The book focuses on Indonesia's most pressing labor market challenges and associated policy options to achieve higher and more inclusive economic growth. The challenges consist of creating jobs for and the skills in a youthful and increasingly better educated workforce, and raising the productivity of less-educated workers to meet the demands of the digital age. The book deals with a range of interrelated topics---the changing supply and demand for labor in relation to the shift of workers out of agriculture; urbanization and the growth of megacities; raising the quality of schooling for new jobs in the digital economy; and labor market policies to improve both labor standards and productivity.

Migration presents a stark policy dilemma. Research repeatedly confirms that migrants, their families back home, and the countries that welcome them experience large economic and social gains. Easing immigration restrictions is one of the most effective tools for ending poverty and sharing prosperity across the globe. Yet, we see widespread opposition in destination countries, where migrants are depicted as the primary cause of many of their economic problems, from high unemployment to declining social services. Moving for Prosperity: Global Migration and Labor Markets addresses this dilemma. In addition to providing comprehensive data and empirical analysis of migration patterns and their impact, the report argues for a series of policies that work with, rather than against, labor market forces. Policy makers should aim to ease short-run dislocations and adjustment costs so that the substantial long-term benefits are shared more evenly. Only then can we avoid draconian migration restrictions that will hurt everybody. Moving for Prosperity aims to inform and stimulate policy debate, facilitate further research, and identify prominent knowledge gaps. It demonstrates why existing income gaps, demographic differences, and rapidly declining transportation costs mean that global mobility will continue to be a key feature of our lives for generations to come. Its audience includes anyone interested in one of the most controversial policy debates of our time.

In Indonesia, the past two decades have been a time of great progress but also massive transformations and abrupt setbacks. In this context, this book reviews the main characteristics of - and trends in - demand for skills in Indonesia. It seeks to document the existence of a possible skills mismatch between employer demands and the available supply, the contribution of the education and training sector to this mismatch, and possible measures to improve the education and training system's responsiveness to what the labor market and the economy need. In today's job market in Indonesia, there appears to be a premium on theoretical and practical knowledge of the job. While skills do not appear to be yet among the most important constraints for the economy, the situation is different for larger more export-oriented manufacturing firms. Subjective assessments of difficulties of matching needs with available skills provide evidence that skills are becoming an issue overall in Indonesia. The widest gaps across professional profiles are for English and computer skills followed by thinking and behavioral skills. Theoretical and practical knowledge of the job are also considered to be weak. There are important gaps in creativity, computing and some technical skills for young workers. English remains the largest gap. Five general skill related priorities can be highlighted for Indonesia. First, the country needs to improve skill measurement to get a fuller understanding of skill needs and gaps. Second, it is urgent for Indonesia to address the still unsatisfactory quality and relevance of its formal education, including higher education. Third, the country needs to set-up multiple pathways for skill development. Fourth, the country needs to develop an integrated approach to tackle skill development for youth. Fifth, Indonesia should also tackle labor market constraints which affect the skill matching process.

Because poverty mainly af ...

October 1996 Because poverty mainly afflicts agricultural and self-employed households in Indonesia, the most direct ways that policy can help to reduce poverty are through improving the operation of product, land, and capital markets, particularly where the regulatory environment now works to reduce farm profitability or inhibit entry to productive enterprises by the poor. Labor market policy can play an important role by facilitating, not impeding, labor mobility across sectors. The majority of the poor in Indonesia come from agricultural and self-employed house--holds. About 70 percent of the remaining poor came from rural agricultural households in 1993, and more than 72 percent lived in households that derived the bulk of their income from self-employed enterprises. Moreover, the largest single contribution to poverty reduction between 1990 and 1993 came from within-sector welfare gains to self-employed farm households. Data show that the role of the labor market in reducing poverty has increased since the mid-1980s. Wage labor markets can be expected to play an increasingly important impact on the welfare of Indonesia's poor as the economy continues to undergo structural change, and as the workforce continues to move out of agriculture into manufacturing and services. Because poverty remains largely an agricultural and self-employed phenomenon, the most direct way for policy to contribute to reducing poverty is to focus on improving the operation of product, land, and capital markets - particularly where monopolies reduce farm profitability or viability (for example, cloves, oranges) or where excessive regulations raise costs or inhibit entry to productive enterprises by the poor. At the same time, labor market policy can play an important role in the Government of Indonesia's efforts to reduce poverty by helping to facilitate labor mobility across sectors - for example, from low productivity activities in agriculture to higher productivity activities in other sectors. But if they reduce labor mobility, labor market policies can be counterproductive to Indonesia's poverty reduction efforts. Recent empirical evidence suggests that increases in the minimum wage may have hurt employment growth, particularly among small firms. As such, using minimum wage policy to ensure high wages to a limited number of (mostly nonpoor) workers will almost certainly diminish the poverty reducing potential of the labor market. This paper - a joint product of the Poverty and Social Policy Department and the Country Operations Division, East Asia and Pacific, Country Department III - is part of a larger study of the labor market in Indonesia undertaken by East Asia and Pacific, Country Department III. It was presented at a joint Ministry of Manpower, Indonesia-World Bank workshop, Indonesian Workers in the 21st Century, Jakarta, April 2-4, 1996.

Changes in the poverty profile.

Over the past two decades, the percentage of the world’s population living on less than a dollar a day has been cut in half. How much of that improvement is because of—or in spite of—globalization? While anti-globalization activists mount loud critiques and the media report breathlessly on globalization’s perils and promises, economists have largely remained silent, in part because of an entrenched institutional divide between those who study poverty and those who study trade and finance. Globalization and Poverty bridges that gap, bringing together experts on both international trade and poverty to provide a detailed view of the effects of globalization on the poor in developing nations, answering such questions as: Do lower import tariffs improve the lives of the poor? Has increased financial integration led to more or less poverty? How have the poor fared during various currency crises? Does food aid hurt or help the poor? Poverty, the contributors show here, has been used as a popular and convenient catchphrase by parties on both sides of the globalization debate to further their respective arguments. Globalization and Poverty provides the more nuanced understanding necessary to move that debate beyond the slogans.