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Indonesian workers at risk of losing service jobs in Asean race

Publication Date : 26-05-2014

 

Never before has Feby, 31, been as worried about her future as she is these days.

An employee of a local bank in Indonesia, Feby says the feeling stems partly from new challenges in the domestic job market resulting from the freer flow of labour from neighbouring Southeast Asian countries, set to begin next year.

“I certainly have aspirations for a better career, but I’m a bit worried the competition will be tighter ahead [and] at the same time, I feel I have some gaps [compared to] foreign workers, such as language skills,” said Feby, who has been working at the bank for five years.

Earlier this year, the management of her office required employees in all positions to submit English test certificates, although they had already passed such tests during recruitment, and Feby fears the office may also start to demand higher professional competencies.

Many other Indonesian workers may share Feby’s concerns, as they are becoming increasingly aware of the opening of the services sector under the Asean framework, which will consequently bring in workers to support jobs.

Indonesia, together with its Southeast Asian peers, is slated to liberalise 12 service sectors, including business services, financial services, health-related and social services, as well as tourism- and travel-related services, with the establishment of the Asean Economic Community (AEC) by the end of next year.

At present, the commitment for the movement of professionals from the region to Indonesia is both time-bound and unbound.

Economists have warned that Indonesians may risk losing not only highly skilled jobs in sectors like telecommunications, transportation and financial services, but also semi-skilled jobs in areas like tourism and distribution services, with the regional liberalisation of service sectors that will also ease the flow of service providers.

Business expansion that came with Indonesia’s fast-growing economy, and higher competencies of skilled workers from other Asean countries could possibly trigger bigger inflows of workers from neighbouring Southeast Asian countries compared to the outflow of Indonesian workers, according to Atma Jaya University economist A. Prasetyantoko.

“The opportunity for Indonesian workers to occupy certain positions will likely be slimmer because they may be filled by workers with better qualifications from other Asean countries,” he said.

Prasetyantoko pointed out that competitive salaries in sectors like finance and IT in Indonesia would be the primary factor luring foreign workers to the country.

A report by the Boston Consulting Group last year estimated that firms operating in Indonesia would see a deficit between the supply and demand of middle managers of up to 56 per cent as the nation failed to prepare its labour force to tap into robust growth in the services sector.

In the country’s rapidly growing finance industry, the shortage of qualified professionals has resulted in a gap between supply and demand at the middle-management level set to reach between 40 per cent and 60 per cent by 2020, according to an industry estimate.

Alex Denni, senior vice president for human capital strategy and policy at Indonesia’s biggest bank by assets, Bank Mandiri, said that reliance on foreign providers of business services, particularly technology and management consultants, would be inevitable as it should thrive on the heels of tougher competition with international and regional players.

That would occur despite Mandiri’s stance on prioritising hiring domestic workers, he said.

“We need best practices and a benchmark to find new ways to carry out our business activities and to win more open competition,” Alex said in an emailed statement.

Ersa Tri Wahyuni, technical director of the Indonesian Accountants Association (IAI), said that there would likely be bigger inflows of foreign accountants to Indonesia by 2015 as there were huge opportunities being provided by growing business expansions but the country lacked accountants with the appropriate certifications to handle certain jobs, particularly under current international standards.

Indonesia started adopting the International Financial Reporting Standards (IFRS) in 2012 — one step behind its neighbours such as the Philippines, Malaysia and Singapore that earlier applied the measures.

Indonesian Institute of Sciences (LIPI) economist Agus Syarip Hidayat said overseas workers would also flock to the country to grab semi-skilled jobs in the maritime, logistics and tourism industries because they were more prepared.

“Our Southeast Asian rivals have prepared [for labour competition in service sectors], notably through facilitation by the government, while we have not,” Agus said.

He cited an example of the Thai and Vietnamese governments providing Indonesian language training for their workers in tourism-related services.

He added that the Indonesian government should begin concerted efforts to facilitate semi-skilled workers not only staying in domestic jobs, but also to tapping into potential opportunities in other Asean countries.
 The Jakarta Post, Jakarta | Business | Mon, May 26 2014, 10:10 AM


Never before has Feby, 31, been as worried about her future as she is these days.

An employee of a local bank in Indonesia, Feby says the feeling stems partly from new challenges in the domestic job market resulting from the freer flow of labour from neighbouring Southeast Asian countries, set to begin next year.

“I certainly have aspirations for a better career, but I’m a bit worried the competition will be tighter ahead [and] at the same time, I feel I have some gaps [compared to] foreign workers, such as language skills,” said Feby, who has been working at the bank for five years.

Earlier this year, the management of her office required employees in all positions to submit English test certificates, although they had already passed such tests during recruitment, and Feby fears the office may also start to demand higher professional competencies.

Many other Indonesian workers may share Feby’s concerns, as they are becoming increasingly aware of the opening of the services sector under the Asean framework, which will consequently bring in workers to support jobs.

Indonesia, together with its Southeast Asian peers, is slated to liberalise 12 service sectors, including business services, financial services, health-related and social services, as well as tourism- and travel-related services, with the establishment of the Asean Economic Community (AEC) by the end of next year.

At present, the commitment for the movement of professionals from the region to Indonesia is both time-bound and unbound.

Economists have warned that Indonesians may risk losing not only highly skilled jobs in sectors like telecommunications, transportation and financial services, but also semi-skilled jobs in areas like tourism and distribution services, with the regional liberalisation of service sectors that will also ease the flow of service providers.

Business expansion that came with Indonesia’s fast-growing economy, and higher competencies of skilled workers from other Asean countries could possibly trigger bigger inflows of workers from neighbouring Southeast Asian countries compared to the outflow of Indonesian workers, according to Atma Jaya University economist A. Prasetyantoko.

“The opportunity for Indonesian workers to occupy certain positions will likely be slimmer because they may be filled by workers with better qualifications from other Asean countries,” he said.

Prasetyantoko pointed out that competitive salaries in sectors like finance and IT in Indonesia would be the primary factor luring foreign workers to the country.

A report by the Boston Consulting Group last year estimated that firms operating in Indonesia would see a deficit between the supply and demand of middle managers of up to 56 per cent as the nation failed to prepare its labour force to tap into robust growth in the services sector.

In the country’s rapidly growing finance industry, the shortage of qualified professionals has resulted in a gap between supply and demand at the middle-management level set to reach between 40 per cent and 60 per cent by 2020, according to an industry estimate.

Alex Denni, senior vice president for human capital strategy and policy at Indonesia’s biggest bank by assets, Bank Mandiri, said that reliance on foreign providers of business services, particularly technology and management consultants, would be inevitable as it should thrive on the heels of tougher competition with international and regional players.

That would occur despite Mandiri’s stance on prioritising hiring domestic workers, he said.

“We need best practices and a benchmark to find new ways to carry out our business activities and to win more open competition,” Alex said in an emailed statement.

Ersa Tri Wahyuni, technical director of the Indonesian Accountants Association (IAI), said that there would likely be bigger inflows of foreign accountants to Indonesia by 2015 as there were huge opportunities being provided by growing business expansions but the country lacked accountants with the appropriate certifications to handle certain jobs, particularly under current international standards.

Indonesia started adopting the International Financial Reporting Standards (IFRS) in 2012 — one step behind its neighbours such as the Philippines, Malaysia and Singapore that earlier applied the measures.

Indonesian Institute of Sciences (LIPI) economist Agus Syarip Hidayat said overseas workers would also flock to the country to grab semi-skilled jobs in the maritime, logistics and tourism industries because they were more prepared.

“Our Southeast Asian rivals have prepared [for labour competition in service sectors], notably through facilitation by the government, while we have not,” Agus said.

He cited an example of the Thai and Vietnamese governments providing Indonesian language training for their workers in tourism-related services.

He added that the Indonesian government should begin concerted efforts to facilitate semi-skilled workers not only staying in domestic jobs, but also to tapping into potential opportunities in other Asean countries.


 

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