How Indonesia is boosting workforce productivity through large-scale training

Indonesia has the world’s fourth largest workforce, with over 140 million workers. However, the country's labour productivity remains relatively low at IDR86.5 million (US$5,300) per year for every worker in 2023, according to data from the Ministry of Manpower. Indonesia's labour productivity rate also lower than neighbouring countries. According to the ILO report (2023), Indonesia's labour productivity rate is US$14 per hour, while Malaysia's is US$26 per hour and Singapore's is US$74 per hour. 

"This is the main challenge we address at Prakerja as part of active labour market policy, by providing skilling, upskilling and reskilling to improve workforce’s competence and productivity,” says Executive Director of Project Management Office, Kartu Prakerja, Denni Purbasari to GovInsider. 

Prakerja is the national skills development agency that runs Indonesia’s largest vocational training programme through Kartu Prakerja. This programme aims to provide training scholarships to improve  the competence and entrepreneurship capabilities of workers. 

In 2023, Prakerja disbursed about IDR4.2 million (US$260) to each participant, of which IDR3.5 million (US$215) is used to enroll in courses in the training portal, and the remaining IDR600 thousand (US$37) is used to reimburse the participants' Internet and transportation costs to attend the training. Participants can attend training both online and offline depending on the course they apply for. 

Over the past four years, Prakerja has provided training to 18.6 million workers from all provinces in Indonesia. This year, the programme is targeting 1.15 million participants with a total budget of IDR 5 trillion (US$307 million). 

Research from the Svara Institute has shown that the Prakerja increased workers income by 15-17 per cent per month on average. Another study found that the programme contributes to eight out of the 17 sustainable development goals. 

Prakerja's success has been studied by Cambodia's National Social Protection Council (NSPC) and Thailand's Equity Education Fund (EEF) with the objective to adopt similar policies in their respective countries. 

Using tech to reach more people faster 

Denni emphasises that technology has played a critical role in driving the programme’s success. "Why online training? Because it is the only way to scale in terms of numbers and speed," she says.  

Prakerja is the government's first end-to-end digital programme in Indonesia, from the registration, account verification, fund disbursement, to training process.  

To register, participants are required to verify their identity to ensure they are eligible to receive scholarship benefits. The verification uses a system that is connected by APIs with data from the Directorate General of Population and Civil Registry (Dukcapil) of the Ministry of Home Affairs.  

Once the applicant is eligible, he or she is asked to validate a bank account or digital wallet for disbursement, before they can use the fund to enroll in courses provided by training partners. 

"We apply machine learning to help participants get relevant training according to their interests and demographics, so hopefully this outcome can answer industry needs," she adds.  

Prakerja has developed a labour market ecosystem that integrates various services in one portal. This includes job vacancy information services from various job portals and industry associations. 

Adaptive and agile bureaucracy is key success 

Secondly, the programme aims to be adaptive. Prakerja was launched shortly after the government declared the emergency status during the Covid-19 pandemic.  

It was originally designed as a skills development programme, but it pivoted into becoming a semi-social assistance programme. During the pandemic from 2020 to 2022, every participant was provided a total incentive of IDR3.5 million (US$215) for training and social assistance. In 2020, Prakerja distributed incentives to 5.6 million beneficiaries. 

"We distributed cash assistance so that they could survive the economic difficulties, while giving them access to training to help them bounce back," she continued. 

Since 2023, Prakerja has returned to the normal scheme of things which means that it has renewed its focus on skills development and reduced its cash incentives. "With less cash incentives, we were worried that demand would drop sharply. However, the courses are currently oversubscribed by 3.4 times. This reinforces our belief that vocational training is really needed, and this is a good thing for the future." 

Strong political commitment 

There is strong political commitment from policymakers. Denni underlines that political support is needed to ensure the programme objectives are achieved, especially in terms of funding. 

"The country's productivity lies in its human capital. Efforts to keep people productive cannot rely on philanthropy and corporations," she said. 

She gave an example of how the Singapore government established SkillsFuture, which aims to upskill the workforce to face the challenges of evolving skills. Recently, the government increased the budget for training and subsidised education for people aged 40 and above. 

"The modern education system already includes adult learning. In the future, we must think about how to integrate the education system with the skills development system, rather than each being stuck in silos and achieving goals in their own way." 

It is also important to collaborate with the private sectors to tap into the market, to ensure that programmes are not only run in a technocratic way, but also optimise service delivery.  

"We hope that this initiative can be continued in the next elected government in a better way with greater collaboration among stakeholders."