​By Intan Pratiwi

The pre-employment card program is improving household welfare.  Furthermore, the program has also expanded the labour force in Indonesia, though not significantly.  That was the salient conclusion of the latest Bank Indonesia research conducted by Bagdja Muljarijadi and Pipit Pitriyan from Padjadjaran University (2021).

With funding from the Bank Indonesia Research Grant (RGBI), the research findings indicate that the pre-employment card program has successfully increased the wages of program participants, though not significantly.  The knock-on effect of higher wages is improving economic welfare among households.

Undeniably, the Covid-19 pandemic has had a massive impact on all sectors of life, particularly economic sectors.  The pandemic has forced the government to issue unprecedented policies to rescue Indonesia's economy. One such government strategy is the pre-employment card program.

Indonesia has the unenviable distinction of the highest unemployment rate in the Asia-Pacific region.  Low labour force competitiveness coupled with a lack of expertise have led to high unemployment.  In 2020, the percentage of adults not in work, not in education and not in training stood at 24.28%.  This represents a serious concern that must be addressed by the government through various programs to overcome unemployment in Indonesia.

Launched by President Jokowi in 2020, the pre-employment card program is a government initiative to reduce unemployment in Indonesia.  Through the program, training and incentives are provided for jobseekers, workers wishing to develop their competencies as well as anyone experiencing a termination of employment (PHK).  The program also aims to develop the skills and capabilities of workers and prospective workers, while increasing workforce productivity and competitiveness.

The pre-employment card program was designed to hasten economic recovery from the deleterious impact of the Covid-19 pandemic.  Based on data issued by Pre-Employment Card Program Management (MPPKP), the number of pre-employment cardholders throughout Indonesia has increased since the beginning of 2020 to 5,509,055, dominated by West Java with 793,400 cardholders, followed by East Java and Jakarta at 651,500 and 542,500 respectively.

With the growing number of cardholders, has the program effectively reduced unemployment in Indonesia?

Pre-employment card program implementation aims to provide recipients applied knowledge for work, thus increasing the benefit.  The National Labour Force Survey (Sakernas) and National Socioeconomic Survey (Susenas) showed that the pre-employment card program has increased the wages of program recipients, though not significantly.

SAKERNAS in February 2021 indicated that the pre-employment card program has improved the employment status of pre-employment cardholders compared with non-recipient groups.  The results, however, remain scattered and statistically non-significant.

​SUSENAS data from March to September 2022 showed that the pre-employment card program has improved the welfare of households in terms of increasing household expenditure per capita.  Based on the data, the pre-employment card program is expected to increase the size of the labour force in Indonesia, though not significantly.