A workers' rights protest in Banten in November 2016. (Antara Photo/Asep Fathulrahman)

Indonesia's Competitiveness Stales Amid Increasingly Techy Global Economy


JANUARY 16, 2017

Jakarta. Indonesia's ability to compete for the best talent and maintain and grow its existing skilled workforce has stagnated relative to its peers, undermining its ability to maintain growth amid rapid advances in technology and automation that drive the global economy, according to an index published by the graduate business school Insead on Monday (16/01).

The largest economy in Southeast Asia scored 36.81 points in the Global Talent Competitiveness Index 2017. Indonesia was ranked 90 out of 118 countries, the same position as last year.

The report said Indonesia "has a long way to go" in terms of cultivating talent pool large and competitive enough to support its growth in the middle of a massive shift in the global economy led by rapid advancement in machines and technology.

Technology and machines would inevitably replace some workforce, so countries like Indonesia needs to "rethink" its growth model and invest in workforce skills improvement, the report said.

On the positive side, the report noted that Indonesia is "increasingly perceived by business leaders as being attractive to high-skilled people," opening a possibility of faster skill and knowledge agglomeration.

Indonesia is left far behind its neighboring country Singapore, which scored 74.09 points in talent competitiveness, retaining its second position globally, behind Switzerland. Malaysia — which took the 28th position globally — scored 56.41 points.

The report found that most high-ranking countries are dominated by developed, high-income countries with European countries dominating the highest rankings.

"High ranking countries share key traits, including educational systems that meet the needs of the economy, employment policies that favor flexibility, mobility and entrepreneurship, and high connectedness of stakeholders in business and government," Insead said in a statement.

Indonesia, however, scored better than India which took 92nd position in the index, Cambodia (108th) and Madagascar (118th).

The Global Talent Competitiveness Index measures how countries grow, attract and retain talent, providing resources for government, investors and employers to make better policies and decisions.

The index drew data from public sources, such as the United Nations Educational, Scientific and Cultural Organization (Unesco) for quantitative data; the World Bank's the World Governance Indicators and the Doing Business Report for composite indicator data; and the World Economic Forum’s Executive Opinion for survey data.

This year's report highlighted the effects of technological disruption on talent competitiveness.

"Technology is changing the ways we live and work, though not always in a spectacular fashion," Bruno Lanvin, Insead executive director of global indices and co-editor of the report, said in a statement.

Despite beliefs that machines will threaten the labor market, the report — which measures each country's readiness in the educational system, employment, stakeholders connectivity and technological competences —pointed out that technology is also creating new opportunities.

"Routine work is being taken over by algorithms and machines, but this creates new opportunities for connected, innovative work," Paul Evans, Insead shell chair professor of human resources and organizational development emeritus, said.

The report was published by Insead in cooperation with the global staffing firm Adecco Group and Singapore-based educational consultant Human Capital Leadership Institute.