Dr. Ninasapti Triaswati
Introduction
Indonesia has developed very rapidly during the past three decades. The average annual growth rate of GDP in the last decade before the crisis hit in 1996 is more than 7 percent and the inflation rate is relatively low, below 10 percent. (Table 1).The population growth is about 2 percent and the open unemployment rate is about 5 percent.
The path of development in Indonesia has been disturbed by the economic crisis since mid-1996. The impact seen among others are the declining pattern of investment in human capital, the increasing drop out rate at primary to tertiary level and the reduction of quality of education. These problems are critical, since the disturbance of investment in human capital will affect the future national output. Therefore it is important to describe strategies in human resource development, especially in financing education, to save the future generation.
The paper will describe three aspects: First, the policies of human resource in Indonesia before crisis. Second, the impact of crisis on the human resource development in Indonesia. Third, the design of human resource development in Indonesia to overcome crisis
Human Resource Development in Indonesia compared to other APEC Countries
Based on the Human Development report (UNDP, 1998) the human resource development in Indonesia can be represented by the human development index. Using the 1995 data, Indonesia is categorized as a country with medium human development. The human development index for Indonesia is 0.679 (Table 2). The human development index represents three indicators (UNDP, 1996). First, longevity which is measured by life expectancy at birth. Second, educational attainment which is measured by a combination of adult literacy (two third weight) and combined primary, secondary and tertiary enrollment ratios (one third weight). Third, standard of living which is measured by real GDP per capita (PPPs).
The standard of living in Indonesia in 1995 is relatively low, PPP$ 3971, among the lowest compared to other APEC countries, after Viet Nam, Papua New Guinea, Philippines, China and Peru. The performance of education based on education index is also among the lowest compared to other APEC countries, i.e. Papua New Guinea, Malaysia and China. The combined first, second and third level gross enrollment ratio is 62 percent, after Papua New Guinea (37 percent), Thailand (55 percent), Viet Nam (55 percent and Malaysia (61 percent).
The comparison within ASEAN region also shows that there is positive correlation betweeen GDP per capita (1987 US$) and human development from 1960 to 1995. Indonesia is ranked the lowest in this comparison. (Figure 1).
Public expenditure on education in Indonesia is mostly (79 percent) on primary and secondary education (Table 3). Only 18 percent of the total education budget is allocated for higher education.
In 1995, the labor force in Indonesia is only 46 percent of the total population, which is among the lowest compared to other APEC countries (Table 4). This proportion is larger than in Peru (36 percent), Mexico (39 percent), Chile and Malaysia (40 percent), Philippines (41 percent) and Brunei Darussalam (43 Percent).
Policies in Human Resource Before the Crisis
By the mid 1990s, Indonesia has about 220,000 schools with more than 45 million students and 40,000 preschools and kindergarted with 1.65 million students (ADB, 1998).
The basic strategies in human resource development are the expansion in primary and secondary education, while introducing new paradigm for tertiary education. This new paradigm basically is the improvement of higher education quality through five aspects. These are relevance (external efficiency), academic atmosphere, sustainability, (internal) efficiency and productivity.
Six Years Universal Basic Education.
In early 1970s government introduced education subsidy for basic education which is called Inpres SD. The program has successfully increased the Gross School Enrollment Rate from 1970 to 1993 (Table 5), at the primary level from 73 to 112 (male) and from 87 to 116 (female). In 1971, most of the Indonesia population only reach the primary education level, i.e. 74 percent of Indonesian population has education less than primary school and 20 percent has completed primary school. In 1994 these figures improve to 34 percent of Indonesian population has education less than primary school, 37 percent has completed primary school and the rest has completed junior secondary school and above.
In early 1990, the World Bank study which titled is the East Asian Miracle: economic Growth and Public Policy (World Bank, 1993) stated that the succesfull growth in these High Performing Asian countries is due to the balanced investment in human capital especially in primary education level.
Nine Years Universal Basic Education
In 1994, government of Indonesia plan to expand the universal basic education into nine years. The expansion of universal education from six years to nine years has required huge financial resources. After crisis in 1996 the education funding is very limited. The study (ADB, 1996) shows that the quality of most public schools, both primary and secondary schools, are very low. Therefore, the challenge in public basic education is increasing the quality of education, more than the expansion of universal basic education..
According to present policy, most of education funds are allocated by the central government. The allocation has proven to be inefficient (ADB, 1996). The discussion of fiscal decentralization in Indonesia has developed the ability of local government in improving the efficiency of human capital investment in education. The local government, both provincial level and district level, will have more capacity in improving the efficiency and the effectiveness of education funding allocation in its area than the central government. .
Current Policies in Higher Education: New Paradigm
Indonesia currently has 51 public universities institutes. In 1996, the Directorate General for Higher Education introduced the Medium Term Strategy in Higher education which is called New Paradigm. The idea of new paradigm among others is to improve the quality and expansion of higher education through a competitive distribution of subsidy in public higher education institution. Criteria for the distribution are five aspects which is abbreviated as RAISE. These are Relevance, Academic atmosphere, Internal management and organization, Sustainability and Efficiency and productivity.
The distribution of investment funding is conducted by clustering the public higher education. The program which is called the Development of Undergraduate Education (DUE) is designed for a relatively low quality public higher education institution. While another program, which is called the Quality for Undergraduate Education (QUE), is directed for the best program studies based on their proposal. The evaluation process is conducted by a group of experts as peer reviewers.
The allocation of maintenance and operational costs, including salary of the teaching and administration staff, is planned to be allocated though performance based funding mechanism. The main indicator for this allocation among others are number of graduates.
Existing Social Protection System
Currently, there is social insurance system in Indonesia for medical benefits and for work injury and program for old age (retirement fund) and disability. However, there is no unemployment assistance and there is limited social assistance such as welfare program for the poor. Limited grant for underdeveloped village (Inpres Desa Tertinggal) is available since 1993 to improve the village condition. In 1996 government of Indonesia provides limited grant for the low income families in the form of saving (Tabungan Keluarga Sejahtera, Takesra) and loan (Kredit usaha Sejahtera, Kukesra) who live outside the underdeveloped village. Source of funds for Takesra and Kukesra at the beginning are from group of big conglomerates in Indonesia which is called Jimbaran Group. Now the sources of funds are axpanded to 2 percent taxation on companies or individuals who has annual after tax income above Rp 100 million.
The Impact of Crisis on Human Resource Development in Indonesia
World Bank: 1998 Education Sector Report
The World Bank stated three main risks that threatened the human resource development in the present condition. First, the declining of enrollment at the basic education level, especiallly in the lower income group. Second, the deterioration of school quality at all levels of education. Third, compounding resource wastage due to existing inefficiencies.
The declining of enrollment at the basic education level is shown by the econometric estimation based on 1996 data of National Socio Economic Survey (SUSENAS). The reduction of income by 10 percent will reduce the number of enrollment by 115,000 to 260,000 for 7 to 12 year olds, 173,000 to 270,000 for 13 to 15 year olds (World Bank, 1998). Ministry of Education and Culture predicts more severe impacts for dropping out rate at primary and secondary level, these are 890,000 and 640,000 children respectively.
The deterioration of schooling quality will be the result of government and community cost minimization strategy in facing the crisis. Community whose member are low income households will be critical, since they will be the one who suffer most from the economic crisis.
The government inefficiency problems appears in three areas. First, the centralization of subsidy for education. Second, the teachers’ mismatch and the inadequate incentive structures of government officials. Third, the inefficient location of public schools. The reduction government revenue will worsen the government inefficiency problems.
The Social Impact of the Crisis in Indonesia
The study conducted by Sumarto et. al. (1999) were based on a subjective, expert respondent survey in 4025 districts (kecamatan). The respondents in aeah districts are an agricultural officer in rural areas or development officer in urban areas, the school supervisor and the health officer. The questions asked among others is degree of different kinds of impacts, including health and education. The respondents answer are qualitative based on a five point scale: 1=somewhat improved, 2= about the same, 3= somewhat worse, 4= much worse 5= very much worse. The results are represented by summary indices. The study appllies principle components analysis for the construction of the indices. The education index is a combination of nine questions, among others are enrollments and drop outs at the primary level, parental contribution and teacher attendance. The weakness for this approach is the loss of quantitative precision and the results rely on a very small number of respondents in each location.
However, the results give a first indication of overall crisis impacts (Table 6). Analysis of this survey results shows the indication that urban areas have been hit harder than rural areas, except in education. The impact on education shows that from 20 hardest hit areas, 12 of them are rural areas. The main result of this study are consistent with data from other survey.
The Policy Design for Human Resource Improvement
The policies can be categorized into two groups: First, the short run policies, these are the policies needed to sustain the welfare and the human capital investment, especially protecting the low income families.
· Improving efficiency in allocation of fund for the poor, by targetting directly the program to the poor, reducing the bureaucratic channel of distribution
· Protecting the low income family investment in human capital:
The policies among others are scholarship programs, increase people contribution to protect the poor from drop out of school through promotion in media
· Maintaining the quality of school, especially in the low income communities:
The policy is to provide grants to school especially for textbooks and materials needed to maintain school’s quality
· Improving efficiency in all level of education, both external efficiency and internal efficiency, including the decentralization of planning
Second, the medium run and long run policies, these are the policies needed to improve the human resource infrastructure:
· Reform in Education Finance which promotes efficiency and equity, includes the challenge in fiscal decentralization:
To study the impact of change the administration of schooling to the School Based Management and Community Based Management and then based on the study, apply the pilot project for this program.
· To improve the welfare program which include the general program of social assistance for the poor. At first, the improvement of centralized database of population needed to avoid the loopholes in expenditure side.
· To build institutional capacity, especially to prepare the human resource improvement of government officials , both at the central government and local government, to carry out the monitoring and evaluation of the programs.
· To improve the educational quality by periodically monitor the national curiculum at primary to tertiary level of education and to ensure that the curriculum is effective; to monitor the distribution of teaching staff and the quality of teaching staff..
Bibliography
Asian Development Bank and Comparative Education Research Centre (1998). Financing of Education in Indonesia, research team: David Clark, James Hough, Aris Pongtuluran, Robert Sembiring, Ninasapti Triaswati, supervised by S.A. Chowdhury edited by Mark Bray and R. Murray Thomas
Lee, JongWha and Changyong Rhee (1998) Social Impacts of the Asian Crisis: Policy Challenges and Lessons, New York: UNDP, Human Development Report Office
LPEM FEUI (1999), Developing Performance Based Funding Mechanism for Higher Education: Final Report, study for Board of Higher Education Directorate General for Higher Education, research team: Ninasapti Triaswati, Achmad Bayhaqi, Zulkarnain Pulungan, Isfandiarni
Republic of Indonesia, Annex of President Speech at Parliament Meeting on August 15, 1998
Sumarto, Sudarno, Anna Wetterberg and Lant Pritchett (1999). The Social Impact of the Crisis in Indonesia: Results from a Nationwide Kecamatan Survey, Preliminary Draft.
UNDP, Human Development Report, 1996
UNDP, Human Development Report, 1998
World Bank, Indonesia: Education in Indonesia, From Crisis to Recovery, December 9, 1998
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