences in Indonesia’s job market.

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Most Demanded Jobs in Indonesia

Indonesia’s job market is uneven across its various regions as only two major cities, Jakarta and Denpasar, are known as the hub for providing substantial employment opportunities. Skill-based jobs are mostly in demand in most of the regions across Indonesia. People are seen moving from rural jobs related to agriculture and fishery to careers in the cities. Many people are enrolling themselves in the vocational courses to get jobs in the cities.

Most of the rural-based workforce is moving towards the palm oil industry because Indonesia is the world’s largest producer of palm oil. Many skilled people from Sumatra and Kalimantan are employed in this industry. This industry is the primary foreign exchange earner. It also employs millions of workers in Indonesia. This industry contributes nearly 2.5% of the country’s GDP.

Many Indonesians as well as foreigners living there are employed in the tourism sector, particularly in Bali because it is a famous tourist destination. Teaching is also one of the most coveted and skill-based professions; thus, many educated Indonesians are employed in urban schools. This profession attracts most people since the government allocates 70% of education funds for teachers’ salaries. Many Indonesians are also employed in state-owned enterprises. Such jobs pay well and also have significant perks and allowances. Those who pass a government-administered test may claim a job in such enterprises. Accounting, business, finance, and marketing jobs are also in high demand across Indonesia. Such jobs are plentiful in Jakarta and Denpasar, but in general, they are in demand across the country.

Other jobs which attract many Indonesians who have the requisite educational qualifications are those of IT expert, journalist, doctor, accountant, nurse, editor, and customer service representatives.

On the other hand, many of those who do not have requisite educational qualifications choose to work lower-income jobs abroad. Many of these people come from low-income rural areas. They work in foreign countries, then send money back to their home. The less educated people who remain in Indonesia to work often take up jobs such as hawker, peddlers, professional driver, waiter or waitress, factory worker, farmer, street performer, or fisher, among others.

 

Role of Government to Reduce Employment Inequality Between Various Regions

The unemployment rates differ across various regions in Indonesia because of education and living standards. However, the government of Indonesia is taking concrete measures to reduce this employment inequality. Many of the government’s agencies have devised strategies to provide equal services to people living in rural as well as urban areas.

By providing educational subsidies and conditional cash transfers, the Indonesian government has facilitated the strengthening of social programs. The government has also used the money it has received through taxes for the reduction of income inequality. The Indonesian government has also been working on providing immediate services for the educational and health sectors while also promoting family planning, job opportunities, and skill-based jobs for the Indonesian workforce. The government also plans to reduce the gender gap when distributing wages to male and female workers.

The government of Indonesia has been working rapidly towards reducing the employment inequality in the country so that everyone there can lead a high-quality life.

 

Conclusion

Indonesia’s economy has seen significant changes, especially in the agricultural sector and trade industry. Although there are fundamental regional differences in the job market and unemployment rates of the country, these differences have been reduces by the government. Due to changes made in industries such as mining, petroleum, natural gas, rubber, and automotive, the country has seen significant growth. Locals and foreigners alike can be employed if they fulfill the primary criteria related to the selection.

Regional Differences in Indonesia’s Job Market FAQs

Which industries of Indonesia employ the most foreigners?2020-04-02T15:12:45+08:00

Due to ongoing stringent rules in Indonesia, the employment rates for foreigners are not particularly high in Indonesia. Nevertheless, there are many rules in place with relate to foreigners in various jobs. For example, all foreigners must be able to speak and read Indonesian before they may enter Indonesia’s job market. Foreigners also ought to learn about basic Indonesian ways of life before entering any of various jobs in Indonesia.

The main sectors which employ foreigners enter are those in tourism, IT, education, and trade. The wood and rubber industries also employ many foreigners. Many expatriates in Indonesia work in foreign companies mainly located in Java, Bali, and Sumatra.

Many foreign investors have been investing in the domestic Indonesian industries because the demand for local products has been on the rise. They also often invest in the exporting and importing of products. Exports and imports are carried out through the largest seaport in Indonesia: the Port of Jakarta. Thus, many foreigners work in the export industry.

Other industries which employ many foreigners include the automotive, chemical, electronics, and engineering industries.

Are there any similarities between each region’s respective job markets?2020-04-02T15:12:15+08:00

The job market in each region of Indonesia contains certain similarities. Common industries in all regions of Indonesia include agriculture, fishery, tourism, petroleum, natural gas, forestry, and mining. However, significant changes occurred after the year 1990. At this point, clear differences between each region’s job market began to set in, particularly regarding shifts in the agricultural sector and service sector.

Sumatra provides job opportunities in petroleum, mining, and agriculture. Sumatra’s primary mined products are gold, silver, and coal, while its leading agricultural products are rubber, coffee, palm oil, tea, tobacco, corn, and rice. North Sulawesi’s job market is also primarily agriculture-based. The main products that come from that region are sugar cane, rice, coffee, coconuts, and nutmeg.

The job market of Java is much more diverse because of its economic prosperity and large population. Industries which are prominent in Java include agriculture, forestry, fishery, livestock, mining, hydrocarbons, and automotive. Leading industries in Kalimantan, meanwhile, include agriculture and fishery.

Which regions of Indonesia contribute the most to the country’s economy?2020-04-02T15:11:14+08:00

The islands of Java and Bali are the primary contributors to the Indonesian economy. The Greater Jakarta area is in Java. Java is the country’s most populous island, with 60% of the Indonesian population residing on the island. It contributes more than 58% of the nation’s total economic production. Bali provides nearly 28%, Sumatra 23.9%, and Kalimantan 8.73%.

The reason Java, Bali, Sumatra, and Kalimantan contribute more towards the national economy is that they are closer to foreign countries such as Malaysia and Singapore. Jakarta and Bali also have many foreign companies and popular domestic brands. Bali is also a well-known tourist destination that also makes it a significant contributor to the country’s economy. The islands of Java, Sumatra, and Kalimantan are also major contributor to the country’s palm oil industry, making these regions essential contributors towards the Indonesian economy.

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