ADB, Indonesia Improving Education to Close Labor Market Gaps

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is lending $75 million to bring Indonesian industries and polytechnic institutions together to update vocational training and better align graduates’ skills with employers’ needs.

Watch how ADB supports vocational education in Indonesia.

“Job seekers know that employers are looking for highly skilled, highly trained employees. This program will help graduates of Indonesia’s polytechnic institutions get the training they need to land the jobs they want,” said Wolfgang Kubitzki, a Principal Portfolio Management Specialist at the Indonesia Resident Mission.

Indonesia’s polytechnic education system, which includes 32 public and 140 private institutions, is considered as a significant contributor to accelerate the shift towards a knowledge-based economy and the development of a productive workforce. The proposed project will support the economic policy objectives by increasing access to, and quality and relevance of, the polytechnic system to deliver improved skills that meet the identified needs of employers and the employment aspirations of graduates.

More than 80% of graduates from high-performing public polytechnics find jobs within three to six months of graduation, but feedback from employers reveals that many new employees need retraining, as their knowledge and skill set doesn’t match what’s needed in the workplace. Many graduates of weaker polytechnics, meanwhile, can spend more than a year searching for jobs, as their training programs are considered out-of-date or poorly taught.

The project will provide targeted support to polytechnic institutions in six economic corridors so they can deliver high-quality programs related to manufacturing, infrastructure, mining, agro-industry, and tourism. It will also establish a $38 million flexible and demand-driven National Skills Fund, which polytechnics can use to access resources to upgrade their learning environments, strengthen lecturers’ professional development, and improve study programs with inputs from industry.

Building on the goals of the Indonesian Master Plan for Acceleration and Expansion of Indonesia’s Economic Development, the project should increase the number of students enrolled in polytechnics, especially female students, and increase the number of students finding relevant employment within six months of graduation.