End of 2015 will be the deadline for Indonesia to enter the Asean Economic Community (AEC), one that opens the boundaries of the rules regarding taxes, tariffs and duties on goods and services in the Southeast Asian region.
The presence of AEC will not only influence the free trade sector for a variety of goods, but will also affect the labour sector. With AEC, the Association of Southeast Asian Nations (Asean) will be competing freely to fill the labour sector across Asean.
For those countries that have a workforce with high educational qualifications and competencies, the AEC will be an opportunity to expand their workforce to other Asean countries.
What about Indonesia, is Indonesia truly prepared to face the AEC?
Central Statistics Agency (BPS) for August 2013 mentions that the number of Indonesian workers holding qualifications from elementary schools (SD) and below, is 52 million people (46.93 per cent) or nearly half of the total number of workers, amounting to 110.8 million people.
Workers who are Junior High School (SMP) graduates make up a total of 20.5 million people (18.5 per cent), while high school graduate workers (SMA) totalled 17.84 million people (16.1 per cent). University graduates form the lowest number of workers at 7.57 million people (6.83 per cent) and those with a diploma totalled 2.92 million people (2.63 per cent).
In comparison, according to the Department of Statistics Malaysia (DOSM) in 2012, Malaysia’s total employment was 13.12 million people with a total of 7.32 million people (55.79 per cent) as high school graduates and 3.19 million people (24.37 per cent) as university graduates and diploma holders.
Other Asean countries such as Singapore, according to World Bank data in 2012 had a total employment of 3.22 million people with high school qualification holders at 49.9 per cent and university graduates and diploma holders at 29.4 per cent.
From these data we can see that almost half of the Indonesian workforce (46.93 per cent) forms the low-skilled labour sector, in contrast with Singapore and Malaysia where 80 percent of its workforce are high school and college graduates. This implies Indonesia’s lack of preparedness in the ASEAN free labour market, should the AEC be in place on 31 December 2015