It is all but impossible to discuss Indonesia today without acknowledging the significance of the country’s increasingly rapid pace of change — evident in economic development, social and cultural areas, and in its young people, or so-called millennials.
Millennials — by some definitions those born between the late 1970s and the mid-1990s — use technology routinely to communicate and to consume and are more connected and less homogeneous than previous generations. “Millennial” can also mean those aged 15 t0 24 years old.
They demonstrate creativity and enterprise on the periphery of more formal channels of innovation such as universities, network-rich tech incubators, or venture-capital-driven accelerators. Through grit and ingenuity, young people are cobbling together a mix of resources to forge a distinct pathway to opportunity.
An expert on millennials, Craig Watkins, in an article titled Doing Innovation: How Millennials Are Navigating Today’s Economy, argues that one of the most crucial resources in any vibrant innovation ecosystem is the capacity to cultivate social capital — rich social connections to provide access to expertise, financial capital, and mentoring. Largely because of globalization, the viewpoints and attitudes of millennials are profoundly different from those of the previous generation. While the older generation remembers how to play cassette tapes and VCRs, millennials are familiar with smartphones, iPods, iTunes, Facebook, Instagram, and Twitter.
With technology at the core of their lives, millennials have a different view of the world and, supported by education, have increased their ability to think creatively and reshape traditional economic practices to suit modern life. However, in practice there is a wide diversity of interest, knowledge, access and opportunity for young people because of Indonesia’s ethnic diversity, its environment, and social inequality.
Not all young people in Indonesia can access the same communication tools, especially those who are marginalized, part of minority groups, or live in remote rural areas. They also don’t have access to basic needs such as education and health care which, in turn, affects future employment opportunities and the ability to eradicate poverty.
Some groups face particularly strong labor market challenges, including ethnic minorities, those living in deprived areas, low-income families, and those with low education levels.
Young people, an opportunity or a threat?
The world’s 16th largest economy in 2012, Indonesia is projected by the McKinsey Global Institute, a private-sector think tank, to become the seventh largest by 2030. This optimistic outlook reflects Indonesia’s development of its macro economy. McKinsey says Indonesia has 55 million skilled workers, 45 million members of the consuming class, and 53% of the population in cities producing 74% of GDP.
But challenges remain for Indonesian youth. The World Bank published data in 2011 stating that, globally, a young person’s risk of being unemployed was three times higher than an adult’s. Even worse, the World Bank Group Entrepreneurship snapshot reported low job creation, specifically in entrepreneurship, in Indonesia, with less than 2%, compared with Thailand’s 4.1%, and Singapore’s 7.2%.
Indonesia must encourage youth engagement in education, employment, and entrepreneurship so they can be more competitive in a globalized world. The large youth population — there are up to 65 million young people aged 10 to 24 years old — should be an opportunity for Indonesia, not a threat to development.
Unemployment has long-term consequences
Global youth unemployment is one of the principal social and economic challenges of this decade. Chronic unemployment can have severe long-term effects on individuals, such as reduced income and social exclusion.
In a creative economy, businesses promote knowledge convergence, and advanced technology based on coordinated learning to create new markets and new jobs. Creative economies are flourishing in developed countries, primarily the United States, the United Kingdom, the European Union, and Japan. In many developing countries such as Indonesia, commodity prices are declining, and populations are growing strongly. But the country’s ethnic cultures and arts can be promoted to enhance national pride and economic gain.
Indonesia’s youth face barriers in three major areas — soft and hard educational skills, financial inclusion, and market challenges. These barriers are inter-related, demonstrating the need for a package of policy tools, rather than a single one-shot solution. Another barrier is inequality of opportunity. Access to technology is still concentrated in large urban areas, and young people in rural areas lack adequate entrepreneurship education, work experience, and access to loans and credit.
The way forward
To boost youth engagement in creative ideas, regional economic integration is needed. To achieve this, young people have to be treated as a partner in, rather than an object of, development.
Education: Stakeholders have to realize that education is closely related to career opportunities, and it can determine whether a young person becomes an active contributor to the creative economy. The education system should allow students and graduates to learn beyond the classroom and touch upon life-skills and non-formal education. Academia, business, and government should collaborate to ensure smooth transitions from education to decent employment to enable students and graduates to meet the requirements of the creative economy.
Collaboration for social good: Call it corporate social responsibility or social entrepreneurship, there is a need for a strong collaboration in which the private sector can support young people by funding their social-enterprise activities.
Youth participation: Public and private stakeholders can provide opportunities for hands-on experience through volunteerism, fellowships, and internship programs which will help equip young people with practical job experience.
Financial inclusion: Easy access to credit would help support the capital needs of youth starting a business. This could be done through grant competitions based on a business plan, low interest rates, less stringent loan requirements, coupled with business mentoring for potential young entrepreneurs
The big picture: Policies should focus on developing creative skills; encouraging marginalized youth by improving access to opportunities; providing support and investment, information, advice, coaching and mentoring. The potential of Indonesia’s young people needs to be energized to develop the country’s creative economy