Designing higher education for a sustainable economy

Said Irandoust, Khlong Luang, Thailand | Opinion | Sat, October 19 2013, 11:36 AM

Indonesia’s impressive economic growth in the last decade has many pundits predicting that the country’s rise will last well into the current century. Judging by past and current trends, Indonesia’s economy is likely to break into the top 15 in the world in the next decade.

Serious talent shortages, however, threaten to undermine this positive and promising scenario for Indonesia. The challenges are obvious and many companies risk being left behind by being forced to decelerate their expansion plans unless they can recruit, develop and retain competent human resources. Many Indonesian companies are already facing talent issues at all levels, both qualitatively and quantitatively.

A recent report by the Boston Consulting Group has highlighted the issues of talent shortages in Indonesia, which concludes that the already bad talent shortages for managerial positions in Indonesia will worsen. The shortage is already acute at the middle management levels, and by 2020, there will be a need to fulfill the demand-supply gap of around 40 to 60 percent.

At senior-leadership levels, while modest leadership shortages may occur, the main challenge will be the lack of managerial and leadership experiences in the global context. At the entry-level, although the shortage is less severe, the lack of appropriate education, relevant skills and training among recruits is already a serious limiting factor for many companies. This situation will deteriorate rapidly and by 2020, many companies will be unable to fill about half of their entry-level positions with qualified, competent candidates.

In addition to these talent shortages for managers, technical resources are also in short supply. Annually, Indonesia graduates about 30,000 engineers. But the country’s economic growth requires around 50,000 engineers every year, a 40 percent shortfall. By 2025, this shortage is expected to increase to more than 70 percent.

Few of today’s graduates in Indonesia are sufficiently qualified for the positions available in the job market. A World Bank report of 2010 on Indonesian skills indicated that the skill profile of the human capital has not evolved along with the demands of the labor market. Skill mismatching is a major obstacle to furthering Indonesia’s economic growth.

Furthermore, although many companies face an aging workforce, few offer lifelong learning opportunities to keep skills current.

In the BRIC (Brazil, Russia, India, China), and many other emerging countries, the percentage of prospective employees with sufficient education and skills, especially in middle management, will be a fraction of what is needed.

In the absence of market-oriented university curriculums, many companies in emerging countries have to spend significant resources to operate state-of-the-art facilities for training employees, as evidenced by Infosys which recently inaugurated their Global Education Center-II in India.

The crux of the problem arises from the fact that Indonesia is not producing enough graduates to fulfill the requirements of competent human resources, whether in the manufacturing or in the services sector. Only 22 percent of the college-age population is currently enrolled in a college in Indonesia, a lower percentage than in all of the BRIC nations except India. By 2020, Indonesia will have one of the largest college-going populations in the world, but with limited access to market-oriented education opportunities within its borders.

Strengthening human resource capacity is one of the main elements in the implementation strategy of the Indonesian master plan for the acceleration and expansion of Indonesian economic development for 2011-2025. The master plan highlights that in the era of the knowledge-based economy, the engine of economic growth depends heavily on the capitalization of inventions.

The master plan recognizes that productive human resources are the driving force of economic growth. To generate a productive workforce, it is deemed necessary to have high quality education that is relevant to the development needs.

All these factors show that today we are witness to an era of globalized competition for high-end skills that is perhaps unprecedented. Indeed, clever governments around the world are actively involved in brisk attempts to cultivate and secure the planet’s best young minds.

By equating intellectual capacity, knowledge and creativity with eventual prosperity, economic advancement and even national security, governments are now on the lookout to attract smart, dynamic professionals who are drivers of innovation and future growth.

In Indonesia, countless smart, savvy, mobile professionals are now on the move as highly sought-after commodities.  Indonesian university students are now sprinting beyond their own country’s borders in search of world-class educational opportunities in richer countries.

To meet all these challenges, Indonesia needs to get its higher education right as soon as possible. Last year’s World Bank East Asia and Pacific report on higher education titled “East Asia Putting Higher Education to Work” offers useful prescriptions by calling for higher-learning institutions to align their curricula and research with the needs of employers facing chronic skills shortages.

Central to its findings is a recommendation for regional policy reform in financing and public sector management of learning systems to achieve better human capital and R&D outcomes.

In a sign of what is possible, a new US$ 90 million ADB project for Vietnam intended to strengthen the teaching of biology, chemistry, mathematics, physics and social sciences should close the labor gaps and help the growing country’s young people attain the skills needed in the job market. This should be replicated around the continent, particularly in Indonesia.

Indonesia also needs to urgently put in place a new type of teaching and learning, a new type of university with strong orientation toward professions with the aim to be a first choice for professionals who want to further develop and enhance their careers, and for employers who want a more creative and skilled workforce in the modern professional world.

This is linked to the vision of a distinctively different 21st-century knowledge society where knowledge is judged worthy to the degree that it can be applied for positive societal changes, sustainable socio-economic development and promoting understanding for advancing the greater global good.

Also, the existing universities should make the highest priority producing graduates who are highly employable for stimulating jobs and/or business/job creators once they have graduated.

The curriculum of universities should be competency/outcomes-based where the emphasis is on what comes out of education — what graduates know and can do — rather than what goes into the curriculum.

The ultimate goal for the higher-education sector should be to produce graduates with strong intellectual virtues such as openness to new ideas, freedom of speech, respect, love of truth, honesty, courage, fairness and wisdom. The role of universities is to provide a diverse community of socially responsible, creative and entrepreneurial career professionals equipped with the habits of lifelong learning for the needs of the 21st century.

In an economy that is shifting toward a knowledge-based economy, the role of higher-level education is very important in creating a superior and productive workforce. The improvement of human capital mastering science and technology is urgently needed when Indonesia enters the innovation-driven economic stage.

This is the historical moment to educate the next, smartest generation that is fit for the purpose of sustainable development for a prosperous Indonesia. This is what the future of Indonesia deserves.

The writer is president of the Asian Institute of Technology, Thailand

Who benefits from higher education?

Amich Alhumami, Jakarta | Opinion | Sat, June 01 2013, 12:34 PM

Paper Edition | Page: 7

Education is a public good, that is indisputable. But whether higher education is also a public good, has long been a subject of scholarly debate among experts.

Such a debate is instigated by two related views. First, the economic benefits of higher education mostly go to private individuals rather than to society in general. Economic benefits include all kinds of advantages whether monetary or non-monetary, which can be equalized to material wealth.

Private individuals should therefore share a larger portion of the cost of higher education, as they benefit much more from it economically. Second, the logic of this view asserts that public funds should not be allocated in large proportion to higher education, as it produces mainly private economic benefits.

And those benefiting from higher education are mostly from high-income groups. Indeed, they enjoy very much the benefits of investment in higher education.

Two prominent economists, George Psacharopoulos and Harry Patrinos (2004), have analyzed returns on investment in education by income in both developed and developing countries. In developing countries with about US$3,000-$9,000 of income per capita, returns on investment from higher education for the public and private sectors are 11.3 percent and 19.3 percent respectively.

Similarly, in developed countries with an income of $9,500 above the share of public and private returns on investment in higher education is 10.8 percent and 19.0 percent respectively.

But the gap between the two is much wider in low-income countries with less than $1,000 of average earnings, accounting for 11.2 percent and 26 percent respectively (see Handbook of the Economics of Education, E.E. Publishing Ltd., 2004).

Nonetheless, is the argument saying that high-income groups reap the predominant economic benefits of higher education valid? Perhaps we should take into account the counterargument showing that middle class families and individuals who complete their tertiary education are tax payers. As they get jobs, they take part in economic activities which are supportive of national productivity.

A number of studies confirm that university-educated workers especially those with advanced knowledge and skills relevant to industry are much more productive. As a result, the incomes of college graduates increase faster than the incomes of those without tertiary education. In this context, they make a significant contribution to generating public revenue and creating shared economic resources for the common good.

Here, public funds collected from tax are then allocated for financing basic social services such as education. Yet, some people may argue that there is still a big problem related to the affordability of higher education.

In the context of Indonesia’s education attainment, it is stunning to note the issue of equity of access to higher education. It might be surprising to realize how wide is the disparity of education participation at tertiary level in terms of socio-economic groups. The total population aged 19-23 years old amounts to about 19.9 million people, and the number who are enrolled at both public and private universities, including religious and vocational higher education institutions, is about 5.8 million people.

The Education and Culture Ministry statistics (2011) show that the gross enrollment rate of tertiary education has reached 27.1 percent. However, we observe the fact that there is a great deal of disparity in higher education participation with reference to the National Socio-Economic Survey (BPS 2011).

It is reported that the proportion of quintile one (the poorest 20 percent of the population) studying at universities is only 4.4 percent; meanwhile, the proportion of quintile five (the richest 20 percent of the population) entering higher education institutions has already reached 43.6 percent.

This data clearly shows that the disparity in higher education attainment is evident illustrating that tertiary education is mostly enjoyed by the rich. Indeed, the inequity of higher education has become a critical problem which could instigate socio-political divisions within Indonesian society.

If this situation continues, social segregation based on economic status within society will worsen. Here, we should take into consideration the Marxian caveat: political uproar demanding radical change in social structures often results from the so-called class struggle, as people fight for economic resources and access to power. And the crux of the problem has always been social inequality including unequal access to higher education.

To promote equity in higher education, it must be affordable for all young people regardless of their socio-economic backgrounds. To do so the government has introduced the so-called Bidik-Misi scholarship program for students from low-income families. The Bidik-Misi scholarship program is considered a breakthrough since it paves the way for poor students to enter university.

This program has four main objectives: (1) improving access to higher education in order to lessen the gap in educational attainment between the poor and the rich; (2) widening the coverage of higher education in the young and productive population in order to enhance the competitiveness of Indonesia’s economy; (3) enlarging educated middle class groups in order to establish strong socio-economic structures; (4) expanding the critical mass within society in order to strengthen the social and cultural basis for the improvement of political democracy and for the betterment of the nation.

The beneficiaries of the Bidik-Misi scholarship program are increasing from year to year. Indeed, it is designed to respond to public aspirations that demand equal access to higher education. In this respect, it is reasonable if the government applies an affirmative action policy to overcome financial constraints for disadvantaged groups to get enrolled in university.

Certainly, affirmative action seems to be the only socio-political instrument to prevent high-income groups from dominating the economic benefits of higher education.

The writer, an anthropologist by training with a PhD obtained from the University of Sussex, UK, works at the Directorate of Education, the National Development Planning Agency (BAPPENAS). The views expressed are personal.