Report No. 9350-IND Indonesia Employment and Training Foundations for Industrialization in thie 1990s June 13, 1991 Population and Human Resources Division Country Department V Asia Region FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. PRINCIPAL ABBREVIATIONS AND ACRONYMS APINDO - Employers' Association BAPPENAS - National Development Planning Agency BLK - Skills Training Center (Medium and Large) BPS - Central Bureau of Statistics DEPDIKBUD - Department of Education and Culture DEPERIND - Department of Industry DEPNAKER - Department of Manpower DIK - Routine Budget DIP - Development Budget JIVTAS - Joint Industrial and Vocational Training Scheme Kandep - Provincial Office of Department KLK - Small Skills Training Center NTC - National Training Council SAKERNAS - National Labor Force Survey SD - Primary School SISLATKERNAS - National Training System SLTA - Secondary General School SMKTA - Secondary Vocational Schools (all types) SMEA - Secondary Business and Economics School SMKK - Secondary Home Economics School SPSI - National Workers Union STM - Secondary Technical (Engineering) School STMP - Senior Technical School (Engineering) SUSENAS - National Social Economic Survey FOR OFCAL UE ONLY INDONESIA EMPLOYMENT AND TRAINING: FOUNDATIONS FOR INDUSTRIALIZATION IN THE 1990S Preface This report was prepared by a team led by Gordon Hunting (technical educator). Team members were Arvil Van Adams (labor economist), Jan Segerstrom (technical educator), Martin Godfrey (consultant labor economist), Yudo Swasono (economist, Department of Manpower), and Endang Sulistyaningsih (economist, Department of Manpower). The study team was assisted by training staff from the Departments of Education and Culture (Depdikbud), Manpower (Depnaker), and Industry (Deprind). A draft of this report was discussed with the government in March 1990. this document has a restricted distribution and may be usod by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization. INDONESIA EMPLOYMENT AND TRAINING Table of Contents Page No. Executive Summary . . . . . . . . . . i I. INTRODUCTION: THE ECONOMY AND SKILLS DEVELOPMENT . . . . . 1 A. Introduction and Objecttve . . . . . . . . . . . 1 B. The Economy: Performance and Prospects . . . . . . 1 C. Skills Development . . . . . . t . . . . . . . . . . 3 II. ECONOMIC DEVELOPMENT AND LABOR MARKETS . . . . . . . . . 5 A. Introduction .... . . . . . . . . . . . . . . . .... 5 B. Labor Force Activity and Employment ... . . . . . .... 6 C. Labor Market Issues . . . . . . . . . . . . . . . . . . . 19 D. Concluding Observations . . . . . . . . . . . . . . . . . 23 III. MANUFACTURING INDUSTRY, EMPLOYMENT AND TRAINING. .... . 25 A. Introduction .... . . . . . ...... . . . . . . . . 25 B. Characteristics of the Workforce ... . . . . . . . . . . 26 C. Internal and External Labor Markets . . . . . . . . . . . 28 D. Skills Training . . . . . . . . . . . . . . . . . . . . . 29 E. Impact of Training on Employment, Wages and Productivity . 33 F. Conclusions .36 IV. EVALUATION OF TRAINING ... .38 A. Introduction.. . 38 B. Technical and Vocational Education .. .38 C. Skills Training ....46 D. Conclusions... . 53 V. POLICY OPTIONS AND RECOMMENDATIONS . . . . . . . . . . . . . 55 A. Policy Options . . . . . . . . . . . . . . . . . . . . . . 55 B. Selecting Policy Options for Indonesia . . . . . . . . . . 57 C. Lessons of International Experience . . . . . . . . . . . 59 D. Recommendations . . . . . . . . . . . . . . . . . . . . . 62 Tables and Figures in Text Chapter 2 Table 2.1 Comparison of Labor Force Activity in Selected Asian Countries . . . . . . . . . . 6 Table 2.2 Average Monthly Earnings by Economic Sector as a Ratio of Earnings in Agriculture . . . . . . . . . . . . . 14 Table 2.3 Average Monthly Earning by Education as a Ratio of Earnings for those with no Schooling . . . . . . . . 15 Table 2.4 International Comparison of Manufacturing Productivity: 1984 ........................ 23 Page No. Fig. 2.1 Male and Female Labor Force Participation in the 19809 8 Fig. 2.2 Graduate Unemployment . . . . . . . . . . . . . . . . . 10 Fig. 2.3 Underemployment in the 1980s . . . . . 12 Fig. 2.4 Employment Shift from Agriculture into Manufacturing and Services . . . . . . . . . . . . . . . 14 Fig. 2.5 Real Wage Growth and Value Added in Manufacturing . . . 18 Chapter 3 Table 3.1 Training Experience of Skilled Workers and Supervisors since Starting Work .... . . ..... . . . . . . 32 Fig. 3.1 Male and Female Employees by Skill Level and Pirm Size 25 Fig. 3.2 Skilled Workers and Supervisors by Age, Gender and Education . . . . . . . . . . . . . . . . . . . . . . 27 Fig. 3.3 Occupation on Appointment for Present Skilled Workers and Supervisors .. . . ........ . 29 Fig. 3.4 Average Wages by Gender, Education and Age for Skille.3 Workers and Supervisors . . . . . . . . . . . . . . . 34 Chapter 4 Table 4.1 Qualitative Evaluation of STM Internal Efficiency . . . 41 Table 4.2 STM Income and Expenditure 1989/90: Source of Income and Purpose of Expenditure by Percentage . . . . . . 44 Table 4.3 Unit Recurrent Costs in STMs 1989/90 . . . . . . . . . 45 Table 4.4 BLK/KLK Enrollments in GOI DIP/DIK Financed Courses 1979/80 to 1989/90 . . . . . . . . . 46 Table 4.5 Qualitative Evaluation of Internal Efficiency of Skills Training Centers .... . . . . . . . . . . . . . . 49 Table 4.6 Unit Costs of Skills Training 1989/90 . . . . . . . . . 52 ANNEXES 1. Economic and Population Data (Tables 1 to 5) 2. Labor Market Data (Tables 1 to 12) 3. Manufacturing Industry Employment and Training Data (Tables 1 to 28) 4. Evaluation of Technical and Vocational Education and Training Systems (Tables 1 to 20) 5. Methodology of Study 6. Main References 7. Acknowledgements - i - INDONESIA EMPLOYMENT AND TRAINING Executive Summar, Introduction i. The Indonesian economy expanded rapidly in the 1980s as a result of reforms that opened the economy to trade. Human resources development and the ability of workers to respond to changing skills needs will play an important role in Indonesia's ability in the 1990s to continue this expansion. The principal objective of this study was to identify effective strategies to overcome some of the important constraints to human resources development. The study opens with an overview of the economy and the response of labor markets to the demand shocks of the 1980s. This is followed by the study of employment and skills development in export-oriented manufacturing establishments and public and private vocational and technical education and training systems. Options for overcoming constraints to human resources development are presented, drawing on successful experience in other countries. Ui. The study finds six important assets for human resources development in Indonesia. The first is the increasingly well-educated young work force. The second is a highly mobile labor force. The third is efficient labor markets for guiding this development. The fourth is the existence of a large private training sector. The fifth asset is a public vocational education and training system. The sixth is the interest of employers in expanding and improving training. The goal of policy development should be to get the mechanisms in place to ensure socially efficient use of these training assets as training needs change. iii. The principal constraint to human resources development is that all three major training delivery systems--employer, private, and public--require additional expenditures for quality improvement or expansion as shown in Chapters 3 and 4. The principal training pol'cy issue, therefore, is to determine where the emphasis should be placed in the 1990s. Given the importance and potential efficiency of employer and private training, the study argues that priority should be given to strengthening employer and private training and to improving public training. Economic Development and Labor Markets iv. Through the 1980s the government adopted a bold program of monetary trade and financial reform. The results were impressive. The budget deficit declined from 4.8 percent of GDP in 1983 to 2.2 percent in 1989. Inflation fell. The most dramatic shift in the economy was the growth in non-oil exports from about $4 billion in 1983 to $14.1 billion in 1990. Exports of manufactured goods contributed about 90 percent of the growth and is expected to continue to grow at about 16 percent per year. Productivity in manufacturing is expected to rise with improved level of technology supported by research and development. The manufacturing industry is expected to continue to be a major factor for continued growth in employment and improved earnings. v. The performance of Indonesian labor markets in the 1980s compares favorably with other Asian countries. Indonesia's share of the working-age population in the labor force and the percentage employed, while lower than that in Thailand, the Philippines and Singapore, was higher than that of the strong economy of South Korea. Indonesia's open unemployment rate was lower than that of the other countries. The strong recovery of its economy from 1982 to 1987 is observed in the expansion of its labor force activity, primarily among women. The increase for women was evenly distributed among rural and urban areas. vi. The tightening of Indonesian labor markets in the 19809 is reflected in the decline of open unemployment, but educated unemployment is an issue. Graduates of secondary and post-secondary institutions experienced increases in open unemployment as the decade progressed, while the unemployment of those with less than a secondary education fell. Measures of underemployment show improvements for men and women through the decade, except for those with a university education. Overall, the picture of labor force activity shows substantial benefits in employment growth, especially to women and those with less than a secondary education. vii. The impact of the shift in macroeconomic policies to support outward focused development can be found in employment and earnings trends. Wage employment kept pace with the growth of self-employment during the decade. Labor markets appeared to be workitig well exhibiting wage flexibility and low barriers to labor mobility. Employment shifted from agriculture to manufacturing and services. This movement led to an increase in the relative wages earned in agriculture compared with those in manufacturing and services. The relative earnings of secondary and university graduates declined with the increase of educated unemployment. Unrealistic wage expectations are a possible cause of graduate unemployment. Manufacturing establishment surveys, spanning 1979 to 1986, reveal strong employment growth it, low-technology, labor-intensive export subsectorss wood and wood products; textiles, wearing apparel, and leather industries; and food, beverages, and tobacco. Production accelerated after 1983 and Indonesia's first devaluation. Prior to 1983, unit labor costs appeared to be rising as real wages in manufacturing outpaced growth in productivity. This pattern, however, reversed after 1983, stimulating export growth. viii. The evidence suggests that Indonesia's labor markets have performed well in response to demand shocks and adjustments in the 1980s. Labor regulations involving minimum wages, hiring and displacement, labor protection and other controls have not been a major problem affecting the competitive operation of labor markets. The signals provided to individuals, enterprises, and training institutions draw attention to the economic challenges that face the country for human resources development as it moves into the 19909. These challenges include: the rising number of women entering the labor force, many with inadequate schooling; labor mobility and the shift of employment out of traditiornal agriculture into manufacturing and services and the expansion of educated unemployment and the evidence of unrealistic wage expectations. Still another challenge lies ahead as Indonesia looks for ways to improve the low productivity and low wages of its workforce. - iii - Manufacturing Industry, Employment and Training ix. Employment and training was examined in about 140 enterprises engaged in export-oriented manufacturing. The enterprises use relatively simple technology. A large proportion of their workforce are women. The education level of workers is rising, with 59 percent males and 42 percent females recruited to skilled and supervisory occupations over the past five years having senior secondary education or more. Employers do not consider the skills level of their workers to be a problem, reflecting the low skill nature of production. Many are concerned about low quality of products, missed deadlines and wastage, to which poor skills of workers is a contributory factor. x. External and internal markets for skilled workers and supervisors are active. Very few skilled and abo%e workers receive formal pre-career training, and most of those who do, do so in private training centers. Most skilled workers pick up their skills through experience: over half of the sample reported they had received no training since starting work. About 30 large firms in capital intensive industry are recognized as having good training centers, but the relatively low technology, labor-intensive manufacturing industries do not need high levels of skill. Most of the firms tiherefore do not have training facilities, particularly small establishments which do very little training. Training budgets are tiny. However, off-the- job training appears to improve workers' productivity as suggested by their enhanced earnings. Technical Education and Training xi. The main sources of technical and vocational education and training in Indonesia are secondary technical and vocational schools, skills training centers and non-formal training programs. Senior secondary technical and vocational schools (public and private) had a total enrollment of about one million in 1988/89 which represented about 27 percent of total secondary enrollment. A majority, 55 percent was in private schools. Secondary technical and vocational enrollment increased by about 80 percent in the period 1983/84 to 1988/89 with the private sector growing faster, by over 100 percent, mainly in business and commerce skills. xii. Evaluation of sample secondary technical schools conducted in this sector study indicated deficiencies in equipment and teaching materials, inadequate operational expenditures and weak links with industry. The government system is overcentralized: schools lack flexibility and responsiveness to local needs. Efficiency of utilization of staff in some sample schools is low. Expectations of the schools' graduates obtaining employment within a short period vary widely with location. However, the labor market surveys show that unemployment rates for secondary technical and vocational school graduates are only half those of 3eneral secondary schools. xiii. The quality of private secondary technical schools varies widely. A few are excellent, with well established training and production activities and strong demand for their graduates. But many private technical schools have inadequate facilities. Private sc.-ools above a minimum size are required to register with the Department of Education, but criteria are minimal and provide no assurance of quality to students or employers. - iv - xiv. Analysis of income and expenditure of the technical schools showed that for the Department of Education schools, about 15-20 percent of income is obtained through tuition fees. About 90 percent of the unit cost of about Rp 300,000 per year is devoted to staff salaries. Six percent is spent on materials which is not adequate to support workshop-based skills training. In specialist technical schools operated by the Department of Industry, the unit cost is about 50 percent higher, obtained mainly through higher feest most of the additional expenditure is devoted to teaching materials and operations. xv. The government's skills training centers currently enroll about 60,000 trainees annually. The trainees are mainly unemployed school-leavers taking three to six-month basic skills-training programs. Enrollment in private training centers is estimated to be four or five times larger than that in the government centers--programs are of varying length, many are attended by trainees on a part-time basis. Non-formal training programs cover a wide range of vocational skills, mainly focused on the informal sector. Most of the programs are privately run. About 500,000 people are estimated to attend programs annually. xvi. Evaluation of the sample of skills training centers included in this study showed deficiencies in equipment and materials and inadequate links with industry, particularly for counselling and placement of trainees. The government centers have low utilization of physical and staff resources. The public training system is overcentralized and centers, like technical schools, have little flexibility. A recent favorable development is the granting of freedcm to the centers to allow industry or other bodies to use their training facilities on payment of fees. xvii. Private training centers vary widely. Only a small ptoportion are registered with the Department of Manpower and there is no effective system of accreditation to assure quality. Private centers have deficiencies in training and support facilities and links with industry. Relatively little of private training is aimed at technical skills for production. Policy Options and Recommendations xviii. Broad Policy Options. The Bank's recent policy paper on vocational and technical education and training, based on an analysis of experience in technical and vocational education world-wide, identifies four policy options for government strategy for skills development. First, strengthen basic and secondary education, which provide workers with abilities to learn new skills over their life times, as .:ell as increasing productivity and improving employability of the poor and disadvantaged. Second, encourage private-sector training. In particular, employer-training for employees is usually cost- effective. A close match can be established between skills demands and supply. Training funds are effective in encouraging additional investment in skills development. Private proprietary training can be encouraged by effective accreditation and information systems and by providing loans for investment in upgrading of facilities. Third, improve the effectiveness and efficiency of public-sector training systems. Public finance and provision of training is justified where large public systems exist, private training capacity is underdeveloped, equity considerations exist or where there are externalities such as strategic skills needs. Improvements can be achieved - v - through increasing flexibility, improving responsiveness and improving efficiency. Fourth, provide training to complement equity strategies. xix. Selecting Options for Indonesia. Labor markets appear to be working well. Demand for training is very limited in the relatively labor-intensive, low wage and low technology manufacturing production which has been set up in response to financial and trade deregulation. More attention is given to training where higher levels of technology are involved. However, managers generally appear not to recognize problems of poor skills inherent in production protlems of low quality, missed delivery and wastage. xx. On the supply side the picture is problematic. Private training systems are large but of uneven quality. Considerabl.? investment will be required in facilities, program and staff to enhance their capacity to supply better trained workers with more advanced skills. The government's technical education and skills training systems are overcentralized and lack flexibility. The training centers are underutilized, with relatively high unit costs. xxi. In industry and services the private sector has responded strongly to the incentives of deregulation and adjustment. The private sector has also played a major role in the expansion of education and training. Indonesia is therefore well-placed to strengthen the thriving private sector and encourage employer-training as a major component of its human resource development strategy. That is, a strategy to meet the needs of the 1990s when the economy moves forward from its comparative advantage of a low-wage workforce employing relatively low skills, towards an economy with higher productivity and raised wages for the workforce, while maintaining international competitiveness. xxii. Other countries, including notable examples in Asia, have successfully made the transition facing Indonesia. Their governments have intervened in human resources development through expanding access to primary and secondary education nnd raising its quality; supporting private training systems; expanding public technical education and training flexibly in response to needs for more skilled workers, and encouraging employer-training by making technical assistance available and increasing investment and expenditure on training through training funds. Recommendations xxiii. Indonesia is recommended to adopt a human resources development strategy that is based on (i) encouraging private and enterprise-based training, and (ii) improving the effectiveness and efficiency of public training. Basic and secondary education should also continue to be strengthened to increase the flexibility of the workforce and improve access to training. Indonesia needs to give close attention to the integration of human resources planning and economic pl1anning. Its investments in skills training need to be carefully coordinated with economic development. xxiv. Labor Market Regulations and Information Systems. Labor regulations should be kept under review to prevent distortion of labor markets. Regulations to protect the health and safety of workers and to enforce broad social objectives such as prohibitions against child labor and discrimination in employment against women are appropriate. Other regulations that introduce - vi - wage rigidities into the economy and that create legal and economic barriers to labor mobility should be avoided or minimized. xxv. Additional investments are called for to improve labor market information as a guide to education and training decisions. The capacity of national and provincial level institutions needs to be strengthened to analyze and disseminate in timely fashion labor market data fur planning purposes. xxvi. Enterprise Training. Government strategy should encourage increased investment in training by enterprises through mechanisms in which the enterprises take a major share of responsibility. Services are needed to assist firms to analyze training needs, to train training officers, to establish training systems, to help with the planning and implementation of training programs and to monitor training outcomes. Information on training should be assembled and disseminated. It is recommended that the government takes the initiative by expanding the Industrial Training Develcpment Services which are being set up on a pilot basis by Depnaker. The service should be decentralized to the provincial level. Costs should initially be shared, with the objective of recovering the full cost from participating firms as the system develops. xxvii. Establishment of Training Funds. Training funds can potentially provide incentives for increasing investment in training by firms. It is recommended that the proposals currently under discussion in Indonesia for setting up levy-grant scheres be pursued with close attention to the experience of other countries (e.g., UK, Korea, Singapore and Malaysia). Among the key issues are the following: (a) Scope of participation: The size and sector of operation of firms which would contribute to and benefit from the fund need to be identified. (b) Training targets and criteria: Training needs for which costs would be reimbursed by grants should be targeted. E.g., training for specific occupations which are in short supply; newly emerging skills, or retraining for technological change. Reimbursement of costs could also be targeted to particular areas such as supervisory and management training; productivity improvement; technical skills or craft skills. Reimbursement could be made at different rates. Criteria for reimbursement should be devised to promote training quality and outcomes. (c) Levy rates: Levy rates should be strictly related to budgets for planned training outcomes. Government should consider covering initial start-up costs. (d) Management: Administrative overhead costs should be minimized. xxviii. Upgrading of Private Training Centers. An effective accreditation system, squarely based on quality criteria including employment outcomes should be established. Accreditation would be a powerful influence for improved performance. It would give clear indication of the value of training in the labor markets. The criteria for accreditation should include laboratories and workshops, libraries and support facilities; teaching staff - vli - qualifications, and satisfactory teaching materials. Employment outcomes should be measured by follow-up of trainees and the results publicized. Representatives of the training centers should be included in the evaluation process. A substantial part of the cost should be covered by fees paid by the training Institutions. The government could consider covering the costs of the accreditation schemes given their function of generating information. xxix. Additional expenditure will be needed by the private centers to raise quality, particularly in specialist technical skills. It is recommended that the Government consider providing direct assistance for quality improvement, through provision of loans for capital investment, of by estab)lishing specialist facilities to be used by a group of private schools which would be responsible for all operation and maintenance costs. Assistance should be restricted to centers which meet the accreditation criteria. Upgrading Public and Technical and Vocational Schools xxx. The public system should be given more flexibility with the schools having responsibility for curricula and courses and for developing links with industry. At the same time, arrangements should be devised to improve their accountability for the public funds allocated to them, particularly in terms of graduates' labor market performance. Financing and accounting procedures should support schools to increase revenue from production and related activities. Utilization of teaching staff should be improved. Operational expenditure should be increased, through revenue earning and improved efficiency. The potential for raising charges in the schools should be considered together with the need for a scholarship scheme for needy students. xxxi. Upgrading of Public Skills Training Centers. The flexibility of public skills training centers should be improved and links with industry strengthened by giving the centers responsibility for determining training needs; courses and materials, selecting trainees, and establishing appropriate fees. The level of training should be raised by focussing on specialist skills training and retraining of existing workers. Efficiency of utilization of facilities and staff should be improved. Planning, budgeting and delivery systems should be modified to ensure that the institutions are fully used. Operational funding should be increased mainly through efficiency gains. A larger share of costs should be covered by training fees and externally financed training. Options should be examined for transferring responsibility for the centers to provincial governments or local industry or to private enterprise associations. xxxii. Improvement in Equity. A more positive approach should be taken for the provision of technical skills training for females and other disadvantaged groups so that they can be better represented in the more skilled occupations and improve their earnings. Possible approaches include introduction of quotas in recruitment to training; development of skills upgrading programs for particular occupations, and better career guidance. I. INTRODUCTION: THE ECONOMY AND SKILLS DEVELOPMENT A. Introduction and Objectives 1.1 The Indonesian economy has expanded rapidly in tile 1980s in response to economic reforms opening the economy to trade. The growthi of manufactured exports has created new employment opportunities. As the nation looks ahead to the 1990s, it has an opportunity to become a member of the next generation of Asia's newly industrialized countries (NICs). Human resources development and the ability of workers to respond to the changing skill needs of the global economy will play an important role it achieving this goal and improving household incomes and welfare. The principal objectives of this study include the highlighting of constraints to human resources development in Indonesia and the identification of effective strategies to overcome these constraints. 1.2 The study opens with an overview of the Indonesian economy in the 1980s and its response to global recession and declining oil prices. The response of labor markets to these demand shocks is examined together with incentives for human resources development. This development is studied more closely in a survey of export-oriented manufacturing firms and their skilled and supervisory workers. Opportunities for skills development outside enterprises are examined in an evaluation of public and private vocational and technical education and training institutions. Options for overcoming constraints to human resources development are presented drawing on successful experiences in other developing countries.l/ 1.3 This report on labor markets in Indonesia comnlements the series of reports on macroeconomic development, and recent or current reports on population, poverty, the finance sector, the legal system and land, which contribute to the policy dialogue between the Bank and Government. It recognizes the importance of the private sector, both for employment and for technical education and skills training. It defines a more facilitative role for government. B. The Economy: Performance and Prospects Macroeconomic Strategy and Performance 1.4 Following a decade of rapid economic expansion in the 1970s, led by rising oil revenues, the Indonesian economy faltered in the early 1980s as it encountered global recession and declining oil prices. In 1982, oil provided more than 80 percent of export earnings and 70 percent of budget revenues. The combination of lower oil prices and the depreciation of the US dollar between 1985 and 1988 led to an increase in the cost of Indonesia's debt service. These events produced a widening budgetary deficit as the decade progressed. The government was quick to respond by adopting a program to stabilize the economy and restore growth. 1/ World Bank, Vocational and Technical Education and Training, A World Bank Policy Paper, 1991. 1.5 The government began by reducing its own budget deficit and adopting restrictive monetary policies.2/ This led to a freeze of civil service salaries, a cut in capital spending, and a reduction of transfers to public enterprises. At the same time, the government attempted to reduce Indonesia's dependence on oil as a source of foreign exchange and budgetary revenues by lowering barriers to trade. The exchange rate was devalued in 1983 and again in 19e6. In 1985, the government undertook a comprehensive reform of the tariff system, followed in 1986 by the elimination of a large number of non- tariff barriers and a reduction of investment licensing restrictions.3/ Financial sector reforms and the opening of a capital market encouraged domestic and foreign investment. 1.6 The results were impressive. After coming to a virtual halt in 1982, and the subsequent adjustment period, real GDP growth made a recovery (Annex 1: Table 1). GDP growth averaged 5.5 percent between 1.986-88 and has accelerated to 7.3 percent in the last two years. The budget deficit declined and it is expected to turn into surplus in 1990. Inflation, which was rising at double digit rates in the late 19709, decelerated in the 1980s, averaging 8.0 percent per annum. The most dramatic shift in the economy occurred in the growth of non-oil exports. These exports have more than doubled from about $6.7 billion in 1986/89 to about $14.3 billion in 1989/90. Manufactured goods as a share of non-oil exports nearly doubled in the period 1983 to 1989 from 17 percent to just over 32 percent. As a result, the current account deficit fell from a high of 7.8 percent of GDP in 1983 to 1.9 percent in 1989. 1.7 Manufactured goods as a percentage of GDP rose from 8.4 percent in 1982 to 14.3 percent in 1990. About 90 percent of non-oil export growth was in manufactured goods. Almost one-third of the growth was due to plywood and textiles. Items with the largest rates of growth over the period 1985-89 were ceramics (179 percent), plastics (162 percent), footwear (119 percent), furniture (116 percent) and other metal articles (102 percent). Exports of non-oil manufactured goods are expected to continue to grow at about 16 percent per annum. 1.8 Government strategy for economic development for Repelita VI and beyond is to continue its program of adjustment in support of continued growth of non-oil manufactured exports. Continued trade reforms to remove remaining distortions and deregulation of investment activity are expected to be the main thrust of industrial policy. The current pattern of manufacturing export growth predicated upon the abundant supply of cheap labor is expected to continue. Indonesia also has import-substituting industries, including engineering and metal products, which are still relatively highly protected. Since further deregulation will expose hitherto protected industries to international competition, alleviating supply constraints in skilled manpower, managerial and professional expertise, and technological capabilities will play an important role. 2/ World Bank, Indonesia: Foundations for Sustained Growth, Report No. 8455-IND, 1990; and World Bank, Indonesia Strategy for Growth and Structural Change, Report No. 7758-IND, 1989. 3/ World Bank, Indonesia Trade Policy Report, Report No. 8317-IND, 1990. - 3- Population and the Labor Force Outlook 1.9 Indonesia's population in 1990 approached 180 million, growing at a rate of 1.8 percent per annum between 1985 and 1990, a decline from 2.4 percent per annum in the 19709 and 2.2 percent in the early 1980g. Its working age population, 10 years and over, was just over 131 million in 1988. The national planning agency, BAPPENAS, estimates this figure will increase in the five-year planning period from 1988 to 1993, (Repelita V), at a rate of nearly 2.5 percent per annum to over 147 million.4/ The rate is expected to fall to 2.2 percent per annum during Repelita VI and the working age population expected to approach 164 million by 1998. 1.10 The share of the working age population in the labor force was estimated to be 56.8 percent in 1988. The rate for men was 69 percent and for women 44.9 percent. By 1993 and the conclusion of Repelita V, BAPPENAS expects the labor force participation rate to climb to 58.6 percent, due mainly to the growing number of women entering the labor force. The labor force participation rate for women is expected to reach 48.4 percent, while that for men would remain virtually unchanged. This trend, moreover, is projected to continue through Repelita VI. By 1998, the labor force participation rate is anticipated to rise further to 60.7 percent, with the rate for women increasing to 52 percent, and that for men rising slightly to 69.5 percent. These figures represent a 3 percent growth rate per annum in the labor force during Repelita V, dropping to slightly over 2.8 percent during Repelita VI. 1.11 The labor force is predicted to increase by about 11.9 million persons during Repelita V, and 12.9 million persons during Repelita VI. Assuming that open unemployment continues at the 1988 rate of about 2.8 percent the demand for new jobs under Repelita V will be slightly more than 2.3 million per annum, and in Repelita VI, over 2.5 million per annum. With productivity growth of 2 percent, the creation of these jobs would require real GDP growth of 5.0 percent per annum in Repelita V and 4.8 percent per annum under Repelita VI. As the 1990s approached, the economy was already producing an average of 2.4 million jobs per annum. ~.. Skills Development 1.12 Skills training is provided in Indonesia through a variety of mechanisms. Within the formal education system, vocational and technical education at the secondary level has expanded considerably, with vocational/ technical enrollments increasing by 80 percent over the Repelita IV period, 1988 to 1988/89, rising to about 27 percent of all secondary enrollments. The share of enrollments in private vocational/technical schools remained at about 55 percent, but the greatest growth was in secondary commercial/economic vocational schools (SHEA) which expanded by over 100 percent. There has been a trade-off between quantity and quality. Vocational and technical education quality appears to have deteriorated through inadequate funding for operation and maintenance and provision or replacement of equipment. Private schools in particular vary enormously in quality of facilities and teachers. 4/ BAPPENAS, Perkembangan Struktur Ekonomi Dan Kesempatan Kerja Pada Pelita V, VI Dan VII, Jakarta, 1989. - 4 - 1.13 The Department of Manpower (Depnaker) provides pre-employment skills training for unemployed out-of-school youth in its 150 training institutes (BLK/KLK). The training activities of this Ministry, including its staffing capabilities and training programs, are being upgraded under the Bank's Manpower Development and Training Project (Ln. 2705-IND). Since 1987 some of the BLK/KLK have developed revenue-earning, privately-funded training in addition to GOI budget-financed training. 1.14 Private training institutes provide an important and diverse source of skills training. The capacity of the sector is not accurately known; but it is estimated that there are about 25,000 private institutes including about 3,000 registered with the Ministry of Manpower. There is also a large volume of vocational training provided by the Directorate of Public (Nonformal) Education of the Ministry of Education which supports training in some 17,000 private training centers with about 200,000 trainees annually taking nationally conducted examinations out of a total estimated enrollment of 500,000 in courses of duration ranging from a few days to a few months. The private sector outweighs the public in capacity. The majority of new entrants to employment, however, rely on their employers for training, whether this be through on-the-job experience or via structured systematic employee training programs. 1.15 Human Resource Development Policy and Planning. Responsibility for Human Resource Development (HRD) policy, planning and implementation is fragmented. Overall, national planning is the responsibility of BAPPENAS, whose capacity to carry out HRD policy analysis and support provincial and local governments in policy making and implementation is being strengthened under the Bank's Professional Human Resource Development Project (Loan 3134- IND). The Department of Manpower is responsible for advising on national manpower planning and labor market issues and routinely collects data from its labor-employment exchanges. The Central Statistics Office (BPS) collects labor market data through annual household surveys (SAKERNAS), industrial surveys and at ten-year intervals through the census. Depdikbud's Research Center is conducting programs of research into education and employment and acts as a focus for an informal working-group of research workers interested in labor market and training issues. - 5 - II. ECONOMIC DEVELOPMENT AND LABOR MARKETS A. Introduction 2.1 Labor markets help shape incentives for individuals to acquire skills that are important to economic development. The expansion of employment for technicians, the increase in wages offered to workers with scarce skills, and the inability of graduates in selected fields of study to find employment are all labor market signals that affect education and training decisions. How well labor markets function in providing these signals is important to an economy's economic growth, its ability to adjust to macroeconomic shocks, and the success of poverty-alleviation efforts. This chapter examines how Indonesian labor markets responded to a series of demand shocks in the 1980s and the adjustment that followed as described in Chapter 1. It summarizes the signals provided to investments in education and training. 2.2 This chapter also contributes to a debate about the competitiveness of Indonesian labor markets. A study of these markets in the late 1970s concluded that they worked efficiently.5/ Given observed wage variations and labor mobility, the report concluded that, on the whole, supply and demand forces provided an adequate explanation of the level and the structure of wages and employment in Indonesia. A later study in the early 19809, however, took a different view.6/ It argued that wage differentials in urban labor markets were too high to be explained by differences in quality and that the underutilization of youth, particularly the educated, could not be explained by competitive market behavior. It further cited wage rigidities in rural labor markets. It called for employment generation initiatives to offset labor market rigidities. The events of the 1980s in Indonesia as described in the current study support the earlier finding of competitive labor markets. 2.3 The findings form a background for a more detailed study of manufacturing employment and skills in Chapter 3 and the evaluation of Indonesian training and skills development in Chapter 4. These findings draw attention to the economic challenges that face the country for expanding and improving education and training in the 1990s. The chapter begins with a comparison of labor force activity and employment in Indonesia with that in other Asian countries during the 1980s. This is followed by a look at demographic trends in these measures during the decade as the economy responded to demand shocks. Attention is centered on the flexibility of wages and the movement of labor from agriculture into manufacturing and services. The implications of these trends for education and training are summarized. The chapter concludes with comments on a number of labor issues that face the economy. 5/ World Bank, Indonesia: Long-Run Development and Short-Run Adjustment, Report No. 2788-IND, 1980. 6/ Constantino Lluch and Dipak Mazumdar, Indonesia: Wages and Employment, Washington, D.C.: World Bank, 1985. -6- B. Labor Force Activity and Employment Comparisons in Asia 2.4 The comparison of labor force measures for one country with those of another is often made difficult because of differences in measurement techniques, labor force concepts and definitions, and labor market policies. One of the important differences in Indonesia's published labor force statistics and those of other countries is its use of a working age population of 10 years of age and older. The international norm, which recognizes 9 years of compulsory schooling, is 15 years of age and older. Given the dominance of schooling as an activity among 10 to 14 year olds, this would imply a downward bias in reported labor force participation rates in Indonesia in comparisons with countries using the higher working age standard. Likewise, it would mean a downward bias of the reported share of the working age population that is employed and a likely upward bias of reported unemployment rates. 2.5 Even with these differences, Indonesia has a lower open unemployment rate than four other countries in the region (Table 2.1). Its share of the working-age population in the labor force and the percentage employed, while lower than that in Thailand, the Philippines, and Singapore, is higher than that of South Korea. Indonesia compares favorably with the strong economy of South Korea on all these measures. The differences between Indonesia's labor force participation rates and emplopyment-population ratios and those of the Philippines and neighboring Singapore are smaller than those for Thailand whose working-age population is defined to include those 11 years of age and over. The strong recovery of Indonesia's economy from 1982 to 1987 is observed in the expansion of its labor force activity compared with other countries in the region. Labor force participation rates rose sharply as did the share of the work-age population that was employed. Open unemployment fell below 3 percent. Table 2.1: COMPARISON OF LABOR FORCE ACTIVITY IN SELECTED ASIAN COUNTRIES Nation Indonesia La S. Korea, PhIIppin.e*L SingaporeLb Thailand /c Year 1982 1987 1992 1987 1988 1987 1982 1987 1982 1984 Working g popu atiron (mIn) 110 128 27 80 82 85 1.8 2.0 84 87 Labor Force partici atlon rato (X) 64.2 E7.a 66.9 50.2 64.1 66.4 65.2 62.8 76.7 72.8 Employment- pouietlo n 62.6 66.9 68.8 64.6 61.1 69.4 68.8 59.6 68.6 68.8 ratio (X) Unemployment raote () 8.0 2.6 4.8 8.1 4.1 9.1 2.6 4.7 2.6 4.8 In Porsons 10 years of age and over. Persons 16 years of age and over. P ersons 11 years of age and over. Source: Yearbook of Labor Statistice, ILO (1988-1989); World Bank estimates. Demographic Trends in the 19809 2.6 Labor Force Participation. At first glance, the number of women entering the labor force increased sharply with the expansion of the Indonesian economy after the initial devaluation in 1983.7/ However, on closer inspection, the gains in labor force participation for women are found to be inflated by changes in survey methods.8/ The 1986 SAKERNAS and subsequent surveys placed greater emphasis on the measurement of work activity than the 1982 SUSENAS.9/ Interviewers were encouraged to probe for this activity. The change in interviewer instructions in 1986 produced a substantial increase in the number of unpaid family workers whose frequently intermittent work activities were overlooked in the earlier survey. The percentage of unpaid family workers in 1986 was 29.2 percent, an increase from 23.2 percent in 1982. The increase among women, 41.4 percent to 49.9 percent, was larger than that among men, 13.0 percent to 15.8 percent. This inflated the measured increase of women's labor force participation between 1982 and 1986. 2.7 The trend in labor force participation after 1986 is unaffected by this change. The three surveys conducted from 1986 to 1988 confirm that women's labor force participation was rising with expansion of the economy, while the rate for men was declining (Fig. 2.1 and Annex 2: Table 1). The increase observed for women, 44.4 percent to 45.8 percent, if extrapolated linearly to the earlier years, produces an estimated labor force participation rate in 1982 of 41.6 percent. This rate is higher than the actual measured rate of 38.3 percent and is an indicator of the size of the undercount of unpaid family workers in the 1982 SUSENAS survey. The modest decline in men's labor force participation linked with the increase in the rate for women from 1986 to 1988 reveals a narrowing of the gap in labor force participation rates for men and women. The increase for women was evenly distributed among rural and urban areas with the rate in rural areas significantly higher than that in urban areas. 2.8 The labor force participation rate for women and men in Indonesia, follows a pattern observed in other countries. It increases with age and subsequently declines (Annex 2: Table 2). During the early adolescent and teenage years, schooling is the dominant activity for both groups, with only about one out of ten young women and men, ages 10 to 14, employed or looking for work. This percentage rises sharply in the later teenage years and continues to increase into the 40s before declining. The increase in the 7/ The labor force trends examined in this chapter are drawn from the 1982 SUSENAS national social-economic survey and the 1986, 1987, and 1988 SAKERNAS national labor force surveys conducted by the government's central statistics agency, Biro Pusat Statistik (BPS). Annex 1: Table 2 contains population, labor force, employment and unemployment data by place of residence for men and women in all survey years. 8/ A. Korns, Distinguishing Signal from Noise in Labor Force Data for Indonesia, Development Studies Program, Statistical Paper #1, Jakarta, November, 1987 (mimeo). 9/ Korns, op.cit., p.17. -8- Flaure 2.1: MALE AND FEMALE LABOR FORCE PARTICIPATION IN THE 19SOS Labor Force Participation Rate 80 60- 40- 20- 1982 1986 1987 1988 inMen MWomen *w .. U|SI *UEA i4....... A. IftNA number of women entering the labor force before and after 1986 was well distributed across age cohorts with the largest gains for women in their 20s and 30s. The labor force participation of men which remained relatively unchanged during this period showed no variation in this pattern by age. The attraction of new jobs created by economic growth during the 1980s appears to have had its largest impact on younger women in both rural and urban areas. This impact is also seen in terms of education. 2.9 Education is an important variable in labor force participation.10/ Since earnings tend to rise with schooling, the opportunity cost of remaining outside the labor force increases with the level of schooling. In 1988, this pattern was evident for both women and men in secondary and post-secondary education (Annex 2: Table 3). Below these levels, labor force participation rates varied, averaging around 60 percent. Sizeable differences are seen, however, at the secondary level. The labor force participation rate for graduates of general secondary schools, many of whom would continue their education in post-secondary institutions, was 59.7 percent. This compared with a rate of 81.8 percent for graduates of vocational secondary schools, most of whom would not continue their schooling. This rate was similar to that for post-secondary graduates of Diploma I, II, and III programs. For university graduates, labor force participation rates reached 92 percent. 2.10 The increase in labor force participation for women during the 19809 was evident at all levels of schooling, but was larger in relative terms for those who had less than a secondary education. This holds true for changes before and after 1966. Women with a primary education in 1986, for example, 10/ OECD, Educational Attainment of the Labor Force, Paris: Organization for Economic Cooperation and Development, 1989. - 9 - had a labor force participation rate of 43.8 percent which rose to 46.4 percent in 1988. In contrast, there were no measurable differences for men by level of schooling. Thus, the shift of the Indonesian economy in the 1980s had its strongest impact on the labor force participation of women. It brought additional numbers of women in both rural and urban areas, many outside the main island of Java, into the economy. It attracted women of all ages and schooling levels, but had its largest impact on women in their 20s and 30s with less than a secondary education. Unemployment and Underemployment 2.11 Unemployment. The tightening of the Indonesian labor market for men and women in the 1980s is seen in the decline of open unemployment. Open unemployment rates, representing persons without a job who are actively looking for work, are low in Indonesia by comparison with those in Western Europe and North America. One reason for this is the absence in Indonesia of government programs offering incomes protection. Without unemployment insurance or other sources of incomes protection, workers cannot afford to extend their job search. The low productivity and incomes of the workforce make it difficult for households to finance lengthy job searches.ll/ The open unemployment rate for Indonesia in 1982 was 3 percent. As the economy grew, this rate fell to 2.8 percent in 1988. The improvement was concentrated among women as the rate for men actually increased (Annex 2: Table 4). 2.12 The improvement in open unemployment for women is restricted to rural labor markets and is likely overstated by virtue of the undercounting of unpaid family workers. This undercounting and the subsequent addition of unpaid family workers to the total of those employed in 1986, mainly in rural areas, would increase the denominator of the open unemployment rate and lower the 1986 open unemployment rate. If the comparison of open unemployment rateq is restricted to the period from 1986 to 1988 when the economy was exhibiting strong growth, there is very little evidence of further labor market tightening. The only case that might be made is for women in urban areas whose unemployment fell in this period from 8.1 percent to 7.8 percent. There is some evidence of labor market tightening outside Java for women and men. An increase in educated unemployment is an important reason for the failure of aggregate unemployment rates to decline further as the economy expanded. 2.13 Open unemployment through 1988 fell for persons with less than a secondary education, but increased for graduates of secondary and post- secondary institutions (Fig. 2.2). The heavy concentration of educated unemployment in urban areas accounted for most of the increased unemployment in these markets.12/ The increase in educated unemployment in urban areas makes the reduction in open unemployment for women in these markets all the more significant. The picture emerging from these trends is that of a strong 11/ R.L. Rucker, A Preliminary View of Indonesia's Employment Problem and Some Options for Solving It, Jakarta: U.S. Agency for International Development, 1985 (mimeo). 12/ Among unemployed university graduates in 1988, for example, 842 lived in urban areas compared with only 48% of unemployed primary graduates and 601 of total unemployment. - 10 - economic recovery after 1982 in which the main beneficiaries of employment gains were women and men with less than a secondary education. This growth doubtless raised the expectations of those able to acquire a secondary or post-secondary education. It created wage expectations that may not have been realized.13/ The increase and persistence of high unemployment among graduates provides some evidence of market rigidities. This problem is largely an urban problem, but can also be found to a lesser degree in rural areas. Flgur* 2.2s ORADUATE UNEMPLOYMENT t S~~~~Rt 0pUrumpi@VKISfRlt 90 10- - - 1982 1WI - No 8ehe PtlWy Jr. H"lh Gbwnrl -8- S. High gmra-l UnlIwtity 2.14 Underemployment. Open unemployment is only part of the story as it overlooks the problem of underemployment.14/ Underemployment occurs where a worker is employed in less productive activities with lower wages than his or her skills would allow. The concept of open unemployment is thus only one point on a continuum measuring the productive utilization of labor. The need to accept employment at any wage is a reality for most Indonesians who do not have the benefit of a social safety net or family wealth for support. This leads to the expectation that underemployment may be a more serious problem in Indonesia than open unemployment. In considering how Indonesian labor markets have tightened in response to economic growth in the 19809, it is useful to 13/ D.H. Clark, Tracer Study of Secondary School Graduates, Jakartat 1988 (mimeo). 14/ See M. Godfrey, The Nature of Indonesia's Employment Problem: Evidence from the 1986 Labor Force Survel, Development Studies Program t73, Jakarta: 1988 (mimeo). - 11 - look at how growth has affected the productive utilization of labor and measures of underemployment. 2.15 Two measures are constructed from Indonesian labor force surveys. The first builds on the concept of involuntary part-time employment. These are persons who want full-time work, but are unable to find it and are thus involuntarily working part-time. There is no direct measure of this cor."ept available in Indonesia.15/ As a proxy, persons working part-time, less than 35 hours per week, who are searching for additional work are counted as involuntarily part-time employed. These are persons who by their job search are indicating a dissatisfaction with their current hours of work and employment. The number meeting these conditions are added to the open unemployed and expressed as a percent of the labor force, identified as U2. The second measure, U3, is created by adding to the unemployed and the involuntarily part-time employed the persons who are full-time employed, 35 hours or more per week, and who are also searching for another job. This, too, is expressed as a percent of the labor force. In both measures, the revealed preferences for another job are treated as an indicator of underemployment. 2.16 The first measure, U2, confirms a high level of underemployment in 1982, prior to the first devaluation ( Annex 2s Table 5). There were nearly as many persons employed part-time and looking for work as there were persons openly unemployed. U2 is estimated to be 5.6 percent in 1982, nearlv twice the open unemployment rate of this period. The pattern of underemployment is similar to that for open unemployment. It was higher among women than men, in urban areas than rural areas, and on Java compared with outside Java. The important finding, however, is that by 1986, U2 had fallen sharply with the economic expansion. The observed decline in U2 for men is particularly significant since this decline is less likely to be biased by the undercounting of unpaid family workers. There is little evidence of change after 1986 with U2 rising slightly in 1988 to 3.0 percent for men and women, only a fraction above the open unemployment rate. The patterns of change in underemployment during the decade for women and men match those of open unemployment. 2.17 U2 adds a new dimension to the educated unemployment problem. Whereas open unemployment for secondary and post-secondary graduates increased during the decade, U2 tended to decline, except for university graduates. This pattern applies to men as well as women. The expansion of the economy after 1982, while raising graduate expectations and contributing to open unemployment, appears to have had a positive impact on graduate underemployment. This impact, however, may also reflect discouragement in searching for additional work as open unemployment increased. The story for underemployment is repeated using U3 (Annex 2: Table 6). This combination of open unemployment, involuntary part-time employment, and full-time employment looking for a new job stood at 8.1 percent in 1982. It fell by more than half to 3.8 percent in 1988. The improvement in this measure was realized by all 15/ In most industrialized countries, household labor force surveys ask persons working under 35 hours per week about the reasons for their part- time employment. The responses are used to identify the voluntarily and involuntarily part-tin.e employed. - 12 - Flure 2.8: UNDEREMPLOYMENT IN THE 1980S Underemployment 10 4 2 0 _ 1882 1986 1987 1988 Open Unemployment + U2 W U9 *00 "SO *uOGUA. w** |NA". except university graduates. The two measures of underemployment together reveal a labor market that responded positively to the shift in economic activity in the 1980s (Figure 2.3). Employment and Wages 2.18 Employment. The impact of the shift in macroeconomic policies to support outward-focused development can be seen in employment and earnings trends. To begin, it can be seen in the expansion of non-farm self-employment and wage employment. Nor-farm self-employment is an indicator of entrepreneurial activity and is sometimes treated as a measure of informal sector employment.16/ The informal sector is represented by small enterprises that use high percentages of domestic inputs and owners capital, produce primarily for domestic markets, serve mostly low-income populations, and function largely outside the government regulatory environment. It might include small traders on the street, the production of hand crafts and small goods, and repair shops and personal services. The informal sector may employ some wage workers, but relies heavily on unpaid family workers. 2.19 The non-farm self-employed as a share of total paid non-farm employment remained unchanged during the 19809 at 46 percent (Annex 2: Table 7). This percentage excludes unpaid family workers and farm workers. 16/ The employment status of an individual, without further adjustment, is an imperfect measure of informal sector employment. This measure includes self-employed professionals and technicians, most of whom are part of the modern sector, and owners of small businesses that operate at the fringe of the modern sector. - 13 Self-employment was more prevalent in rural than in urban areas. Women were more likely to be self-employed than men. Over the decade the share of men who were self-employed rose by a small percentage while that for women declined. These changes occurred primarily in urban areas. For women, this meant an increase in wage employment in urban areas in manufacturing, services, and other industries. Throughout the decade, self-employment was related in a positive fashion to age and a negative fashion to education. That is, the share of self-employment increased with age and decreased by level of schooling. 2.20 Wage employment shifted into manufacturing as macroeconomic policies opened the economy to trade. Manufacturing accounted for 13.5 percent of total wage employment in 1982, rising to 17.6 percent by 1988 (Annex 2: Table 8). Meanwhile, agricultural wage employment fell from 36.8 percent to 22.4 percent.17/ Reforms in banking and informal sector activity were a possible source of the substantial growth of employment in the service sector from 26.7 percent to 44.5 percent during this period (Figure 2.4). The growth of employment in manufacturing was concentrated in urban labor markets, while the growth of service employment was evenly distributed between urban and rural labor markets. The strong growth of employment for women in rural areas is found to be largely in the service sector.18/ 2.21 Wages. The movement of labor out of agriculture and into manufacturing and services might be expected to increase farm workers' earnings relative to earnings in other sectors. This would occur as the capital to labor ratio in agriculture is increased with the exit of labor and is reduced in manufacturing and services with the introduction of labor. This is observed as the average monthly earnings of wage employees in manufacturing declined relative to those in agriculture as did those in the service sector, while earnings in trade remained relatively unchanged (Table 2.2 and Annex 22 Table 9). This evidence is consistent with wage flexibility in Indonesian labor markets accompanying labor mobility. There is also evidence of this flexibility in the wages paid to workers by level of schooling. 17/ The decline in the share of employment in agriculture from 1982 to 1988 is confirmed by reference to the 1980 census and 1985 mid-decade census. See World Bank, "Indonesia Poverty Assessment and Strategy Report," Report No. 8034-IND, Washington, D.C., Annex Table 8, p. 176. The size of the decline may be overstated, however, due to changes in industry classification in the 1988 SAKERNAS compared with the 1982 SUSENAS. 18/ Employment gains in the service sector were primarily in low-skilled jobs. The share of paid employment with a primary education rose in the services sec.tor from 22.7 percent in 1982 to 29.9 percent in 1988. - 14 - Flour* 2.4: EMPLOYMENT SHIFT FROM AGRICULTURE INTO MANUFACTURING AND SERVICES _K js 2 3 e ~~~~~~~~~~~~~~~~~~thll OErdCZ ~~~~~~~~~~~~~~~~44'6 Table 2.2i AVERAGE HONTHLY EARNINGS BY ECONOMIC SECTOR AS A RATIO OF EARNINGS IN AGRICULTURE 1982, 1986, 1987, 1988 1982 1986 1987 1988 T1.~~~~~~~~~~~~~~~~~ . . . Industry: Agriculture 100 100 100 100 Manufacturing 206 199 196 186 Trade 214 214 225 215 Services 295 163 259 241 Others 229 267 252 240 Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS. 2.22 The average monthly earnings for each education level are expressed as a ratio of the average monthly earnings of workers with no schooling. The ratios show a narrowing of earnings differentials by level of schooling during the decade and imply a possible decline in the rate of retur m to education in the 19809 (Table 2.3 and Annex 2: Table 10). This pattern bears further study, but as presented, it suggests that the supply of well-educated workers may be outpacing the demand for these workers. The demand for labor has been focused on workers with less than a secondary education. The failure of the decline in relative earnings to reduce graduate unemployment suggests that the - 15 - reservation earnings of graduates may be slow in adjusting to changing economic conditions. Table 2.3: AVERAGE MONTHLY EARNINGS BY EDUCATION LEVEL AS A RATIO OF EARNINGS FOR THOSE WITH NO SCHOOLING 1982, 1986, 1987, 1988 1932 1986 1987 1988 Education: No Schooling 100 100 100 100 Primary 190 174 174 166 Jr. High, General 285 259 243 232 Jr. High, Vocation 278 256 264 256 Sr. High, General 349 338 307 285 Sr. High, Vocation 327 306 306 283 Diploma I, II n/a 342 330 321 Diploma III 491 455 469 395 University 578 580 615 492 Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS. 2.23 The narrow earnings differential .'iserved favoring general over vocational secondary schools deserves furthjr study: vocational education tends to be more expensive than general education, but entrants to general secondary schools appear to be selected on the basis of better performance.19/ At the post-secondary level, these trends in earnings differentials would need to be examined by f'-ld of study before they are used to guide investments in education. The point :; be stressed is that earnings in Indonesia are moving in patterns consistent with other economic indicators and appear to be a good guide to changing marke; conditions. The shifting of market incentives during the 19809 to the prodts.x.on of tradeables seems to be adequately reflected in the movements of employ'-eut and wages. Employment and Wages in Manufacturing 2.24 The impact on employment and wages of the shift of production to tradeables can be studied further by looking at economic activity in manufacturing. This activity is described by establishment surveys of value- added, employment, and wages, collected quarterly but reported annually from 1978 to 1987. The Survei Industri (SI), conducted by the BPS, covers all manufacturing establishments with 20 or more employees. This includes most enterprises engaged in manufacturing for export. The SI provides uneven coverage of establishments from year to year and it fails to include the birth 19/ See paragraph 4.21 and Annex 4, Table 9. - 16 - of some new establishments.20/ This produces irregular yearly movements in the series and a downward bias of measured economic activity in the growth subsectors. 2.25 The problem of irregular yearly movements is addressed using a 3-year moving average to smooth the series. The revised time series covers 1979 to 1986. The downward bias of the measured growth remains a problem. Nominal measures of value added and wage costs aze adjusted using the producer price index for manufacturing with 1983 as the base year. Comparisons are based on these adjusted series. The wage costs in each establishment reported in the SI do not measure occupation-specific wages. Instead, they combine production and nonproduction workers. Wages per worker may therefore change over time for reasons that are unrelated to productivity, such as changes in the mix of production workers, skill levels, hours of work, and the employment of women and men. The data therefore provide a rough guide to changes in subsector production, wages, and employment. Production 2.26 The real value added by these medium and large manufacturing establishments exhibited strong growth from 1979 to 1986. This growth was produced by the entry of new establishments in the sector and an increase in plant size, measured by value added per establishment (Annex 2: Table 11). Growth in real value added accelerated from 1983 to 1986 following the first devaluation.21/ It reached 85 percent in this period compared with the increase of 56 percent from 1979 to 1982. Subsectors with above average growth in the later period included textiles, wearing apparel, and leather; wood and wood products; paper and paper products; basic metal industries; and other manufacturing. These subsectors included two of the largest producers of non-oil exports. 2.27 Wood and wood products is the numbe: one source of non-oil exports including plywood, veneers, and furniture.221 Textiles, wearing apparel, and leather industries, including garments and footwear, shared the number two position with food, beverages, and tobacco. Food, beverages, and tobacco is a traditional export subsector for commodities such as coffee, tea, cocoa, and spices. Other important subsectors producing for export are paper and paper products; chemicals, rubber, and plastics; basic metal industries; and fabricated metal products. The growth in manufactured goods led to an expansion of sector employment and wages. 201 The directory of establishments is periodically updated with the last update completed in 1986. The BPS is currently updating the coverage and attempting to backcast the series to more accurately reflect changes in manufacturing activity. 21/ The growth in real value-added in 1984 and 1985, shown in Annex 2, Table 11, is biased upward by the use of the 3-year moving average smoothing technique. The timing of this growth is closer to 1986 and the second devaluation of the 1980s. 22/ BPS, Statistik Indonesia 1988: Jakarta, 1989. - 17 7 Employment and Wages 2.28 Employment. Medium and large manufacturing establishments employed 1.7 million workers in 1986, almost twice the number employed in 1979. Nearly 900,000 jobs were created during this periG: The percentage increase in manufacturing employment associated with a 1.0 percent increase in output rose sharply from 1983 to 1986 compared with that from 1979 to 1982. Rising from 0.34 to 0.63, this measure of the elasticity of employment reveals that the growth in manufacturing output after the first devaluation of the 1980s, produced twice as many jobs as that before (Annex 2: Table 12). The increase in manufactured goods for exports became an important source of new employment. Much of this employment growth came from the entry of new establishments. Employment per establishment increased only slightly after 1982, while the number of new establishments increased. 2.29 The three most important exporters of manufactured goods--wood and wood products; food, beverages, and tobacco; and textiles, wearing apparel, and leather--also produced the largest number of new jobs during the period from 1983 to 1986. In each subsector, this growth came primarily from the entry of new establishments. In two cases, food, beverages, tobacco and textiles, wearing apparel, and leather, the employment elasticity of the subsectors rose after 1982, suggesting that the expansion in output was achieved by increasing the share of labor used. The increase was particularly large for the food, beverages, and tobacco subsector. Other subsectors where this pattern was repeated were non-metallic mineral products, including glass and cement, and fabricated metal products. Wood and wood products, on the other hand, shows a reduction in its employment elasticity after 1982, indicating that its growth was achieved by decreasing the share of labor used in production. 2.30 Wages. Average real wages per worker in manufacturing increased by 43.8 percent between 1979 and 1982, but then slowed to an increase of less than 11 percent from 1983 to 1986. In the latter period real wages per worker increased from 66,333 Rp. per month to 73,333 Rp. per month.23/ The rapid increase in average real wages between 1979 and 1982 outpaced productivity growth as measured by the increase in average real value added per worker. The rising unit cost of labor associated with this pattern might be considered a factor in the slowdown of the economy in this period. From 1983 to 1986, this pattern reversed with productivity rising at a rate twice that of average real wages. The gap between wage and productivity growth began to narrow as the decade progressed (Figure 2.5). This would have been a favorable trend to reducing unit labor cost and improving the competitiveness of the Indonesian economy and its manufactured goods. 2.31 Textiles, wearing apparel, leather and wood and wood products, both producing large numbers of new jobs from 1983 to 1986, exhibited strong 23/ Average monthly real wages per worker in manufacturing from the Survei Industri exceed the average monthly real earnings of employees in manufacturing from the SAKERNAS. The difference is about 30Z. Both surveys show a slowdown of real wage growth after 1983. Real wage growth in manufacturing measured by the SAKERNAS actually turned negative in 1987 and 1988. - 18 - FIluro 2.6: REAL WAGE GROWTH AND VALUE ADDED IN MANUFACTURINO 200 190 1S 170 100 1SO 140 180 110 110 1979 1980 1981 1982 1983 1984 1988 19806 -' Real Wage per Wxrk Cl Value-add pwr rwtew productivity growth outpacing the increase in average real wages. This provided a basis for further growth by improving the competitiveness of both subsectors and for future gains in real wages. The outlook for food, beverages, and tobacco, however, is less optimistic. From 1983 to 1986, the output per worker in this subsector actually declined, while real wages increased slightly. The ability of this subsector to continue its rapid employment expansion will depend heavily on increasing productivity, while holding down real wage growth. Both food, beverages, tobacco and textiles, wearing apparel, and leather are low wage employers, while wood and wood products pays slightly more than the manufacturing average. Market Signals for Education and Training 2.32 The growth of women's labor force activity and the restructuring of employment in urban and rural areas both send important signals to education and training institutions. The expanding role of women in the labor market brings attention to their educational disparities. Twenty-four percent of women in the labor force in 1988 had no formal schooling compared with 11.6 percent for men. Thirty percent had less than a primary school education against 27 percent for men. Access to schooling and training in the workplace will become increasingly important to women's productivity and contribution to household welfare. The movement of employment from agriculture into manufacturing and services will also change the structure of needs in education and training. - 19 - 2.33 The shift of employment in rural communities from agriculture to other sectors will reduce the demand for agricultural education.24/ The high level of non-farm self-employment in rural areas will place attention on access to general education as a foundation for apprenticeship training that characterizes small businesses in the informal sector.25/ In urban areas, the growth of wage employment in manufacturing and services will increase the demand for in-service training by enterprises. The success of export-led development and the ability to increase real wages will depend heavily on training in the enterprise to improve labor productivity. 2.34 The increase in unemployment among secondary and post-secondary graduates during the decade in the face of declining wage differentials for this education provides some evidence of unrealistic wage expectations on the part of graduates that need adjustment. More attention needs to be given to these wage differentials and the costs and financing of schooling in terms of the signals both provide to future investments in education, particularly if Indonesia expects to follow the pattern of South Korea in the 1970s and increase the technological intensity of the goods it produces for export and increase the demand for educated labor. C. Labor Market Issues Labor Market Regulation 2.35 Labor markets in Indonesia exhibit wage flexibility and low barriers to labor mobility. From the analysis above, the case is weak for arguing that the government has excessively regulated these markets leading to the distortion of competitive wages and employment. The impact of market regulation comes first from the scope of regulation and second from the effectiveness with which regulations are enforced. The scope of labor regulation in Indonesia is similar to that in other developing countries and covers (i) labor protection and supervision, (ii) minimum wages, (iii) reporting of information on employment, (iv) safety and health standards, (v) hiring and displacement, and (vi) employment of expatriate workers.26/ These regulations are enforced by DEPNAKER, the Department of Manpower. Labor inspections are carried out by 27 provincial and 170 district level offices. 2.36 With an extended array of market regulations, there is a potential for the distortion of labor markets. However, the observed flexibility of these markets suggests otherwise. The absence of effective enforcement of regulations provides a possible explanation for this flexibility. Minimum wages can be used as an example. A system of minimum wages exists which is 24/ A more optimistic view for the role of agriculture in employment generation is found in C. Manning, Indonesia: Employment Problems, Prospects and Policies, prepared for the World Bank, 1988 (mimeo). 25/ J. Middleton, A. Ziderman, A. V. Adams. Skills TraininB for Productivity: Vocational Education and Training in Developing Countries, (in process), World Bank 1991. 26/ Mari Pangestu, Manpower Regulations in Indonesia, a report prepared for the World Bank, 1988 (mimeo). - 20 - reviewed and updated approximately every two years. Minimum wages are set at the provincial level, beginning with recommendations from a tri-partite regional wage board comprised of representatives from DEPNAKER, the National Trade Union (SPSI), and the association of employers (APINDO). Different wages are set at the provincial level by sector and subsector producing over 600 different minimum wages throughout the 27 provinces. Prior to 1989, there was no sanction to enforce these wages, however, in 1989 DEPNAKER began to prosecute employers who failed to comply with wage and insurance requirements. Even where sanctions exist enforcement is difficult.27/ 2.37 The enforcement of minimum wages and other labor regulations by DEPNAKER is the responsibility of 1,124 labor inspectors. These inspectors cover over 120,000 establishments, a number that increases approximately 10 percent annually. Some 30 percent of these inspectors are administrators and are unavailable for field inspections so that only about 700 inspectors are available to enfor-.e labor regulations. This is a ratio of 170 enterprises to each labor inspector. As a result, the coverage of enterprises is uncertain. The situation requires setting priorities in inspections. SPSI, the National Trade Union, through its worker education function helps workers report and enforce labor regulations.28/ The sheer numbers, however, make the effectiveness of enforcement problematic. Labor regulations are a potential source of market rigidities, but the evidence currently contradicts this finding.29/ Labor Migration 2.38 DEPNAKER has licensed private employment agencies to assist the placement of workers overseas. This program is seen as a safety valve for the economy and a source of foreign exchange. Twenty-nine countries are currently receiving workers, but three countries account for 94 percent of placements: Saudi Arabia, Malaysia, and Singapore.301 The target is 500,000 placements during Repelita V, although the current placement rate appears to fall below 27/ APINDO representatives in East Java report that minimum wages are not an important constraint to employment in large enterprises, which regularly pay more than the minimum wage, but may be a problem for small enterprises. This was confirmed in the survey of export-oriented manufacturing firms, see para. 3.7. 28/ SPSI is the national umbrella for labor unions. Affiliation with SPSI is required for government recognition. Pangestu (1988:8) reports that the labor movement in Indonesia is weak. Union membership is not obligatory and strikes are rare. SPSI reports its membership in December 1989 was 868,194 distributed among 8,845 local unions. 29/ Interviews with a small number of enterprises in East and West Java did not produce a great deal of concern about the burden of labor regulations. The regulation mentioned most often was the extended process of DEPNAKER approvals required for layoffs and dismissals. 30/ There is substantial unregulated migration to Malaysia for work. No official figures are available, but estimates of those in the country at any one moment range as high as one million migrants. - 21 - this target.311 Even before the Gulf crisis, the market in the Middle East had weakened for unskilled workers. Agencies report orders for skilled workers which they are unable to fill for lack of an adequate supply. 2.39 The growth of employment in manufacturing and services in the 1980s is proving to be a very effective source of employment creation for unskilled workers. With the tightening of the domestic labor market, the migration of unskilled workers would appear to be of decreasing importance, if not of decreasing likelihood in view of the shift in international demand. The rising unemployment among secondary and post-secondary graduates, however, suggests the value of focusing on the rising international demand for skilled workers and the role that sppnlFllzed education and skills training might play in preparing graduates to meet this demand. Educated Unemployment 2.40 The issue of educated unemployment has been highlighted at several points in this chapter. The important finding in interpreting the cause of this problem is evidence of the downward drift in wage differentials for secondary and post-secondary graduates during the 1980s. If these wages had been shown to be rigid in the face of rising unemployment, then wage rigidity might be considered the cause of the problem. The failure of wages to adjust downward to the excess supply of graduates would explain the problem of their persistent unemployment. However, this is clearly not the case as there is adequate evidence of downward wage flexibility. This shifts attention to a second hypothesis to explain the persistent unemployment of educated workers, that of unrealistic wage expectations on the part of graduates. 2.41 There is also a competing, but related hypothesis involving the attraction of public sector employment and the queuing of graduates for these jobs.321 The freezing of civil service employment and salaries as part of the government's stabilization program, however, has reduced the attraction of these jobs in the late 1980s. This hypothesis is a special case of the more general hypothesis that there is a mismatch of the demand and supply for skills. That is, students are pursuing fields of study that do not conform with the market demand for skills. Students studying for careers in the civil service, for example, may find that their studies are not immediately transferable to the private sector. In this case and the case above, of unrealistic wage expectations, an appropriate policy approach would involve 31/ Compared with other Asian countries, Indonesia's overseas labor migration is negligible. The yearly volume of international labor migrants is estimated to be about 57,000, of which 80 percent are housemaids and nearly 20 percent drivers. See, T.F. Kelly, "The Contribution of Overseas Employment to Indonesia's Growth Prospects," Project Discussion Paper, INS/82/013-08, Jakarta: International Labor Organization, 1987. More recent figures for 1989/90 show an increase in the yearly volume to slightly over 75,000. 32/ See, P. Wirutomo, et.al., Labor in the Public Service: Indonesian Report, Research and Development Centre for Manpower and Development - Yayasan Tenaga Kerja Indonesia in cooperation with the International Labor organization, Jakarta: 1988, pp. 57-69 (mimeo). - 22 - providing labor market information to change graduate wage and employment expectations. Finally, there is a third hypothesis that public subsidies to education could result in private returns to education remaining attractive while social returns are falling. This hypothesis warrants further investigation although private secondary school and university enrollments exceed enrollments in government schools. 2.42 The most plausible of these explanations of graduate unemployment are those of unrealistic wage expectations and the possible mismatch of skills demand and supply. As suggested, improved labor market information about expected wages and employment in fields of study would permit students and new labor market entrants to make more informed schooling and career choices. It would also allow schools and training centers to adjust curricula to market needs. The lag between changing market conditions and the realization of these changes can be reduced by better dissemination of market information. The largest change affecting graduate employment in the 19808 has been the deterioration of employment prospects in the civil service. Anecdotal evidence of large numbers of social science graduates unable to find employment against shortages of technical and engineering graduates would be consistent with this shift in the market demand for skills in the 1980s. The flexibility of wages and the dissemination of information about changes in earnings differentials by education are strategies to address the educated unemployment problem. Low Wages 2.43 The issue of low wages is wrapped up in the problem of low productivity. Even though Indonesia's share of the working-age population employed is similar to that of three of the four countries in the earlier regional comparison, its per capita income, $440, is well below that of all four countries (Table 2.1). The average monthly wage in manufacturing from the SAKERNAS was 67,400 Rupiah in 1988, equivalent to about $1.55 per day for a six-day work week. This is an indication of its low productivity. Another indicator of low productivity is found in the international comparison of value added per employee in manufacturing. The comparison in Table 2.3 of manufacturing productivity by subsector, developed by UNIDO, shows Indonesia to be behind Malaysia and South Korea, but ahead of India. The comparison with the Philippines is mixed. A more revealing measure of the productivity gap to be filled is seen in the comparison with the United States where the value added per employee in manufacturing is a factor of 10 or more times higher than that in Indonesia by subsector. - 23 - Table 2.4: INTERNATIONAL COMPARISON OF MAN.WACTURINO PRODUCTIVITYs 1084 (value added per mployee, '000) Industry Indoneiao Malaysia Phillppine South Korea Indl US Light Industry 811/2 Food products 2.8 14.1 0.7 18.7 1.7 70.1 821 Textiloe 2.8 6.8 8.8 9.0 1.6 81.9 822 Garments 1.9 8.2 1.6 5.8 1.8 24.9 Heavy Processing 841 Paper products 2.8 7.7 9.7 14.1 1.8 66b6 851 Basic chemicals 10.6 n.a. 16.0 84.7 6.8 107.7 Engineering 881 Moel products 4.0 0.9 6.1 10.0 2.6 46.2 884 Transport equipment 5.6 12.1 4.2 16.8 2.9 67.2 Source: UNIDO (1980) and H. Hill, gIndonesia*s Industrial Transformation: Part I", Vol. 26, No. 2 Bulletin of Indonesion Economic Studies, August 1990, p. 99. 2.44 The task of expanding manufacturing employment in Indonesia and increasing real wages requires improvements in labor productivity. The failure to emphasize productivity growth while increasing real wages will lead to rising unit costs and the reduction of Indonesia's competitiveness in the world economy. The need to emphasize productivity growth as a means to increase household incomes and reduce poverty places a high premium in the 1990s on giving more attention to choices in technology, investment in capital, in-service training and skills development for managers and workers. In the long term, it calls for looking to the next stage of development and the adoption of strategies to move production into higher value added activities. Real wages can thus be increased by making workers more productive in their current jobs and by creating new jobs whose technology and capital add to their productivity. Human resources development is important to both strategies. It is important to improving managers and workers' skills in their current jobs and preparing workers with the skills required by new technologies. D. Concluding Observations 2.45 Indonesia's labor markets have performed well in response to demand shocks and adjustment in the 1980s. Tha signals these markets provide to education and training institutions draw attention to the economic challenges that face the country for expanding and improving its education and training system in the 1990s. The shifting of production from non-tradeables to tradeables durlng the decade has increased the importance of manufacturing in the economy. The expansion of labor intensive, low-skill employment in this sector has helped tighten labor markets and increase the participation of women in the economy. However, Indonesia continues to suffer the twin problems of low productivity and low wages. Its ability to compete in the world economy and increase the wages of its workforce and incomes of households will increasingly depend on its investments in education and training amidst continuing investments in capital and technology. - 24 - 2.46 Indonesia has yet to reach the point of exhausting the comparative advantage of its low wages and ample work force. The entry of women into the labor force will continue to expand the labor supply through the 19909. The shift of labor from agriculture will further support expansion of labor- intensive manufacturing and service industries. At the same time, there is an overhang in the labor market of educated labor to be absorbed. These conditions do not discount the possibility of scattered skill shortages as already observed in the rapidly growing financial sector, but they suggest that widespread labor and skill shortages leading to wage inflation are not an immediate concern affecting Indonesia's competitiveness in the world economy. The country has some time to prepare for this and the next stage of development. 2.47 With export-led development and emphasis on labor-intensive manufacturing, Indonesia is about where South Korea was in 1965. To increase output, productivity, and incomes, South Korea chose a strategy of step-wise development linking increasing technological sophistication in production with expanded levels of education and training (see paras. 5.12 to 5.15). There was a careful integration of economic development and human resources planning in this process. Indonesia in the 1990s has a similar opportunity supported by competitive labor markets providing effective signals to guide public and private investments in human resources development. The performance of labor markets could be further enhanced by additional investments improving the quality and timeliness of labor market information. Many of the demographic trends observed in this chapter can be seen in the following chapter as it describes employment and skills development in export-led manufacturing. - 25 - III. MANUFACTURING INDUSTRY, EMPLOYMENT AND TRAINING A. Introduction 3.1 This chapter provides a detailed picture of how industry obtains technically skilled and supervisory workers, and how those workers acquire such skills, based mainly on the findings of surveys of export-oriented manufacturing firms and their skilled and supervisory employees. The surveys were conducted in a random sample of 142 enterprises located in four geographical areas in eight branches of export-oriented manufacturing. The four locations: Jabotabek (Jakarta, Bogor, Tangerang and Bekasi), Bandung, Surabaya and Medan, account for about 60 percent of total manufacturing industry, by employment, in the eight selected branches of textiles, garments, footwear, rattan furniture, wood furniture, plastics products, non-electrical machinery and consumer electronics. Firms owned by Indonesian private capital predominate and account for 83 percent of the sample. Almost 40 percent of larger firms (more than 200 employees) export more than 50 percent of their output (by value), but only about 10 percent of the smaller firms (less than 200 employees) (Annex 3: Tables 1A and B). The firms have relatively low levels of technology: nearly 60 percent have no more than ordinary (non- automatic) power-driven equipment, about 25 percent more have some automatic equipment but no computer controls. Forty-five percent of firms report in- house design while 35 percent rely on their buyers for design. Only 10 percent report manufacturing under license (Annex 3: Table 2). 3.2 Individual records of education, training, employment by occupation and earnings were obtained from a sample of about 1,900 skilled workers, supervisors and technicians who had been recruited to their current firms within the previous five years. F.ture 8.1: MALE FEMALE EMPLOYEES BY SKILL LEVEL AND FIRM SIZE Thousands 14- 12- 16 - 4- 2 0 Unskilled Skilled Supervisor Unskilled Skilled Supervisor Large firm Omall Firm _ Female 1 Malo - 26 - B. Characteristics of the Workforce 3.3 The composition of the workforce of about 56,000 employees in the sampled firms is shown in Fig. 3.1, by skill level, gender and size of establishment. A striking aspect is the large proportion of women in these industries, representing 53 percent of the total. About 32 percent of employees are described as unskilled, with 56 percent skilled and 12 percent supervisors. Females are over-represented among unskilled (of whom they represent 64 percent), slightly under-represented among skilled and heavily under-represented among supervisors and technicians (and most female sn:pervisors work in small establishments). Remarkably few employees (only 8 percent) are on monthly contracts (Annex 3: Table 3). The largest single c.ategory is that of permanent daily-paid workers (43 percent). But the proportion on piece rates (at 41 percent), is much higher than expected, reflecting perhaps the absence of subtle management styles in these industries.34/ There is little difference between the genders in their distribution between types of contracts, but unskilled workers are heavily over-represented among permanent daily and monthly paid employees, as are skilled workers and supervisors/technicians among piece-rate workers. Small establishments are much less likely to employ their workers on permanent daily or monthly terms (only 39 percent of whom are in these categories) than are large (53 percent). 3.4 Occupation. Data on occupation were collected by allocating employees to pre-coded ISCO categories.351 The largest specialist occupational categories are operators in the garments and textile and plastic products industries (Annex 3: Table 4). Female workers, dominant in the sample as a whole, are even more dominant in export-oriented establishments, where they comprise 63 percent of the workforce, and are over-represented among the unskilled (70 percent) and skilled operators (69 percent). These patterns are consistent with the expanded role of women in manufacturing observed in Chapter 2. 3.5 Recent Recruits to Skilled and Supervisory/Technician Posts. Nearly 70 percent of the sampled workers are under 30 years of age and, in line with recent expansion in educational enrollment and output, only 18 percent have no more than primary education (SD), while 26 percent have junior secondary schooling (SLTP), and a further 52 percent have senior secondary schooling (SLTA, STH, SHEA, SMKK, STH Pembangunan). As might be expected with these occupations, very few (around 3 percent) have any post-secondary education. Females in the sample have considerably less education than males; 58 percent of women have less than senior secondary schooling, compared with only 39 percent of men (Fig. 3.2 and Annex 3: Table 5). 3.6 The sample was reasonably well spread over the relevant occupations. Skilled tradespersons however represent 23 percent of those interviewed, which 34/ See Chomitz et al (1988) for further discussion. 35/ International Standard Claesification of Occupations. The revised 1988 version of ISCO, modified to suit local circumstances, was used. - 27 - Eloure .9: SKILLED WORKERS SUWERVISORS BY AGE, GENDER A EDUCATION towel~~~~~~~~~~~oB 2 26 14% ary 00% 27%LOBI28 u ~~~~~~~~~~~~~~Secondarv l uvo Male Under 30 Female Under 30 23% 12 LOwOVr LWr 65% Poo U Voc. Seoo,Secrv lale Over 30 Female Over 30 is higher than their proportion ef the total stock of skilled/supervisory workers in the sampled establishments (16 percent). 3.7 Importance of Lack of Skill as a Problem. Managers were asked to grade a number of production problems on a four-point scale: (1) always a problem; (2) sometimes a problem; (3) seldom a problem; and (4) never a problem. Thirty-one percent of estab'ishments reported lack of skills in the workforce to be a problem (Annex 3: Table 6). This is quite a high proportion, but it is ranked only seventh in the list of twelve problems. More managers are worried about workers missing deadlines (52 percent) or the low quality of products (49 percent). Export-oriented establishments seem to be even less worried about lack of skills--it is ninth in their ranking of problems. Lack of skill was given a relatively high ranking as a problem (5th in ranking with 38 percent) only by firms which grew in output by less than 10 percent between 1988 and 1990. Labor market regulations concerning layoffs and minimum wages as discussed in Chapter 2 are also given a low ranking as problems (cited by only 20 and 23 percent of the sample, respectively). Obtaining technical advice also appears not to be a problem (22 percent), which reflects the firms' low level of technology. 3.8 Although lack of skills is identified as a problem by only a minority of establishments, other problems, given a higher ranking, are partly related to inadequate skills--for instance, low product quality, workers missing deadlines and wastage of materiajq, which particularly worry export- oriented establishments. The narrow op.erator skills required in this early stage of labor-intensive manufacturing can be acquired quite quickly so it is not surprising that skill inadequacies are not seen as much of an immediate problem by managers. - 28 - 3.9 Skills Shortage. Some skills are scarcer than others. Vacancy rates by occupation reported by different establishment types vary with skill levelt for skilled operators the vacancy rate is 2.8 percent, for skilled tradespeople 7.7 percent and for supervisors/technicians 13.4 percent (Annex 3: Table 7). The top ten categories (in descending order of rate) ares electronic machinery assemblers, weavers and knitters, silkscreen etc. printers, wood/rattan treaters, pattern makers, production supervisors, precision workers, wood/rattan handicraft workers, and other technicians. Variations in vacancy rates between different types of establishment are as expecteds highest for small, central government and fast growing establishments. Export-oriented establishments have below-average vacancy rates, particularly in the case of supervisors/technicians for whom their rate is not much more than half the average. The finding confirms the importance of wages in these markets: the type of establishment which pays the highest wages, the foreign private, also has the lowest vacancy rates. This reinforces the findings of wage flexibility in Chapter 2. 3.10 Foreign Workers. Another indicator of relative skill scarcities is the number of foreign workers employed in each occupational category. The number is small, representing only 0.2 percentt of skilled operators, 0.4 percent of skilled tradespeople and 1.3 percent of supervisors/technicians (Annex 3: Table 8). Almost all of them are in large establishments and the majority in export-oriented establishments. They appear to be particularly important in textile and garment industry occupations. C. Internal and External Labor Markets 3.11 Internal and External Labor Markets. There are two ways for employers to obtain skilled workers. One is to recruit them from pre-career training institutions or from other firms. The other is to promote their own workers from lower skill categories and train them for their new posts. The conventional wisdom about Indonesian industry is that, particularly in the case of larger firms, there tends to be an internal labor market, with a preference for recruiting unskilled workers and improving their skills towards eventual promotion. Reports by the firms on the source of recruitment of skilled workers and supervisors/technicians since January 1989, tends to challenge the ;iew that internal labor markets are dominant (Annex 3: Table 9). For all establishment types the reported rate of recruitment of skilled workers from outside since January 1989 has exceeded that of promotion from within. This is particularly so for export-oriented, Jndonesian private, fast-growing and low-technology establishments. Since the majority of skilled workers (about 70 percent) are in '-illed operator occupations and have relatively low levels of skills, it is not surprising that they move readily between firms particularly at a time of expansion of employment opportunities. An internal labor market is more clearly evident in the case of superviso'rs and technicians, with the rate of internal promotion exceeding that of external recruitment for most types of establishment. 3.12 Worker Turnover and Poaching. Reports of the number of workers who left since January 1989 as a proportion of the mid-1990 workforce, shown in Annex 3: Table 10, are broadly consistent with the data on recruitment reported in para. 3.11. The turnover rate is lower for skilled than for supervisory workers. For skilled workers the rate is highest for export- oriented establishments and those with slow-growing employment, presumably for - 29 - different reasons. For supervisors and technicians there are wide variations in rates, with the highest rates experienced by slow-growing and central government establishments. Only a small number of firms responded to a question on poaching of trained workers indicating that this is not a serious issue. However, a few firms are concerned about a high incidence of apparent poaching of supervisors and technicians. 3.13 The importance of both internal and external labor markets is supported by the individual records of the recent recruits. About 40 percent of skilled employees reported that they were first employed as unskilled workers and a similar percentage of supervisors/technicians started as unskilled or skilled workers (Fig. 3.3 and Annex 3: Table 11). Within the skilled worker category, those in skilled operator occupations reported a higher frequency of initial employment as unskilled workers (46 percent) than skilled tradespersons (39 percent). Individuals' answers to a question about their immediately previous activity are also broadly consistent with the picture given by managers of active external labor markets. About 47 percent of both skilled operators and skilled tradespersons among recent recruits were appointed to their present posts from employment elsewhere, compared with 21 to 24 percent appointed from within the establishment; for supervisors/ technicians the comparable percentages are 45 and 27 (Annex 3: Table 12). As reported by managers, large establishments make more use of internal labor markets for skilled workers than do smaller ones, but for supervisors/ technicians it is the other way round. Flureo 8.3: OCCUPATION ON APPOINTMENT FOR PRESENT SKULL.D WORKERS AND SUPERVISORS 60% 40% 80% 20% 0 kIlli d Skilled Sup/Tech Operator Tradempurtso Oocupatlon on Appt. jnakliled = Skilled a2 SupP/TOh Other D. Skills Training 3.14 Pre-career Training. The individual records show that relatively few ofL those recently recruited to skilled and supervisory positions have had pre-career training after leaving school. The proportion which reports training is highest for skilled tradespeople (24 percent) and lowest for - 30 - operators (14 percent), with supervisors/technicians in between (18 percent) (Annex 3: Table 13). The low proportion of skilled operators who reported that they had pre-employment training is not surprising in view of the nature and low level of their skills. The percentage of workers with pre-career training increased with level of educational attainment: from 10 percent of those with primary education to 40 percent of those with post-secondary education. Twenty percent of those with secondary technical education had undertaken precareer training, slightly lower than the 27 percent of secondary general school graduates who had such training (Annex 3: Table 14). Six percent of respondents reported having had post-school training which turns out to be irrelevant to their current work, leaving only 14 percent who have enjoyed relevant pre-career training. Most pre-career training was in private institutions. Only 3 percent of the sample had been to government training centers, with the Manpower Department's BLK and the Department of Industry's training centers accounting for only 1 percent each. This is consistent with the much larger size of the private training system and the easier access to private training (see para. 4.42). It indicates also readiness of people to pay for training as a means of entry to industrial employment. 3.15 Employers' Opinions of General Education, Technical Education, and Government Technical Training Centers. Employers were questioned about the quality of the recruits they get from schools and training centers. Most of them are reasonably satisfied with the quality of general education. Sixty- twO percent expressed themselves highly or quite satisfied, with as many as 65 percent of export-oriented and 78 percent of foreign (but only 56 percent of high-technology and 60 percent of central government) establishments in these categories (Annex 3: Table 15). The few who expressed themselves dissatisfied identified the lack of knowledge of science and unsatisfactory work discipline as particular weaknesses. 3.16 Nearly 50 percent of the sampled establishments claimed to have recruited STM graduates last year. Among these the verdict is relatively favorable. Thirty-nine percent regard them as at least as good as experienced skilled workers. Only 33 percent think that they are no better than graduates of the general senior secondary schools. Twenty-eight percent think they are not as good as experienced skilled workers. Foreign establishments are the most skeptical, central government the most enthusiastic about STM graduates, while the export-oriented have an above-average opinion of them (Annex 3: Table 16). 3.17 Less than a quarter of the establishments hac experience with graduates of the Manpower Department's Technical Training Centers (BLK), which fits in with the lack of pre-career training reported in para. 3.14. Again their verdict is relatively favorable. Thirty-two percent see the centers as adding nothing useful to a general senior secondary education, but the much larger 68 percent compare BLK graduates favorably with STM-holders (Annex 3: Table 17). Nowadays some STM and SMA graduates subsequently pass through BLK, so this verdict needs to be interpreted cautiously, but it implies that BLKs add value to secondary technical graduates and may be an effective alternative for some purposes. 3.18 Training of Employees. Establishments were questioned about their training resources and capabilities, their training preferences, the actual - 31 - training programs provided for their workers in 1989, actual training expenditures and views on training. The establishments report only 0.2 of a manager and 2.6 trainers or production supervisors with training responsibility per establishment. Even more strikingly, 87 percent of establishments have no training manager and 74 percent do not have a trainer or supervisor with training responsibility (Annex 3s Table 18). Foreign establishments have the most training managers, while the best endowed with trainers are high-technology, central government and export-oriented establishments. The proportion of establishments with classrooms and training workshops is also very low--14 and 11 percent respectively (Annex 3: Table 19). This implies that most of the establishments that have training staff have no facilities for off-the-job training. Foreign owned, export- oriented, high-technology and employment-expanding establishments have more facilities than other types. This confirms the direct relationship between level of technology and training. Operating successfully with relatively simple technology many Indonesian enterprises have little incentive to train. 3.19 Sixty-three percent of establishments report training their skilled workers in-plant, with supervisors or experienced workers training them on- the-job (Annex 3: Table 20A). About 13 percent report relying on the workers learning by watching others. Few (8 percent) report training workers off-the- job in training centers or special classes. Above-average in this respect are foreign, central government, high-technology, large and export-oriented establishments. Only 16 percent of establishment include any off-plant element in their programs, predominantly in government training centers; over- represented in this group are foreign, high-technology, export-oriented and, as might be expected, small establishments. Central government establishments report no off-plant training at all, even though those in the sample have no classrooms or training workshops. 3.20 Establishments also report training supervisors and technicians in-plant (82 percent). About 42 percent report that training is provided by staff, but quite a high proportion (36 percent) of supervisors and technicians receive only on-the-job experience (Annex 3: Table 20B). Once again foreign and high-technology establishments are over-represented among those providing off-plant training, including some overseas training. 3.21 Number and Types of Training Programs. To supplement the questions about the training methods which are favored, the firms were asked to report on actual training programs they provided during 1989, by type (on-the-job, off-the-job, apprenticeship, skill upgrading) and level (operators, tradesmen, foremen/supervisors, technicians), and the number in each category trained. The reports confirm the situation described in paras. 3.18 to 3.20. Only 25 percent of establishments reported any type of programs for skilled operators, 8 percent each for skilled tradespersons and technicians and 11 percent for foremen and supervisors during 1989, and the proportion with skill upgrading programs was even lower (Annex 3: Table 21). The dominance of on-the-job training is confirmed, as is the very small amount of training going on in small establishments. In spite of the claim of sixteen small firms to favor off-the-job training, no such program was apparently mounted in 1989. 3.22 Training Experience since Starting Work. The individual records of the sample of recent recruits provide further evidence of training practices - 32 - in these establishments. Fifty-one percent of the sample report having had no training at all since starting work, including 45 percent of skilled operators, 48 percent of supervisors/technicians and 71 percent of skilled tradespersons (Table 3.1 and Annex 3: Table 22). These are very high proportions, particularly since the types of "training' include the category "in-plant on-the-job watching only" (reported by 13 percent overall). Among these reporting training, on-the-job training is dominant: overall about 36 percent reported having been trained on-the-job with instruction from supervisors or other workers. Very little off-plant training has been received and, comfortingly, even less training which is irrelevant to current employment. Table 3.1: TRAINING EXPERIENCE OF SKILLED WORKERS AND SUPERVISORS SINCE STARTING WORK (2) In-Plant Training /a No On-Job On-Job Off Training Watching Taught Off-Job Plant Total Skilled operator 44.4 7.3 42.3 4.6 1.4 100 (n=847) Skilled tradesperson 70.6 5.7 20.7 1.6 1.4 100 (n=435) Supervisor/Technician 47.7 11.5 33.9 4.1 2.8 100 (n=703) Total 51.3 8.5 34.6 3.8 1.9 100 (n=1,985) /a Those trained include a total of 17 who reported their training was unrelated to their present work. 3.23 Training Expenditure. The low volume of training is confirmed by only 18 percent of firms reporting training expenditures and the small average amount that they report--Rp 68 million, (equivalent to about $35,000) (Annex 3: Table 24). Export-oriented establishments report below-average training expenditures, as do small and Indonesian private establishments and those with employment growing slowly, while central government, foreign and high-technology establishments and those with slowly growing output report above-average expenditures. There was no clear reason given for not spending more on training. Twenty-eight percent of all establishments felt that there was no need: either because skills were already satisfactory (23 percent) or the cost of doing so would exceed the benefit (5 percent). Shortage of staff to identify training needs and/or to provide training was the next most important reason, cited by 24 percent of all, and 50 percent of foreign-owned establishments. Only 7 percent of all, but 11 percent of export-oriented, establishments cited fear of poaching of trained workers. Only 28 percent firms reported having staff able to analyze training needs and only 3 percent (4 firms) reported having actually completed an analysis of training needs, and only one has done so with the assistance of the Department of Manpower. 3.24 Firms were also questioned on their views about the training needs of other firms with which they are in contact--as suppliers or users. Not - 33 - surprisingly, there was little response, except from foreign and high-tech firms which identified skills needs in their suppliers of materials and of component s. E. Impact of Training on Employment, Wages and Productivity 3.25 Unemployment Experience by Age Group, Education and Sex. Based on the individual records, recently recruited skilled and supervisory workers appear to have experienced very little unemployment since they started work, on average only three months among ever-unemployed men and two months among women (Annex 3: Table 25). Those who have ever been unemployed, however, have had to wait a long time for their first job--on average, 10 months for men and 12 months for women. For both sexes the incidence of unemployment among the under-thirties first rises with level of education, then falls, then rises again. Forty-seven percent of primary-educated (SD) males in this age group have experienced unemployment at one time or another, compared with 62 percent of junior secondary school graduates (SLTP etc.), 66 percent of senior general secondary school graduates (SLTA), 51 percent of graduates of secondary technical schools of various kinds (STM etc.), and 61 percent of those with post-secondary education. For females the comparable percentages are: primary, 54 percent; junior secondary, 56 percent; senior general secondary, 61 percent; secondary technical, 45 percent; and post-secondary, 71 percent. This pattern fits in with the view of open unemployment as primarily a search phenomenon as mentioned in Chapter 2, with higher rates among those with higher general educational qualifications looking for their first job. 3.26 Unemployment Experience by Education, Sex and Training. An interesting aspect of unemployment is the apparent effect of pre-career training. For both sexes and all educational levels (except males from STM) the incidence of unemployment is higher among those with pre-career training than among those without (Annex 3: Table 26). This can perhaps be attributed to the impact of such training on expectations and propensity to search for a job. Among those who have ever been unemployed, on the other hand, there is little difference between the trained and the untrained in the average length of their unemployment. 3.27 Average Wage by Sex, Education and Age Group. For males there is a fairly orderly connection between level of education and wage (including basic wage, allowances received in the form of money and annual bonus) (Fig. 3.4). For males under thirty, general senior secondary schooling yields a considerably better return than vocational schooling (STM or SMEA). However, for females in the same age group the return to senior general secondary schooling appears to be negative, while vocational schooling (SMEA) has a positive impact. In general, women are paid far less than men in the same age group and educational category (though the difference is less in the case of those with junior secondary schooling). How far this reflects differing lengths of time in the labor force is unfortunately not discernible from the data. The low reported wages, particularly for female workers confirm a recent study by ILO which identified very low wages, long work hours and - 34 - related health and nutrition problems of women workers in manufacturing industries.36/ Flaur. 8.4: AVERAGE WAGE BY GENDER EDUCATION AND AGE FOR SKILLED WORKERS AND SUPERVISORS (1990) Thousands (Rp.) 350 300 250 - 200 - 100 -- [ Male Female Male Female Under 30 Under 30 Over 30 Over 30 Primary M Lower Sao. ED Upper Gen. Sco. Upper Voc. 8Se. X Post Second. 3.28 Average Wage by Occupation, Sex and Age. There is also a fairly orderly wage hierarchy by occupation. Male supervisors and technicians under thirty earning, on average, 90 percent, and skilled tradesmen 25 percent, more than skilled operators. For women in the same age group the scale is more compressed, but supervisors still earn 64 percent and skilled tradeswomen 20 percent more than operators. Again women generally earn much less than men in the same occupation and age group with three exceptions--weaving/knitting machine operators and other textile products machine operators under the age of thirty, and production supervisors in their thirties (Annex 3: Table 27). For occupations for which there is comparable data, wages show quite a large increase with age, and presumably experience. Overall, the average wage for males of age 30-39 is 50 percent above that for males under 30. For females the difference is about 70 percent. 3.29 Wages reported by the sample are low consistent with the findings of Chapter 2. For males they average only Rp 129,000/month and for females only Rp 77,000 ($70 and $42 per month respectively). These wages are not much above the minimum wage for Jakarta of Rp 2,500 a day. 3.30 Impact of Training on Average Earnings. The impact on earnings of pre-career training and various types of training since starting work (and by 36/ Mary C. White, Improving the Welfare of Women Factory Workerst Lessons from Indonesia, International Labor Review, Volume 128, 1990. - 35 - inference productivity) was examined, controlling for education and gender (Annex 3: Table 28). The number of observations in some cells (signified by brackets) is too small to be usable, but a pattern is discernible. The impact of pre-career training on earnings appears to be generally positive. The only exceptions are female primary school leavers (SD) and male and female junior secondary school leavers (SLTP) with no training since starting work. On average males with no training since starting work earn 10 percent more if they have had pre-career training than if they have not; for comparable females the return on pre-career training is 26 percent. The impact of training since starting work, on the other hand, is generally negligible or negative unless there is an off-the-job or off-plant element in the training. Male employees without pre-career training earn 18 percent more if they have had off-the-job training than they do if they have had no training since starting work, and 22 percent more if they have had some off-plant training. For comparable females the return on off-the-job in-plant training is 56 percent. These figures suggest that the return to off-the-job and off- plant training of employees is higher than the return to pre-career training, and the return to training of all these kinds may be higher for females than for males. Caution is needed in this interpretation however since allowance has not been made for the effect of age and experience. 3.31 Eamings as a Function of Training. Education and,Experience. Data obtained from the sample of skilled workers, supervisors and technicians have been analyzed through the regression of earnings on type of training, years and level of schooling and years of experience.37/ As expected, years of schooling and level of education are associated with increased earning when length of experience is controlled. Secondary technical school (STM) graduates show a premium of about 13 percent in earnings over general secondary (SMA) graduates, again controlling for years of experience. Pre- 37/ M. Godfrey, Earnings, Education, Training and Experience in Manufacturing in Indonesia, paper in draft under preparation for publication. The basic relationship was of the form lnY - f(S, EX, EX2) where lnY is the log of earnings, and S and EX are the number of years of schooling and potential labor market experience respectively. Training-related and other variables were added to this initial specification for differing subsets of the sample. Results for the basic equation for the entire sample (1,861 observations) were: lnY = 2.53 + 0.13S + 0.07EX - 0.OO1EX2 R2 - 0.24 (28.8) (20.6) (10.5) (4.8) t - statistics in parentheses For those (877 observations) who received training after they began employment, the earnings regression including training variables was as follows: lnY - 2.49 + 0.12S + 0.08EX - 0.OO1EX2 + 0.34T1 + 0.32T2 (18.6) (12.9) (6.5) (3.2) (4.5) (3.0) t - statistics in parentheses Ra a 0.25 Tl and T2 are (0,1) variables referring to those who had received in- plant, off-the-job and off-plant training respectively. - 36 - employment training shows no statistically significant effect on earnings, controlling for schooling and experience. Post employment training as a whole shows a negative effect, although the type of training makes a difference. There is a large and statistically significant premium for training off-the- job and off-plant. Controlling for level of schooling, in-plant off-the-job and off-plant training has greater impact for less educated employees. 3.32 New Investors. The findings from the survey of establishments were supplemented by data obtained by postal questionnaire from a small sample of 15 new foreign investors granted licenses in 1989 to invest in the selected sectors. Of the 15, 13 were Asian. Their total estimated new employment is over 17,000 workers. Selecting from a wide range of factors, the three which the majority (over 80 percent) regarded as Indonesia's comparative advantages were: low political risk, low wages of skilled workers and low wages of unskilled workers. The main disadvantages (60 percent) were bureaucratic inefficiency and high interest rates. With regard to the expected availability of employees the majority, to a slightly diminishing extent expect that managers, engineers, supervisors and skilled tradesmen would be available but need to be trained. The majority of training was expected to be done on the job. Less than 20 percent expected skilled training to be provided off the job in-plant. Only a few expected to provide training outside the firm--about 12 percent, for managers and supervisors. The new firms expected to employ more than 1 percent foreign workers, mainly at supervisor/technician and above levels. F. Conclusions 3.33 Although the industry sectors in the sample were selected for their actual or potential export performance, they turned out to be rather less export-oriented than expected, with only 26 percent of establishments exporting more than 50 percent of their output. They use relatively simple technology which is important to their demand for training. A large proportion of their workforce consists of women, particularly in the case of unskilled workers and skilled operators in export-oriented establishments. The majority of workers in these branches still have a relatively low level of education. But that level is rising, particularly among skilled production workers. Fifty-nine percent of males and 42 percent of females recruited to skilled and supervisory positions over the past five years have senior secondary schooling or more. 3.34 Employers' attitudes and practices reflect the relatively simple processes in their industries and the relatively high level and, in the view of most, satisfactory quality of education of their skilled workers. Lack of skills is not identified as a serious problem. It is ranked below missed deadlines, low quality of products and many other problems. This may be explained partly by the nature of the skills needed for present labor- intensive manufacturing which can be acquired quite quickly. However, many employers appear not to have recognized the relevance of training and lack of skills to these perceived production problems. There are shortages of some specific skills, but the only broad category for which vacancy rates are high is supervisors and technicians. 3.35 Both external and internal markets are active for skilled workers, supervisors and technicians. Between the skilled worker and supervisor/ - 37 - technician occupations the internal market is stronger. Relatively few skilled-and-above workers have had formal pre-career training, and almost all of those attended private training institutions. Most of the firms surveyed favor providing purposive training, mainly in-plant and on-the-job. High tech., foreign and export oriented firms tend to support off-plant and off- the-job training, particularly for supervisors and technicians. However, consistent with the low skills work force many firms lack training facilities and staff, particularly small establishments which appear to do virtually no training. Training budgets are tiny. 3.36 In the survey of employees, about half reported that they had not received training since they started work, particularly the skilled tradespersons. This may be accounted for by the relatively wide ranging skills in these occupations which makes in-plant training less practicable, particularly for small firms, coupled with the current lack of skills upgrading courses. However, given the relatively high level of general education of these workers it is a matter of concern that so many report having not received any training; it indicates that the potential of these young people acquired through extending secondary education and possibility of improvement in their productivity and increased earnings are not being realized through further training. 3.37 There is no single clear reason given for not spending more on training--those given most frequently, by about a quarter of firms each, are that skills are satisfactory and that the firm lacks training staff and facilities. Poaching is not seen currently as a serious problem. Data on earnings obtained from the recently recruited employees suggested that the returns to certain types of training are high. In particular, the impact on earnings of structured, in-plant training with an off-the-job element Is high, apparently higher than that of pre-career training and that of secondary technical schooling. 3.38 Looking ahead to the increasing technology of manufacturing in Indonesia, it is interesting to note that for the high technology establishments in the example, the most important production problem is the low quality of their products. These higher technology firms are less satisfied than most with the quality of general education, identifying low standards in mathematics and science as particular problems. They spend more than the average on training, with more specialist staff and facilities and provide more off-the-job and off-plant training (including overseas experience for supervisors and technicians). Employers in the lower technology labor- intensive industries do not need much additional training for their low paid, low skill labor to meet present production standards in textiles, garments, footwear and furniture. However, the experience of higher tech. firms suggests the need for an improvement in productivity in existing labor- intensive processes as a basis for development of more skill-and-technology- intensive export industries with improved wages for the workers. Such development would have to be backed up by improvements in the quality of general education, with emphasis on disciplines relevant to the new types of industry. - 38 - IV. EVALUATION OF TRAINING A. Introduction 4.1 In the previous chapter we saw that over 25 percent of skilled and supervisory level workers in manufacturing have secondary technical or vocational education. About 20 percent of workers had had pre-career training after leaving school, mainly in private training centers. This chapter presents the findings of an evaluation of internal and external efficiency of technical and vocational education and skills training, based on surveys of a sample of about 50 technical schools and training centers. The schools and centers selected for evaluation were located mainly in the same regions as the firms sampled in the survey of manufacturing: Jabotabek (Jakarta, Bogor, Tangerang, Bekasi); Bandung; Medan, and Surabaya. The methodology followed the Bank's guidelines for evaluation of vocational training.37/ 4.2 Two systems are described. Section B describes the formal technical and vocational secondary school system which enrolls about one quarter of senior secondary school students. Section C covers the more diverse skills training system which provides a wide range of courses of varying duration, including part-time courses, in technical and other vocational skills for pre- employment training for school leavers and for skills upgrading. The Department of Education and Culture (Depdikbud) is responsible for most of the secondary and vocational schools, but a few specialized schools have been established by other departments, e.g., Industry. About 55 percent of secondary technical and vocational enrollment is in private schools. The Department of Manpower (Depnaker) has the main government responsibility for training in vocational skills for employees in the private sector, but its training capacity is far outweighed by that of the private training system. Other government departments have training centers for skills training for their own staff and for other employees in their sectors. The majority of workers, however, as shown in Chapter 3, receive skills training in their employment and on-the job. B. Technical and Vocational Education 4.3 The types of technical and vocational school and enrollments in 1988/89 are shown in Annex 4: Table 1.38/ About 31 percent of enrollments were in senior secondary technical (engineering) schools (STM), and 58 percent in senior secondary business and commerce schools (SMEM). 4.4 Total enrollments in technical and vocational schools increased by about 80 percent over the period 1983/84 to 1988/89, i.e., Repelita IV, and are projected to grow by about 54 percent over Repelita V (1988/89-1993/94). Growth of enrollments in general secondary schools (SMA) over Repelita IV was 37/ Hunting, Zymelman, and Godfrey, Evaluating Vocational Training Programs: A Practical Guide, World Bank, 1986. 38/ The main source of data was the report of the Directorate of Technical and Vocational Education: Laporan Kegiatan; Pendidikan Menengah Kejuruan; 1984/5 to 1988/9, Dikmenjur, October 1989. - 39 _ about 47 percent, but growth is projected to increased to 64 percent over Repelita V (Annex 4: Table 2). Growth over Repelita IV was by no means even across the types of school or between government and private schools. Enrollments in SMEA increased by about 109 percent compared with STM growth of only 34 percent. Even more striking, the Repelita IV growth rates in government STM and SMEA enrollments were 51 and 57 percent respectively but private STM enrollments increased by only 21 percent while private SHEA enrollments increased by 174 percent. The relatively greater growth in technical and vocational enrollments compared with general secondary school enrollments was in line with the Government's declared policy to double the intake to secondary technical and vocational schools in Repelita IV. 4.5 It is interesting to note that the private sector played a disproportionately large part in providing for the increased enrollments. The number of private SMEA increased by about two and a half times over the five- year period while the number of government SMEA increased by only about 11 percent. The growth in private schools and particularly SMEA was clearly a response to a strong demand for secondary education. The extent to which it reflected a preference of parents and students for secondary vocational as distinct from secondary general education is, however, less clear. From informal discussion an impression was gained that registration of a secondary vocational school was easier than registration of a private secondary general school. The lower cost of establishing and running an SMEA compared with that of an STM with engineering workshops also help to explain the greater growth in the number of private SMEAs. 4.6 The Ministry of Education is currently undertaking a major study of quality and efficiency of technical and vocational education and related policy issues with funding from USAID. The study will be based on data from about 100 public and private schools with a large scale tracer study of 6,000 to 8,000 of the schools' graduates. Results are expected in 1992. Additionally, the Asian Development Bank (ADB) is currently providing technical assistance to prepare a fourth ADB Senior Technical School (STM) Project. That report is expected very shortly. Efficiency of Secondary Technical Schools 4.7 The objectives of secondary technical and vocational education are to provide students with general education vocational skills as preparation for employment, and the capacity for continued self-development--either of vocational skills or higher levels of education. The centrally planned curricula were last revised in 1984 and arranged in six areas of study of which engineering and business and commerce have the widest range of study programs. In engineering and technology, for example, there are 19 clusters of subjects and 53 study programs (Annex 4s Table 3). Each cluster is composed of a core program of basic general and vocational subjects with specialist vocational subjects beginning in the second year. In electronics basic general subjects, i.e., history, religion, etc. account for about 25 percent of total credits, while mathematics, physics and chemistry which are classified as basic vocational subjects account for only 11 percent. This relatively light treatment of mathematics, physics and chemistry conflicts with the objective of providing students the capacity for higher level of education since entry qualifications for higher education are geared to general school curricula which devote considerably more time to these - 40 - subjects. Initial findings from the study of quality and efficiency of technical and vocational education indicate that only about half of the programs can be satisfactorily taught in the schools. The central design of courses also gives too little flexibility for schools to relate courses sv their resources and to local employment need. 4.8 The percentage of female enrollment in secondary technical and vocational schools increased from about 30 percent in 1984/85 to 44 percent in 1988/89 (Annex 4, : Table 4). The main growth was in enrollment in private business and commerce schools (SMEA) where the female enrollment in 1988/89 was about 68 percent. By contrast, in the sample of STMs surveyed in the study the percentage of female enrollment was reported as only 1.6 percent in 1987/88, rising to 2.2 percent in 1989/90. The main enrollment of females in technical courses are in the drawing and surveying specialties. 4.9 The efficiency of a sample of 17 secondary technical schools was evaluated through questionnaires and interviews and observations by the study team and staff of the three Departments of Education, Manpower and Industry. The sample included 10 Department of Education STMs and two centralized workshops serving three or four local STMs for all practical workshop training, and 2 STMs of the Department of Industry. The government schools were chosen to represent a cross-section of schools in terms of quality. Three private schools were also evaluated, but they were not a representative sample. The Ministry of Education selected good private schools to illustrate good practice in terms of production activities to support income and training and links with industry. Two of the private STMs chosen have exceptionally good national reputations with long-established production capacity and their graduates are eagerly sought by employers: the third was chosen as a representative "good" school. 4.10 Internal Efficiency. Quality was evaluated for the following key performance factors: content and quality of training programs; trainees; staffing and staff development; provision and utilization of facilities, and strength of links with industry. Each factor was evaluated for a series of criteria on a six-point scale. The evaluations are summarized in Table 4.1. The summaries by school are shown in Annex 4, Table 5, and full details of ratings are given in a working paper. - 41 - ble 4.1: QUALITATIVE EVALUATION OF $TM INTERNAL EFFICIENCY Dept. of Dept. of Selected Education Industry Prive Mean (N=12) (No2) (N.$) 1. Content *nd Quality of Training 1.1 Format of curricula 2.9 2.5 2.7 1.2 Review and revision 8.6 2.6 8.8 1.8 Methods of training 8.0 8.0 2.7 1.4 Testing and assessment 2.9 2.6 2.7 2. Trainees 2.1 Selectlon and admission 2.9 2.6 8.0 2.2 Counsolling and guidance 2.4 8.0 2.7 8. Staffing and Staff Devolopm nt 8.1 Staffing poici-e 8.8 8.0 2.0 8.2 Selection and qualifications 8.6 8.5 8.0 8.8 Staff development and training 2.7 8.5 8.7 8.4 Support staff 2.7 8.0 2.a 4. Physcal Resources 4.1 Training facilities 8.1 8.0 2.7 4.2 Support facilities 1s9 8.0 2.8 4.3 Provision of equipment 4.0 4.0 8.8 4.4 Equipment utilization 8.6 8.6 8.0 4.6 Consumable materials 8.7 8.6 2.0 5. Links with Industry 6.1 Training and employment 8.9 8.0 2.8 6.2 Formal links 4.6 8.6 2.8 Notes on Ratings 1 - Completely satiesfactory. 2 - Generally satisfactory; room for ome, Improvement. 8 - Acceptable; needs improvemnt In limited aspeets, but not major or urgent. 4 - Less than acceptable; needs improvement on fairly wide scale, but not major or urgent. 6 - oenerally unsatisfactory; needs attention. 6 - Completely unsatisfactory; needs urgent attention and improvement. 4.11 For the Ministry of Education schoolss the provision of equipment is unsatisfactory--in terms of not being up to date and the absence of a program for replacement of equipment; the supply of consumable materials and provision of audio visual aids were also assessed to be inadequate. Formal links with industry and employment outcomes and follow-up of graduates were also unsatisfactory. The qualification of teachers was judged marginally to be unsatisfactory overall, but this reflected generally satisfactory theoretical training and training in teaching but an unsatisfactory lack of industrial experience. 4.12 The ratings for the Ministry of Industry schools were more favorable in respect of the utilization of equipment and supply of consumable materials. Not surprisingly, the formal links with industry and training and employment were also assessed to be satisfactory. Staff qualifications are satisfactory- -inclttding their industrial experience. The curricula were also judged to be more satisfactory in the Ministry of Industry, apparently on the evidence of better laboratory experimental work with more equipment and materials. - 42 - 4.13 The findings for the Ministry of Education STM confirm the following findings of the Bank's Impact Evaluation and Report on Sustainability of the First Education Project which assisted the establishment of five central technical training centerss satisfactory equipment had been provided initially but due to lack of funds, had not been adequately maintained or updated; the effectiveness of centralized workshops had been sustained; enrollments and outputs had been maintained satisfactorily; the supply of books, teaching aids and materials had not been maintained due to lack of funds; and visits to industry and meetings of industrial advisory committees originally funded by the project had lapsed when funding ceased. 4.14 The evaluation of the three private STMs cannot be taken as representative. The good reputations of these particular schools were confirmed by very favorable assessments: only for staff development and staff training were the mean assessments less satisfactory than for Ministry of Education schools. However, it should be noted that two of the schools were assessed to need improvements, particularly in physical resources. Two of the schools have very good production facilities: one in the manufacture of furniture and the other for motor vehicle maintenance and general engineering production. In these two schools the net income from production was reported to cover about half the cost of training. The level of skills training is high, offers of employment for their graduates exceed the outputs by factors of 4 of 5, their starting wages are reported to be well above average. 4.15 The quality of the private STMs vary widely. The study of quality and efficiency of technical and vocational education (para. 4.5) will provide a detailed analysis of quality factors and of the characteristics of the students. Initial data indicate that public STMs have 3.5 times as many workshops as registered private STMs. More than one-third of registered private STMs in the sample have no workshop which means that these schools are unable to provide the practical skills training which is a major component of all STM programs. The criteria for registration by Depdikbud are regarded by the Department as 'minimal'; furthermore, except for a few large cities the number of supervisors is insufficient for the effective accreditation and supervision of private schools. It is also reported that there are many schools with less than the equivalent of three full-time teachers, which is the cut-off level above which schools are required to register. These schools generally have no specialist facilities. 4.16 Quantitative Aspects of Internal Efficiency. Two important quantitative measures of internal efficiency are the utilization of facilities and the studentsstaff ratios. In the surveyed STMs the average utilization of accommodation overall was of the order of 60 percent in the Department of Education Schools and 45 percent in those of the Department of Industry. But the utilization varied between schools over the range of 40 percent to 90 percent (Annex 4s Table 6). 4.17 The student:staff ratios observed in the schools were in the range from 6-29 to 1 (Annex 4s Table 7. The staffing by subject is very uneven, and for some subjects in some schools the reported numbers of teachers in post in particular subjects were four times the number required and teachers' timetables showed less than 12 periods of duties each week. A review of staffing and reallocation of teachers in accordance with needs would enable efficiency to be increased and staffing costs reduced. In the Ministry of - 43 - Industry STMs the ratios were about 13:1, including the full-time equivalents of part-time staff. Staff Development 4.18 Staff in the sampled Department of Education schools have good academic qualifications with about 85 percent having a degree or D3 diploma. About 25 percent have received in-service training and 3 percent have been trained overseas. They have a wide age distribution with just over 50 percent of age 40 or over and about 40 percent have more than 15 vears teaching experience. Less than 1 percent have any industrial expertence (Annex 4: Table 8). In-service training for the technical teachers groduating from technical facilities of IKIPs is provided in three Technical or Vocational Teacher Upgrading Centers, which in addition to in-service ti-ining also develop curricula, produce learning materials, provide managemnent training and are responsible for developing links with industry. There is very little mobility of teachers, and practically none between teaching and industry. In interviews, some teachers appeared to see their employment in the STM as a consequence of their IKIP/FKIP education which had given them no other option. There was less detailed information available for staff of the Department of Industry and private STM, although teachers appeared to have more technical and less academic background, but relatively little in-service training. 4.19 Depdikbud assists some private schools by appointing government teachers to serve in them. In 1988/89, 8 percent of teachers in private secondary schools were government staff while only 20 percent were full-time staff employed by the schools. The rest of the teachers, nearly 75 percent, were part-time, of whom about half were estimated to be full-time teachers of government secondary schools working part-time in the private schools. External Efficiency 4.20 As described above, the assessments of links with industry and employment/training relationships which are critical to external efficiency were generally unsatisfactory. The views from the STMs vary widely. Staff had mainly low expectations of their graduates obtaining relevant employment within a short period: the exceptions were the STM(P)s for which there were strong demands for the graduates--exceeding the outputs. Two of the three sampled private schools with their exceptionally good reputations have demands for graduates far in excess of outputs. Private STM's in general, however, had poor reputations among industrialists who were interviewed. The specialist STMs of the Department of Industry generally had favorable experience of employment of their graduates. The survey of skilled workers and supervisors in export-oriented industry showed that among males secondary technical and vocational graduates were the largest group (para. 3.5 and fig. 3.2). The Ministry of Education has recently taken steps to improve links with industry by including a six week practical work assignment in the fifth semester of the STM course, and a complete one semester assignment in the final year of the STM(P) program. Reports prepared by the initial groups of students who had completed industrial assignments showed a high level of work. The Ministry is also attempting to form close links between large firms and local STMs. - 44 - 4.21 There is no recent follow-up tracer-study of STM graduates--hence the tracer study mentioned in para. 4.5 will be a very important source of data on employment outcomes. Evidence of unemployment and duration of job search obtained in the industry survey showed that secondary technical and vocational school graduates had a lower incidence of unemployment than secondary general school graduates (para. 3.25). Unemployment rates for senior vocational and technical school graduates shown in labor force surveys were also lower than rates for senior general secondary school graduates through the 1980s (Annex 2: Tables 4, 5 and 6). Projections of supply and demand for Repelita V by BAPPENAS indicate a surplus of supply over demand for all secondary school graduates, with a surplus of general high school graduates projected as 36 percent and for technical and vocational schools of 25 percent. But these projections are based on historical occupational structures and distribution by education levels of the labor force and P,e not appropriate for the industrial development now taking place. 4.22 In the early 19809, there was evidence that social rates of return to general secondary education were higher than those for technical and vocational education. But more recent evidence suggests that rates of return for STM graduates are of the same order as returns for general secondary graduates.39/ Recent results are summarized in Annex 4s Table 10. Costs and Financing of Secondary Technical Education 4.23 Government Budgets. The total GOI Development (DIP) and Routine (DIK) budget for secondary technical and vocational education proposed over the five years of Repelita V (1989/90 to 1993/94) is approximately Rp 1.9 x 1012, representing about 11 percent of the total Repelita V education budget of Rp 18 x 1012. The routine budget is only 32 percent of the total. Overall, the annual unit routine budget allocation is Rp 218,000 ($120) per student year. 4.24 Technical and Vocational School Budgets and Expenditures. Income and expenditure data for the year 1989/90 for the surveyed STMs of the Departments of Education and Industry is summarized in Table 4.2, and shown in detail by school in Annex 4, Table 10. Table 4.2: STM INCOME AND EXPENDITURE 1989/90 SOURCE OF INCOME AND PURPOSE OF EXPENDITURE BY PERCENTAGE (Summary for Sample Schools) (%) PurDose of ExDenditure Source of Income Salaries A Teaching Utilities Admini- Materials Travel DIK SPP/DPP DIP Honoraria Activities A Meint. stration A Equipment A Other Dept. of Education 81 15 4 87 5 2 1 a 2 Dept. of Industry 5S 89 4 69 12 8 - 18 8 Source: Survey of schools (se* Annex 4, Table 8 for detall.). 39/ W. McMahon and Boediono, Social Rates of Return and Labor Market Analysis by Province in Indonesia, Department of Education, Jakarta: 1989 mimeo. - 45 - 4.25 The main features are: (a) Routine budget (DIK) provides about 80 percent of Depdikbud STM expenditure covering salaries, allowances, "teaching activities" and Ut414.ties. (b) Tuition fees and other charges (SPP/BP8) provide about 15-20 percent of income for Depdikbud schools but 30-40 percent for Department of Industry schools, and covers maintenance and additional teaching activities. (c) Salaries and honoraria for staff account for nearly 90 percent of expenditure for the Department of Education STM but only 60 percent in the Department of Industry schools. (d) Teaching/learning activities, which include materials, equipment examination expenses, (and in some schools additional payment to teachers for special duties) account for an average of 10 percent of expenditures (range 5 to 14 percent) in the Department of Education Schools, and 40 percent in the two Department of Industry Schools. (e) There was negligible expenditure on equipment and maintenance in the Department of Education schools. 4.26 Unit Costs. For the surveyed schools the reported unit recurrent or operational cost in 1989/90 varied from Rp 230,000 to Rp 390,000/student year for the Department of Education STMs and averaged Rp 480,000/student year for the two Department of Industry STMs. (Table 4.3 and Annex 4: Table 11). Table 4.8: UNIT RECURRENT COSTS IN 3ECONDARY TECHNICAL SCHOOLS (STMS) 1989/90 Unit Cost Type of STM Rp/stud.nt yoer Department of Education 826,000 (Range 280,000 to 890,000) Department of Industry 484,000 4.27 The difference in unit expenditures between Department of Education and Department of Industry schools is accounted for almost entirely by the greater expenditure in the latter on materials and other non-salary items. Staff of the Directorate of Technical and Vocational Education of Depdikbud estimate that operational expenditure, excluding salaries, to cover materials, maintenance etc. should be of the order of Rp 200,000 per student year (as for Department of Industry STMs), compared with the present figure of about Rp 35,000. 4.28 The unit costs and fees for private STMs were reported by the Ministry to vary widely, particularly with location. In Jakarta tuition fees were estimated to fall in the range Rp 20,000 to Rp 50,000 per month, -46 - exclusive of initial payments. For the three private STMs surveyed, the unit operating expenditure varied from Rp 140,000 to Rp 670,000 per student year. The two exceptional private STMs with large well-established production facilities reported that earnings were equal to tuition fee income. The three private schools reported an average of about 53 percent of expenditure as salaries and 42 percent on teaching activities, materials and maintenance. C. Skills Training 4.29 Enrollments in Depnaker's Training centers BLK/KLK grew from about 18,500 in 1979/80 to about 113,000 in 1984/85, then dropped sharply to 23,000 in 1987/88 because of cuts in budget for expenditure on training, but rose again to about 67,000 in 1990/91 as budgets were restored (Table 4.4). Training is provided in technical and business skills, miscellaneous crafts and agriculturet in 1989/90 only about 25 percent of enrollment was in the mechanical, electronic and electrical skills relevant to technical occupations in manufacturing industry (Annex 4, Table 12). The majority of trainees in 1989/90 were enrolled in basic level, pre-employment training. Trainee's performance is normally assessed by the BLK/KLK instructors and a certificate awarded by the provincial or local manpower office. Table 4.4: 9UK/KLK ENROLLMENTS IN 0O! DIP/DIK FINANCED COURSES 1979/80 TO 1989/90 Enrol lmnt Inotltutlonal Non-Institutional Total MTU 1979/80 7,17B 11,278 16,461 1980/81 9,401 22,264 81,66 1981/82 11,008 26,686 87,B66 1982/8a 28,068 68,928 81,994 1988/84 28,768 77,844 106,612 1984/86 n.a. n.a. 118,484 1986/86 n.*. n.*. 98,144 1986/87 48,811 - 48,811 1987/88 28,028 - 28,028 1988/89 29,841 - 29,841 1989/90 86,719 - 86,719 1990/91 (Pln) 82,700 84,880 67,080 Source: 4.30 Third Party Training in BLK/KLKs. Regular training in BLK/KLKs is financed from GOI Routine (DIK) and Development (DIP) budgets and there is no training fee. With the budget cuts in 1984 to 1987 the training facilities were seriously underutilized and the Minister of Manpower in 1987 issued regulations (02/MEN/1987) for "third-party" utilization of BLK/KLK facilities at agreed costs. Such third-party training is provided for a variety of clients, e.g., private training institutions which lack workshops, private manpower/employment agencies, industry and other government departments including the military. In 1989/90 there were about 19,000 trainees in third- party financed courses, representing about 36 percent of training. 4.31 The National Training Council (NTC) and National Training System. The NTC was set up by the Minister of Manpower in 1984 to advise on training - 47 - policy, plans and systems. The NTC, with assistance under the Bank's Manpower and Training project (Loan 2705-IND), has established a National Training System (SISLATRERNAS) incorporating a Joint Industrial Vocational Training Apprenticeship Scheme (JIVTAS), occupational skills and training standards and skills tests. The NTC has also prepared a draft grant-levy scheme for increasing industry's share of training costs and providing incentives to industry to expand training and improve its quality. Regional Training Councils have been set up in all provinces. Skills standards and tests established as part of the National Training system were introduced in 1989/90 jointly by'Depnaker and Ministry of Public Works through testing some 25,000 candidates in four construction trades in 11 provinces: about 80 percent were successful. Tests were conducted at basic level by observation of skills/ practice. In 1990/91 it is planned to test 30,000 candidates in 27 provinces in 7 skills trades. 4.32 Private Skills Training. Private training is loosely organized and is supervised by both Depnaker and Depdikbud. About 2,800 training centers, providing about 3,200 courses with an enrollment of about 75,000 were registered with Depnaker in 1988/89, but these are estimated to represent less than 10 percent of private training centers. Only about 23 percent of the courses are in technical subjects, and most of those in subjects related to technical maintenance, rather than production (Annex 4: Table 13). The centers registered with Depnaker are also members of the Association of Indonesian Private Skill Training Institutes, HILLSI.40/ 4.33 A much larger private vocational training system is associated with the Directorate General of Community Education (and Sports) of the Department of Education, supervised by the Directorate of Non-formal Education (Dikmas). In 1989 there were about 18,400 private courses licensed by Dikmas in 300 different subjects arranged in 10 groups: home economics, services (accounting, etc.) health, industrial crafts, agriculture, arts, technical, languages, sports and miscellaneous. Courses varied in length from a few hours to six months. Examinations are conducted under Dikmas control in about 40 of the subject areas. Total enrollment in the non-examined courses, was not known, but overall in Indonesia, it is estimated that about 500,000 attend these courses annually. Of the 18,400 courses, only about 4 percent are in technical subjects and these are mainly at a basic skill level. In Jakarta DKI, for example, it was reported that in 1989 there were about 3,100 private courses licensed by Dikmas, of which only 83 were technical. 4.34 Training is also provided by some regional governments. In Jakarta there are 35 regional government training centers, but they are reported to be very seriously underutilized because of lack of operating funds. 4.35 Occupational and In-Plant Training. The majority of the labor force acquire skills in their occupations through experience and informal on-the-job learning. Only relatively few obtain structured training. There are only 30 or so companies recognized as having good quality training centers offering one to three year skills and technician training for school leavers or short specialist upgrading training programs for employees. The survey of enterprises and employees (Chapter 3 paras. 3.18 to 3.22) shows that even in a 40/ HILLSI--Himpunan Lembaga Latihan Swasta Indonesia. - 48 - dynamic subsector such as export-oriented manufacture, the majority of Oskilledo workers obtain their skills by experience and observation. 4.36 Depnaker has established pilot Industrial Training Development Units (ITDU) to provide consulting services, assist with training needs analysis and provide training officer and supervisor's training. ITDUs have been developed in Jakarta, Bandung and Medan. In the pilot project about 85 firms in the textiles/governments/wood/food/construction/metals and automotive sectors received assistance with assessment of training needs, and half followed up with training of supervisors and training officers. Supervisory training was identified as a high priority. Most companies were reported to lack capability to identify training needs or to implement structured training, however the majority were planning to introduce new machines, processes or products which would create substantial training needs.41/ The findings parallel those obtained in the more detailed surveys undertaken in this study and reported in Chapter 3. The ITDU development is now being changed into an Industrial Training Development Service (ITDS) which is intended to link with private sector provision of training and training consultancy services. 4.37 Training of Females. Data on the enrollment of females in training was obtained in a survey of samples of 9 BLK/KLK, 9 private training centers and 11 industrial training centers. In the BLK/KLK, females account for about 40 percent of training overall, but in technical subjects the demand by girls to enter is low and the enrollment is small, 2.5 percent, and shows no clear trend over the past three years. In business and general subjects the percentages are higher, 60 percent and 70 percent respectively, but these figures are misleading in so far as 60 percent of enrollments in general courses were trainee-baby sitters for overseas employment (Annex 4: Table 14). Of the industrial training centers only one had a policy for enrolling 15 percent females: others generally enrol only males. The private training centers have negligible enrollment of females in technical courses, but in business and other subjects the female enrollments is high, about 55 percent. Efficiency of Training Centers 4.38 The quality of training in the centers was evaluated by the same teams, following the same guidelines as for the evaluation of technical secondary schools. A summary showing the mean rating for each group of centers is presented in the following table (Table 4.5). Evaluation by institution are shown in Annex 4, Table 15. 41/ Ministry of Manpower, Industrial Training Development Units 1 and 2; Reports on Surveys of Firms, 1989. - 49 - Table 4.6: QUALITATIVE EVALUATION OF INTERNAL EFFICIENCY OF SKILLS TRAINING CENTERS 8LK/KLK Industrial Training Private Centers Foctor (=9) Centers (N11) (Nl1l) Mean Mean Moon 1. Content and Quality of Training 1.1 Format o curriculs 8.6 8.0 8.0 1.2 Review and revision 8.4 2.4 8.0 1.3 Training methods 3.8 2.8 8.0 1.4 Testing and assessment 8.4 2.0 8.8 2. Trainees 2.1 Selection & admisslon 3.0 8.0 8.7 2.2 Counselling A guidance 4.6 8.2 8.8 3. Staffinfi and Staff Devolopment 3.1 Staffing polifces 4.1 2.6 4.1 3.2 Selection and qualification 8.7 2.5 8.7 3.3 Staff development/ training 8.0 2.8 4.4 3.4 Support staff 8.9 2.8 8.8 4. Physical Resources 4.1 Training fecilities 3.2 2.1 8.8 4.2 Support facilities 2.8 2.0 4.4 4.3 Provision of equipment 4.4 2.6 8.7 4.4 Equipment utilization 4.1 2.7 8.1 4.6 Consumable materials 4.2 1.8 8.2 5. Links with industry 6.1 Training A Employment 4.8 2.0 3.7 6.2 Formal Links 5.2 2.0 5.0 Notes on Ratings i - Completely satisfactory. 2 - Generally satisfactory; room for some improvement. 8 - Acceptable; needs improvement in limited aspects, but not major or urgent. 4 - Less than scceptable; needs improvement on fairly wide scale, but not major or urgent. 6 - Generally unsatisfactory; needs attention. 6 - Completely unsatisfactory; needs urgent attention and improvweent. 4.39 Overall, the assessments of BLK/KLKs showed the following: * content and quality of training is intermediate between satisfactory and unsatisfactory but training methods are judged least satisfactory, mainly because of the lack of training aids. * counselling and career guidance is judged to be unsatisfactory, however since the responsibility for coun. elling rests with the kandeps the assessment is not strictly valid for the BLK/KLK. * arrangements for pre-service and in-service training are satisfactory, but overall staffing policies are unsatisfactory, mainly because of the lack of a satisfactory scheme for grading staff in relation to experience, qualifications or responsibilities. Staff qualifications in practical skills are less than acceptable and the lack of industrial experience is judged to be unsatisfactory. - 50 - * provision of equipment is unsatisfactorys the range is not comprehensive; there is lack of relevance; it is not up to date: provision of audio visual aids is unsatisfactory and there is no satisfactory program to replace equipment. * equipment utilization and stocks of spare parts and consumable materials and provision for replacement are generally unsatisfactory. * links with industry are unsatisfactory. Employment possibilities and follow-up are not satisfactory overall, but the situation varies widely between BLK/KLK. 4.40 Interviews with directors, staff and trainees in BLK/KLK 6ave useful insights into the system. Directors were almost unanimous in identifying better staff training and improvement of facilities as the main factor for improving training and employability of graduates. Staff identified the need for staff training but also for improved coordination with industry, while trainees identified the need to upgrade both the staff and the training programs. All directors and senior staff reported on the inadequacy of budgets for maintenance. 4.41 The industrial training centers received generally satisfactory to acceptable ratings. 4.42 The evaluation of the private training centers showed the followings a Training methods are unsatisfactory, mainly due to a lack of training aids. * Selection of trainees and counselling and guidance is not satisfactory. * Staffing and staff development are rated as unsatisfactory. - Training and support facilities and provision of equipment are generally unsatisfactory: the equipment is generally not up to date. Utilization is satisfactory. * Links with industry are generally unsatisfactory and employment arrangements and follow-up are less than acceptable. Quantitative Aspects of Internal Efficiency 4.43 Utilization. Utilization of BLK/KLKs is improving with increase in training budgets from 1988/89 and introduction of third-party financed trainees, but utilization is still low. For the nine BLK/KLKs surveyed the overall utilization ranged between 11 to 42 percent. Without third-party training the range was 11 to 25 percent (Annex 4: Table 16). A major cause of low utilization is the fact that many centers are practically empty from April (the beginning of the financial year) for three or even more months awaiting release of DIPs for training costs. Another factor is the indirect method of recruitment of trainees: the BLK/KLK is not directly responsible for recruiting trainees, but 'receives' trainees selected by the regional or local - 51 - office of Depnaker. It was not possible to analyze utilization in industrial training centers, but observation and limited analysis indicated low utilization--of the order of 30 percent. The situation was markedly different in the private training centers where the utilization is generally very high and equalled or exceeded 100 percent--sometimes with overcrowded conditions. 4.44 Trainee:Staff Ratios. In the BLK/KLK the trainee-staff ratio was low, ranging from only 2:1 to 4.Sl (on a full-time equivalent basis). This very low and inefficient ratio also results in part from the absence of training activities for the first few months r& each financial year. In the industrial training centers the extensive use of part-time staff makes it difficult to determine trainee:staff ratios, but for the centers with the longer trainee program the ratios were of the order of 7s1. Trainee:staff ratios in the private training centers ranged from 9 to 16:1 (Annex 4: Table 17). Staffing and Staff Development 4.45 About 50 percent of BLK/KLK instructors have secondary technical/ vocational school qualification and 10 percent have bachelors degrees. The staff are younger than in STMs, only 7 percent are over 40 years of age (compared with more than 50 percent in STMs). Only 5 percent have more than 15 years experience and 40 percent have less than 5 years training experience. No member of staff was reported to have had industrial experience before becoming an instructorl Depnaker has compensated for the lack of qualification and experience by an extensive staff development program: 80 percent of staff have received training in domestic programs, 45 percent have had more than a year of domestic training and 14 percent have been trained overseas (Annex 4: Table 18). Mobility is very low--no member of staff in the sampled centers was reported to have left during the past three years. 4.46 The most striking feature of staffing in the BLK/KLK system is the lack of a professional career structure. Staff are designated as instructor, assistant instructor or candidate instructor, but the only grading is by the civil service grade scale which is based heavily on academic qualification at entry and years of service. Hence, a graduate (even in an irrelevant subject) with less than 3 years experience has a 3-grade level advantage over a more experienced STM graduate. A functional career structure has been approved by the Minister: this now needs to be related to an organizational structure in ,the BLK and implemented. 4.47 In the industrial training centers there is heavy reliance on part- time instructors drawn from the production departments and more than half of the full-time training staff appear to have had production experience. In the private centers about 35 percent have bachelors degrees, and 25 percent are from secondary technical schools. About 65 percent reported less than 5 years training experience and only 1 percent more than 15 but about 5 percent had industrial experience. Only about 30 percent reported having received training. - 52 - External Efficiency 4.48 There is little hard evidence about employment of graduates from the BLK/KLK and the private training centers: there is no follow-up information of employability collected by the centers, indeed within Depnaker placement is a responsibility of the kandep or manpower office, not the training center. Estimates by BLK/KLK staff of the rates of success of BLK/KLK graduates obtaining employment within 6 months of completing training ranged from up to 25 percent in about half the sample, up to about 100 percent for a training center located in an area of strong industrial development. The survey of industry also showed only a small number (1 percent) of workers having received pre-employment training in a BLK, (para. 3.14). The private training centers surprisingly also had little data on the employment of their output. In the sampled industrial training centers most of the training was directed towards intended employees or skills upgrading of the firms' employees, but overall about one-third of training was pre-employment training for out of school youth not targeted to meet identified job vacancies--the training was provided as part of an obligation to community and social service. 4.49 In-plant training. The sittuation of training in industry was followed up through discussions with representations of firms, chambers of commerce and employer and trade associations. The representative confirmed the need of industry, particularly domestic firms, for assistance with training. The Chamber of Commerce in Jakarta has taken the initiative to organize training programs to be paid for by members, using one of the empty training centers belonging to the city government, but it seeks technical assistance to implement the program. Costs and Financing of Training 4.50 The BLK/KLK are financed from three sources: development budget (DIP), routine budget (DIK) and income from renting facilities and providing courses for third parties. About half of the recurrent costs of training programs are covered under the development budget (DIP); with only about 10 percent of courses financed wholly from the routine budget. The amount of training and efficiency of use of facilities and staff are thus very sensitive to the level of DIP funds each year. For the sampled BLK/KLK in 1989/90 the staff salaries and allowances accounted for about 75 percent of total recurrent costs, consumable materials for 2 to 11 percent and utilities 10 to 23 percent (Annex 4: Table 19). Table 4.6: UNIT COSTS OF SKILLS TRAINING, 1989/90 (Rp/traine6 year) Type Estimated Unit Cost (Rp/trainee year) CLK/KLK (N=9) 2,400,000 (1,470,000 to 8,720,000) Private training centers 800,000 to 2,000,000 Industrial training 4,000,000 to 6,000,000 - 53 - 4.51 Unit costs of training in the BLK/KLK in 1989/90, estimated on the basis of equivalent annual costs, are estimated to have been of the order of Rp 1,500,000 to Rp 3,700,000 (or $830 to $2,000) per year per trainee (Table 4.6 and Annex 4: Table 10). The cost is high compared with other education programs in Indonesia (Rp 300,000 per year for STM for example). The current unit DIP allocation for training is equivalent to about Rp 1,000,000 per trait:ee year--the rest of the recurrent cost is covered by the Routine budget (DIK). 4.52 Third Party Training in BLK/KLK. In the two BLK,'KLK for which full details of third-party training and incomes were available, the average income per full-time equivalent trai:tep was of the order of Rp 350,000 per year. For the whole BLK/KLK system the total income from third-party training in 1989/90 was Rp 902,190,000 with a total enrollment in courses of varying length of about 19,360. The equivalent full time third-party enrollment is about 2,000 and annual income overall equal to about Rp 450,000 per full-time equivalent trainee. The income from third-party training thus appears to represent less than 30 percent of the actual cost, which means that the Government is heavily subsidizing the training. 4.53 Industrial Training. It was not possible to obtain comprehensive data for the analysis of the cost of training in industrial training centers. In general, the firms do not know how much they "spend" on training. For two centers for which total expenditure was reported the unit cost per trainee year was in the range Rp 4 to 6 million--i.e., two to three times the cost of BLK/KLK training. No industrial training center had any estimate of the costs of lost production because of training. In a sample of firms which provide training on-the-job, the recognized training budget appears to cover only the cost of regular training programs such as supervisor training: the cost of on-the-job training is not identified by the firms. 4.54 Private Training Centers. The main income for private training centers is provided by tuition fees which vary widely depending on length, institution and nature. Fees ranged from Rp 120,000 to 145,000 for one month courses to Rp 150,000 to Rp 300,000 for four month courses. The fee per trainee-hour was estimated to range between Rp 1,000 to Rp 1,700. Unit cost for equivalent full-time study range from Rp 300,000 - 400,000 per trainee year for typing courses to Rp 800,000 to 2,000,000 per trainee year for electronics or sewing machine repair and maintenance. Expenditures appear to be mainly for recurrent costs, i.e., salaries, consumable materials and rents. Capital expenditure on building and equipment is negligible. Staff salaries accounted for less than 50 percent of income--ranging from 13 percent to 45 percent. For some centers the expenditure was reported to be about one half of the income, showing a high percentage profit. Costs appear to reflect location rather than quality of training, equipment or facilities. D. Conclusions 4.55 The private technical and vocational education and skills training systems are large--greater than the government systems--and growing rapidly, The quality of private training varies widely. At its best it is excellent, with examples of private secondary technical schools with national reputations founded on strong revenue-earning production units and well- trained graduates who are eagerly sought by industry. There are, however, - 54 - many private technical schools without practical workshop facilities. The private sector has also expanded more rapidly in the business, commercial and general vocational subjects rather than in technical skills which cost more to establish and run. 4.56 There are schemes for registration of private training institutions. Secondary technical and vocational schools with more than three teachers are registered by the Department of Education and skills training centers by the Department of Manpower. But, the criteria for registration are minimal and give no assurance of quality. There are many unregistered centers in operation. An effective quality and performance based accreditation system is required in order to provide potential trainees with information about the quality and employment outcomes of the training available. 4.57 In the public sector, both the secondary technical and vocational school system of the Department of Education and the skills training centers of the Department of Manpower are overcentralized with the result that the schools and centers lack flexibility and responsiveness to local needs. In both systems there is scope for much more efficient use of staff. Staff costs represent a high proportion of operating costs, consequently there is inadequate expenditure on materials and maintenance. In the Ministry of Manpower BLK/KLK there is also need for more efficient use of physical resources. Hore timely allocation of training funds would help to achieve this. 4.58 Links with industry and employment generally need to be strengthened. There are encouraging steps in this direction. The inclusion of an industrial assignment in the STM course is already showing some good results. The scheme for "third-party" financed training is being used by some BLK/KLK tc, earn revenue through training for industry. In both systems more responsibLlity for curriculum and courses should be given to the institutions. The regional training councils which have recently been set up in each province with private sector membership provide a mechanism for decentralization of responsibility for training which, if expanded could improve coordination and responsiveness at local levels. 4.59 The majority of skilled and supervisory level employees in industry obtain their skills in employment and on-the-job--other than the basic technical skills of the secondary technical school graduates who comprise about a quarter of those workers. Apart from a relatively few medium and large firms with well established training centers, enterprises satisfy present needs for relatively low skill labor by on-the-job training experience and related training. As shown in Chapter 3 there are already unsatisfied needs for skills training for skilled tradespersons and supervisors. As the level of technology increases industry will need assistance to identify training needs and to obtain the appropriate training. The Industrial Training Development Science which is being established by Depnaker provides one mechanism for assistance. BLK/KLKs also have potential to assist by providing technical skills upgrading. - 55 - V. POLICY OPTIONS AND RECOMMENDATIONS A. Policy Options 5.1 Introduction. The successful development of the Indonesian economy in the 19809 and the growth of manufactured exports and employment have exploited the comparative advantage of the country's abundant supply of low- skilled, low-wage labor and its relative political and social stability. Industrial development has been achieved with minimal on-the-job training of operators and skilled workers. Productivity, however, is low and industrialists identify problems of low quality, delays in production and high wastage--which are normally problems related to the use of poor production methods and inadequate skills training for managers and workers. Indonesia faces the challenge of improving productivity and the well-being of its workforce as it moves into the 1990s. Improvements in productivity are necessary to enable workers' wages to rise without reducing Indonesia's competitiveness in world markets. 5.2 Strategies to improve productivity include shifting production into higher value added activities. Indonesia will need to look carefully in the 1990s at opportunities for expanding investment in new industries that promise to raise the average value added in production. This strategy was successfully exploited in the development of South Korea as explained later in this chapter. There are also opportunities to improve productivity in existing industries through attention to technology choices, investment in new capital, and emphasis on skills training for managers and workers. As labor markets tighten pushing up wages, incentives for taking advantage of such opportunities will increase. 5.3 Human resources development through education and training will be a key element of any strategy chosen to improve the productivity and well-being of workers and households. The access of Indonesians to education and training will influence the level and distribution of wages and incomes. In- service training for managers and workers has the potential to address many of the production problems cited above and in Chapter 3. Education and training will also be important to the introduction of new production technologies and the capacity of the workforce to respond rapidly to changing conditions in the global economy. This chapter develops policy options for Indonesia's continuing investment in human resources development in the 1990s to ensure sustained economic and industrial development. It draws on the successful experience of other countries that have made the transition to a newly industrialized status. The options are presented within a policy framework. The Policy Framework 5.4 An economy faces the challenge of using its public and private resources efficiently and equitably in human resources development. A recent Bank review of over 900 studies of skills training for economic development was combined with the Bank's own studies of this subject to produce a policy paper to guide developing countries in the choice of effective strategies for - 56 - human resources development.42/ The paper presented policies for using public resources to ensure that skills needed for economic development are produced efficiently and the equity objectives for the poor and the socially disadvantaged are addressed. The policies recommended included: (1) strengthening basic and secondary education, (ii) encouraging private training, (iii) improving the effectiveness and efficiency of public training, and (iv) using training to complement equity strategies. Successful strategies for implementing these policies were presented in the policy paper and summarized here. (a) Strengthening basic and secondary education is an essential step to effective skills development. General education strengthens abilities for the leainli&g oL iew skills over a worker's lifetime. This is especially important in an open economy like that of Indonesia. It directly improves an individual's productivity and flexibility and increases the access of the poor and disadvantaged groups to training and wage employment. Academic secondary education is found to be more cost-effective in enabling graduates to enter wage or self-employment than diversified secondary schools that replace part of the academic curriculum with a few vocational courses. (b) Encouraging private training is important to expanding the resources available for skills development and encouraging the efficient use of these resources. Incentives for this training depend on competitive labor markets linking productivity and wages. Few countries, however, will be able to depend initially on private training to meet skills needs for economic development as the size of the private sector and its capacity for training may be limited. This capacity needs to be assessed and encouraged by governments through appropriate incentives to enterprises and accreditation of private training centers. (c) Improving the effectiveness and efficiency of public training is an important objective where there is a large public training system or where employer and private training is not yet well developed. Public training will continue to be important where market failures and imperfections impede private training. The effectiveness and efficiency of public training can be improved by making this training more responsive to market forces and by consolidation and better utilization of training capacity. Building capacity for policy implementation through training funds and diversifying sources of financing can improve the stability and level of funding needed to improve training. (d) Using training as a complement to equity strategies can improve the condition of the poor, many of whom are located in the urban and rural informal sector. In the informal sector, traditional apprenticeships, appropriately strengthened, can be a major source of skills development for the economically disadvantaged. Formal training programs can contribute if they are used as a complementary 42/ World Bank, 1991 op. cit. - 57 - input in broader income-generation strategies, e.g., reduction of regulatory barriers to self-employment. Training alone, especially when oriented to modern sector wage employment, does not develop the range of skills needed for productive self-employment in informal markets. B. Selecting Policy Options for Indonesia 5.5 The Bank's policy options are not prescriptive. That is, there is no set of strategies to which developing countries can mechanically adhere. The choice of appropriate strategies for human resources development will depend on each country's economic circumstances. The policy paper provides a framework for the development of these strategies that places an emphasis on economic analysis. In low-income countries, for example, without extensive private training capacity, the framework recognizes the need to rely on improving the effectiveness and efficiency of public training while working in the long run to build private training capacity. In middle-income countries, with large dynamic private sectors, attention can be focused more on encouraging private training while consolidating and improving the quality of public training. The role of governments will vary. Governments will continue to be actively involved in the financing, though not necessarily the delivery of skills training where market imperfections and failures distort private incentives. In competitive markets, governments can shift more responsibility for training to the private sector. 5.6 Against this background, attention can be turned to what human resource development strategies are best suited to the needs of Indonesia as it seeks to mtve into the company of other newly industrializing countries in its region. Steps taken to open the Indonesian economy in the 19809 to trade have been quite successful as measured by the growth of manufactured exports. Labor markets appear to be working quite well, reflecting flexible wages and low barriers to labor mobility. The jobs created by economic growth have been in labor intensive, low-skilled production in manufacturing and services matching the general skill levels of the workforce. At this stage of development there has been only limited skills training in enterprises. As described in Chapter 3 employers have been content to rely largely on informal on-the-job training, although general education levels in the workforce have been rising. The need for skills training for workers is mentioned by one- third of employers in the manufacturing survey, but ranked only seventh in priority as a production problem. Technology and ownership appear to be important correlates of employers' attention to skills training. High technology enterprises and foreign owned enterprises commit more resources to trai,iing. 5.7 The picture that emerges from this assessment of the demand for training in Indonesia is one where labor markets are performing their necessary allocation function providing signals to guide private investments in human resources development. Given the low levels of technology employed in export-led manufacturing, the demand for training has been limited. Where higher levels of technologv are involved and where foreign capital is employed in exports that demand e. .- on quality more attention has been given to training. At first glance, this suggests the adoption of a benign strategy for government investment in human resources development. However, there are also disturbing features in the survey of manufacturing. The failure of - 58 - managers in this survey to make the connection between training and the ability to meet quality stardards in production, provide on-time deliveries, and wastage of materials is a matter of concern. So is the failure of enterprises to invest in training where skill differentials in wages show evidence of increased productivity. 5.8 On the supply side of the market for skills training, the picture is problematic. Private training is a large and important component of Indonesia's current human resources development strategy. The potential of this training, however, is not without problems as reflected in its uneven quality. There is little formal information on the quality of private training to permit trainees to make informed choices among programs. The findings of the present study indicate that this training will require considerable investment in training facilities, staff, and programs if it is successfully to supply better trained workers with more advanced skills. For the government vocational and technical schools, the main issues are the lack of flexibility of centralized systems, the lack of close links with industry, and the need for investment to modernize equipment and provision of adequate operation and maintenance budgets. The government training centers, BLK/KLK, are not effectively used--the facilities and staff are underutilized, partly because of budget and financing procedures and partly due to cumbersome enrollment methods, resulting in very high unit costs. Management is over- centralized. 5.9 Although the inefficiencies in private and public skills training do not appear to be a serious constraint to Indonesia's economic growth, there are strategies that, if adopted, would improve their effectiveness and efficiency. The more important issue at this time is what strategy for human resources development should be followed once Indonesia has exhausted its comparative advantage of low-skilled, low wage workers? The country is some distance from doing this as described in Chapter 2. Will enterprises later respond to tightening labor markets, skill shortages, and wage pressures with investment in training? There is some evidence to support this in foreign owned, higher technology enterprises where wages have increased to attract scarce skilled workers. In Indonesia's open economy with its competitive labor markets, there is reason to believe that the demand for training by employers will increase as markets tighten. Representatives of employer and trade associations express this view. With the adoption of new production technologies in the 1990s, including the entry of higher value added industries, the demand for more cost-effective training modes outside enterprises seems likely to emerge. Will private and public training institutions be responsive to this demand? 5.10 These are the important issues to be addressed in designing human resource development strategies for Indonesia in the 1990s. In the 1980s, private investment played an important role in the nation's successful export- oriented development strategy. Indonesia has opened its economy to trade and has relied heavily on the private sector to serve as the engine of growth for the economy. The private sector has played a major role in expansion of formal secondary and post-secondary education. Indonesia is thus well positioned to encourage private training as a cornerstone of its human resources development strategy. Government strategies encouraging private investment in training by enterprises and private training centers can go a lon, way toward improving the efficiency of skills training and expanding the - 59 - resources available for skills development. Strategies to achieve this objective are discussed later in this chapter along with strategies for improving the efficiency of training in government schools and training centers. Improving the effectiveness and efficiency of public training is essential in view of the current status of this training. Public training will continue to play an important role in Indonesia even with the expansion of private training. 5.11 With private training providing the cornerstone for Indonesia's human resources development strategy, public training will need to be consolidated and re-focused. Its focus would be the meeting of strategic skills needs for development, including highly specialized skills and addressing equity issues in training for the poor and socially disadvantaged. This vision of a human resources development strategy for Indonesia looks ahead to the needs of the 1990s and movement beyond the present economy whose comparative advantage rests in an abundant low-wage workforce using relatively low skills. It considers how to meet the skill needs of a future economy whose labor markets have begun to tighten and wages costs increase and that seeks to increase the productivity of its workforce while maintaining its competitiveness in world markets. In developing this approach, it is useful to look at the experience of other countries which have successfully navigated this economic transition or are similarly poised to make the transition. C. Lessons of International Experience 5.12 South Korea is one of the notable examples of countries in the Pacific Rim that have successfully moved beyond dependence on labor intensive development. It is a story of successful development. Like Indonesia, South Korea experienced a sharp increase in manufacturing employment which rose from 9 percent to total employment in 1965 to 28 percent in 1989, absorbing an additional 4 million workers. Its comparative advantage shifted during this period from low-technology, labor intensive production to more high- technology, capital intensive production. This was accompanied by a rapid increase in productivity that enabled South Korea to maintain its international competitiveness in an environment of rising wages. 5.13 The profile of skills development in South Korea shows a system with three important features (Box 5.1). First, human resources development was carefully integrated with economic development. As new industries and technologies were introduced, emphasis was placed on the necessary skills development. Second, private training was an important feature of the human resources development strategy alongside public training. Private expenditures on vocational education and training have consistently outstripped public expenditures. Third, the system was flexible in its response to the changing needs of the economy. Government was willing to change the system in areas where weaknesses were identified. 5.14 As a neighbor, Malaysia offers an example of a newly industrializing country that has begun to experience labor shortages and is poised to make the transition to the production of higher technology goods. It is useful to look at the training strategy it plans to employ (Box 5.2). This strategy emphasizes private sector participation in training, improving the responsiveness of public training, and development of a stable source of financing. Malaysia is developing its training strategy using an integrated - 60 - Box 6.1: SKILLS DEVELOPMENT IN SOUTH KOREA South Kor ea economle growth has linked increaslng sophitication In production with expanded lovels of education and training. The first industitsl involved in development In the 1960. were textiles and electrical manufactured goods. The labor Intensive, low skill nature of these Industriel was compatible with a labor force that already had access to universal primary education. In the 1970e, development shifted to more capital Intensive production in steel, electronics, and ship building. Accompanying this develop nt, ducations l opportunities were expanded. Enrollment rates In secondary educstion ros from 85 percent In 1986 to 68 percent In 1976 Including emphasis on vocational and technical education. This pattern continued In the 1970, and Into the early 1980s with the growth of chemicals and heavy Industry. The shift to high levels of production technology was accompanied by continuing growth In education and a new emphasis on *nterprise training. Enrollment rates In secondary education rose to 95 percent In 197. The number of students in vocational high schools Increased hy throe wnd on^ half times between 1967 and 1981, from 188 000 to 817 000, generally covering about 40 percent of ill high school students EMphAsis was also pleced on skills development outside the formal educotion system through non-formal training. This was achieved through public vocational training and private training based in private nterprises. In a seven year period from 1976 to 1981 the total number of workers trained was nearly 700,000 compared to the training of 211.000 workers during the eight year period form 1967 to 1976. Private training has been an Important feature of South Korea's human resources development strtey alongside public training. This has extended from the secondary level upward, IncludIng support for non-formsi training in enterprises. Private expenditures on vocational education and training have consistently outstripped public expenditures. In 1989, private expenditures on vocational education were 84 percent of total private education expenditures. By comparison, public expenditures on vocational education wore only 8.4 percent of total public education expenditures. The focus of th- government has been on improvemonts In quality. A notional skill ceortificotion system wa adopted and the govornment provided Incntives to attract better students by providing scholarships and opening access to higher education. One characteristic of the government's support for vocational education and training has been the willingness of policy makers to respond quickly to apparent cases of policy fallures. This Is reflected in the three stages of reform Involving two-year post- secondary education Intended to ensure Its usefulness to the economy. It is alo observod in the financing of non-formal training. In 1976, the government mandated training by enterprlses with 600 or more employees. In 1976, this was extended to enterprliso with 800 or more employees, but employers were allowed to avoid training and pay a tax for the Vocational Training Promotion Fund. The mandated training was heavily regulated and costly and employers found It cheaper to pay the tax and offer their own training instead. Rcently, the government has began to emphslae use of the fund to finance training by the private sector training Institutions. approach that brings together representatives of different ministries involved in training in a cabinet-level committee. This committee has as its goal the establishment of an effective training system that is responsive to the rapidly changing needs of the economy. 5.15 The financing of training is an important issue to be addressed. Outside the region, the U.K. has had experience with a number of options (Box 5.3). The lesson drawn from this experience is that of flexibility and the fact that methods of financing may change over time as different circumstances and needs arise. Singapore shows that a levy-grant scheme can be a flexible and effective source of financing for training (Box 5.4). The lesson it provides reenforces the theme of flexibility. It illustrates how the scheme can be used to encourage training in small enterprises which are frequently slow to respond to training needs. Its creative approach to training grants has spurred the development of corporate training plans. This could be particularly important to Indonesia where private training capacity, as shown in Chapter 3, is not yet well established. - 61 - Box 6.2: TRAINING POLICY REFORMS IN MALAYSIA The Malaysian economy has reached a stage where further growth will involve a shift of industry to higher value-odded, more sophisticated production end Improvod R&D capabilitles for technological development. RisIng wages and comP tition from other developing countries with cheaper labor Is forcing It to move up the tchnological laddor and increase the productivity of its labor force. Recognizing the central role played by human resources In this shift, the Oovernment of Malay*ia established a cabinet committee on training policies. The committee has Issued a report with a far-reaching package of reforms and recommendations to establish an effective training system that Is responsive to the rapidly changing needs of the economy. Among the recommndations made are: o promotion of private sector particlpation, o promotion of centers of excellence *or specific technology areas, o provision of incentives to workers for skills uprading, and o improvements in the responsiveness of public training. Measures under consideration to promote private sector participation include: o a levy-grent fund (in additlon to the existing tax incentives for enterprise- based tra Ining) o subsector * cIfic training operations by Industry associations, and o private soctr representation In National Vocational Training Council activities. Provisions being considered to encourage workers' participation in skills upgrading Involve: special financing schemes and development of Improved career paths. Steps under consideration to improve public training Includ accreditation and *enced labor market information, expanded use of facilitios offering more training for private entortrises, increased autonomy for local training managers, and privatizing of training I uti ut e. Box 6.8: FINANCING TRAINING IN THE U.K. Among devoloped countries, the United Kingdom has a history of financing training dating from Its 1964 Industriol Training Act which established a levy-grant System. The Act crsated sector-specific training boards with statutory power to raise levies and make grants for training. The subsequent inability of these boards to address cross-s-ctoral Issues such as youth training needs and their high overhead costs was a factor In the formation of the Manpower Services Coammasion In 1972. In 1982, most of the sector training boards were abolished as part of a policy to reduce the number of statutory bodles not accountable to Government. By the lt s980os Britain had replaced the Manpower Services Commission with a Training Agency and estabilihed employer-dominated Training Enterprise Councils to be responsible for training at the local level. These councils are financed mainly from central government with a total training expenditure of about to billion annually. The remaining sector training boards are being converted Into non-stotutory bodies without legal power to Impose levles. Box 6.4: SINGAPORE'S SKILLS DEVELOPMENT FUND The Skills Development Fund (SDF) was established In Singapore In 1979, fInenond bya levy on wages of unskilled workers. Initially, the objective was to upgrad the traing of low-wage workers but through the levy the government also intended to Increase unskilled labor costs and encourage the use of capital and advanced technologies. In the 1980s, the SDF target shifted. The initll focus on unskilled workers changed to the encourgement of tralning for management, specialist skills, and skills development In small enterprises. The grants administration also changed. While reimbursemont of approved courses was made on an ad hoc basis during the first two years, the formula was subsequently refined to provide up to 90 percent coveroge of training costs, Including trainee salaries. Advances were offered on training grants to encourage the development of corporate training plans. The number of trainees rose repidly reaching a cumulative total of 240,000 by 1984, equivalent to 21 percent of Singapore's labor force. By 1988 the rogram provided training In all firms with more than 0 employees, and more than half of those employing 11-49 workers. - 62 - D. Recommendations 5.16 Indonesia is encouraged in the 19908 to adopt a human resources development strategy that is based on (i) encouraging private training, and (ii) improving the effectiveness and efficiency of public training. Behind this strategy, there is a need to strengthen basic and secondary education to increase the flexibility of the workforce, improve access to training and skills development, and lower the cost of new skills acquisition over the lifecycle of workers. Much like the case of South Korea, Indonesia needs to give close attention to the integration of human resources planning and economic planning. Its investments in skills training need to be carefully coordinated with economic development. In the near term represented by the completion of Repelita V, economic development is expected to proceed without serious labor and skill constraints. Bevond, however, under Repelita VI it is important to l(,ok at emerging industries and new technologies to identify strategic skills needed for further economic development. Labor Market Information Systems 5.17 Competitive labor markets are an important resource for use in the planning and coordination with economic policies. The signals these markets provide through movements in wages and employment are an effective instrument for guiding public and private decisions in human resources development. The regulation of these markets should be done carefully to avoid their distortion. Regulations to protect the health and safety of workers and to enforce broad social objectives such as prohibitions against child labor and discrimination in employment against women and minorities are appropriate from a social welfare perspective. Other regulations that introduce wage rigidities into the economy and that create legal and economic barriers to labor mobility should be avoided, or at best minimized to preserve the efficiency of labor markets and facilitate their adjustment to changing economic conditions. 5.18 Additional investments need to be made in improving labor market information as a guide to education and training decisions. Indonesia has a strong foundation on which to build with its labor force and employment surveys conducted by BPS. There is room for improvement, however, that would help improve public and private choices in skills development. A study is needed to assess the suitability of labor force concepts and definitions used in national surveys, technical issues that affect the accuracy of labor force estimates and regional coverage, and policies on analysis and dissemination of labor force data. There is now a paucity of this analysis. A unit either within BPS or possibly in the planning ministry BAPPENAS or Manpower Ministry, Depnaker needs to be established to analyze and disseminate in timely fashion labor market data for planning purposes. The national unit should be complemented by provincial units to serve the same purpose in the context of provincial development. 5.19 From a different perspective there is a critical need for market information about the quality of private and public training. This need can be met through the introduction of an accreditation system. Such a system can be developed by professional training associations with possible support from government. This information can play an important role in improving the effectiveness and efficiency of both private and public training. By giving - 63 - trainees information about the quality of training available and a choice, the market will eliminate ineffective providers. The accreditation process will need to focus on the quality of inputs in training, e.g., equipment and facilities, instructor qualifications, curriculum, but also the outcomes of the training in terms of job placements and wages. Employer or Enterprise-based Training 5.20 Enterprise-based training, while shown to be cost effective and responsive to changing needs of the productive sector, suffers from a number of market failures. For example, in an environment of high turnover, firms have little incentive to provide training for transferable skills. Firms do not spontaneously train except for cases such as those in Japan or Germany where a tradition of life long employment and other cultural factors has enabled enterprises to internalize such externalities. Emerging firms also tend to lack stability in product and input markets to develop a coherent personnel policy that includes training. It may also take managerial maturity and medium-term vision to recognize skills deficiency as an underlying production problem. Smaller firms suffer from economies of scale in providing training. In response to these problems, a number of countries have introduced incentives in the form of subsidies, tax advantages and levy-grant funds, to encourage firms to introduce training. An important goal for Indonesia is then to establish effective incentive systems and support services for firms to undertake optimal level of training. 5.21 Incentives for Enterprise-based Training. As the need grows for new and better skills in the workforce, firms will have to invest more in training and retraining. In 1990, Indonesia introduced a tax deductible system for training costs incurred in firms. This would help enterprises that are already undertaking or about to initiate training. However for the majority of firms without training experience tax deduction may provide too little impetus to get them started. It would be important for the GOI to monitor and evaluate the effectiveness of this new policy. A training fund would provide a more direct financial incentive. The National Training Council has recommended the introduction of a Levy-Grant scheme in Indonesia and this has been followed by the preparation of detailed plans for a scheme in East Java. This scheme is strongly supported by the Governor. It is recommended that these proposals be pursued with detailed attention to the following key issues in the design of the funds. (a) Scope of Participation. An important issue is the identification of firms which would contribute to and benefit from the fund. One possibility would be to exempt large firms with established training schemes on the grounds that they would recover in grant any payment in levy. Another possibility would be to exempt small firms on the grounds that administration costs would be high in relation to the levy collected. A target of mid-size firms would probably address the enterprises with the most critical needs. The sectors to be covered also need to be determined. (b) Training Targets and Criteria. Experience etc., indicates the importance of targeting training needs for which costs would be reimbursed by grants. Possible targets include training for specific occupations which are in short supply; training in newly - 64 - emerging skills, or retraining for technological change. Reimbursement of costs could also be targeted to particular areas such as supervisory and management training; productivity improvement; technical skills or craft skills. Reimbursement could be made at different rates. Criteria for reimbursement of costs would need to be established. These criteria should relate directly to training quality and outcomes. Training within the firm or training in an outside training center should be eligible. Training services such as training needs analysis could also be eligible for reimbursement. (c) Levy Rates and Administration. It is essential that levy rates and fund income be strictly related to budgets for planned training outcomes. It is also important that the basis for liability for payment of the levy is seen to be fair by industry. A relatively simple mechanism for collection would be needed. An important question will be that of the government's willingness to cover initial start-up costs. (d) Management and Organizations. If training funds are established within government it will be essential to have strong and effective private sector participation in management. In order to keep administrative overheads at a minimal level the fund would need to be staffed by very competent staff. The objectives and performance outcomes of the fund should be clear and the staff accountable for their achievement. 5.22 Success of a training fund will be measured by its benefits to the participating firms. The range of issues discussed above indicate the need for careful study and design before launching this initiative. It is also recommended that a limited start be made with one or two pilot schemes in East Java and one other province with well-focused training objectives and covering priority sectors. 5.23 Industrial Training Development Services. A service is needed to assist firms to analyze training needs, to train training officers, to establish training systems, to help with the planning and implementation of training programs and to monitor training outcomes. Information on training should be assembled and disseminated. Small firms or firms with common specialist skills require assistance in the establishment of group or cooperative training programs. Supervisory and management training appears to be a priority need for many firms. In the long-term assistance could be provided entirely by private sector consultancy, advisory and training bodies, and their services paid for the firms. But the private sector capacity is weak and as a transitional approach it is recommended that the government takes the initiative by expanding the Industrial Training Development Services which are being set up on a pilot basis by Depnaker. The ITDS would need specialist resources to provide the range of consultancy services mentioned above--or to facilitate these services being obtained. The ITDS would also require access to specialist experience in other countries. They should not normally provide training courses, except for training of firms' training officers where there is no other source. The service should be decentralized to the provincial level. Costs should initially be shared, with the objective of recovering the full cost from participating firms as the system develops. - 65 - Upgrading of Private Training Centers 5.24 The introduction of an accreditation system, squarely based on quality criteria including employment outcomes is recommended in para. 5.20 as an aspect of labor market information. An effective accreditation system would also be a powerful influence for raising quality. The criteria for accreditation provide guidance to the centers, and their clients, on training resources and methods. Measuring employment outcomes would give clear indication of the value of training in the labor markets. 5.25 It is recommended that the existing procedures under which staff of the Departments of Education and Manpower are responsible for registration of private institutions be replaced by schemes in which there is full participation of the private training centers and private technical schools. Accreditation should not be a necessary requirement for a private training center to operate. But it should become generally known that accreditation represents acceptable quality. The criteria for accreditation should include physical facilities, including access to laboratories and workshops with adequate equipment, libraries and support facilities; teaching staff with adequate qualifications, and satisfactory teaching materials. Employment outcomes should be measured by follow-up of trainees and students. 5.26 Representatives of the training centers should be directly involved in the evaluation process. A substantial part of the cost should be covered by fees paid by the institution which could include an element of that cost in the registration fees paid by the students and trainees. As with the training fund the government would need to cover the start-up costs of the accreditation schemes. 5.27 The growth of private technical and vocational secondary education and skills training shows the vitality of the private sector. However, additional expenditures will be needed to raise quality, particularly in specialist technical skills. It is recommended that the Government examine in detail ways in which to provide direct assistance for quality improvement, in addition to the present scheme for assigning some government teachers to work in selected private schools. Possible types of assistance include the provision of loans for capital investment, or shared investment in which the government provides all or part of the capital cost of establishing specialist laboratory and workshop facilities used by a group of private schools which would be responsible totally for the operation and maintenance costs. Upgrading training could be provided for private staff training staff at subsidized costs in the government's staff training schemes. Upgrading Public and Technical and Vocational Schools 5.28 There are steps which could be taken to improve the quality and efficiency of the public technical and vocational schools. The system should be given more flexibility with the schools having more responsibility for curricula and courses and for developing links with industry. This would be clearly in line with current decentralization policies of the government. Financing and accounting procedures should be modified to facilitate schools using revenue from production and related activities. Utilization of teaching staff should be improved through allocation of staff in accordance with actual - 66 - teaching needs. Savings in staffing costs would help to provide the necessary funds for improving equipment and the supply of teaching material. 5.29 The greater fees and charges collected in the specialist STMs of the Department of Industry indicate a potential for raising charges in the Department of Education schools. This should be considered together with the need for a scholarship scheme for students who cannot afford increased fees. This issue could be more effectively examined in the light of the current Ministry study of technical and vocational schools (para. 4.5) which will provide valuable details on the facilities and resources of the schools, their teaching processes and socioeconomic data on the students. Upgrading of Public Skills Training Centers (BLK/KLK) 5.30 The flexibility of public skills training centers should be improved and links with industry strengthened by delegating to the training centers responsibility for determining training needs; courses and materials, selecting trainees, and establishing appropriate fees and charges. Training should be provided jointly by industry and the training centers through dual, training systems. The level of training should be raised by focussing on specialist skills training and retraining of existing workers. 5.31 Efficiency of utilization of facilities and staff should be substantially improved, including the introduction of planning, budgeting and delivery systems which ensure that the institutions are full for the whole year. A staff career structure with responsibilities related to a functionally based organization of the BLK/KLK should be introduced. 5.32 Operational and maintenance funding should be increased mainly through the above efficiency gains. A larger share of costs should be covered by the introduction of training fees and continued expansion of "third-party" financed training charged at full costs. The increased financial autonomy and declining reliance on public budget would give options for the responsibility for BLK/KLKs to be transferred from Depnaker to provincial government or local training councils, e.g., Regional District Training Councils with executive responsibility, run by and accountable to local industry and the community or to private enterprise associations. Such transfer should be considered as a target for Repelita VI. Skills Standards, Tests and Certification 5.33 The occupational skill and training standards and the skills tests developed by the National Training Council should be fully implemented. Nationally recognized certificates or vocational qualifications should be awarded for successful completion of training and skills tests. To facilitate full involvement of industry, the scheme, although national, should be implemented at the provincial and local levels by the Regional Training Councils. Improvement in Equity 5.34 In addition to improving access to and quality of basic and secondary education a more positive approach should be taken for the provision of technical skills training for females so that they can be better - 67 - represented in the more skilled occupations and improve their earnings and occupations. This could be achieved through enrollment policy for public training courses--particularly for upgrading skills of existing workers under joint training-industry schemes and by making the training, and subsequent employment of females, one of the targets in any scheme for financing or subsidizing training costs. Follow-up Actions 5.35 The above recommendations would need further study and follow-up by government before an action plan could be designed. Such follow-up would include feasibility studies of the training fund and accreditation schemes, identification of priority targets for skills training, examination of schemes for financial and other support for the private sectors and further examination of equity issues. A wider range of employment and trairning should be studied, including the import-substitution manufacturing sectors, which generally have a different technology-labor mix, and the service sectors, which are important because of their large share of employment. The middle and senior level management occupations also appear to be critical. ANNEX 1 - 68 - INDONESIA EMPLOYMENT AND TRAINING Economic and Population Data Table 1. Recent Economic Developments. 1975-1989 2. Population and Labor Force Activity by Sex and Location, 1982 3. Population and Labor Force Activity by Sex and Location, 1986 4. Population and Labor Force Activity by Sex and Location, 1987 5. Population and Labor Force Activity by Sex and Location, 1988 Table 1: RECENT ECONOMIC DEVELOPMENTS - 1975-1990 Ic 1975-1980 1981 1982 1984 1985 1986 1987 1988 1989 1990 Real Growth Rates GDP 6.8 7.2 -0.1 6.7 2.5 5.9 5.0 5.6 7.4 7.1 Non-Oil GDP: Agriculture 3.7 5.9 -0.4 4.2 4.3 2.6 2.2 4.3 4.3 2.5 Mining 8.2 -8.1 23.4 -7.1 3.8 10.7 7.0 4.8 11.0 4.1 Manufacturing 13.8 10.1 0.9 13.0 12.5 11.1 11.4 13.5 11.6 12.8 Construction 13.3 13.5 0.9 -4.4 2.6 2.2 4.2 8.9 11.8 12.1 Trade/d 7.9 6.5 5.8 3.4 5.0 8.1 7.1 9.1 10.1 - Transportation/d 11.7 13.7 7.0 8.4 1.0 4.0 5.8 5.5 8.8 - Finance/d 10.4 21.7 10.2 11.2 4.6 10.0 4.7 3.2 10.1 - Services/d 6.7 11.3 9.5 4.6 5.7 5.5 6.2 6.6 5.3 _ Non-Oil Exports 55.1 /a -9.5 -25.4 10.0 7.8 6.7 25.5 14.2 23.1 6.7 Manufactured Exports 70.8 62.3 8.6 -0.5 70.3 45.4 Ratios Current Account/GDP * * * -3.0 -2.6 -5.8 -2.7 -2.3 -2.2 -4.1 Manufactured Exports/ * * 8.0 16.9 24.9 25.8 23.6 28.5 32.3 Total Non-Oil Exports Public Sector Balance/GDP * * * * * - - -2.5 -0.6 1.6 ,l Prices Consumer Price Index 18.9 lb 7.1 9.7 8.8 4.3 9.2 9.3 5.6 6.1 9.9 la 1980. lb 1979-1980. /c 1983 data are not given here because of changes in BPS series in 1983. Id 1989 data. Source: Central Bureau of Statistics (BPS) and World Bank Staff Estimates - 70 - ANNEX 1 Toble 2 Table 2s Population and Labor force Activity by Sex and Location 1982 Men & Women Mon Women TOTAL Population 10+ 110,410,654 54,235,066 56,175,588 Labor Force 59,582,445 38,078,161 21,504,284 Employment (Wage) 44,398,894 32,246,720 12,152,174 Unemployment 1,795,182 1,022,128 773,054 URBAN Population 10+ 25,776,954 12,658,138 13,118,816 Labor Force 11,358,986 7,711,378 3,647,608 Employment 9,785,477 6,967,712 2,817,765 Unemployment 659,909 422,312 237,597 RURAL Population 10+ 84,633,700 41,576,928 43,056,772 Labor Force 48,223,459 30,366,783 17,856,676 Employment 34,613,417 25,279,008 9,334,409 Unemployment 1,135,273 599,816 535,457 JAVA Population 10+ 70,052,034 34,198,867 35,853,167 Labor Force 38,559,672 24,459,198 14,100,474 Employment 29,845,597 20,917,771 8,927,826 Unemployment 1,298,472 757,374 541,098 OUTSIDE JAVA Population 10+ 40,558,923 20,236,199 20,322,724 Labor Force 21,022,773 13,618,963 7,403,810 Employment 14,553,297 11,328,949 3,224,348 Unemployment 496,710 264,754 231,956 SOURCE: SUSENUS. - 71 - ANNEXI Table 3 Table 3s Population and Labor force Activity by Sox and Location 1986 Hen & Women Men Women TOTAL Population 10+ 122,541,855 60,394,937 62,146,918 Labor Force 70,190,725 42,567,878 27,622,847 Employment (Wage) 48,379,968 34,898,441 13,481,527 Unemployment 1,853,402 1,125,271 728,131 URBAN Population 10+ 33,103,383 16,407,787 16,695,596 Labor Force 14,682,134 9,756,593 4,925,541 Employment 12,299,500 8,649,900 3,649,600 Unemployment 1,073,475 674,015 399,460 RURAL Population 10+ 89,418,508 43,987,186 45,451,322 Labor Force 55,508,591 32,811,285 22,697,306 Employment 36,080,468 26,248,541 9,831,927 Unemployment 779,927 451,256 328,671 JAVA Population 10+ 76,128,735 37,455,616 38,673,119 Labor Force 43,797,965 26,633,330 17,164,635 Employment 31,910,305 22,299,168 9,611,137 Unemployment 1,310,442 810,927 499,515 OUTSIDE JAVA Population 10+ 46,413,156 22,939,357 23,473,799 Labor Force 26,392,760 15,934,548 10,458,212 Employment 16,469,663 12,599,273 3,870,390 Unemployment 542,960 314,344 228,616 SOURCE: SARERNAS - 72 - ANNEX 1 Table 4 Table 4: Population and Labor force Activity by Sex and Location 1987 Men & Women Men Women TOTAL Population 10+ 125,894,824 62,054,344 63,840,480 Labor Force 72,245,313 43,628,232 28,617,081 Employment (Wage) 49,389,178 35,575,979 13,813,199 Unemployment 1,842,870 1,147,914 694,956 URBAN Population 10+ 35,941,736 17,763,633 18,178,103 Labor Force 16,190,061 10,608,657 5,581,404 Employment 13,484,025 9,341,126 4,142,899 Unemployment 1,123,950 721,078 402,872 RURAL Population 10+ 90,085,088 44,422,711 45,662,377 Labor Force 56,055,252 33,019,575 23,035,677 Employment 35,905,153 26,234,853 9,670,300 Unemployment 718,920 426,836 292,084 JAVA Population 10+ 77,976,271 38,331,524 39,644,747 Labor Force 44,200,567 26,933,838 17,266,729 Employment 32,198,853 22,528,601 9,670,252 Unemployment 1,369,697 866,118 503,579 OUTSIDE JAVA Population 10+ 47,918,553 23,722,820 24,195,733 Labor Force 28,044,746 16,694,394 11,350,352 Employment 17,190,325 13,047,378 4,142,947 Unemployment 473,173 281,796 191,377 SOURCE: SAKERNAS ANNEX 1 Table 5 Table St Population and Labor force Activity by Bex end Location 1988 Men & Women MNn Women TOTAL Population 10+ 129,402,201 63,934,075 65,468,126 Labor Force 74,595,594 44,588,851 30,006,743 Employment (Wage) 50,406,602 35,995,429 14,411,173 Unemployment 2,077,495 1,251,732 825,763 URBAN Population 10+ 37,945,687 18,792,792 19,152,895 Labor Force 17,135,829 11,098,321 6,037,508 Employment 14,156,761 9,719,615 4,437,146 Unemployment 1,248,032 779,305 468,727 RURAL Population 10+ 91,456,514 45,141,283 46,315,231 Labor Force 57,459,765 33,490,530 23,969,235 Employment 36,249,841 26,275,814 9,974,027 Unemployment 829,463 472,427 357,036 JAVA Population 10+ 79,911,844 39,364,692 40,547,152 Labor Force 45,973,401 27,483,280 18,490,121 Employment 33,016,451 22,751,046 10,265,405 Unemployment 1,526,971 942,123 584,848 OUTSIDE JAVA Population 10+ 49,490,357 24,569,383 24,920,974 Labor Force 28,622,193 17,105,571 11,516,622 Employment 17,390,151 13,244,383 4,145,768 Unemployment 5509524 309,609 240,915 SOURCEs SAKEREAS - 74 - ANNEX 2 INDONESIA EMPLOYMENT AND TRAINING Labor Market Data Table 1. Labor Force Participation Rates by sex and Location - 198216/7/8. 2. Labor Force Participation Rates by sex and Age group - 1982/6/7/8. 3. Labor Force Participation Rates by sex and Education - 1982/6/7/8. 4. Open Unemployment Rates by sex, Location and Education Level - 1982/6/7/8. 5. U2 Underemployment Rates by sex, Location and Education Level - 1982/6/7/8. 6. U3 Underemployment Rates by sex, Location and Education Level - 1982/6/7/8. 7. Ratio of Non-farm Self-Employment to Total Paid Non-Farm Employment by sex, Location and Industry, 1982/6/7/8. 8. Distribution of Wage Employment by sex and Industry, 1982/6/7/8. 9. Average Monthly Earnings by Industry as Ratio of Wages in Agriculture 1982/6/7/8. 10. Average Monthly Earnings by Education Level as Ratio of wages for those with No Schooling 1982/6/7/8. 11. Production and Employment in Manufacturing 1979-86. 12. Indicators of Change in Production, Employment and Wages in Manufacturing, 1979-82 and 1983-86. Table 1: LABOR FORCE PARTICIPATION RATES BY SEX AND LOCATION 1962, 1988, 1987, 1988 Men and Women men women 1982 1986 1 1988 1982 1988 1987 1988 1982 1986 1987 1988 Residence: Total 54.0 57.3 57.4 67.6 70.2 70.6 70.8 69.7 S8.3 44.4 44.8 46.8 Urban 44.1 44.4 46.2 45.2 60.9 59.6 60.2 59.1 27.8 29.5 30.7 31.5 Rural 67.0 62.1 62.2 62.8 73.0 74.8 74.8 74.2 41.5 49.9 60.4 61.8 Java 66.0 67.6 68.7 67.5 71.6 71.1 70.8 69.8 39.8 44.4 43.6 46.6 Outside Java 52.1 68.9 68.6 67.8 68.0 69.6 70.4 69.6 36.4 44.6 48.9 48.2 Source: 1962 SUSENAS; 1986, 1987, 1988 SAKERNAS I., Table 2: UBOR FORCE PARTICIPATION RATES BY SEX AN AGE 1982, 1986, 1987, 1988 mn and Wown Men Women 192 19w 19987 1988 1982 1986 1987 1988 1982 19e8 1987 1988 Age: 10-14 10.8 12.9 11.9 12.4 12.0 14.3 13.3 13.7 9.0 11.6 10.4 10.9 15-19 40.7 41.5 41.4 41.1 48.2 46.6 46.9 45.6 33.2 36.3 35.7 38.2 20-24 59.9 63.4 63.7 84.3 83.6 79.9 79.3 77.3 41.4 49.7 50.7 52.7 26-29 68.3 73.0 74.1 73.6 95.5 95.6 95.3 94.1 48.9 53.5 56.6 66.5 30-34 72.8 77.9 77.8 77.8 98.2 98.3 98.1 97.8 48.9 57.1 57.2 68.8 a5-39 74.2 79.5 79.6 80.5 98.3 98.8 98.5 98.6 51.8 60.1 61.3 62.1 40-44 76.2 80.5 80.6 80.7 97.6 98.4 98.4 98.4 54.7 63.2 63.4 84.2 45-49 76.9 80.5 81.6 80.7 97.2 97.4 97.8 97.8 56.7 63.4 65.4 63.6 50-54 73.1 76.5 76.0 77.7 93.0 95.2 9s.3 95.4 51.1 58.7 57.3 60.7 55-59 68.6 70.8 71.8 72.8 87.4 87.2 88.1 89.1 60.4 53.7 55.1 55.8 60-64 58.3 60.3 60.8 83.0 78.8 77.3 77.0 79.2 39.3 43.8 43.9 46.1 65. 39.4 38.2 38.7 40.2 57.9 56.2 65.3 56.2 23.2 22.8 23.8 25.3 Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS IrD I ANNEX 2 Tablo a Table 8: LABOR FORCE PART2CIPATION RATES BY SEX AND EDUCATION LEVEL 1982, 198, 1987, 198 Men and Womn Mon Women 1962 1986 1987 1988 i982 198 1987 1988 1962 1986 1967 1988 Education: No Schol 60.6 65.0 64.7 63.7 86.1 85.1 84.8 84.9 48.5 56.4 66.4 56.6 Primary 57.8 60.9 61.1 61.7 75.7 76.2 76.8 75.6 86.0 48.8 44.8 46.4 Jr. High GCen. 42.1 44.4 45.2 45.0 66.6 58.2 59.1 58.4 21.7 26.5 27.5 28.0 Jr. lgh, Voc. 62.3 60.2 59.4 68.8 79.2 76.1 76.4 76.6 85.6 5 4.6 86.6 87.0 Sr. High, Gen. 60.1 60.8 69.4 69.7 72.9 71.8 71.6 71.2 86.1 89.6 89.6 41.2 Sr. High, Voc. 80.6 88.0 62.9 81.8 89.5 91.1 92.0 90.1 65.6 70.1 69.2 69.5 DipI. 1,II n.n. 86.0 88.1 87.6 n.n. 88.7 90.9 91.8 n.e. 78.9 78.6 82.0 Dipl. III 84.6 85.9 86.1 83.6 90.5 90.7 91.8 88.8 68.7 74.8 71.3 74.7 Univerelty 90.6 90.9 91.7 92.0 94.0 93.9 96.7 94.7 78.3 78.9 78.8 84.6 Source: 1982 SUSENUS; 198, 1987, 1988 SAKERNAS Table 4: OPEN UNEYLOYMENT RATES BY SEX, LOCATION AND EDUCATION LEVEL 1982, 1986, 1987, 1988 Mien and Wome Men WOMe1 19S2 1986 1987 1988 1982 1988 1987 19S8 1982 1986 1967 1988 Residence: Total 8.0 2.6 2.* 2.8 2.7 2.6 2.6 2.8 a.6 2.6 2.4 2.8 Rural 2.4 1.4 1.3 1.4 2.0 1.4 1.3 1.4 3.0 1.4 1.3 1.6 Urban 6.8 7.8 6.9 7.8 6.5 6.9 6.8 7.0 6.6 8.1 7.2 7.8 Java 8.4 8.0 3.1 8.3 8.1 8.0 8.2 8.4 8.8 2.9 2.9 8.2 Outsid Java 2.4 2.1 1.7 1.9 1.9 2.0 1.7 1.8 3.1 2.2 1.7 2.1 Education: No School 1.2 0.4 0.4 0.8 0.9 0.8 0.6 0.4 1.5 0.6 0.8 0.8 C Primary 3.2 1.7 1.5 1.4 2.6 1.6 1.5 1.4 4.7 1.9 1.5 1.6 Jr. High, Gen. 6.2 5.8 4.5 5.2 5.4 4.7 8.9 4.4 9.0 8.0 6.0 7.2 Jr. High, Voc. 4.4 4.2 8.6 3.9 4.0 8.2 2.4 8.7 6.0 7.3 6.7 4.4 Sr. High, aom. 18.7 17.7 17.6 17.9 10.9 14.4 14.6 14.9 25.0 28.4 26.1 26.3 Sr. High, Voc. 7.8 9.5 8.7 10.7 8.5 9.0 8.0 9.5 12.8 10.4 10.2 18.0 DipI. III n"a. 4.9 7.8 8.0 n.a. 4.0 7.2 6.8 n.r. 6.6 8.9 12.7 Dipl. III 6.4 7.7 6.0 7.9 4.5 5.6 4.2 6.1 8.4 18.4 11.8 12.0 University 4.7 9.4 10.1 12.6 2.7 7.7 7.6 10.5 14.4 17.7 19.9 19.1 Source: 1982 SUS8EAS; 1986, 1987, 1988 SAKERNAS I.. Table 6: U2 UNDEREMPLOYMENi RATES BY SEX, LOCATION AND EDUCATION LEVEL 1982, 1988, 1987, 1988* Men and Women Men Women 1982 198 1987 1988 182 1986 1987 1988 1982 1986 1987 1988 Residdnce: Totel 5.6 2.9 2.8 8.0 5.2 2.9 2.9 3.0 6.3 2.9 2.6 3.0 Rural 4.3 1.7 1.6 1.6 8.8 1.6 1.6 1.6 5.1 1.7 1.5 1.7 Urban 11.2 7.4 7.1 7.4 10.7 7.0 7.0 7.1 12.2 8.2 7.4 7.9 Java 8.3 3.2 3.3 3.6 6.0 3.3 3.4 3.6 6.8 3.1 3.2 3.4 Outside Java 4.3 2.3 1.9 2.1 3.7 2.3 2.0 2.0 5.5 2.4 1.8 2.2 Education: No School 2.0 0.7 0.6 0.6 1.6 0.6 0.8 0.6 2.3 0.7 0.4 0.5 Primary 5.9 2.0 1.7 1.6 6.0 1.8 1.7 1.6 8.4 2.1 1.7 1.7 Jr. High, Gen. 11.7 6.1 4.8 6.3 10.6 5.1 4.3 4.6 16.1 9.1 6.4 7.3 Jr. High, Voc. 8.3 4.3 3.7 3.9 7.8 3.3 2.6 3.8 10.0 7.6 6.7 4.4 Sr. High, Gen. 26.6 17.8 17.8 18.0 21.4 14.6 14.9 15.0 47.9 28.4 26.4 26.3 Sr. High, Voc. 19.4 9.5 8.9 10.9 16.8 9.1 8.3 9.7 25.5 10.4 10.2 13.1 Dipl. I,II n.a. 4.9 8.3 8.2 n.a. 4.1 7.9 6.3 n.a. 6.6 8.9 13.1 Dipl. III 9.8 8.0 6.1 8.0 7.8 6.0 4.3 6.3 18.9 13.7 11.3 11.9 University 10.0 9.4 10.1 12.8 6.4 7.7 7.6 10.8 28.7 17.7 19.9 19.1 a U2 Underemployment includes the open unemploymed and involuntarsly part-time employed expressed as a percentage of the labor force. Source: 1982 SUSENAS; 1988, 1987, 1988 SAKERNAS Table 6: U3 UNDEREMPLOYMENT RATES BY SEX, LOCATION AND EDUCATION LEVEL 1982, 1988, 1987, 1988* Men and Women Men Women 1982 1988 1987 1988 1982 1986 1987 1988 1982 1988 1987 1988 Residence: Total 8.1 3.8 3.5 3.8 7.9 4.0 3.7 3.9 8.5 3.S 3.1 3.S Rural 7.0 2.7 2.3 2.6 6.8 2.9 2.5 2.6 7.5 2.3 2.0 2.3 Urban 12.7 8.2 7.8 8.2 12.2 7.9 7.7 8.0 13.7 8.8 8.0 8.5 Java 8.9 4.2 4.1 4.4 8.7 4.4 4.4 4.6 9.2 3.8 3.7 4.0 Outside Java 6.7 3.3 2.6 2.8 6.4 3.4 2.7 2.8 7.4 3.0 2.3 2.7 Education: No School 4.2 1.0 0.8 0.7 4.0 1.3 1.1 0.8 4.4 0.8 0.6 0.8 0 Primary 8.4 2.8 2.3 2.4 7.7 2.8 2.S 2.4 10.S 2.7 2.2 2.3 Jr. High, Gon. 14.9 7.8 S.9 6.5 13.8 6.9 5.4 5.8 19.0 10.4 7.4 8.4 Jr. High, Voc. 10.5 6.3 4.9 6.8 9.7 6.4 3.8 S.9 13.3 9.4 8.0 5.6 Sr. High, Con. 29.7 20.8 20.7 20.8 24.4 17.4 17.9 17.8 51.1 31.9 29.1 29.2 Sr. High, Voc. 22.6 12.2 11.1 13.8 20.0 11.4 10.0 12.4 29.4 13.8 13.3 16.3 Dipl. I,II n.a. 5.7 8.3 9.0 n.e. 4.7 7.9 5.3 n.s. 7.7 8.9 1S.3 Dipi. III 11.9 9.1 7.0 9.5 9.5 6.5 5.1 7.1 20.5 18.3 12.6 14.8 University 10.7 10.6 12.1 13.3 5.9 8.8 8.2 11.2 30.8 18.8 22.2 19.8 * U3 Uhderemployment includes the open un.mploymed, the involuntarily part-time employed, and the full-tome employed looking for another job expressed s a percentage of the labor force. Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS I'U Table 7: RATIO OF NON-FARM SELF-EMPLOYMENT TO TOTAL PAID NON-FARM uPLOYwENT FOR mEN AND WOMEN S SE%, LOCATION AND DNDUSTRY 1982, 1986, 1987, 1988 Men and Womn men Women 1982 1986 1987 198S 1982 1986 1987 1988 1982 1986 1987 198 Reuldence: Total 46.8 47.0 46.6 46.6 39.4 41.8 41.6 41.6 60.8 67.3 56.5 56.1 Rural 52.4 58.4 64.1 52.7 44.8 46.5 46.8 45.6 67.2 66.8 66.8 64.9 Urban 87.8 88 4 87.7 89.6 82.8 36.1 86.6 87.1 46.0 48.7 42.1 44.4 Industry: Menutecturlng 89.6 84.8 86.8 84.2 82.8 26.6 28.4 6.9 50.2 47.6 46.9 45.3 Trade 84.6 90.0 88.6 88.7 79.9 87.6 86.8 86.6 90.7 92.8 91.8 92.0 o Services 21.3 26.6 28.8 28.6 17.6 27.2 25.0 26.7 29.6 21.2 18.4 17.7 Others 86.2 81.4 36.0 26.8 82.7 29.2 83.1 88.6 60.1 89.8 42.4 41.7 Source: 1982 SUJSENAS; 1986, 1987, 1988 SAKERNAS I.! * 0' Tab le 8: DISTRDBUTION CF WAGE EIOYMUfENT BY SEX AND INDUSTRY 1982, 1988, 1987, 198.* Men and Women men Women 1982 1996 1987 1988 1982 1986 1987 1988 1982 1986 1987 1988 Industry: Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Agrlculture 86.8 20.1 21.3 22.4 84.0 16.6 18.1 19.1 44.3 28.4 28.6 29.6 Manutacturlng 18.5 17.7 17.0 17.6 12.3 17.8 16.4 17.1 16.7 18.8 18.6 18.5 Trade 6.2 4.5 6.1 5.0 5.2 4.3 4.8 4.8 5.1 5.0 5.6 6.3 Services 28.7 41.5 44.9 44.6 26.6 43.2 46.9 46.6 27.0 37.6 40.6 40.1 Others 17.8 16.1 11.6 10.6 21.9 18.7 13.7 12.4 7.0 6.6 6.9 6.6 Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS 00 IQ! - 83- ANNEX 2 Table 9 AVERAGE MONTHLY EARNINGS BY INDUSTRY AS A RATIO OF WAGES IN AGRICULTURE 1982, 1986, 1987, 1988 1982 1986 1987 1988 Industry: Agriculture 100 100 100 100 Manufacturing 206 199 196 186 Trade 214 214 225 215 Services 295 263 259 241 Others 229 267 252 240 Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS. - 84 - ANNEX 2 Table 10 AVERAGE ;MONTHLY EARNINGS BY EDUCATION LEVEL AS A RATIO OF WAGES FOR THOSE WITH NO SCHOOLING - 1982, 1986, 1987, 1988 1982 1986 1987 1988 Educationt No school 100 100 100 100 Primary 190 174 174 166 Jr. High, General 285 259 243 232 Jr. High, Vocational 278 256 264 256 Sr. High, General 349 338 307 285 Sr. High, Vocational 327 306 306 283 Dipl. I, II n/a 342 330 321 Dipl. III 491 455 469 395 University 578 580 615 492 Source: 1982 SUSENAS; 1986, 1987, 1988 SAKERNAS. - 85 - ANNEX 2 Table 11 Page 1 Table 11: PRODUCTION AND EMPLOYMENT I1N TUFACTURING - 1979 - 1988* Real Value Addod Resl ages Subsector Number of per Workor per Worker and Year E.tabilahments Employment - Rp (000) - Rp (000) Manufacturing: 1979 7,960 688,882 2,616 602 1980 7,997 958,909 2,691 541 1981 8,017 1,019,678 S,184 621 1982 7,960 1,068,749 8,418 722 19083 7,982 1,120,764 8,639 796 1984 9,811 1,826,667 8,971 847 1985 11,227 1,624,668 4,256 876 1986 12,817 1,721,496 4,884 660 Food, Bevorage., and Tobacco: 1979 2,428 808,741 8,042 872 1900 2,897 812,194 8,882 402 1901 2,846 821,899 8,724 468 1982 2,201 827,644 4,174 654 1988 2,296 884,700 4,460 628 1984 2,884 400,144 4,424 5e8 1985 8,871 440,667 4,871 667 1986 8,861 527,696 4,199 646 Textiles, Wearing Apparel, and Leather: 1979 2,168 288,678 1,266 870 1980 2,159 249,262 1,277 401 1961 2,140 262,187 1,895 449 1982 2,094 286,668 1,621 515 1988 2,086 272,650 1,885 659 1984 2,298 811,089 2,051 596 1986 2,688 852,816 2,428 614 1988 2,888 896,529 2,454 611 (Contin...) - 86 - ANNEX 2 Table 11 Page 2 Table 11: Producton and Employment In Manufacturg - 1979 - 1986* Real Value Added Real Wages Subsector Number of per Worker per Worker and Year Establishments Employment - Rp (000) - Rp (000) Wood and Wood Products: 1979 632 55,749 2,111 569 1980 652 65,895 2,653 608 1981 676 81,194 3,010 719 1982 668 89,924 2,963 772 1983 675 121,785 2,346 738 1984 829 148,150 2,669 762 1985 998 175,130 3,217 820 1986 1,165 187,368 4,129 b00 Paper and Paper Products, Printing, and Publishing: 1979 354 29,659 2,052 683 1980 362 32,218 2,052 715 1981 369 34,676 2,088 791 1982 369 36,072 2,088 879 1983 372 36,474 2,363 983 1984 448 42,950 2,960 1,105 1985 527 51,622 3,585 1,216 1986 601 60,391 4,138 1,250 Chemicals, Rubber, and Plastics: 1979 858 105,369 3,724 810 1980 861 112,309 3,948 851 1981 893 122,948 4,115 966 1982 949 148,449 4,350 1,080 1983 1,032 172,910 4,160 1,143 1984 1,260 210,287 4,566 1,272 1985 1,357 206,379 4,912 1,373 1986 1,459 204,162 5,359 1,468 (Contin...) - 87 - ANNEX 2 Table 11 Table 11. Production and Employment Page 3 In Mamnfacturing - 1979 - 19860 Real Value Added Real Wages Subsector Number of per Worker per Worker and Year Establishments Employment - Rp 1000) - Rp (000) Non-Metallic Mineral Products: 1979 652 43,020 3,524 1,118 1980 660 46,853 3,808 1,146 1981 670 50,225 3,680 1,096 1982 690 53,152 3,988 1,303 1983 693 54,939 3,942 1,555 1984 875 66,898 4,322 1,658 1985 1,044 75,212 4,551 1,930 1986 1,211 84,156 4,572 1,934 Base Metal Industries: 1979 21 7,043 7,892 750 1980 22 8,895 9,207 783 1981 22 9,501 8,419 883 1982 23 10,803 11,381 1,022 1983 24 12,300 20,053 1,136 1984 27 14,160 26,479 1,235 1985 29 15,505 33,503 1,310 1986 31 16,463 37 729 1,300 Fabricated Metal Products: 1979 781 106,996 3,120 750 1980 807 120,324 3,766 783 1981 821 131,647 4,345 883 1982 834 138,119 4,587 1,022 1983 837 139,586 4,605 1,136 1984 985 152,827 5,100 1,235 1985 1,126 165,954 5,568 1,310 1986 1,278 182,255 5,806 1,300 (Contin...) - 88 - ANNEX 2 Table 11 Tae 11: Production and Employment Page 4 In Manufacturing - 1979 - 1986 Real Value Added Real Wages Subsector Number of per Worker per Worker and Year Establishments Employment - Rp (000) - Rp 1000) Other Manufacturing: 1979 84 5,677 1,396 372 1980 84 6,132 1,406 392 1981 87 6,672 1,509 436 1982 91 7,340 1,376 480 1983 96 8,017 1,558 562 1984 117 9,496 1,883 609 1985 144 11,333 2,225 675 1986 171 13,008 2,324 694 *Wages and Value Added are adjusted using the producer price index for manufacturing with 1983 = 100. A three-year moving average has been used to smooth all series. SOURCE: Survei Industri 1978-1987 Tab 12:Indcats of Chme hI Producdon, EDpkrymmt. and Wages hIn MaufactndWg 1979-82 mnd 1983-80 Percent Change in Eepltyent-0utput Growth of Rest Value Growth of Real Wages Sector l"979ea8 19 79- t 19W-56 17-82 190-56 1979-B2 1983-86 M^an.faotughg: 55.8 85.0 .344 .630 30.7 20.5 43.8 10.6 Food, Beverages, Toboooo 48.0 48.2 .164 1.196 37.2 -6.0 48.9 2.9 Textiles, Veering Apparel, Leather 36.5 94.5 .377 .481 20.0 33.7 39.2 9.3 Wood ond Wood Products 126.4 170.7 .485 .315 40.4 76.0 35.7 22.0 Paper and Paper Products, Printing, and Publishing 23.8 189.9 .910 .345 1.8 75.1 28.7 27.2 Chemicals, Rubbers, PLesties 64.6 52.1 .633 .347 16.8 28.8 33.3 28.4 Non-Netallie Mineral Products 39.8 77.7 .592 .685 13.2 16.0 47.8 -9.2 Basic Netal Industries 121.2 151.8 .4"1 .223 44.2 88.1 16.6 24.4 Fabricated Netal Products 89.8 64.6 .324 .473 47.0 26 1 36.3 14.4 Other Nwuafacturing 27.5 142.0 1.066 .439 -1.4 49.1 29.0 33.5 SOURCE: Survel Industri, 1978-87 and World Bank Staff Estimates -90 - ANNEX 3 INDONESIA EMPLOYMENT AND TRAINING Manufacturing Industry Employment and Training Data l/ Table 1. A. Structure of Sample of Firms by Sector, Size and Location. B. Structure of Sample of Firms by Sector, Export-orientation, Ownership and Size. 2. Distribution of Firms by Size, Ownership, Technology and Design Capacity. 3. Employees by Skill Level, Size of Firm, Status and Gender. 4. Numbar of Skilled Workers and Supervisors by Occupation, Sex and Age Group. 5. Number of Employees in Survey by Age Group, Sex and Education. 6. Ranking of Production Problems by Type of Firm. 7. Vacancy Rates (as Z of Employees) by Occupation and Type of Firm. 8. Foreign Workers by Occupation and Type of Firm. 9. Relative Importance of Recruitment from Outside and of Promotion from Within: Skilled Workers and Supervisors/technicians. 10. Worker Turnover and Prevalence of Poaching by Type of Firm. 11. Current Occupation by Job on First Appointment to this Firm and Size of Firm. 12. Current Occupation by Immediately Previous Activity. 13. Pre-career Training Experience by Occupation. 14. Pre-Career Training by Occupational Group and Education 15. Opinions of General Education by Type of Firm. 16. Opinion of STM by Type of Firm. 17. Opinions of BLK by Type of Firm. 18. Number of Training Managers and Instructors per Firm and Percentages of Firms with Training Managers and Instructors by Type of Firm. 19. Firms with Training Facilities by Type of Firm. 20. A Methods of Training Skilled Workers by Type of Firm. B. Methods of Training Supervisors/Technicians b) Type of Firm. 21. Number of Training Programs and Number of Production Workers Trained during 1989 by Size of Firm. 22. Training Experience Since Starting Work, by Occupation. 23. Training Experience since starting work by Occupational Group and Education 24. Training Expenditure 1989 and Reasons for Not Spending More by Type of Firm. 25. Jaemployment Experience, by Age Group, Education and Gender. 26. Jnemployment Experience by Education, Gender and Pre-career Training. 27. Average Wage by Occupation, Gender and Age Group. 28. Impact of Training on Average Earnings by Gender. 1/ The data was obtained through a survey of about 142 firms in export- oriented manufacturing sectors and a sample of about 1,900 skilled and supervisory workers in those firms--see Annex 5 for more details. TABLE 3: STRUCTURE OF SAMPLE OF FIRS BY SECTOR, SIZE A1D LCATION NUMBER OF FIRMS 8ECTCR: JABOTABE BAIWG SURBAYA MEDAN TOTAL L_GM SIML* TOT LTG SMia TOT LRG S)IL TOT LRG SIL TOT Lin mm TT TEXtILES 7 5 12 1 7 a 0 0 0 0 1 1 S 13 21 GARIIS 8 6 14 3 1 4 0 1 1 0 2 2 11 10 21 FOOWEAR 5 5 10 2 0 2 3 0 3 0 0 0 10 5 15 RTTAX PRODICS 8 5 13 0 1 1 2 1 3 1 0 1 11 7 18 IOOD FURITURZ 3 6 9 0 0 0 2 1 3 0 1 1 5 8 13 PILB TCPRODUCTS 10 3 13 0 0 0 1 0 1 3 3 6 14 6 20 MON-ULCTRIC IACIINIE 4 5 9 2 2 4 0 0 0 1 4 5 7 11 18 ELECTRONICS 7 6 13 0 1 1 1 1 2 0 0 0 8 a 16 TOTAL 52 41 93 8 12 20 9 4 13 5 11 16 74 68 142 *: Large 200 mployees or more; si l betwn 20 and 200 employees. II1 TABLE 1: 8TRUCTURE OF SAMPLI OF FIRMS BY SECTOR, EXPORT-ORIENTATION, OWNERSBIP AND SIZE TEXTILES GARMENTS FOOTWEAR RATTAN WOODEN PLASTIC NONElECTRIC ELECTRONICS TOTAL PRODUCTS FURNITURE PRODUCTS MACHINERY EXPURT EXPORT EXPORT EXPORT EXPORT EXPORT EXPORT EXPORT EXPORT >50% <50% >50% <50% >50% <50% >50% <50% >50% <50% >50% <50% >50% <50% >50% <50% >50% u 10 I 0 0 11 5 I 0 0 9 is a 0 0 30 wuvnm/m2ovi "mA 08 it I 0 0 12 12 3 0 0 14 23 3 0 0 as SuuUt1/O1 rD11tiin "CAM OM22* 4 1O 0 0 L4 73 & 0 0 so 74 is 0 0 94 SLZ&CUZUOfhIW TC MACU OM5 i5 4 0 0 1t 0 0 0 0 0 1s 4 0 0 19 osuT 15x21 nOwCws NaOt OJD51OEI 33 1o 0 0 43 26 4 0 a 40 6o 14 0 0 03 MECUAVICAL mACSm,I A5535135 5 4 1 0 to 0 0 0 0 0 5 4 1 0 10 ACSt8CA MACNEWS? "4513118 2 4 0 0 a a 0 0 0 a 4 4 0 0 a WZCT50MEC MIACSlmE! *88351355 1 4 0 0 5 4 5 1 0 1o 5 9 I 0 15 ASXTIC eTC xcOn0T ASS315 4 0 a 0 4 5 1 0 0 6 9 1 0 0 10 WOOD/RATT AUAS8SA 23 a 0 0 31 14 0 0 0 14 37 8 0 0 45 OSI STATIONSTV NACS OM/ ASS210LEAS 0 1 0 0 1 0 0 0 0 0 0 1 0 0 1 IMIELS MATS-EASOLET O T33 025 14 1 0 0 15 0 0 0 0 0 14 1 0 0 is OTUS MELL5XD 0OsIOS 174 73 6 a a55 74 a 0 0 54 250 * * a 39 WUSTOTAL 279 144 12 3 541 353 33 1 0 lo6 431 1l8 13 2 827 5511tl5D TRAMPMOIs uaUz NMDJ , ,n, - :MiA 1O tfC 2L 4 I 0 17 0 2 0 0 a 2 1 6 1 0 19 SLACSM"sNITSS,!OUmZTWe 0 1 0 0 1 0 0 0 0 a 0 1 0 0 1 :-M CIcSAmEcsIvnf2 31 29 1 0 61 0 0 0 0 0 31 39 1 0 61 *CUPECRCAUX&SCTIONIC 1123151 - MM IsCSSIfTWE 23 19 3 0 43 a 0 0 0 a 31 15 3 0 52 3501510 WCSX3S in MsTm.5 0 AsI.AWMATO I 1 0 0 2 0 0 0 0 0 1 a 0 0 2 MDXCS*2T 1IJ Xi 9O0., 0 assTSSWC 4 0 0 0 a * 1 0 0 9 14 1 0 0 15 TEXT I 2CSAECUAW vow= I 0 1 0 t 2 1 0 0 0 I a e 1 0 2 :Snacua, W4 St Ma nO 22*W355 5 0 0 0 5 3 0 0 0 I a 0 0 0 a WOOD/ShW YASTIDltS 10 5 0 0 21 0 0 0 0 0 16 5 0 0 21 cut= MARSM 8 6 0 0 14 3 0 0 0 2 It 6 0 0 17 uooz10IE1 KMaC 5TM OPULTO, 11 I 0 0 12 ~ p 0 0 0 0 11 1 0 0 12 StR W sAV eST a 0 0 0 2 1 0 0 0 1 3 0 0 0 2 Wu=EDWSAA 2 1 0 0 3 3 0 0 0 3 s 1 0 0 4 WATUE .A355 & OgMS e 1 0 0 10 7 1 0 0 a 1i 2 0 0 t8 TUAZS, DeesIUm T w e 1 1 a O 41 4 0 0 45 47 5 1 0 52 uSSWo.18 2s 4 0 0 a 0 0 0 0 0 4 0 0 6 o 10uuA= wC 7 3 1 a 13 5 1 0 0 6 12 4 1 a 19 *TM WU= TRAOSIMS0 54 16 1 0 69 24 6 2 0 44 so 30 2 0 113 SUSIOTAS, 196 90 * a 257 116 is a 0 133 312 105 11 a 430 suIMEVESO/sCMexCZA18 DANOM 44 27 10 1 14 27 5 0 0 45 as 35 10 1 139 IUOCIECS4 QUVESO 124 121 14 2 264 so la 1 1 72 l5 133 17 4 336 eIUxCL WSCUmeCA 2 4 0 0 7 1 0 0 0 1 4 4 0 0 5 e oCUZCLlL 1301 IXCMCZAM 11 13 1 0 28 0 1 0 0 1 11 14 1 0 24 wae550N1CS/T,.0U e0i S a 2 0 0 9 1 0 0 0 1 S 3 0 0 10 0000 oS oCxe t i 23 3 1 SO 0 0 0 0 0 23 as 3 1 So oi sWscx 6 l 7TS . 0 0 0 1 1 0 0 0 1 a 0 0 0 2 05g,1 ASSTS/mm Oo nfs 4 4 0 0 a 0 0 0 0 0 4 4 0 0 a a12inS 36 3J 3 0 62 it 3 0 0 14 47 Zs 3 0 76 OmR igeatczw I 0 * 0 1 0 0 0 0 0 1% 0 0 0 1 susiowax 255 218 22 5 511 10t 24 1 1 135 364 242 34 6 464 lO0Al 030 454 54 9 1349 477 72 4 1 554 1207 52o 58 10 1903 - 96 - ANNEX 3 Table S TABLE S NUMBER OF EMPLOYEES IN SURVEY BY AGE GROUP, SEX AND EDUCATION Number in A3e Group Less than 30 30 to 39 40 to 49 More than 50 Total Males Primary 123 47 14 3 187 Lower Secondary 220 97 18 3 338 Upper General Secondary 219 113 8 3 343 Upper Technical Secondary 215 167 9 0 391 Upper Vocational Secondary 30 9 1 0 40 Academy/Polytechnic 13 18 2 0 33 University 10 5 2 0 17 Subtotal 830 456 54 9 1349 Females Primary 123 25 2 0 150 Lower Secondary 154 21 1 0 176 Upper General Secondary 127 12 0 1 140 Upper Technical Secondary 6 1 0 0 7 Upper Vocational Secondary 60 9 1 0 70 Academy/Polytechnic 4 1 0 0 5 University 3 3 0 0 6 Subtotal 477 72 4 1 554 Males & Female Primary 246 72 16 3 337 Lover Secondary 374 118 19 3 514 Upper General Secondary 346 125 8 4 483 Upper Technical Secondary 221 168 9 * 398 Upper Vocational Secondary 90 18 2 0 110 Academy/Polytechnic 17 19 2 0 38 University 13 8 2 0 23 Total 1307 528 58 10 1903 TABLE 6: RANK=NG OF PRODUCTION PROBLEMS BY TM OF FIRI % of Establibabents Reporting Probles LARGE SMUL EXPORT HOME OWNERSHIP 8 G 16 KNPWYIE OUTPUT AML I ORIEN- MARKET CEll- INDON FOR- TECH TECH GROWNG GRIW3 FIRtM TED ORIEN- TRAL PRI- EIGN FAST SLOW FAST SLW TED GOT VATH PR!- VATE WASTAGE OF MATERIALSt 46% 34% 51% 36% 171 40% 30% 42% 40% 36% 46% 41% 40% 40% JACX OF 811K1 OF WOEt3Ss 34% 28% 30% 31% 0% 31% 30% 29% 31% 34% 26% 25% 38% 31% LW QuaLm OF PRODUCTS: 53% 44% 54% 47% 674 46C 40% 718 44t 53t 42% 49% 48% 49% SUPERVSION: 458 41% 41% 44t 67% 41t 40% 54% 41% 51t 321 441 411 43U WORKERS mISs DEADLINS: 53% S5t ' 54% s1% 67% 50% 70% 58% 511 56% 46% 48% 57% 52% IMPROPER USE OF MACHINERY: 30% 29% 32% 29% 17% 28% 40% 42% 27t 28% 32% 29% 301 30% ABSEWNEZISM: 49% 35% 430 -429 67% 40% 60- 461 42% 42% 42% 45% 38% 421 TURNoVER: 43% 28% 51% 30% 50% 34% 40% 38% 368 40% 30% 39% 32% 36% M(INI3MU IW, REGULATION: 23% 24% 30% 21% 333 213% 20% 33% 21% 22t 25% 24% 22% 23% REGUIATIOI RE LAYOFFS: 27% 13% 24% 19% 17% 17% 10% 29% 19% 21% 19% 19% 221 20% RAN MATERIALS DIPFICULTIES: 42% 28% 43% 32% 17% 34t 50% 50% 32% 39% 30% 33t 38% 28% TECH ADVICE DIFFICULTIES: 22% 22% 19% 23% 17% 21% 0t 25t 21% 21% 23% 22% 22% 22% -98 - ANNIMX 3 TabS VA" VI VIIA RATIOA IA or*Lm i OWMf l O meAtO WM or O .~~~~~~~~~~~~~~~~~~M g m alO " su 0SYZX OADMIO em nocueswe NACM1 TOO aP " 3 0 0. 0.0 O,O 004 O O 0.0 00 *| 0. 3 U 5. e.o *0.0 3.0 NgAL psu1gm we it.& 0,0 0.0 0.0 0,0 7.5 0.0 0,0 9.0 9.9 0.0 13.1 0.0 7.4 stBWOD nOo NAC Oy O . O.O 0.a o.o 0.0 o.o o.o 0.0 1.3 o.o 0.0 o .o 0.0 . sYimm/IN/ IN macJ O" 3. 0.O 4. 7 O 13. O . O . O O O7 O. O . O . I O .4 O.O 3.6 WRAVgSMAM TTS M&(= Ov 1. 4.*4 1.7 *. 2.1 2* 0. 1. O *7 3. 2. * . 2. * a4 O. 1.i * §glllEa/lloXDmiW NtA= or" 0.0 4.7 4. | $.1 43. 6. 0. 1 OO . 60 O 1. 1.0 5. 12. O .tAa O&ACHING/bUIN MC NAM M 1 9.0 3.1 2., 0.0 3.9 o,o 1., 3, 3.1 0.0 3.2 0.0 3.3 07in1 7%XTIXU OWie Pheor OMTM *. 2. 5. 5.0iO 7. 3.a4 O. O . 0.8O 4. 6.0 4.4 12. s .0 nRCtCAL *&CUM JaSUI * a 0.0 0O 3.a7 O. O A 0 .o o.o o.2 4.a 0.3 4.7 o.o 3.x UCYVC l0CXYlRY "ammLa ""Tic rcO move" A J$soL 0.0 0.0 0.0 2.0 0.0 *.1 0.0 0.0 *.0 3.7 0.0 a.a o.o a.0 WOM/fAWAY7 A"ZNLU 10.F 5 4.* 22.4 4.2 0.0 11.3 0.0 17.0 *.7 12.8 7.1 14.2 .4 11.1 OSII fWTIXOAR MACEO 0/ ASMrU 0.4 0.0 0.0 0.4 0.0 3.0 0.0 0.0 0.4 0.4 0.0 0.0 0.4 O.4 0sSLS HAS-AMI S W OM *.8 0.0 0.0 14.§ * a.4 *.4 0.0 *2.9 3.3 11.4 0.0 0.0 20.1 0.3 07,M exntiD OpzD*ORG 0.4 0.0 1.0 0.0 0.0 l.S 0.0 0.4 0.a 0.0 0.0 0.9 0.1 e.3 sUF7s"fX 2.7 3.4 3.7 2.9 3.1 *. 0.0 3.5 *.4 3.5 O.6 3.3 3.3 *.6 S XIZ INAMCOPRSO iWA MCKOXI, ,U M MM ITAL O M 10 fC 1.7 0.0 0.0 1.0 0.0 1.2 0.0 0.0 1.2 1.6 0.0 1.4 0.0 1.0 PACsF IXOJm/rXEYm 0.4 0.0 0.0 0.0 0.4 0.4 0.0 o.a 0.2 0.3 0.0 o.a 0.0 o.a XzcRrC&L/l X˘Tm 7XWi- su agssrIxE 0.2 *4.4 o.o .s 20.4 1.a o.e o.o 14.e *.0 2.7 9.1 0.0 o.a CŁslowxm tOW KB " 6 PA7" man 26.0 0.0 0.0 *4.0 0.0 24.4 0.0 0.0 $6.3 *7.4 7.5 4.5 03.3 24.0 XWCSA Xwaio TO,D RATTA mC 13.a 10o.0 7.4 77.7 0.0 aa.9 0.0 MAl. 12.1 10.9 1000.0 44.e 0 ao.a aa. ev"8liml, W4CX 6 7nT "wax WWoD/PA 7A 7,11X 0-0 3000.0 0.0 *0.0 0.0 *z.0 0-0 1500.0 2°-l 0.° go.0 o 16 1900.0 so.° tlooDVMZW "al $armWI ommim 0.0 is. 0 1. 10. o .e 3.0 M. o.o 3.2 2.8 4.1 9.3 0.9 3. XvM, mKTn svc 1.4 * n1.4 * 0.0 214.3 o.o o.o 214.2 a1s.a o.o n.4 uJs 2u.a PATIMKA a CoMR *s.4 65.2 of.t 9 4.4 750.0 59.0 0.0 2$.& 120.0 *1.2 *.'1 St.} 323.3 S$. a TATION' VMNM S"e 31.4 .0 71.0 2.3 0.0 23.1 o.e o.s 23.9 20.4 4. 30.1 5.L 23.9 PU7OMOM, TAA_ STC 0.0 * 0.0 21.4 0.0 7.1 0.0 0.0 la. a .1 0.0 150.0 0.0 7.1 GUSAXR rs o.o 131.a o .o .4 o.o 8.9 e.o o.o e.o 9.S o.o aa7.a 0.0 0.0 ,. ero4 7AD8ESN 0.7 1.4 0.7 0.9 0.0 a.a 0.0 0.0 0.0 0.9 0.3 0.6 0.0 0.7 SUROfW *.2 15.s 5 .4 *.0 5.9 10.4 ,0.0 5.2 *.S 9.3 3.1 4.3 4.2 7.7 sumVX§OI/ M CCl 1 ~~~~~~ ~ ~~~~~~~0.0 5.4 0.0 1.0 0.0 O.9 0.0 0.0 O.9 0.9 0.0 0.0 2.1 0.4 anaoMO v xgme 19.7 40.3 It. 9 S.3 60. 1 13.2 34.0 21.4 1.9 0. I 12.1 34. 2 22.3 24. 5 Cll tCALgg rl 7Cz &.7 0.0 0.0 2.9 0.0 0.0 9.0 0.0 3.7 3.6 0.0 0.0 2.9 I.S 07TXXX 7WI"XCtn 24.3 0.o 0.0 21.@ ov 0. 0.6 0.0 30.3 0.0 25. 2 .0 24.9 0.0 29. 4U7MA 1.7 32.1 7.4 at. * 4.7 0.4 14.3 3.9 11.4 10.2 7.3 is.0 7.7 it. a 7.0L *.1 *.7 .0 *.3 *.6 *.2 0.7 .3 *.3 S.7 1.7 5.2 4.0 *.1 lats IeW SI VO3U **038A, ST OCCUPATION AND 1113 oF plus LARGE 333L& 313OT so03 OWW3sRsuZ 3s10 LOW SWILOY1333 OTIVI ALL 03233- 3s3333 C05- IDO3 tOt- ItRe 1303 GROWING GROtiWa plans t13 VS&16 VRI- 3103 WaSt $LOW 13AS SION 0oVt vWft 331- WAYSX XZULLD OSM4t0Sos POWER 03W53&12U6 V1L3n 03l&ateOS 0 t 1 0 1 0 1 0 0 1 0 1 1 3L3&CNINGJDYUSIO CSC MACU OPRS 20 0 20 0 0 20 0 0 20 20 0 20 0 20 00813 2132111 IODOCIS 3a30313 OPERATOS3 20 0 is 2 1i a 0 20 0 20 0 to a 20 NOSXLS 3318-333DL130 3011 o013 20 0 0 20 20 0 0 20 0 as 0 0 24 20 Ol333 6oS1L3D 3013ASO! s 2 0 0 3 0 a 0 0 3 3 0 3 0 3 1STO131 42 1 20 24 20 as 0 41 23 43 1 41 23 4 SKILLED W" D3o3SllOosI uUCNAUZCewiVltCW3 a 0 2 0 0 a 0 2 0 a 0 2 0 2 *aNDCAVCIa wo6033 is WOOD. 33a1s 3 1re I O a o I 00 0 1 a 0 02 1A1Yt3E3ac 30rs000113 I 0 1 0 0 1 0 0 1 1 0 I TAILORS. D3663&3S33 8YC it I 0 20 0 20 0 a 20 1 13 0 20 as 0133t 3 ILL3D t1AD30X1330E 0 2 0 2 0 2 0 0 2 a 0 2 *SOSOTAL 22 2 4 22 0 26 0 2 24 7 19 a 20 26 NAWDONS I 0 1 0 0 1 0 0 1 1 0 0 1 1 33Cm w30 I3CNMiCIaU8 20 0 20 0 0 0 20 0 20 20 0 20 0 20 COMOY3ER &Savo/Sept CONTSO&LLs3 1 I 0 2 0 2 0 0 a a 0 a 0 2 0o331 3C3sWZScZAs 10 0 Is o 0 0 le 0 1s 1i 0 a1 0 1s B60301L 40 1 29 a 0 2 36 0 41 41 0 40 1 e1 0O1?L 16 31 s0 3 55 i0 42 as 11t 20 51 44 131 IN - 100 - ANNEX 3 X*19e 9 TABLE 98 RZLATV Z3aORTA1Z 0 PZPITlT JR1 OUTXSIDE AD A0 ROIMION FRM WrTHN SXSLL WOKERS AND SURVSORS/TECUHICIIANS, BY Tm OF FIRM RECtUnTuw nox OUTSIDE M O1S ON DR1 Wn'm SINCE JAN 1989 AS 9 OF STOCK SSncE m 1989 AS a OF STOCK OF EMPLOYES MD-1990 OF zOYS MI-1990 SKILLED sUPMVXOR/ SKXLD SUPEVSORS/ WORKERS TECNICIANS WS ECNC LARME 11 14 2 14 SMAL 11 8 3 20 EXPORT ORIENTED 10 15 2 14 HOME NAR1T 10 12 3 15 OWNERSSIPt CENRAL GOVT 5 31 2 29 INDON PRIYM! 12 11 2 12 FOREIGN PIU a 13 2 17 HIGH TECH 9 16 2 19 UN TECH 11 11 2 13 EPoYma: GR*WIm FAST 11 1S 2 15 GROW1ZSL1W 6 8 2 14 OUTPU GR0wna wiAST 10 13 2 14 GRUwnr suw 9 14 3 16 AL FRm 10 13 2 15 - 101 - ANNEX 3 Table 10 TABLE 10t WORKER TURNOVER AND PREVALENCE OF POACHING BY TYPE OF FIRM* NUMBER WHO LEFT Z OF LEAVERS SINCE JAN 1989 POACHED BY AS X OF MID-1990 OTHER FIRMS STOCK OF EMPLOYEES SKILLED SUP/TECH SKILLED SUP/TECH LARGE 9 16 64 96 SMALL 8 13 57 83 EXPORT ORIENTED 13 8 57 100 HOME MARRET 6 20 63 88 OWNERSHIP: CENTRAL GOVT 3 28 65 - INDON PRIVATE 11 16 64 100 FOREIGN PTE 10 6 34 1 HIGH TECH 7 11 63 75 LOW TECH 10 18 61 95 EMPLOYMENT: GROWING FAST 8 8 53 72 GROWING SLOW 13 36 70 100 OUTPUT GROWING FAST 10 6 61 90 GROWING SLOW 8 29 62 91 ALL FIRMS 9 16 61 91 * 57 firms replied about poaching skilled workers. 10 firms replied about poaching supervisors/technicians. - 102 - AMNEK 3 Table 11 TABLE Ill CURRENT OCCUPATION BY JOB ON FIRST APPOIND(ENT TO THIS FMRM AND SXZE OF FIRM NUMBER IN CATEGORY Of OCCUPATION ON FIRST APPOINTMENT UN- SKILLED FOREMAN/ OTHER TOTAL SiaLLED WORXER SUPER- WORKER VXSOR/ TECHNI- PRESENT OCCUPATION CXAN LAP.GE FIRMS SKRLLED OPERATOR 261 210 4 52 527 SKILLED TRADESPERSONS 102 108 8 24 242 MANDOR/SUPERVXSOR/ TECHNICITA 46 60 137 56 299 TOTAL 409 378 149 132 1068 SMALL FIRMS SKILLED OPERATOR 136 144 8 41 329 SKILLED TRADESPERSONS 59 87 4 22 172 MANDOR/SUPERVISOR/ TECHNICIAN 99 46 143 46 334 TOTAL 294 277 155 109 835 ALLs FIRS SKILLED OPERATOR 397 354 12 93 856 SKILLED TRADESPERSONS 161 195 12 46 414 MANDOR/SUPERVISOR/ TECHNICIAN 145 106 280 102 633 TOTAL 703 655 304 241 1903 TABLE 12: CURRENT OCCUPATION BY IMMEDIATELY PREVIOUS ACTIVITY NUMBER IN EACH CATEGORY OF PREVIOUS ACTIVITY AT UNEM- EMPLOYED ELSENHERE EMPLOYED HERE OTHER TOTAL SCHOOL PLOYED UN- SKILLED SUPER- UN- SKILLED SUPER- SKILLED VISOR/ SKILLED VISOR/ TECH- TECH- PRESENT OCCUPATION NICIAN NICIAN LARE FRMS SKILLED OPERMVR 63 48 99 151 3 77 47 3 36 527 SKILED TRADESFE}ON 14 19 64 62 2 37 22 1 21 242 MANDWRSUPERVISOR/ TECHNICIAN 25 19 19 64 68 8 39 28 29 299 TOTAL 102 86 182 277 73 122 108 32 86 1068 SMALL FIRS SKIZD OPERATOR ;8 55 47 100 3 19 32 3 32 329 w SKIILTD TRADESRON 11 30 20 48 3 19 21 0 20 172 NX)/~SUPRVSR/ TECHNICIN 35 31 51 43 42 18 30 48 36 334 TOTAL 84 116 118 191 48 56 83 51 88 e35 ALL FIRMS SKIlLED OPERATOR 101 103 146 251 6 96 79 6 68 8S6 SKILlBD TRADESPERSON 25 49 84 110 5 56 43 1 41 414 MANDOR/SUPERVISOR/ TECHNICIAN 60 50 70 107 110 26 69 76 65 633 TOTAL 186 202 300 468 121 178 191 83 174 1903 FE1 - 104 - ANNEX 3 Table 13 m ma- wz.cam mm m W Wmm "a -um sto cma - -u swr m no M pa- M 0a "ma/m Om - 0sarn smua WU= OPUMTM ca ncnu r0 o nt OVRM so o a o o o o e a o 0 nu c mmm*a 49 o o o 2 3 5 o o o o 1 1 wutFV/mnX IW:II MA is O 0 a 0 a a O O ttIDW /X_OlDER "AM am 76 1 s 0 O I * - I 0 2 2 7 P MI O WC 4 0 0 0 0 3 0 a 0 0 0 a onM sunz lace 0ogum apomLic" 3 0 a 4 0 10 0 0 0 0 t0 IILVWAMS2 4 0 0 4 a 9 0 0 0 0 0 ASSINKUM 8~~~4 0 0 0 1 0 0 0 0 0 a 0 UIAzin/VIiIu0 is 0 0 0 2 0 2 0 0 0 0 0 0 AWW/aw1VL 06At1 0 0 0 2 3 S 0 0 0 0 0 0 BOOD/fAX mZ.AzS Qgps 76 1 0 0 7 1 0 2 1 0 2 2 7 Om=~ ~ ~ ~ OTT=w OGV O OO OO/ DSSEN1 2 0 0 0 1 0 0 0 0 0 0 0 0 "_A_uoN&ZMu G as o 0 o 4 1 4 0 0 1 a 0 1 aon o.1* 77 1 1 1 t 2 * 2 0 0 0 2 0 7 wffi__L ns2 6 4 <4 17 71 3 I a 19 * as AL LU, u X SOm" 1 SW S7 0 0 0 0 0 a 0 0 0 0 0 0 . Imuc u ooooo WACMDTM, UON WW 0 0 0 0 0 0 0 0 0 0 0 0 Run SUUWMS 10vm I 0 0 0 0 0 0 0 0 0 0 0 mm p& m*sar 44 I 0 0 0 0 04 0 1 a I 0 0 GPMU S nu0 0 0 0 1 0 1 0 0 0 0 0 0 C 9LBM We 11 0 0 1 3 2 0 0 0 0 0 0 os wSTIu aorA2m m 222 1 1 0 a 1 1 a 2 0 o 0 0 7 8In?0CRM. K116 C4 4 177TEX1T115 2 2 cAgnm NAMIRS we ~17 0 a 1 0 2 0 0 0 0 0 0 55M51A1005 m010 0 0 0 0 0 0 0 0 0 0 0 .ASaM WC sICI 55 1 0 0 2 O 0 0 0 0 0 0 sAT0viu a cus/2ms U4 1 1 0 31 1 24 a 0 1 a I TAM", MXBOMMS WC 41 0 0 0 4 0 1 0 0 0 a 0 0 342Ta0OU 10 0 0 0 1 1 2 0 0 0 a 1 2 Is,zTinmmcm nxhM9 0 0 0 0 a 0 0 0 0 0 0 0 *nmi. KCa 4 I~U arm sstuxpTRADEOM 2 0 0 0 1 0 1 0 0 0 a 0 0 JIIMAL 320 0 0 0 0 i 1 0 0 0 0 0 0s 0PASR S 101 0 0 0 1 0 17 2 0 0 0 0 0t sasaW arO SPRnVinc IS 0 0 0 0 0 04 0 0 0 02 0a 0 CUMCAL gm 19=CIAN 4 0 0 0 0 0 0 0 a 0 0 0 0 ZLNCIMCAL MD 29cmel14 a 0 0 3 0 2 0 a a I I yuzD s,ANInaaain 45 =11 2 0 04 0 6 0 la 0 2 0 2 so= ZMaTxcmCV M 60 0 0 0 0 0 0 0 0 0 0 0 .-t4AOmse a 0 0 0 0 0 0 0 0 0 0 0 0 WOUVVI AfTS/MW MMCZ79 1 0 0 12 4 U 0 0 0 0 1 9 plAins 03 1 2 0 p 5 O 7s 2 0 0 O 2 O inuarm uw,uCAzca 0 0 0 a 9 a 0 0 0 0 0 7.3 sn i I CUI 21 0 0 0 4 0 s O a 0 1 41 0 1 0 0s o o 0 2 0o 0 2oo mpu.a in SE 1U 0 0 0 1i 0X 0 0 O 0 0 0E m m zi 303 2 0 0 9 2 P7 * 0 0 0 0 01 I:SUY SE* 531 7. Z o o3 23 12 3 0 o 2o 1o 2o soIx. SU 16 13 10 °164 31 ° 7 ° 6 °9 2 10 - 105 - ANNEX 8 Tabl. 14: PRE-CAREER TRAINING BY OCCUPATIONAL GROUP AND EDUCATION Occupation/ No Other Total wlth Educational Attain_ment Training BLK/KUL INDR. Government Private Other Tralning Total Skilled Operators: Primary Education 184 1 1 0 8 5 15 (8) Lower Secondary 247 2 1 B 19 4 29 (11) Upper General Secondary 164 8 1 1 20 7 82 (17) Upper Vocational Secondary 168 5 0 2 18 5 8o (15) Poet Secondery 2 0 0 0 a 1 4 Subtotal 766 11 8 6 68 22 110 Skilled Trades Persons Primary Education 76 1 0 0 8 2 11 (18) Lower Secondary 101 1 1 0 26 4 82 (24) Upper General Secondary 58 2 1 0 29 4 86 (88) Upper Vocational Secondary 87 1 4 0 6 4 15 (16) Post Secondary 8 0 0 0 8 0 8 (60) Subtotal 825 5 6 0 72 14 97 Supervisor/Technicians Primary Education 44 0 1 0 6 1 8 (15) Lower Secondary 87 0 1 0 15 6 21 (20) Upper Genoral Secondary 155 8 0 2 47 14 66 (80) Upper Vocational Secondary 188 4 2 7 82 12 67 (26) Post Secondary 85 1 1 1 18 4 20 (88) Subtotal 489 8 5 10 118 a8 172 All Primary Education 804 2 2 0 22 8 84 Lower Secondary 456 8 8 8 so 18 82 Upper General Secondary a87 8 2 a 96 26 184 Upper Vocational Secondary 423 10 6 9 S8 21 102 Poet Secondary 40 1 1 1 19 6 27 Total 1,569 24 14 16 258 72 879 - 106 - ANNEX 3 Table 15 TABLE 15 OPINIONS OF GENERAL EDUCATXON BY TYPE OF FM NUMBER RATING GENERAL EDUCATXON IDElNIFIED NISA8SES FOR VERY QUTE NMT UNSAS UNSATISFACTORY CATEORY SATXS- SATXS- VERY FACTORY MAS SCIEC WOR PRACTI- TECH- FACTORY FACTORY SATXS- DXSCX- CAL NICAL FACTORY PLxNz sxxLLs sKiLLs LARGE 5 39 20 10 1 2 4 1 2 SHAL 2 43 19 6 0 3 1 1 1 EXIORT ORIENED 0 22 10 2 0 0 1 0 1 UOKEMARKT 7 60 28 14 1 5 4 2 2 ORNEHIP: CENTRAL GM 0 3 3 0 0 0 0 0 0 XNDON PRXVATE 5 74 33 16 1 5 5 2 3 FRSIGN PTE 2 5 2 0 0 0 0 0 0 HIGH TECH 1 12 7 3 1 1 1 0 0 AX TECH 6 70 31 13 0 4 4 2 3 M1WAMMls GROUNG FAST 3 47 26 8 0 1 4 1 2 GRWNG SLWw 4 35 12 8 1 4 1 1 1 ouTPUr GRGUNF PAST 2 43 25 9 1 3 4 0 1 *RING SLOW 5 39 13 7 0 2 1 2 2 AL FXRMS 7 82 38 16 1 5 5 2 3 - 107 - ANNEX 3 Table 16 TABIE 162 OPINIONS OF STHi BY TYPE OF FIRM NUMBER OF FIRMS BXPRESSING OPINION BETTER AS GOOD NOT AS SA8E AS TOTAL THAN AS EXPD GOOD AS SM MOST SRILLD EPD GRADS SKILLED WORER SKILLD WORKERS WORKER LARGE 9 5 15 18 47 SMALL 6 7 4 5 22 EXPORT ORIENTED 8 4 8 7 27 HOME IM T 7 8 11 16 42 OWNRSHIP: CENTRAL GOVT 3 1 1 0 5 INDON PRIVATE 12 10 17 21 60 FOREIGN PTE 0 1 1 2 4 HIGH TECH 3 4 8 3 18 LOW TECH 12 8 11 20 51 EMPLOYMENT: GROWING FAST 10 8 11 16 45 GROWING SLOW 5 4 8 7 24 OUTPUT GROWING PAST 13 4 13 8 38 GROWING SLOW 2 8 6 15 31 ALL FIRMS 15 12 19 23 69 - 108 - ANNEX 3 Table 17 TAMA 17o OPINIONS OF KZ BY TMlB OF F NUMER OF 11M3I XRMESsnI OPINION Tll WV AS 8anW AS TAN GOOD AS A GRsm GRAD LARDE 18 0 9 27 SULL 5 0 2 7 EP ORENTED 8 0 5 13 RHOE MAiT 15 0 6 21 CENTRL GOYT 0 0 0 0 INDOl PRIVATE 19 0 11 30 FOIGN PIT 4 0 0 4 KM GTgS 6 0 4 10 LW TMc 17 0 7 24 GROwnIS PFST 15 0 7 22 GOWIM8SLW 8 0 4 12 G M PAST 10 0 8 18 GR*WIM SW 13 0 3 16 AML FIRES 23 0 11 34 - 109- ANNEX 3 Table 18 TWA 18 -NwUR OF or IInm 9WUGE AM IIW5W* MI FM AND PERCENUMor rnF FIW=8hM M MWI IW AMI ZImIS c'svm, IBY Tu or VIm NUIIER PM Fim rM % q^; $RS; 51IS IW BN INSB9 MN= ,CSM LaME 0.3 4.4 16% 31% SHAL 0.1 0.6 9% 21% EXPORT CRIENTED 0.2 5.6 16% 46% OIE HAJUT 0.2 1.6 11% 19% OWNlRSHIP: CENTRAL GOv 0.2 11.3 17% 50% INDON PRIVATE 0.2 2.0 11% 25% POREIGN PTE 0.4 5.2 30% 208 HIGH TECH 0.2 7.6 21% 54% IW TECH 0.2 1.6 11% 20% EXPIDWS: GRNG; FAST 0.1 3.5 12% 32% GRGNnG SLw 0.3 1.3 14% 18% GIROW FAST 0.2 3.4 14% 28t GIon swI 0.3 1.6 11 24% AILL IMS 0.2 2.6 13% 26% * Instructoro include supervisor with sam training responsibilities. - 110 ° ANNEX 3 Table 19 A4LE 19i FIRMS WITH TRAINING FACILITIES BY TYPE OF FIRM (2; PERCENTAGE OF FIRMS WITH FACILITIES CLASS TRAINING ROOMS WKSPS LARGE 16 14 SMALL 12 7 EXPORT ORIENTED 22 14 ROME MARKET 11 10 OWNERSHIP: CENTRAL GOVT 0 0 INDON PRIVATE 13 10 FOREIGN PTE 30 20 HIGH TECH 21 25 LOW TECH 13 8 EMPLOYMENTt GROWING PAST 18 15 GROWING SLOW 9 4 OUTPUT GROWING FAST 11 11 GROWING SLOW 17 10 ALL FIRMS 14 11 - 111 - ANNEX 3 TABLE 2OA: METHOOSOF TRAININGSKILLED WORKERS, BY TYPE OF FIR Table 20A + B NUW4BER OF FIPRMS EMPLOYING EACH TRAINING METHOD IN-PLANT ONLY OFF-PLANT ONLY IN-PLANT+ OFF-PLANT TOTAL ON-JOB ON-JOB INCL. GOVT PRIVATE BOTH GOVT PRIVATE BOTH WATCHING ONLY: OFF-JOB TRG TRG GOVT & TRG TRG GOVT & ONLY INCL. TRAINING CENTRE CENTRE PRIVATE CENTRE CENTRE PRIVATE INSTRUC- ONLY ONLY TRG ONLY ONLY TRG TION CENTRES CENTRES LARGE 8 48 8 1 1 1 4 1 2 74 SMALL 10 42 3 1 2 3 4 1 2 68 EXPORT ORIENTED 4 22 4 1 0 2 3 0 1 37 HONE KARKET 14 68 7 1 3 2 5 2 3 ¶05 OWNERSHIP: 0 CENTRALGOVT 1 4 1 0 0 0 0 0 0 6 INOO PRIVATE 17 80 8 1 2 4 8 2 4 126 FOREICN PTE 0 6 2 1 1 0 0 0 0 10 HIGH TECH 1 14 3 2 0 0 3 0 1 24 LOW tECH 17 76 8 0 3 4 5 2 3 118 EMPLOYMENT: 0 GRtWING FAST 9 54 7 2 2 3 4 0 4 85 GROWING SLOW 9 36 4 0 1 1 4 2 0 57 OUTPUT 0 GROWING FAST 13 45 6 2 2 2 5 1 3 79 GROWING SLOW S 45 5 0 1 2 3 1 1 63 ALL FIRMS 18 90 11 2 3 4 8 2 4 142 TABLE 20B: METHODS OF TRAINING SUPERVISORSAND TECHNICIANS, BY TYPE OF FIRM NIMBER OF FIRMS EMPLOYING EACH TRAINING METHOD IN-PLANT ONLY OFF-PLANT ONLY IN-PLANT. OFF-PLANT TOTAL ON-JOB EX- INCL. INCL. INSIDE OVER- BOTH INSIDE OVER- BOTH PERIENCE TRG BY TRG BY INDON- SEAS INSIDE INDON- SEAS INSIDE WITHOUT STAFF VISIT- ESIA ONLY INCOM- ESIA ONLY INDON- INSTRUC- ING ONLY ESIA & ONLY ESIA & TION TRAIN- OVER- OVER- ERS SEAS SEAS LARGE 21 33 4 0 3 0 6 3 4 74 SMALL 30 26 1 1 2 0 2 2 4 68 EXPORT ORIENTED 13 15 3 0 0 0 2 2 2 37 KHE NARKET 38 44 2 1 5 0 6 3 6 105 OWNERSHIP: CENTRAL GOVT 3 2 0 0 0 0 0 1 0 6 INDON PRIVATE 46 52 5 1 S 0 8 3 6 126 FOREIGN PTE 2 5 0 0 0 0 0 1 2 10 HIGH TECH 6 10 1 0 0 0 2 3 2 24 LOW TECH 45 49 4 1 5 0 6 2 6 118 EMPLOYNENT: GROWING FAST 27 36 4 0 4 0 5 4 5 85 OROINa SLOW 24 23 1 1 1 0 3 1 3 57 OUTPUT GR0WING FAST 30 29 3 0 3 0 4 4 6 79 GROWING SLOW 21 30 2 1 2 0 4 1 2 63 ALL FIRMS 51 59 5 1 S 0 8 5 8 142 - 112 - ANNEX 3 Tablo 21 TABLE 21t NUMBER OF TRAINING PROGRAMMES AND NUMBER OF PRODUCTION WORKERS TRAINED DURING 1989, BY SIZE OF FIR) APPRENTICESHIP S9KILL UPGRADIG NUMBER NUMBER NUMBER NUMBER OF FIRM TRAINED OF FnRM TRAINED WITH PER WITH PER TRG FIRM TRO FIRM PROGS PROGS LARGE ON-THE-JOB TRAINING SKILLED OPERATORS 19 97 7 64 SKILLED TRADES 6 38 3 107 FOREMEN/SUPERVISORS 7 21 2 3 TECHNICIANS 5 24 1 8 LARGE OFF-THE-JOB TRAINING SKILLED OPERATORS 3 45 3 63 SKILLED TRADES 2 72 2 9 FOREMEN/SUPERVISORS 4 36 2 1 TECHNICIANS 5 28 0 0 SNALL ON-TEE-JOB TRAINING SKILLED OPERATORS 11 17 5 19 SKILLED TRADES 4 6 3 5 FOREMEN/SUPERVISORS 5 7 0 0 TECHNICIANS 2 2 1 2 SMALL OFF-THE-JOB TRAINING SKILLED OPERATORS 2 4 0 0 SKILLED TRADES 0 0 0 0 FOREMEW/SUPERVISORS 0 0 0 0 TECHNICIANS 0 0 0 0 ALL FIRMS ON-THE-JOB TRAINING SKILLED OPERATORS 30 67 12 45 SKILLED TRADES 10 25 6 56 FOREMEN/SUPERVISORS 12 15 2 3 TECHNICIANS 7 18 2 5 ALL FIRMS OFF-THE-JOB TRAINING sKILLED OPERATORS S 28 3 63 SKILLED TRADES 2 72 2 9 FOREMEN/SUPERVISORS 4 36 2 1 TECHNICIANS 5 28 0 0 - 113 - TANIN2 3 SX Ja aa *s1 sim uuzn. au ewatw woesasw IRIIIIII wits m Wim US nWMLIMs zU-w au rr-M a".- OsIA L i-w en-sms rn4lhM @w- r05 5 I 0p-J 1SD-0011O- SMLA O11501 11-U OW-am NMh aIum IAwCu11 moim nami mu mYlgsim ein Ism om Wm SKILLD 01Z3108 5LA 0 on i0m 4 0 0 a 0 e 0 1om 4swi9lva PnAM OPoTM 3 0 1 0 0 1 0 e 0 0 o K= !oo; OIUAOSS to a I a 0 5 0 0 0 1 a UsIAL ruha asuC I 0 a o a o e0 o 0 PLAZC noAS OACO OM as a as 0 0 26 1 0 a * Ł WO0D/ASTAI IACU OP, iS a 30 a 1 34 0 0 0 0 6 sPIpuU ZtoXIwI maCU 03 B 3 13 I 0 it 0 4 0 0 0 eIM/rMii!im NAc oa a . i a a aa 0 1 1 *a 6sm.ru/0a0a1 uNSM PA= oUs 3* a m $ 6s s I 6 6 1 sWAACuzm/ovum re NcE oCaU 14 * I 0 6 6 0 S 0 6 OMM umna CaDVc,S HacNZinOsMtM 46 6 31 1 1 35 0 0 0 0 6 KZCXUICAL HACUIW A"NmnsAm 4? 3 30 S a 40 0 0 0 0 0 rCUCMRCL ACMIWN SSmaIa 0 o * 0 7 a 0 Q 6 NiCSMR IC MACNiml A nS at0 a xa 0 o 3 0 0 e 0 0 1L8 sIC Ere5OVUCY 0 0o 0 0 0 0 a 0 6 AS S 2 a 3 0 e * o I 0 * a VQOD/RATTAI ASMIRLS 34 10 5 I 1 at 0 0 0 e 6 O2U suT&TOUAAWIACS OS3B 0 0 0 0 0 0 0 0 e 0 ABSZNSUL 0 0 1 0 0 1 0 0 0 4 MOBILE NATS-BamLi.o 39s am S 1 4 0 I 6 I . 0 a 0 1 O? *r D on aPnaoa 114 31 %la 6 2 154 0 a 0 0 a SUBITOL 376 60 3I4 o 11 463 * 4 1 1 6 "KILLID I5160t USAL ulmintsl , WUDS. 505 :zs aSRMIS sic if 0 3 a 0 3 0 0 0 0 e xACumN s, zUs.aouo sx w 0 0 0 0 0 0 0 0 6 0 ACH XaCRAKICSV 47 2 10 0 A 13 I 0 0 a WCMTIC1L/U.ECYOXC IwYn- NM3 3 1 14 0 0 is 0 0 0 * 3331C5sOW WOPZU ZY 8553 a r LA! MASS 1 1 0 0 1 0 0 0 0 e auDXCRA WOER n WM.D UAssaAV wc *e o1 KU UOCD. 5331M SvC 0 7 0 0 7 0 0 0 0 O Taft= Mm CUAUICR&MWS12JCIS 3 0 0 0 a 0 a 0 sX2UCRl, micc & ysnsa pazwxm I 0 1 0 0 1 0 0 0 0 o IlOOIAD/PASUM ISIJs 0 3 0 0 3 a 0 0 0 0 CAUZUTE?AKC3S 15s a 0 0 0 a a 0 0 0 0 IfODIUOSKZW MAC Ł11 O OPMTM U~~~1 0 I 0 0 1 0 0 0 0 0 am srr v nsc a m 0 0 0 1 s 0 0 o 0 FISSM 3DAI.MS I 0 a a 0 0 0 0 0 SMWO11310132G UYWM 6 0 5 0 1 10 0 0 0 0 0 !AZLo s, DSESSNE !C 44 4 3 a 0 6 0 1 0 0 1 U5U0L6Y33 *3C 4 0 0 0 0 0 0 0 0 0 6 UowAWISvc I 1 is 0 0 o o 0 0 0 0 0 OSIm slzLEDYAOUIUU so 4 33 s 4 44 0 0 1 6 a suWYoSL 30? 34 so 6 a 135 0 3 SUNVIMSORS/YTeICZAMSS wSAaD 35 is 4? 5 4 is 0 1 0 13 PODU0CTIONS0AV30S 163 46 146 14 a 3ls 0 1 0 0 a caUscAL IMI n sf aW S 1 0 1 3 0 0 a o o at,ZC=AZug fumoh 30 1 0 0 0 6 0 0 0 a O inC130KI/3 5aue 1S We 4 I * 0 4 0 0 S 0 0 CUW AMI VIS3COMCA U S 1? 4 4 30 3 e 0 0 a O mot nu"IS a c * 6 6 1 0 * * 0 0 =On.= u10_sss/uQIsO 4 0 3 2 3 0 6 0 0 oMIO 6? 0 14 a 0 a3 0 0 0 o 6 0TM wa AC AM I 0 0 0 0 a 0 0 0 0 5935055. s 7am 336 as aI s 42 3 * o 1 OyaL tole 1s6 6t1 73 36 550 4 I a a 1_ - 114 - ANNEX 3 Table 23 Table 7B: TRAININO EXPERIENCE SINCE STARTING t'iRK BY OCCUPATIONAL GROUP AND EDUCATION Training In-Plant In-Plant On-Job On-Job In-Plant Occupation/ No Watching Being Ott- Off- Educational Attainment Training Only Taug,4t Plant Plnnt Total Skilled ODerators: Primary Education 93 20 8S B 0 207 Lowor Secondary 187 16 112 10 4 278 Upper Goneral Sepondary 80 18 77 8 6 189 Upper Vocational Secondary 64 9 98 12 8 201 Post Secondary 4 0 0 1 0 5 Subtotal 896 62 888 89 12 879 Skilled Tradesmen: Primary Education 60 5 22 1 0 68 Lower Secondary 104 6 20 1 1 182 Upper General Secondary 60 4 28 1 8 91 Uppor Vocational Secondary 68 9 20 4 2 108 Poet Socondary 2 1 2 0 0 S Subtotal 294 26 87 7 6 419 Supervisor/Technical: Primary Education 84 4 12 0 1 51 Lower Secondary s8 7 84 7 2 108 Upper Gonoral Secondary 97 45 99 6 2 249 Upper Vocational Secondary 108 16 76 11 12 222 Post Socondary 29 9 11 6 8 67 Subtotal 826 61 281 29 20 687 All Primary Education 187 29 120 9 1 848 Lower Secondary 299 28 166 16 7 518 Upper Genoral Secondary 287 67 199 15 10 628 Upper Vocational Secondary 260 84 18 27 17 526 Poet Secondary 85 10 18 8 8 67 Total 1,018 1SE e86 76 a8 1,985 - 115 - ANNEX 3 Table 24 las*, 240 YsIRAZIe 3333M110E1 23 16 AMP SEAOMS lea UG *pawo:e KORB, eV 1t1s or Flux MNbEUR AV 130 REASOM roF g0t 1 PEDsIo KORS GM IRAZUZUG WOTAL or 331 IM *opnsE rIRus ton36 so USD,t nO $T1rr 10 fSAIMUD or VIRUS asPoauT:O tiaRs OXZLL6 UEMUVSt tDaEM1rZ PROVIDB tZxDEtU v UOREERI laG ESP ltOt Ł1,351' La3o5 s IRAIMMO 1R&ZMIMG MEDf G WMOUL.D (Rp an) ATYS- 11AM "tube PROVID4 as rVAcIoM CO01 g13&ZSMe IOACUUD LARGE is 104 ts a s a t0 * 14 SMALL, 0 4 is s a a S so 311OT ORIgMIM1 to .43 12 0 s 1 3 4 $3 SONS MAR3T? is 65 21 7 10 4 t0 5 se0 OWasRSU s> CRbMRAL GGV 3 242 0 0 0 0 o INDON PRItVAS 10 17 as 7 12 4 1O 1O 126 tORSION 113 4 144 a O 1 1 2 0 t0 SIGN 1S30 t 1al 4 1 4 0 2 0 24 L.OW 3acs is 30 a? 11 S Li 10 1I$ SXPLOTMEMIt GROW3IN lAS! 1t 6o t1 4 10 2 6 6 as GROWING SLOW a 12 14 3 5 4 57 OUTPUT 05O0t13 trAl 17 36 20 5 6 S * *6 ROWIN0 SLOW 5 121 13 a 7 0 S 5 3 ALL FIRMS 25 66 as 7 is 3 13 10 142 - 116 - ANNEX 3 Table 25 TABLE 25: UNEMPLOYMENT EXPERIENCE, BY AGE GROU, DUTION & aeNDER KALE FIUALE .......... ....AGE GROUPW............... . ..............AN ORUP--.--. . LESS 30-39 40-49 50+ TOTAL LES 30-39 40-49 50 TOTAL THAN THAN 30 30 PRIMARY EDUCATION NEVER UNEMPLOYED - NUMBER: 65 30 6 3 104 ST 9 0 0 66 - X: 53K 64X 43X 10K 56X 46X 368 OX 44K AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 16 11 (24) 0 16 15 (19) 6 0 16 AFTER STARTING WORK 0 0 (3) 0 0 1 0 6 0 1 JUNIOR SECONDARY NEVER UNEMPLOYED - NUMBER: 84 49 13 2 148 67 14 1 0 82 -x: 38K 51K rrx 67K 44X 44K 67K 100X 47X AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 9 12 (31) (12) 11 10 (14) 0 0 10 AFTER STARTING WORK 3 4 (1) 0 3 3 '(4) 0 0 3 UPPER GENERAL SECONDARY NEVER UNEMPLOVED -NUBER: 97 40 4 1 142 49 2 0 I 52 - K: 44K 35K SO5 33K 41K 39X 17K 100 37K AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WRK 9 10 (12) (18) 9 10 10 0 0 10 AFTER STARTING WORK 4 4 (2) (4) 4 2 1 0 0 2 UPPER VOCATIONAL/TECHNICAL SECONDARY NEVER UNEMPLOYED - NUER: 120 73 7 0 200 36 6 0 0 42 - !: 49X 41K 7K 46X 55X 60K OK S5S AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 9 10 (5) 0 9 7 (18) (12) 0 9 AFTER STARTING WORK 1 2 (2) 0 2 2 (16) 0 0 3 POST-SECONDARY NEVER UNEMPLOYED - NUMBER: 9 5 2 0 16 2 2 0 0 4 - X: 39K 22 50K 32! 29X 50X 36X AVERAGE LENGTH OF UlNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK (13) (12) 0 0 (13) (24) 0 0 0 (12) AFTER STARTING WORK (6) 0 0 0 (4) 0 (4) 0 0 (2) TOTAL NEVER UNEMPLOYED - N UMER: 375 197 32 6 610 211 33 1 1 246 - %: 45X 43K 59X 67K 45K 44X 46X 25 lOOX 44K AV`RAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 10 10 20 (16) 10 11 15 (8) 0 12 AFTER STARTING WORK 2 3 2 (3) 3 2 3 (4) 0 2 - 117 - ANME 3 Table 26 TABLE 26: UNEMPLOYM4ENT EXPERIENCE, BY EDUCATION, GENDER AND PRE-CAREER TRAINING MALE FEMALE ................................................. ................................................................................... ....................... BLK/ DEPT OTNER PTE OTHER NO TOTAL BLK/ DEPT OTHER PTE OTHER N TOTAL KLK IND GT TRG KLK IND GOVT TRC PRINARY EDUCATION NEVER UNEMPLOYED - NUER: 0 1 0 4 1 98104 0 0 0 5 0 61 66 - : OX 50 OX 50X 33X S7X6 K 0X 0 0X 38K 0X 47K 4X AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 3 2 0 6 13 16 16 24 0 0 8 14 16 16 AFTER STARTING WORK 0 0 0 2 0 0 0 0 0 0 2 0 1 1 LOWER SECONDARY NEVER UNEMPLOYED -NM ER: 0 1 0 6 4 137 148 1 0 0 6 0 75 82 - 0 OX 33% 0 18 44X 47X 44 50X OX 0X 23X 0X 52X 47X AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 3 7 11 11 11 11 11 6 0 15 10 24 10 10 AFTER STARTING WORK 0 0 9 3 2 3 3 0 0 9 5 0 2 3 UPPER GENERAL SECONDARY NEVER UNEMPLOYED - NUMBER: 4 0 1 11 3 123 142 0 1 0 15 0 36 52 - X: 100X OX3O S 20X 38X 45X 41X 0 100X OX 42X OX 302 37S AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 0 0 12 10 13 9 9 17 0 0 8 6 11 10 AFTER STARTING WORK 0 0 0 3 1 4 4 1 0 0 2 1 2 2 UPPER VOCATIONAL/TECHNICAL SECONDARY NEVER UNEMPLOYED - NUBER: 4 0 5 14 7 170 200 0 0 2 7 1 32 42 - : 4X OX 71X 41X 78 46 46X X 0X 100 44X 33 5OX 552 AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (NONTHS): 8EFORE STARTING WORK 7 5 8 13 6 9 9 0 12 0 5 5 10 9 AFTER STARTING ORK 3 0 1 1 2 2 2 0 0 0 0 2 5 3 POST-SECODMARY NEVER tUNEXPLOYED - NIBER: 0 1 0 3 0 12 16 0 0 1 2 I 0 4 - X: . ...32X 36 AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 13 12 AFTER STARTING WORK 4 2 TOTAL NEVER UNEMPLOYED - NIBER: 8 3 6 38 15 540 610 1 1 3 35 2 204 246 - X: . .. .45X .. .. 44X AVERAGE LENGTH OF UNEMPLOYMENT PER EVER-UNEMPLOYED (MONTHS): BEFORE STARTING WORK 10 12 AFTER STARTING WORK 3 2 - 118 - AJNCE 3 Table 27 TABLE 27t AVERAGE WAGE BY OCCUPATION, OGNDER AND AGE GROUP L m-uu AaG GaROUP- - -- aGE GROUP- P- LESS 30-39 40-49 TOTAL LESS 30-39 40-49 TOMA THN TaN. 30 30 SKILLED OPERATORS: MACH TOOL OPERATORS 98 126 PLASTIC PRODS MACH OPRS 114 128 li8 39 40 WOOD/RATTAN MACH OPRS 63 66 SPINNING/WINDING MACH OPRS 62 61 WEAVING/XNITTING MACH OPRS 53 54 65 69 SEWTNG/EMBROIDERING MACH OPR8 137 119 51 52 BLEACHING/DYEING ETC MACH OPRS 84 77 OTHER TEXTILE PRODUCTS MACHINE OPERATORS 60 80 64 68 67 MECHANICAL MACHINERY ASSEMBLERS 151 ELECTRONIC MACHINERY ASSEMBLERS 128 WOOD/RATTAN ASSEMBLERS 80 93 58 S8 MOBILE MATS-HANDLING EQPT OPRS 61 59 OTHER SKILtED OPERATORS 86 140 103 63 64 SUBTOTAL 81 125 164 95 59 89 63 SKILLED TRADESPERSONS: METAL MOULDERS, WELDERS, SHEET METAL WORKERS ETC 136 152 MACH MECHANICS/FITTERS 107 125 117 ELECTRICALELECTRONIC INSTRU- MENT MEC8S/FITTERS 95 147 117 WOOD/RATTAN TREATERS 95 105 CABNET MARES ETC 93 WOODWORKING MACH SETTER OPERATORS 94 88 PATTER3OAKERS & CUTTERS 137 TAILORS, DRESSMAKERS ETC 73 72 SHOEMAKERS ETC 98 OTHER SKILLED TRADESPERSON 98 86 96 70 75 SUBTOTAL 101 121 108 71 114 75 SUPERVISORS/TECHNICIANS: MANDORS 112 148 235 138 63 59 PRODUCTION SUPERVISORS 181 199 201 190 105 216 124 ELECTRICAL ENO TECHNICIANS 101 125 121 MMCH MNC TSCHNICIANS 110 181 140 DESIGNERS 149 314 209 101 152 SUBTOTAL 154 199 205 177 91 169 106 TOTAL 108 160 185 129 70 123 77 - 119 - Annex 3 Takib 28- TABLE 28: IMPACT OF TRAJNING ON AVERAGE EARNINGS by Gender (Rp per month) MEAN EARNING (RP PER MONTt) -TRAINING SINCE STARniNG WORK- NONE ONLY ONLY ONLY INCLUDES IN- IN- IN- SOME PLANT PLANT PLANT OFF- ON-THE- ON-THE- BUT PLANT JOB JOB BUT INCLUDES WATCH- INCLUDEE OFF-THE ING BEING JOB ONLY TAUGHT PRIMARY EDUCATION MALE WITH PRE-CAREER TRAININC (79) (23) (168) (195) (300) WITHOUT PRE-CAREER TRG 104 51 77 (206) FEMALE WITH PRE-CAREER TRAJNINC 55 120 (87) - - WITHOUT PRE-CAREER TRG 68 46 49 (147) - LOWER SECONDARY MALE WITH PRE-CAREER TRAININC 104 (84) 99 (105) (163) WITHOUT PRE-CAREERTRG 107 65 95 143 (110) FEMALE WITH PRE-CAREER TRAININC 71 (46) 84 - - WITHOUT PRE-CAREER TRG 96 (66) 63 (87) (45) UPPER GENERAL SECONDARY MALE WITH PRE-CAREERTRAjNINC 142 (112) 127 (211) WITHOUT PRE-CAREER TRG 137 203 104 (126) (87) FEMALE WITH PRE-CAREER TRAININC 87 (58) 73 (113) - WITHOUT PRE-CAREER TRG 78 (53) 70 (120) (79) UPPER VOC/TECH SECONDARY MALE WTH PRE-CAREER TRAENINC 158 (125) 140 (194) (125) WTHOUTPRE-CAREERTRG 152 118 107 .154 (191) FEMALE WITH PRE-CAtEER TRAJNINC (102) (110) 88 (72) - WrTHOUT PRE-CAMEER TRG 96 (48) 74 (131) (44) POST-SECONDARY MALE WITH PRE-CAREER TRAJNINC (344) (275) - (296 - WITHOUT PRE-CAREER TRG 329 (91) (208) (320) (352) FEMALE WITH PRE-CAREER TRAJNINC (313) - (305) (253) - WITHOUT PRE-CAREER TRG - - (145) - - TOTAL MALE WITH PRE-CAREER TRAININC 149 124 128 (185) (197) WITHOUTPRE-CAREERTRG 135 140 100 159 165 FEMALE WITH PRE-CAREER TRAININC 100 77 88 (153) WITHOUT PRE-CAREER TRG 79 52 64 123 (58) - 120 - ANNEX 4 INDONESIA EMPLOYMENT AND TRAINING Evaluation of Technical and Vocational Education and Skills Training Systems Table 1. Technical and Vocational Schools: Type, Number and Enrollment 1988/89. 2. Enrollments and Growth in Secondary Education 1983184, 1988/89 and 1993/94. 3. STM Subject Clusters and Study Programs in Engineering: 1984 Curriculum. 4. Female Enrollment in General and Technical and Vocational Secondary Schools: 1984/85 and 1988/89. 5. Qualitative Evaluation of STM Internal Efficiency. 6. Overall Utilization of Teaching and Training Accommodation, Sampled STMs 1989/90. 7. Student:Teacher Ratios for Sampled STMs 1989/90. 8. Staff Characteristics for Each Institution 1989/90. 9. Summary of Social Rates of Return for Secondary Education. 10. STM Income and Allocated Expenditure by Category 1989/90. 11. Unit Costs: Sampled Secondary Technical registered by Department of Manpower 1988 Schools 1989/90. 12. Enrollment in GOI DIP/DIK Financed Courses by Skill 1989/90. 13. Private Training Institutions in Indonesia/Vocational: Number of Courses. 14. Enrollment in Sampled BLK/KLK by Male/Female 1987/88 to 1989/90. 15. Qualitative Evaluation of BLK/KLK and Sampled Training Institutions 1989/90. 16. Overall Utilization of Training Space in Sampled Institutions 1989/90. 17. Trainee:Staff Ratios: Sampled Training Institutions 1989/90. 18. Characteristics of Training Staff 1989/90. 19. Annual Recurrent and Capital Costs BLK/KLK 1988/89 and 1989/90. 20. Unit Costs of DIP/DIK Funded Courses in Sampled BLK/KLK 1989/90. Table 1: TECHNICAL AND VOCATIONAL SCHOOLS--TYPES, NUMBERS OF SCHOOLS AND ENROLLMENT 1988/89 Duration of course No. of schools Enrollment Type of School (yrs) Government Private Government Private Junior Shcondary Level ST: Junior Technical School 3 193 59 75,757 7,622 SRRP: Junior School of Home Economics 3 74 18 14,813 1,494 Subtotal 267 77 90,570 9,116 Senior Secondary Level STMs Senior Technical (Engineering) School 3) STMP: (STI Pembangunan): Senior Technical School (Engineering) 4) 157 734 137,007 157,010 SMT Grafka (Graphics): SMT Penerbangan (Aviation); SHT Perkapalan (Shipbuilding); and SMT Rimia (Chemistry). 3 8 13 3,651 4,000 SMT Pertanian: Senior Technical Schools of Agriculture 3 30 98 14,296 8,934 SMEA: Senior Secondary School of Business and Commerce 3 307 1,212 232,712 335,175 SMKI (Dance, Drama, Music); SMIK (Crafts); SMSR (Fine Arts) and SNM (Music) 4 25 11 13,389 1,138 SMKK (Home Economics); SMTK (Home Technology), and SMIP (Social Work) 3 100 77 47,077 10,493 Others: sSMFA, SPSMA, SMIP 3 - 54 - 7,613 Subtotal 627 2,199 448,132 524,363 Total 894 2,276 538,702 533.479 Source: Laporan Kegiatan: Pendidikan Menegah Kejuruan: 1984/85 to 1988/89 - Dikmenjor, October 1989. Table 2: EWtCLLMENTS AND GROWTH IN SECONDARY EDUCATION 1983/84. 1988/89 AND 1993/94 /a Enrol lments (thousands) Growth (X1 1983 84_ _ 1988 89 1993/94 -M3284-J1 !i% 19 Govt. Pt.. rTotl Givt. Pt.. Total GoWt. Pt.. Totl G0t7P7t. o Govt. Pt.. Total SMA 732.9 1,038.0 1,770.9 1,052.9 1,647.2 2,600.1 1,725.5 2,531.5 4,267.0 44 47 47 64 64 U4 SUN /b 93.1 132.6 225.7 140.7 161.0 801.7 n.m. n.e. n.a. 61 21 84 n.r. n.n. n.s. SMEA 148.6 122.7 271.3 232.7 335.2 687.9 n.x. n.n. n.a. 57 174 109 n.e. n.r. n.s. Other Votec 38.6 4.8 41.3 74.8 28.2 102.9 n.n. n.m. n.a. 10S 480 149 n.n. n.e. n.a. All Votec 278.2 260.1 638.8 448.1 524.4 972.6 606.0 89S.0 1,600.0 61 102 81 35 71 54 All Secy. /4 1,011.1 1,298.1 2,309.2 1,501.0 2,071.6 8,672.5 2,330.5 8,426.5 5,757.0 48 60 65 55 as 61 Is Projections: Repllt P. 7b Includes STU, STM(P), SliT Oratike, SUT Penerbangan, SkT Porkep lon, m X1F1n. Z Excludes enrollment. In secondary level teacher training for which entry was stopped after 1988/89. 123 - ANNEX 4 Table 3 Page 1 Table 3: STM SUBJECT CLUSTERS AND STUDY PROGRAMS IN ENGINEERING: 1984 CURRICULUM Duration of study Group Cluster Study Program (year) Engineering 1. Building 1.1 Technical Drawing 3 years 1.2 Surveying and Mapping 3 years 1.3 Building and Construction 3 years 1.4 Water Works Construction 3 years 1.5 Building Construction 4 years 1.6 Water Works Construction 4 years 2. Electronics 2.1 Industrial Electronics 3 years 2.2 Communication Electronics 3 years 2.3 Industrial Electronics 4 years 2.4 Communication Electronics 4 years 2.5 Transmission Technology 4 years 2.6 Telecommunications 4 years 3. Electrical 3.1 Residential Electrical 3 years Installation 3.2 Industrial Electrical 3 years Installation 3.3 Industrial Electrical 4 years Installation 3.4 Electrical Power 4 years 4. Metal Processing 4.1 Metal Fabrication 3 years 4.2 Machining 3 years 4.3 Advanced Machining 4 years 5. Power Machines 5.1 General Mechanics 3 years 6. Automotive 6.1 Mechanics 3 years 6.2 Automotive 4 years 7. Industrial 7.1 Process Control 4 years Instrumentation 7.2 Metal and Glass 4 years Instrumentation 8. Refrigeration and 8.1 Refrigeration and 4 years Air Conditioning Air Conditioning 9. Mining Geology 9.1 Mining Geology 4 years - 124- ANNEX 4 Table 3 Page 2 Duration of study Group Cluster Study Program (year) 10. Chemistry 10.1 Industrial Chemistry 3 years 10.2 Industrial Chemistry 4 years 10.3 Analytical Chemistry 4 years 11. Textile 11.1 Spinning 3 years Manufacture 11.2 Weaving 3 years 11.3 Knitting 3 years 11.4 Textile Finishing 3 years 11.5 Spinning 4 years 11.6 Weaving 4 years 11.7 Knitting 4 years 11.8 Textile Finishing 4 years 12. Graphics 12.1 Graphics 3 years 12.2 Graphics Production 3 years 13. Shipbuilding 13.1 Maintenance and Repair of 3 years Ships and Structure 13.2 Maintenance and Repair of 3 years Ships Engine 14. Airframe 14.1 Aircraft Frame Construction 3 years 14.2 Aircraft Body Frame 3 years Construction 15. Aircraft 15.2 Machining - Milling 3 years Production 15.3 Machining - Lathe Work 3 years 16. Aircraft 16.1 Aircraft Electrical 3 years Installation 17. Aircraft 17.1 Aircraft Mechanics and 3 years Maintenance Air Frame 17.2 Aircraft Electrical 3 years and Instrumentation 17.3 Aircraft Electronics 3 years 18. Interior Design 18.1 Interior Fittings 3 years and Fittings 19. Shipping 19.1 Navigation 4 years Transportation 19.2 Engineering 4 years -125 - ANNEX 4 Table 4 Table 4: FEMALE ENROLLMENT IN GENERAL AND TECHNICAL & VOCATIONAL SECONDARY SCHOOLS: 1984/85 AND 1988/89 Percentage of Females in Overall Enrollment Public Schools Private Schools Type of School 1984/85 1988/89 1984/85 1988/89 SMA 38 42 41 44 STM 4 4 3 3 SMEA 39 62 61 68 All Vocational/Technical 26 40 34 47 All Secondary 35 42 39 45 Source: Table 6: qUALITATIYE EVALUATION OF Sm INTERNAL EFFICIENCY Evaluation of STM Internal Efficiency Departaent Demertaent of Eduection of Industry Private Performance Factor 2.1 2.2 2.3 2.4 2.1 2.6 2.7 2.9 2.9 2.11 2.12 Average 3.1 3.2 Averag 4.1 4.2 4.3 Average Content of quality of Training 1. Fo-rat of curricula - - 4 3 3 a 8 8 2 8 2 2.9 2 3 2.5 3 3 2 2.7 2. Rev.w and revision - - 5 4 4 2 4 8 5 a 2 3.5 2 8 2.5 4 8 8 8.3 a Trainingmotbods - - - - 3 8 - 4 - 3 2 8.5 2 4 3.0 4 1 3 2.7 4. Teting and Assessmsnt - - 4 3 3 a 2 3 - 3 2 2.9 2 3 2.5 4 2 2 2.7 Traineen ii7§Tetion and entry - - 4 2 8 3 3 8 4 2 2 2.9 2 3 2.6 2 4 3 3.0 2. Counelling and uidance - - 2 3 3 3 3 8 2 2 1 2.4 2 4 3.0 2 1 4 2.7 Staffing and Staff Develoemant 1 Stalfing policies - - 4 4 4 3 3 3 6 2 2 3.3 a 33.0 2 2 2 2.0 2 Selection and quallficati.s - - 4 4 3 3 4 4 3 4 3 3.6 3 4 3.5 8 8 3 3.0 a. Staff dwelopmant/training - - 2 3 2 4 8 8 2 8 2 2.7 8 4 8.6 4 4 3 8.7 4. Support staff - - 2 8 2 3 4 a 3 2 2 2.7 2 4 3.0 2 2 2 2.0 Phrzlcal R _ rr> e 1. Training fi ciltis 8 2 4 S 2 3 8 a 6 2 2 3.1 2 4 3.0 4 1 3 2.7 2. Support facilities 8 2 1 8 2 2 2 2 1 1 2 1.9 2 4 3.0 a 1 a 2.8 a. Provision of quip.oet 5 4 C 5 8 8 - 4 4 4 8 4.0 8 5 4.0 4 2 4 8.8 4. Fquipmnt utillzation 5 8 4 6 8 3 - 4 4 3 2 3.6 3 4 8.6 3 2 4 8.0 S. Consumabl- matriels 4 2 6 6 8 3 - 4 S 2 2 3.7 8 4 386 2 1 a 2.0 Links with Ind trv 1. Training adm *ploy.ent 8 6 6 a 4 4 4 6 4 5 2 8.9 3 3 8.0 2 1 4 2.3 2. Forml links 4 4 6 S 4 3 6 5 6 4 a 4.5 3 4 38. 1 8 3 2.3 Note on Ratings 1 - Completely satisfactory 2 - Generally satisfactory; rom for some improvement 3 - Acceptable; neds improvement in limited aspects, but not major or urgent 4 - Les" than acceptable; needs improvement on fairly wide scale, but not major or urgent S - Cenrally unsatisfactory; needs attention 6 - Completely unsatisfactory; neds urgent attention and improvemnt. Table 6: OVERALL UTILIZATION OF TEACHING AND TRAINING ACCOMMODATION, SAMPLED STMS, 1989/90 Capacity Enrollment and Utilization Ratio by STM Dept. of Department of Edcuation Industry Private 2.1 2.2 2.8 2.4 2.5 2.6 2.7 2.0 2.9 2.10 2.11 2.12 3.1 3.2 4.1 4.2 4.3 LaL LL b Lb La Le Cepec7ty tr ln q-plac s) GIasroome t210 600 N/A 240 750 S20 760 - 480 -1,800 540 480 504 180 164 460 LabCrntorlen - - N/A 120 80 50 - - - - - 72 160 200 70 8 - Workshops 500 600 N/A 620 - - 1,200 760 1,600 - 144 - 40 200 260 30 Total 700 1.000 1.350 370 750 1,200 1.230 l.SO 1,300 766 630 744 680 412 670 Enrol lent 880 1,080 1,600 600 1,280 690 860 2,600 1,060 3,480 1,100 1,100 524 483 380 140 710 Utilization ratio 0.76 0.6 0.6 0.730.46 0.47 0.6 0.4 0.4 0.9 0.66 0.62 0.64 0.3 1.0 / For 2.6 2.7 and 2.11 facilities used for only theory curriculum = 30 periods/week per trainee. Utilization = 130 x 0.7S) x Enrollment b 2.8 and 2.10 are central workshop facilities used for onlyh 15 periods/week per trainee. Utilization = 16 x 0.76 x Enrollment 60 x Capacity /c Facilities are used for double-shift. - o'1. Table 7: STUDENT: TEACHER RATIOS FOR SAMPLED STMS: 1989190 Dept. of Department of Education Industry Private 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 3.1 3.2 4.1 4.2 4.3 la la /a la /a /b lb /b Enrollments 880 1,080 540 840 1,204 590 860 2,500 1,060 3.480 1,100 1,100 324 483 360 140 710 Full-time staff 73 98 66 77 109 26 59 114 152 90 38 97 49 28 34 25 17 Student: teacher ratio 12 11 8 11 11 23 10 6 7 12 29 11 11 17 11 6 25 La Student:Teacher Ratio = Enrollment x Proportion of Curriculum in School I Staff /b Staff include part-time teachers for whom full-time equivalents are estimated. IN 4 - 129 - ANNEX 4 Table 8 Tobl 8: STAFF CHARACTERISTICS FOR EACH INSTITUTION Dept. of Degaitment of Educatlon Indutrv Private 2.1 2.2 2.8 2.4 2.5 2.6 2.6 2.9 2.11 2.12 14. 4.2 4.T Goloncan 77xA 1 1 4 1 1 1 IIID 6 18 11 9 1 2 IIIC a 65 9 12 1 4 Ills 24 82 18 N/A 28 N/A 42 81 N/A N/A Not IIIA 6 15 10 21 60 62 applicable IID 11 4 6 11 14 21 IIC 18 26 10 26 16 28 II 9 8 4 1 10 16 IIA 1 - - - - Educational Qualification SMA 2 - 1 - - _ _ _ 8 - - - SUKTA 618 9 - 24 64 8 - 8 14 10 19 4 1 02/D8/SM 88 45 27 87 47 24 46 112 12 50 8 6 515 7 S1 88 86 29 40 88 2 86 82 26 89 18 12 6 6 9 S2 - - - - - - - - - - 1 - - - - Trainin T v;erseae Up to yar 6 4 - 9 - - 8 4 - - - - - I to 2 yero 1 - 1 6 - N/A - N/A - - - - - - - (b) Domestic Up to 1 year 18 82 8 42 78 8 - - - - - - I to 2 year* 8 2 - - - - - - - T*nchlno ExDorenc- Up to 2 ycare 10 10 22 16 11 1t 7 18 - 2 a to 6 ycara N/A N/A 9 )28 27 24 22 N/A - 10 14 - 4 6 to 16 years 26 61 80 22 47 421 5 l ) Above 16 years 22 - 42 )26 76 68 )86 14 ) - )26 )11 _Idustrial Exegrienc, Up to 2 years - - - 1 2 - - - - _ N/A N/A - 8 to 6 years - - - - - 6 - - _ _ _ 21 to 26 2 1 7 2 26 to 80 18 16 82 26 81 to 86 N/A N/A 8 N/A 24 N/A 16 84 N/A N/A N/A N/A N/A N/A N/A 86 to 40 7 10 10 20 41 to 46 18 28 82 22 48 to 60 6 29 27 86 Above 60 17 14 16 9 - 130 - ANNEX 4 Table 9 Table 9t SUMMARY OF SOCIAL RATES OF RETURN FOR SECONDARY EDUCATION Source & Period of Date Reference Type Group Social Rates of Return Occupational Categories Civil Gov't non- All Industry Service Civil Service McMahon, Millot 1982 SMA Male 0.23 0.49 0.10 0.14 & Eng. 1986 Female 0.11 - 0.07 0.23 STM Male 0.19 0.01 0.05 0.20 Femalo 0.04 - 0.03 0.07 SMEA Male 0.24 0.51 0.10 0.16 Female 0.17 - 0.07 0.24 Region All Jakarta West Swmatra McMahon & 1982 SMA Male 0.17 0.21 0.14 0.14 Boediono 1988 (Main job Female 0.23 0.35 0.27 0.07 only) All Tech/Voc Male 0.11 0.09 0.15 0.12 Female 0.11 0.06 0.15 0.07 East Central Java Java Sumatra Jakarta Urban Urban Urban McMahon 1989 1986 SHA Male 0.14 0.11 0.12 0.11 Female 0.24 0.15 0.22 0.17 All Tech/Voc Male 0.14 0.08 0.14 0.10 Female 0.25 0.10 0.18 0.18 - 131 - ANNEX 4 Table 10 ZakL4f0 6Th INCO#40 MO AM.LOCATEWD EXPdTIMSl OY CATEaOIW 1989/90 Sair & Teachino A Honorarlm learnin Cmnsumblo *tc. *cvitins Equpment Malintonnco Utlliti.- Admin. material. Othor Total (U) DIx 23e6.oe 9SS- 400 12,100 - 14.000 1,000 267,8a0 (as DIP 4,989 833 5&7 SPP/P8P N/A N/A N/A N/A N/A N/A N/A N/A 80.00Z°0 3 Subtotal "b8 12.1(1 0 14.) 1. (S) Lt (0 ) -- (4) - {) W0.4) XSW J)a (100) SPP/8P3K 189,480 20,e20 980 - 8 1t71S :63 DIP ~~~~~~~~~~~~~~~~~~~ 000 12, Spp/o I - - 96Q - - - - 4,60 ( Subtotal 29g (m) 100 (S) 1) (891) (19) () - 5) (100) DIK 181,1S0 17,800 900 -l1,880 (91) SPP/P8P N/A N/A N/A N/A N/A N/A N/A l/U.O (6) Subtotnl 'i8) --Tof)(1:IS (100) STM 2. DIK 2386,395 - 380 - 7.015 - 16,SOW 5.800 268,660 (78 DIP 12,163 1 800 - 10 81S - 23 0e - tloo 14:1 (4188 SPp/8P3 36,716 1.810 - 19.81S _ 23.091 - - 8l14J2 C Subtotal 26-o6 n10) 119 2D-j L95 71 ¶, 18Las L9 1 (1) 77) 1) C) C) (100) DIK 79,60 - 880 - 7,015 - 16,800 S6W00 268.66o 0 DIP 6C624 497 64 160 - 106 - 86004 158 44 SPP/bP' - 8.786 - - - - - 20.712 29 .448 21 Subtota Be 2. 92S t 6 0 Q 2 1W IZ^Ls S) (L3) 72) 7 7) (100) IK 283.830 400 S.250 20,a0 2.so 812.480 (6) DIP - - --- - -- SPP/8P9 N/A - N/A - N/A - N/ A 69.815 (18) Subtotal - --) - - - i T 1K 8262878 - 880 7 4,480 17.880 900 830,185 (89) DIP - -- --- SPP/GP3 N/A N/i N/A N/A N/A N/A N/A 45.871 (11) Subtotal 42f) - MM - 4 - (CO) (,S) CI-cos o)S) (30.1 Lko,as 21K 802,188 26,000 - 900 0,080 - - - W?7s06 tn DIP - 10,ODO - - '--000 - 2 108 20.108 SPp/6p8 85,988 6.000 - 2.400 - - - ,O500 74 eM en Subtota I as06 aQQ -L S. s -L2 - a Se 42,8A07 (5) 7t) ) (100) o&t tof Xndustr-v 1DIK 89,200 - 8t.50m 1S8.00 2d - 1,800 188,800 (34 DIP 1184 900 8 200 878 2 90 11.898 (4 SPP/8P3 80,065 82,600 4.68 - - 106,60 (4)5 Subtotal U2140 I 4tN68 (100) (5) cl o8 J< (o) DIK 87,980 8,678 28,000 28,000 - 8200 14 an DIP - - 10 8COo- R - 20 - 10:431 8 SPP,P8 89,824 8,000 9,000Z) 8.000 Subtotal 1Q421 11.176 42. 200 28Of.M20 l.49 (S ) )(tota 1 ) -l ) SM ) . ) (100) f Eatiatad. E. cludes SPP/8P8. Excludea DIP and e6i'l Utilities included tth maintonance. Materials includod with equipmnt. - 132 - ANNEX 4 Table 11 Table 11: UNIT COSTS: SAMPLED SECONDARY TECHNICAL/VOCATIONAL SCHOOLS 1989/90 (Rp per student year) Annual Recurrent School Expenditure Enrollment Unit Cost 1,000 Rp Rp/year Department of Education STM 2.1 333,397 880 370,000 2.2 246,515 1,082 230,000 2.4 195,220 600 325,000 2.5 362,160 1,200 300,000 2.6 137,802 592 230,000 2.9 382,245 1,060 360,000 2.11 395,507 1,100 360,000 2.12 432,807 1,100 390,000 Subtotal 2,475,653 7,614 325,000 Department of Industry S 3.1 266,545 524 509,000 3.2 220,899 483 457,000 Subtotal 487,444 1,007 484,000 Private STM 4.1 200,000 400 500,00Ola 4.2 93,500 140 670,000/b 4.3 99,000 707 140,000/c /a Estimate based on reported tuition fee and income from production activity. /b Based on reported expenditure: over 50 percent income from production activities. /c Based on reported expenditure, which is approximately 70 percent of income. - 133 - ANNEX 4 Table 12 Table 12s ENROLLMENT IN GOI DIP/DIK FINANCED COURSES BLK/KLK by Skill 1989/90 Skill Enrollment X Mechanical 2,985 9.9 Electrical and Electronics 4,689 15.7 Automotive 4,335 14.5 Construction 3,631 12.1 Business 2,782 9.3 Miscellaneous Crafts 6,751 22.6 Agriculture 4,768 15.9 Total 29,761 100.0 -134- ~~~~ ~~~~~~~, ~~~~~AUNUM 4 I0 I 0 II C*4 I I I C I I I I ' I I . . . ,. . ."-8X 0 ^Xe'' . .4a I I toal I at ' O U 1 611 11 11 53 1':: 091 C4CE9l ' Il'' N . . . . . . . . . . . . . ." . .le- . . . . . . . IS II I 'A *aIII *I I I I I I * 0 0 I1 Il ,,,1111 *t9...l Ills,.,, 1 1 1 1 1 e e | 4 I q 1 1 4 191111 ....... 111,11111111 3@@ : lS ''''*9@3#^nO! .404OA@ ,,,,,,,, X~~~I * 0''w s- S 1 J! .! - I 1*~s Table 14: ENROLLMENT IN SAMPLED BLK/KLK BY MALE/FEMALE: 1987188 TO 1989190 Technical General /a Business lb 1987188 1988189 1989/90 1987188 1988/89 1989/90 1987/88 1988/89 1989/90 BLKIKLK M F M F M F M F M F M F M F M F M F 1.1 535 1 854 26 884 14 - 68 179 44 106 146 14 196 117 387 168 169 1.2 398 - 511 13 186 - 1 39 21 194 18 46 - - - - - - 1.3 142 6 220 - 504 - 29 31 11 328 24 56 45 92 320 332 351 293 1.4 - - - - - - 63 33 211 189 355 85 - - - - - - 1.5 98 2 73 7 100 - - 40 17 23 24 36 - - - - 8 12 1.6 N/A N/A 275 50 275 5 N/A N/A 59 1 70 68 N/A N/A 33 49 22 38 1.7 115 5 341 2 222 3 71 49 16 64 59 111 - 20 37 19 45 51 1.8 401 1 525 - 379 - 259 231 101 183 - 91 8 57 1 42 28 45 1.9 60 - 40 - 120 - 1 79 50 53 26 74 - - - - - - la Agriculture/Carpentry/Sewing/Babysitting/Rattan. lb Typing/Bookkeeping/Language/Computing. If3 7464 IS: SMLITATiWE 81AATIN F WW3V4AM BFFIC8ICM oF IJCOJt Me OT 1161 TRADW D6TrIIUT UUamJ( Private Tranin- Ceeters Tramnina in Ii4devz P.doeem rfor_Fot 1.1 1.2 1.2 1.4 1.8 1.6 1.7 1.8 1.9 Averag 4.1 4.2 4.3 4.4 4.5 4.8 4.7 4.8 4.9 Aeragel 8.1 5.2 5.3 8.4 5.6 5.6 S.7 8.8 5.9 Aerae A. eS4.t nd 1 a' I of Tnnalg 1. F_mt rel-le. 4 - - - t 4 - 2 3 8.6 2 S 3 2 3 a 8 s s 3.0 4 3 1 4 4 2 2. Rview d revit 2 2 S 2 5 6 S 3 4 3.4 2 4 4 2 3 3 a 3 3 3.0 4 - 1 4 2 1 3. Trainingbmthod 3 5 - - t 4 - 3 3 3.8 3 6 8 2 3 4 3 4 4 3.5 6 a 1 - 3 2 4. Teatieg _aue t 4 3 4 4 - 4 - 2 3 3.4 3 4 2 2 4 4 4 3 4 a.a - 3 1 - 3 1 8. Trti_ee 1. Seleettmoaaemr I - 3 6 - 4 a 2 3 8.0 2 6 a 2 5 4 4 a 4 3.7 2 2 1 3 3 2 2.C o.n.lh;iganedgeldaneL 3 9 t 6 4 S 6 4 S 4.6 2 6 3 2 5 4 3 4 8 8.8 4 - 1 6 4 1 C. Saffing aed Stntt 1 _lo.ant 1. Stffin polici_ 5 6 2 B 5 5 6 2 a 4.1 s 6 8 3 4 4 4 3 5 4.1 2 - 2 - 5 1 2. Selectioaed eaificatioc. 4 4 4 3 4 4 4 2 S 3.7 S 4 4 3 3 4 4 4 4 3.7 3 3 1 3 3 2 3. Staff d.e.pmeI/trining 2 2 2 5 4 B - 1 a 3.0 6 6 6 S 4 4 4 3 3 4.4 4 2 1 3 3 4 4. S"ort staff 3 5 5 4 4 4 6 1 3 3.9 4 4 2 4 3 3 3 4 4 3.3 - 2 1 4 3 4 D. Fbyical Rbenree 1. Traini facilities 4 5 2 4 2 4 4 1 2 2.2 3 a 3 2 S 4 4 4 3 3.8 a 1 1 2 3 1 2. 9ort facilities S 4 2 2 S 5 4 2 9 2.8 4 a 4 a 4 4 3 4 4 4.4 2 1 1 3 3 2 3. Provision of olpnt 5 S 4 5 3 4 4 3 3 4.2 3 6 3 3 3 4 4 3 4 3.7 8 2 1 2 2 3 4. Em;ntublizatcm, 5 5 4 5 4 4 4 3 3 4.1 3 4 2 2 t 3 3 3 3 3.1 2 - 2 - 3 3 5. COn=l. MtOrble 8 6 4 6 6 5 2 2 2 4.2 3 6 3 2 3 3 3 3 3 3.2 2 2 2 2 2 1 E. Links with XDJet, 1. Traoiniande elov p t 3 2 6 5 6 6 S 4 4.3 2 5 4 2 4 3 3 4 5 3.7 1 - 1 5 2 1 2. Fosml ;inks 4 6 8 S 6 6 6 3 6 6.2 S 6 6 6 5 3 4 5 S6.0 1 2 1 2 3 3 ^ COM-Ollis; and w.idaee in esily the r_eepnibility of the K dep. Note Ratimgo 1 - n.pletIY eetisactor 2 - Cenwal satisfactory. ram for m iwrovement * - Acceptabl.; eed. improvmment in li mie aspects. but not major or rgent 4 - Lee than acceptable; n_ed .proawemat oa fairly side *eal.. but not mjor or rgent 5 - Cenral ly uatiefacty; need tteation 8 - Cmlete enati;factory; nedw urgnt attention and improvent. Table 16s OVERALL UTILIZATION OF TRAINING SPACE IN SAMPLE INSTITUTIONS, 1989190 BLKIKLK Private Training Centers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 4.1 4.2 4.3 4.4 4.5 4.6 4.8 4.9 Total Capacity (Trainees) Classrooms 140 40 200 200 60 190 60 120 80 24 40 200 80 140 600 260 1.350 Workshop 530 140 300 120 140 240 120 240 160 24 10 60 20 7 20 30 50 Total 670 180 500 320 200 430 180 360 240 48 50 260 100 147 620 290 1.400 Enrollment (EB.f.t.) DIP/DIK Funded 240 52 310 160 45 220 36 182 73 Third Party 320 24 110 - - 130 11 71 - Total g 560 76 420 160 45 350 47 253 73 85 230 1.200 180 260 580 400 6.700 Utilization Ratio a DIPIDIK Funded 0.18 0.14 0.31 0.25 0.11 0.28 0.10 0.25 0.15 Total 0.42 0.21 0.42 0.25 0.11 0.41 0.13 0.35 0.15 >1 >1 1 1 1 0.9 0.7 0.8 la Utilization Ratio = Enrollment x Training hoursimonth Capacity x Availability (hrlmonth) - Enrollment x 120 Capacity x 240 Ii0 Table 17: TRAINEE: STAPF RATIOS: SAMPLED TRAINING INSTITUTIONS 1989190 BLK/KLK Private TraininR Centers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 4.1 4.2 4.3 4.4 4.5 4.6 Trainee months 2,696 572 3,460 1,800 490 2,490 820 2,002 800 622 657 3,360 2,496 3,079 1,600 Staff 83 26 67 42 * 20 56 42 49 21 4 6 12 14 24 16 Trainee:Staff Ratio La 3.0 2.0 4.5 3.9 2.5 4.4 1.8 3.7 3.5 14 10 16 16 12 9 La Traineez staff ratio - Trainee-months x 1 11 staff I- Table 18: CHARACTERISTICS OF TRAININ6 STAFF 1989/90 Numr of Staff Number of Staff by Characteristics for each Sampled BLKACLK Total Sun Characteristic for Privatf Training Centers 1.1 1.2 1.8 1.4 1.5 1.6 1.7 1.8 1.9 No. x 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 2;I 1B - 1 7 1 9 (2) III A 9 1S 10 1 3 1 6 1 45 (12) II D 6 N/A 10 13 1 - _ _ 29 (a) NOT APPLICABLE 1I C 2t 23 4 3 16 2 83 1 107 (28) SS 1N 25 13 10 16 22 27 9 16 138 (38) IA A 19 6 6 2 7 11 - 2 61 (14) Edcoational 9 i le;ation - SIIP 1 - N/A - - - - - - 1 - - 3 - 4 3 - - - - SMA 14 S N/A 3 2 17 19 9 4 73 (25) 4 2 - S 2 - - 518 SMKTA 55 14 N/A 17 12 21 16 38 1S 136 (47) - 14 - 5 - 20 12 - - D2/D3/SM 13 8 N/A 16 5 5 5 - 1 5- (17) - 2 - - -7 - - 3 10 Trainin_ (a) 0 roo Up tol year 18 - N/A 2 - 2 - 12 - 34 (8) - - _ _ 2 - - 4 - I to 2 yer. 8 - N/A 4 - 6 - 6 - 25 (6) - - - - - - - - - (b) Domstic Up to 1year 27 1 12 22 IS 28 21 17 - 141 (35) 2 1 - 13 4 4 2 - to 2 years 40 7 22 8 5 21 3 32 11 149 (37) 2 - - N/A - 16 8 6 Above 2 yers 1 18 - - - 1 1 10 31 (8) - - - - - - - - None 15 18 16 12 - 9 17 - - 87 (21) Training Excerience Up to 2 years 19 2 4 - 2 - 1 9 37 (9) 1 23 5 - 1S 4 - t 2 3 to5years 38N/A 16 22 6 20 19 3 - 124 (31) 1 - 7 6 5 20 - 9 2 8 to 15 years 22 42 7 14 33 43 45 12 218 (54) 2 - - - 12 16 12 1 - Abov 1S years 4 8 9 - 1 - - - 22 (5) - - - - 1 - - - - 21 to 2S 5 1 6 N/A 1 2 1 - 19 (5) 26 te 30 19 12 12 N/A 13 23 S 12 97 (26) 31 to 35 32 N/A 20 14 N/A 28 14 28 9 145 (40) N/A 38 to 40 22 24 S N/A 11 3 14 - 82 (22) 6-! 41 to 4S 4 8 - N/A 2 - 1 - 1S (4) 4 to 60 0 3 1 N/A 1 - - - 5 (1) o t AboveS0 1 1 2 i/A - - - - 4 (1) Total sa 68 42 20 56 42 49 21 367 0 - 140 - ANNEX 4 Table 19 Table 19: ANNUAL RECURRENT COSTS AND ANNUAL CAPITAL EXPENDITURES FOR BLKS AND KLKS, 1988/89 AND 1989/90 (in '000 ruplah) Cod- 1.1 1.2 1.8 1.4 1.6 1.6 1.7 1.8 1.9 A. Annual Recurrent Costs 1888/89 Salaries I151,364 22,787 140,629 99,176 28,880 Percent 72 58 71 76 60 Consumables 11,896 4,115 18,712 11,595 8,696 Percent 8 10 7 9 10 Office Maint. 9,154 1,260 1,806 665 1,000 Percent 4 8 1 0 8 Utilities 80,970 6,800 20,077 2,708 4,600 Percent 15 16 10 2 12 Transport A Vehlcle Malnt. 8,104 260 4,192 5,002 4,264 Percent 1 1 2 44 11 Other 4,560 7,700 18,719 12,059 1,826 Percent 2 18 9 9 6 Total Recurrent 211.087 42.862 198,856 180.092 88.664 67.701 Annual Copital Expenditure 1988/89 Construction 97,587 0 681,886 34,618 16,880 0 16,000 Equipment 669 0 2,487 1,182 250 0 0 Total Capital 98.148 6388g22 85.800 16,580 0 15000 Third Party Training 0 0 0 14,418 0 0 0 Total 809.188 42.862 882.867 180.808 64.244 0 82.701 B. Annual Recurrent Costs 1989/90 Salaries 157,304 80,981 156,077 109,798 84,810 142,611 54,806 Percent 70 68 881 66 67 s0 71 Consumables 18,096 1,900 18,796 165,896 7,241 108,201 8,119 Percent a 4 8 9 14 88 11 Office Maint. 14,154 6,000 1,806 668 1,000 24,022 1,508 Percent 6 10 0 0 2 8 2 Utilities 80,870 8,800 20,077 8,408 8,000 0 8,622 Percent 14 7 4 2 6 0 5 Transport A Vehicle Maint. 2,600 998 46,496 5,678 792 8,007 2,160 Percent 1 2 9 8 2 1 8 Other 6,568 6,741 261,026 82,668 5,100 9,676 6,269 Percont a 14 62 20 10 8 8 Total Recurrent 224.108 49,220 497.778 187.600 61.448 287.617 76.984 Annual Capital Exoend1tures 1989/90 Construction 119,388 26,229 118,884 41,814 20,769 0 27,020 Equipment 659 1,241 2,000 1,000 1,600 0 1,172 Total Capital 119.896 27.470 120.884 42.814. 22.869 2 27.192 Third Party Training 0 0 0 0 0 174,197 4,690 Total 844.001 70.890 618.610 210.814 78.812 461.714 108.866 - 141 - ANNEX 4 Table 20 Table 20: UNIT COSTS OF DIPIDIK FUNDED COURSES IN SAMPLED BLKIKLK,1989190 (Rp and $ per year) Equivalent Annual Unit cost per Total trainee F.T. trainees expenditure trainee per year BLK/KLK months per year Rp '000 Rp '000 $ 1.1 2,320 210 344,000 1,630 960 1.2 570 52 76,690 1,470 870 1.3 2,080 190 618,500 3,721 1,920 1.4 210,300 1.5 S5O 45 73,800 1,590 940 1.6 1,610 146 287,500 1,960 1,150 1.7 - 36 104,800 2,900 1,700 1.8 2,002 182 355,000 1,950 1,150 1.9 800 73 N.A. - - - 142 - ANNEX 5 Page 1 INDONESTA EMPLOYMENT AND TRAINING Methodology of Study Introduction 1. The analysis of the labor market was based on data from the Central Bureau of Statistics' (BPS) annual labor force and industry surveys. The data was analyzed by staff of the BPS and Ministry of Manpower. The survey of manufacturing industry and employees was conducted in a random sample of about 150 enterprises in eight export-oriented subsectors of manufacture. Tne survey interviews were carried out by training officers employed by the Depnaker, based on questionnaires designed by the study team. Surveys in the Surabaya area were conducted by staff of Depnaker and Depdikbud with support from the ILO staff and counterparts. The data was analyzed by staff of Depnaker. The evaluation of training was based on the Bank's guidelines for evaluation of vocational education and training, using questionnaires for collection of basic data and checklists for structured evaluations of training in a sample of about 50 public and private sector training centers. The evaluations were conducted by teams of experienced training staff of the Departments of Education and Culture (Depdikbud), Manpower (Depnaker) and Industry (Deperind) under the guidance of the study team. 2. The data obtained through surveys were supplemented by follow-up discussions in industry and with representatives of industrial and employers associations and with senior staff of key government agencies. Survey of Export-Oriented Manufacturing Industry 3. Questionnaires were designed for managers of establishments and recently recruited skilled and supervisory workers, in selected manufacturing branches. The branches, selected on the basis of their recent and/or potential export performance, were textiles (ISIC numbers 32112 and 32113), garments (32210), footwear (32400), rattan furniture and other products (35600), non-electrical machinery (38200), and consumer electronics (38230). 4. The Central Bureau of Statistics (BPS) was asked to select a sample of 150 establishments and 100 reserves from its directory of large and medium manufacturing industries. The frame for sampling was: all large and medium establishments in the eight selected branches in Jakarta, Bogor, Tangerang, Bekasi, Bandung, Surabaya (including Sidoarjo and Gresik), and Medan (including Deli Serdang). The sample was stratified by branch and size of - 143 - ANNEX 5 Page 2 establishment 1/ but was otherwise random. Establishments employing 200 or more workers were deliberately over-sampled, on the grounds that they would be most affected by changes in government policy on industrial training. 5. l sample selected by BPS turned out to be heavily concentrated in Jakarta, Bogor, Tangerang and Bekasi (Jabotabek). Sixty-three percent of all establishments (and 65 percent of large ones) were in Jabotabek, compared with 13 percent in Bandung, 12 percent in Medan, and 11 percent in Surabaya. The survey was carried out by interview in July-September 1990. Closures, moves, refusal to cooperate and other complications necessitated substitution of 16 establishments from the reserve list for problem cases and reduced the size of the effective sample to 142. 6. The wooden furniture branch fell short of its target figure (by four establishments), as did footwear and consumer electronics (each two short). Textiles and garments, on the other hand, each had one more interview than had been intended. By region, Surabaya (four short), Medan and Jabotabek (each two short) were undersampled. More significantly, the number of small establishments visited was 12 fewer, while the number of large establishments was four more than had been intended. The net effect is that large establishments, particularly in the Jabotabek area, dominate the sample to a greater extent than had been intended, and this must be taken into account in interpreting the results. 7. Establishments owned by Indonesian private capital predominate, accounting for 83 percent of the total. Foreign-owned establishments represent only 7 percent of the total, but more than 12 percent of those employing 200 or more. Branches vary considerably in the extent of their export orientation, with establishments that send more than half of their output (by value) to export markets accounting for 56 percent of those sampled in the rattan furniture industry and 38 percent in garments, down to 5 percent and 6 percent in plastic products; and non-electrical machinery respectively. The larger establishments are considerably more active in foreign markets, with 41 percent in the export-oriented category, than the smaller, with only 1Opercent. Partly as a reflection of this, Indonesian private establishments are much less export-oriented (25 percent in this category) than are foreign- owned establishments (40 percent) and state enterprises (50 percent). 8. A final aspect of the structure of the sample is the level of technology and design arrangements. Technology is relatively simple. Only 17 percent of establishments have any computer-controlled equipment, and 57 percent have no more than ordinary (non-automatic) power-driven equipment. As might be expected, large establishments are much more sophisticated in their technology than small; 27 percent of those employing 200 or more report use of computer-controlled equipment as against 7 percent of those with less 1I Desired sample size was 10 "large" (200 or more employees) and 10 "small" (more than 20 but less than 200 employees) establishments in textiles; 10 large and 10 small in garments; 7 large and 10 small in footwear; 10 large and 10 small in rattan products; 7 large and 10 small in wooden furniture; 10 large and 10 small in plastic products; 8 large and 10 small in consumer electronics. - 144- ANNEX 5 Page 3 than 200 employees. Forty-five percent of establishments claim to have in. house design capacity, with central government establishments weakest (17 percent) and foreign establishments strongest (50 percent) in this respect. Many use customers' designs, as is common practice in labor- intensive export industries. Licensing is less common, except in the case of foreign establishments, 40 percent of which report it as their main design arrangement. 9. Questionnaires were prepared for each sector listing only the occupations identified as relevant for that sector. Occupations were grouped as: unskilled; skilled operator; skilled tradesperson, and teechnicianl supervisor. The levels were defined in terms of minimum training needs normally required for satisfactory performance in that occupation. In defining training, distinction was drawn between no training; on-the-job training by watching; on-the-job training with instruction from an experienced worker or supervisor; off the job training, etc. The definitions were agreed with the interviewers (all of whom had training and experience as training officers) and tested in pilot surveys before the questionnaires were finalized. Evaluation of Technical and Vocational Education and Skills Training 10. The evaluation of training institutions was based on the Bank's Guide on Evaluating Vocational Training Programs. Data on programs, enrollments, staff and income and expenditure were collected by questionnaire. The data collection was follow-up by a visit to the institution by a team which normally comprised one Bank staff member of the study team and two or three senior staff from the Departments of Education, Manpower and Industry. As far as possibls at least two of the Departments were represented on each visit. The purpose of the visit was to meet senior staff, instructors and trainees and to view the facilities and training programs. The discussions and evaluations were based on a series of checksheets to ensure uniformity in coverage. Qualitative evaluation was based on key factors of quality. 11. The evaluations were carried out mainly in the same locations as the surveys of industry--Jabotabek, Bandung, Medan and Surabaya. The sample was not random. It comprised: 12 Secondary Technical Schools (STM) of the Department of Education (chosen to given a representative range of quality). 2 Secondary Technical Schools (STM) of the Department of Industry. 3 Private STM4s--chosen as examples of good quality (two are exceptionally good). 9 BLK/KLK Training Centers of the Department of Manpower (Depnaker). 9 Private Training Centers 11 Industrial Training Centers. 4 Miscellaneous training centers. - 145 - ANNEX 6 Page 1 INDONESIA EMPLOYMENT AND TRAINING Main References BAPPENAS; Perkembangan Struktur Ekonomic Dan Kesempatan Kerja Pada Pelita V, VI dan VII, Jakarta November, 1989 B.P.S: Statistik Indonesia 1988; Jakarta 1989 D.H. Clark; Tracer Study of Secondary School Graduates, Jakarta, June 1988 Directorate of Technical and Vocational Educations Laporan Kegiatan: Pendidikan Menengah Kejuruan 1984/85-1988/89, Dikmenjur, Jakarta 1989 Christopher Dougherty and Jee Deng Tan; Financing Training: Issues and Options; World Bank 1990 M. Godfrey; The Nature of Indonesia's Employment Problem: Evidence from the 1986 Labor Force Survey, DSP Paper 73, Jakarta, December 1988 (and other papers) Hunting, Zymelman, Godfrey; Evaluating Vocational Training Programs: A Practical Guide: World Bank, 1986 I.T.D.U. 1 & 2; Reports on Surveys of Firms. Department of Manpower, Jakarta 1989 A. Korns; Distinguishing Signal from Noise in Labor Force Data for Indonesia, DSP Stats. 1, November 1987 Lluch, Constantino and Mazumdar, Dipak; Indonesia: Wages and Employment, Washington, D.C. World Bank, 1985 McMahon W. and Boediono; Social Rate of Return and Labor Market Analysis by Province in Indonesia, mimeo, Department of Education, Jakarta 1989 Kelly, T.F. Contribution of Overseas Employment to Indonesias Growth Prospects Discussion Paper INS/82/013-08, Jakarta, I.L.O., 1987 Manning, C. Indonesia: Employment Problems, Prospects & Policies; Report proposed for World Bank; Jakarta; March 1988 J. Middleton, A. Ziderman, A.V. Adams, Skills Training for Productivity: Vocational Education and Training in Developing Countries (in preparation), World Bank, 1991 OECD: Educational Attachment of the Labor Force; Chapter 2, Employment Outlook; Paris OECD, 1989 OECD: The Newly Industrializing Countries: Challenge and Opportunity, OECD 1988 M. Pangestu; Manpower Regulations in Indonesia: Report prepared for World Bank, April 1988 R.L. Rucker, A Preliminary View of Indonesia's Employment Problem and Some Options for Solving It, USAID, Jakarta, January 1985 M.C. White, Improving the Welfare of Women Factory Workerst Lessons from Indonesia, International Labor Review, Vol. 128, 1990 World Bank, 1989 Indonesia: Strategy for Growth and Structural Change; Report No. 7758-IND, May 1989 World Bank, 1990 Indonesia: Foundations for Sustained Growth; Report No. 8455-IND, April 1990 World Bank, Indonesia: Long-Run Development and Short Run Adjustment, Report No. 2788 IND, February 20, 1980 World Bank, 1990 Indonesia: Trade Policy; Report No. 8319-IND, January 1990 World Bank, 1991 Vocational and Technical Education and Training: World Bank Paper, Washington, January 1991. Yayasan Tenaga Kerja Indonesia: Labor in Public Services, Jakarta, 1988 m m mmw=wX11- - 146 - ANNEX 6 Page 2 A companion report presents the labor force data and a more detailed analysis: Yudo Swasono, Endang SulLstyaningsihs Labor Market Adjustment in Indonesiat Evidence from the National Labor Force Surveys, Books 1 and 2, Jakarta, 1991. Su y dd nari----n r Survey data will be reported in a series of Working Papers. .. ._.-rn--rn---....... - 147 - ANNEX 7 INDONESIA EMPLOYMENT AND TRAINING Acknowledgements For guidance and support, the team is grateful to the senior staff of BAPPENAS and the Departments concerned, particularly Dr. Sayuti Hasibuan, Deputy Chairman, and Mr. A. A. Machrany of BAPPENAS; Ismail Sumaryo, DG Manpower Development and Placement and Noor Djaelani, Secretary to DG, Depnaker; Dr. Benny Soeprapto, DTVE, Depdikbud; and Dr. Abu Bakar Soetikno, PUSBINI,AT, Deperind. The survey team acknowledges the valuable assistance of the following training officers in the difficult task of finding the firms and pinning down the owners and managers to complete the interviews and questionnaires: Messrs/Mdmes. Achmad, Agus, Ari, Boston, Budhy, Daniel, Djoko, Elfis, Frans, Linda, Marne, Ninik, Pane, Patampa, supervised by Mr. Syafei Azis. The following assisted with the evaluation of training: Messrs/Mdms. Aswardi, Baidowi, Clemen, Jolly, Ketut, Tati, Togarisman, Sakir, Sumarno, Sutaryono, Prajanto, Hendradmono, (Depnaker); Rina Arlianti, Suhadi and Suharyono (Depdikbud) and A.R. Maklin, Pungki and Basar Hassan (Deperind). The assistance of Dr. Vasquez of ILO and colleagues for collecting data in Surabaya is also gratefully acknowledged. Special thanks go to Rusman Heriawan of BPS for providing data and to Moh. Hidayat, Wisnu, Nurwijaya and Paryatno of Depnaker for computer programming. Dewi Paryanthi and Nora Hanafi provided valuable assistance with the administration of study activities. Special thanks are also given to Derek Lockwood (of Derek Lockwood Associates) and John Gabb of Serco for assistance with administration of the surveys.