OECD urges Indonesia to equip workers with digital skills

“Indonesia is confronting its most severe challenge since the 1997 crisis. With the right reforms, Indonesia can harness the energy and talents of its young population and get the economy moving forward again,” said OECD secretary-general Angel Gurría, presenting the latest OECD Economic Survey of Indonesia at a virtual launch with Indonesia’s finance minister Sri Mulyani Indrawati. 

The survey highlighted that, even before the crisis, skills shortages and high youth unemployment were challenges the country faced. As such, the survey recommends stepping up vocational education and adult training, with an emphasis on digital skills. 

In addition, better early childhood education can also improve later performance and help reduce inequalities.  

Also, recruiting more people – particularly women, internal migrants and foreign workers – into the workforce will be crucial to alleviate the pressures of an ageing population, said the survey. 

The survey added that the recovery from the economic fallout from COVID-19 will be gradual and subject to the development of the health situation, with considerable downside risks. Investment and tourism will likely stay depressed for some time.

Support to households and companies should continue as long as needed, after which the country should focus on bringing more workers into the formal economy, enhancing skills, and improving the business and investment climate. 

State-owned enterprises (SOEs) will play a critical role in the recovery. Although SOEs enjoy favourable operational conditions, their performance is uneven and their rising debt poses a growing risk.

READ: Indonesia calls for increased digitalisation for economic recovery

The survey recommends that SOEs align their corporate governance with global best practices, including keeping management and boards free of government interference, and implementing high standards of integrity, transparency and responsible business conduct. Streamlining regulations and lowering barriers to competition would help to attract private and foreign investments.  

Indonesia should also safeguard the independence and authority of its national anti-corruption commission (KPK) to ensure it can effectively detect, investigate and prevent misconduct, reported Modern Diplomacy.