Government 2018 Plan

to Improve Human Capital

Ministry of National Development Planning/

Head of National Development Planning Agency

Presented in Seminar on Human Capital as a New Driving Force of Economy

Bali, 1st March 2018
 REPUBLIK
INDONESIA

1 Human Capital & Economic Growth

2
 REPUBLIK
Human Capital as the Central of Development
INDONESIA

GAP IN DEVELOPMENT
CHALLENGES
TARGETS

• High Total Fertility Rates vs Below Sustained

Replacement Rate  Quantity vs • Poverty
HIGHER Economic
Quality of children • Inequality PRODUCTIVITY Growth
• High Mother and Infant Mortality Rates OF LABOR
• Youth Unemployment
• Low coverage of Social Security MARKET
Program • Low Human Development
• Uneven and disparity in quality of Index Escape from
education Middle Income
• Population distribution Trap

Human Capital Development Is The Key To Harness The Demographic Dividend

3
 Interaction of Human Development with
REPUBLIK
INDONESIA
Development of other Sectors

Human
Religion
Development: Other Influential Factors
• Human beings
Culture • Development • Institutional
resources • Globalization
Education
• Democratization
Health
• Decentralization
Nutrition • Good Governance
Economy
Population growth • Institutional
Law & Human Rights
Sport
Strengthening
Natural Resources • Justice and gender
Infrastructure equality
Science & Tech.

4
 REPUBLIK
INDONESIA
Human Capital and Economic Growth

Empirically, during 1970-2010, there is a positive correlation Early investment in human capital yields higher
between human capital (education) and economic growth. return.

Human Capital vs Economic Growth in 1970-2010 Return to a Unit Dollar Invested

Islam et. al (2014) Heckman (2008)

5
 REPUBLIK
INDONESIA

Current Achievement in Human

2
Capital Investment

6
 REPUBLIK
INDONESIA
Indonesia Human Capital Endowment

Gini
HDI : 70,79 (2017) Number of Potential
Millenial Generation
medium human development
0,391(Sept’17) 90 Juta (2018)
Poverty Rates (%) Total Fertility Rate

10,12 (Sept’17) 2,28 (Supas’15)

Unemployment Rate Infant Mortality Rate

5,50(Agust’17) 24 (SDKI’17)
GDP/Capita Years of Education

$ 3,605 (2016) 12,72 (2016)

Economic Growth: 5,07% (2017)
7
 REPUBLIK
Indonesia Human Capital Index: Remains a Challenge
INDONESIA

Indonesia ranked at 65 out of

130 countries with overall score
62.19 in WEF 2017 Global
Human Capital Index, compared
to Malaysia (rank 33), Thailand
(40), and Vietnam (64).

8
 REPUBLIK
Current Progress on Indonesia Education Development
INDONESIA

Gross Enrollment Rate (GER) Education Institution Accreditation Status in 2016

2010 - 2016
Education access is increasing

PAUD 47,5%
During 2010-2016 education access
36,5%
was increasing in almost all
education levels. However, a
111%
decrease in GER for elementary
SD 109%
school indicates a decline in early
entry to school.
SMP 90,1%

80,6% Institution accreditation needs to

be improved
SMA 80,9%

62,9% Universal education policy promotes

institution accreditation in primary
31,6%
PT and secondary education. However,
26,3% accreditation for higher education
institution remains a challenge.
Calculated from Susenas 2016 and Forlap Calculated from Dapodik (MoEC) and Emis (MoRA) 2016
Dikti 2016

9
 REPUBLIK
Education Development Challenge: Wide Gap Across Regions
INDONESIA

School Participation Rate Age 7 - 18 Secondary School GER Ratio for Poor Family (by province)

Calculated from Susenas 2016 Calculated from Susenas 2016

School/Madrasah who has accreditation B or higher (by province)

There is a significant achievement gap across regions

• School Participation Rate (Age 7-18) spreads from 65.6% in

Papua to 90.7% in Riau Islands.
• Similarly, the quality of education, measured by status of
accreditation is diverse across provinces. Only 22.4%
school/madrasa in Papua have at least accreditation B,
compared to DI Yogyakarta with 93.3% school/madrasa have
accreditation B or higher.
• There is also gap in education enrollment between pupil from
Calculated from Dapodik (MoEC) and Emis (MoRA) 2016 rich and poor families, and the gap is vary across the provinces.
 REPUBLIK
Education Development Challenge: Teacher/Lecturer Quality
INDONESIA

Percentage of Teacher who has Qualification at Least Bachelor Degree (S1) Lecturer Academic Qualification Profile
Sumber: CImago Research Group, 2016
13%
19%

S1 S2 S3

68%

Calculated from Teacher Database of MoEC and MoRA 2016 Calculated from forlap.ristekdikti.go.id

Indonesian Publications Compared to Neighboring Countries

Teacher and Lecturer Quality Should be Improved

• There are teachers who have non-degree qualification. This is

happened particularly in Eastern of Indonesia.
• At higher education level, there are still under qualification lecturer
who posses Bachelor Degree (S1).
• Compared to neighboring countries such as Malaysia, Singapore, and
Thailand, Indonesia publication number is still left behind.
11
 REPUBLIK
INDONESIA

Target and Policy on Human Capital,

3 Labor Market and Social Security

12
 REPUBLIK
Targets for Human and Community Development
INDONESIA

Macro Targets

Baseline Targets in
No Development Indicators
2014 2019
a Human Development Index (HDI) 73,8 76,3

b Community Development Index*) 0,55 Increase

c Gini Index 0,41 0,36

d Increased percentage of population who 51,8% Min. 95%
participated in health insurance through (October 2014)
SJSN Health Sector

e Participation of SJSN Employment Program

• Formal Workers
• Informal Workers 29,5 million 62,4 million
1,3 million 3,5 million

*) The community development index is a composite index that measures the nature of mutual cooperation, tolerance, and security of
the community.
Source: RPJMN 2014-2019.

13
 REPUBLIK
Targets and Policy Direction for Education Development
INDONESIA

Targets 2018 2019

 Mean years of schooling (age 15 8,8
Policy Directions:
years and over) 8,7 years years
1. Acceleration of the 12 Years Compulsory Education.
 Literacy rate of age 15 years and
over 95,8 % 96,1 %
 Program Study in HEI has
accreditation B or higher 64,8 % 68,4 % 2. Improvement of teacher’s professionalism, quality,
 Percentage of primary school management, and equal deployment.
(SD/MI) has accreditation B or higher 81,6 % 84,2%
 Percentage of junior secondary
school (SMP/MTs) has accreditation 77,9 % 81,0% 3. Improvement of equal quality of higher education.
B or higher
 Percentage of high secondary school
(SMA/MA) has accreditation B or 82,8 % 84,6%
higher 4. Improvement of access and quality of early childhood
 Percentage of Skill Compentency of
Vocational School (SMK) has 62,2 % 65,0% education and community education.
accreditation B or higher
 SMP/MTs GER Ratio between 20%
poorest family and 20% richest 0,89 0,96
family 5. Improvement of the quality of character, and religious
 SMA/SMK/MA GER Ratio between
20% poorest family and 20% richest 0,59 0,60 educations.
family
 Higher Education GER Ratio between
20% poorest family and 20% richest 0,48 0,24
family
 Percentage of teacher having S1/DIV
qualification 80% 90,0%

14
 REPUBLIK
Health Sector
INDONESIA

Baseline
No Development Indicators Targets in 2019
2014
1 Increased Public Health and Nutrition Status
a Maternal mortality rate per 100,000 births 346 306
(SP 2010)
b Infant mortality rate per 1,000 live births 32 (2012/2013) 24

c Prevalence of undernourishment (underweight) in children under five (percent) 19,6 (2013) 17

d Prevalence of stunting (short and very short) children under two (percent) 32,9 (2013) 28

2 Increased Infectious and Non Communicable Disease Control

a Prevalence of Tuberculosis (TB) per 100,000 population 297 (2013) 245

b HIV prevalence in adult population (percent) 0,43 (2013) <0,5

c Prevalence of high blood pressure (percent) 25,8 (2013) 23,4

d The prevalence of obesity of population aged 18+ years (percent) 15,4 15,4
(2013)
e Prevalence of smoking at age ≤ 18 years 7,2 5,4
(2013)
3 Increased Equity and Quality of Health Services and Health Resources
a Number of districts that have at least 1 puskesmas accredited - 5.600

b Percentage of districts / municipalities reaching 80 percent complete primary 71,2 95

immunization in infants
c Number of health centers that have at least 5 types of health personnel 1.015 5.600

Source: RPJMN 2014-2019

15
 REPUBLIK
Human and Community Development
INDONESIA

Building human beings as a whole:

• Individuals: education, health, population and family planning, character
• Society: diversity, social restoration, social security Kemensos, Kemenaker,
Kemenkes, BPJS, Pemda
Kemendikbud
Kemenag
Social security
Kemristekdikti for all people
Kemenpora Education Kemdikbud
Pemda
development, Kemristekdikti
especially Kemenag
Polhukam Revolutionize implementation
the character of of Indonesia
Pemda
the nation Smart Program K/L lain yang melaksanakan fungsi pendidikan
(KIP) with 12
years compulsory
education

Kemendikbud
Kemsos
Improve
Kemenag quality of Improvement of
Kemenkes
Strengthen public health
Kemenkumham diversity and
human and service, BPOM
Kemendagri Indonesian community especially BKKBN
Kemenpora social Indonesia BPJS Kesehatan
(Bappenas: planning
Pemda restoration Healthy Card
coordinator; and
program (KIS)
Pemda
Menko:Implementati
on coordinator)

Improving
community’s Population
welfare through development Kemenkes
The prosperous and family BKKBN
Kemensos Indonesia planning Pemda
Pemda program
Improving
community’s
welfare through
“Indonesia
Kerja” Kemensos; Kemen.Desa, Transmigrasi dan PDT;
Kemenaker
Pemda

16
 REPUBLIK
Community Health and Nutritions’s Policy Direction
INDONESIA

1. Accelerate the Fulfillment of Maternal Health, Child, Adolescent, and Elderly

Care Access
2. Accelerate Community Nutrition Improvement
3. Improving Disease Control and Environmental Health
4. Increasing Access to Quality Basic Health Services
5. Increasing Access to Quality Referral Health Services
6. Improving Availability, Affordability, Equity, and Quality of Pharmacy and Medical
Devices
7. Improve Drug and Food Control
8. Improving Availability, Distribution, and Quality of Human Health Resources
9. Improve Health Promotion and Community Empowerment
10. Strengthen Management, Research Development and Information Systems
11. Establishing the Implementation of the National Social Security System for
Health Sector
12. Develop and Improve the Effectiveness of Health Financing

17
 REPUBLIK
INDONESIA
Current Challenges in Indonesia’s Labor Market

High labor movement in Service Sector

Employers struggle for the past 20 years
to find employees
with the right skills 43% 56%
1997 2017

Need of Skilled Workers

Indonesia will need
90% to have more middle
38%
(2045) and high-skilled
(2015) workers
18
 REPUBLIK
INDONESIA
Strategic Policies to Improve Skilled Workers

To enhance the training curricula for

improving soft skills and hard skills

To promote competency-based vocational

training and apprenticeship program

To improve the qualification, requirement

and the operation of professional
certification institutions across the country

19
 REPUBLIK
Social Security as One of the Key to Improve Productivity
INDONESIA

Investment
Good Job
Human Capital
Opportunities
PRODUCTIVITY

Social security contributes to economic growth and productivity:

1. Protecting the workers from economic shocks: sickness, accident, death, ageing or retirement.
2. Widening investment sources from accumulated assets of Old Age Savings or Pension programs.

5 PROGRAM

Death National
Accident Old Age Pension
Insurance Health
Insurance Savings Program
Insurance
20
 REPUBLIK
Challenges in Achieving Universal Coverage of Social Security
INDONESIA

The memberships of social security have been significantly increasing. Yet, the expansion of membership of
the informal workers remains challenges:

• Financial • Costs of premium • Lack of insurance • Administration

constraints and enrollment literacy problem

100.000 92.380 18.000

National Health Insurance Member 16.068 Employment Social Security
90.000 16.000
(in thousands, Member
80.000 14.000 (in thousands,
December 2017)
70.000 12.000
December 2017)
60.000
10.000
8.459
50.000 44.891
8.000
40.000
6.000
30.000 25.398
20.305 4.000
20.000 1.707
2.000
10.000 5.008
-
- Formal Sector Non-Formal Sector Construction
State PBI Formal Sector Non-Workers Services
21
 REPUBLIK
Closing Remarks
INDONESIA

a) Human capital investment that is implemented more integrated and holistic will
create higher quality of labor force:
• Thus, 90 Billion of millenial generation in the next five years is an asset for
building innovation and boosting the economic growth.
b) Fostering sources of investment to create better and good job opportunities by
improving investment climate and labor regulations.
c) Ensuring the universal coverage of National Social Security (SJSN) to stimulate
higher productivity:
• Ensuring compliance of the employers to enroll their employees.
• Increasing awareness of the informal workers to enroll.
• Open pension program option for informal workers.
• Advocacy, socialization, and innovation development in registration and payment system
• Integrated monitoring and evaluation for National Health Insurance (JKN) and
Employment Social Security.
22
TERIMA KASIH