Australian TVET skills for Indonesian manufacturing
By: Clarice Campbell, Katalis Skills Lead Adviser
Major opportunities exist for Australian Technical Vocational Education Training (TVET) providers to train the Indonesian manufacturing workforce.
Doors are opening for Indonesian manufacturing all over the world – and Australian Technical Vocational Education and Training (TVET) providers have a chance to be a part of the growth.
Indonesia is now the tenth largest manufacturing economy in the world, ahead of Mexico, Russian Federation, Türkiye and Brazil. In 2022, Indonesia produced 1.5 per cent of global manufacturing output, and manufacturing contributed 18 per cent to Indonesia’s GDP, nearly AUD360 billion in value.
Manufacturing employs over 19 million people across Indonesia. It is the second largest employer of vocational high school graduates, the third largest employer of graduates with a diploma, and the fourth largest employer of university graduates.
As Indonesia’s manufacturing continues to grow and modernise, and new industries come online, the manufacturing workforce urgently needs training to meet global demands. Australian TVET providers are well-placed to respond.
Past complex regulations and tariffs mean current manufacturing ties between Indonesia and Australia are moderate. But the 2020 IA-CEPA trade agreement changed the game. Now, over 99 per cent of Australian goods exports by value can enter Indonesia duty free or under significantly improved preferential arrangements. Likewise Australian tariffs on most Indonesian goods exports have been eliminated.
Since then, trade between the two countries has grown, and should continue to grow, as Indonesia and Australia explore a range of new opportunities in advanced manufacturing and related industries. Indonesia is also seeing increased inward investment, with AUD65 billion inward investment last year according to the Indonesian trade board, as it moves towards more technology intensive and value-added products, including minerals processing.
But the Indonesian manufacturing workforce may need help to be ready for this challenge.
Katalis recently worked with Equity Economics to analyse Prospera’s labour market dashboard, which tracks Indonesian job postings in real time, to understand what skills were most in demand in Indonesia’s manufacturing industry.
We looked at general manufacturing job listings from the past 18 months, separated by language of advertisement – English or Indonesian – and analysed the required skills against the European Dictionary of Skill and Competences (DISCO). This allowed us to go beyond job titles and look at core skills needed by Indonesian manufacturers.
So, what did we find?
Firstly, that foreign language skills, especially workplace English, are key to opening up advanced career opportunities in manufacturing. Jobs advertised in English commanded, on average, a 50 per cent higher salary than those advertised in Indonesian. Jobs advertised in English were also more likely to need analytical thinking, suggesting Indonesian manufacturers are willing to pay more for workers who can solve problems. Jobs advertised in English also tended to be seeking people with skills in leadership, teamwork, MS Office and Excel, and customer orientation.
Secondly, we found the top in demand occupation-specific skills were engineering, production management, project management and quality management, business management and sales, although there was variation in relative importance of each skill across different regions in Indonesia.
These findings reveal an emerging opportunity for Australian TVET providers to work with Indonesian manufacturers to build the skills they need in their workforce. Many of the in-demand skills align well with Australian TVET provider capabilities and specialities. The priority on workplace English positions Australian TVET providers even more strongly.
The focus on English and modern skills indicates that Indonesian manufacturers know they need to build their workforce skills to compete in the global economy. The Katalis IA Skills Exchange solves this problem, by offering TVET providers access to Indonesia’s booming market, and providing high quality Australian skills training directly to Indonesian industries.
For a full overview of the latest trends in skills needed in Indonesian manufacturing, read our full market insight here: https://iacepa-katalis.org/publications/katalis-market-insight/
Want to find out more? Get in touch with us:
Contact clarice.campbell@iacepa-katalis.org to discuss opportunities or visit https://www.iaskills.org/
