Bridging the skills gap: Fuelling careers and the economy in India
Bridging the skills gap: fuelling careers and the economy in India
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from India, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
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Bridging the skills gap: fuelling careers and the economy in Asia-Pacific
The nature of jobs and skills requirements are changing rapidly across the Asia-Pacific region (APAC). The fast pace of transformation is forcing business leaders to quickly identify looming skills gaps and prepare their workforces for the future, giving clear direction to employees on how to build the skills they will need to thrive. Getting ahead of these skills gaps will require investment, leadership, and clear communication about the effects of trends like digitisation and automation on future skills needs.
To explore these issues, Economist Impact conducted a research programme consisting of a survey of employees, an extensive literature review, and interviews with employers and industry experts. Focusing on a time frame of three to five years into the future, this research has identified the most important trends driving demand for particular skills, gaps in workforce expertise, and motivations for upskilling and reskilling. This report details these findings and outlines some key steps to address critical skills gaps in APAC.
This research comes at a critical time, when the world of work is changing faster than ever before. Workers are looking for flexible workplaces and a new sense of purpose in their careers, and businesses will need to rethink their priorities and look for top talent in a highly uncertain economic environment.
We would like to thank the following experts for their participation in the research for this project:
Akiko Sakamoto, skills development and employability specialist, International Labour Organisation (ILO) Emre Demokan, lead product manager, SmartRecruiters Gagan Bhargava, vice president, people insights and data excellence, Schneider Electric Kabir Nath, principal, talent strategy, Mercer, Singapore Krishna Raghavan, chief people officer, Flipkart, India Muneaki Goto, representative director, Japan Reskilling Initiative Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia Phil Loveder, executive manager, inform and engage, National Centre for Vocational Education Research (NCVER), Australia Saad Gilani, senior programme officer, International Labour Organisation (ILO) Sean Hinton, chief executive officer and founder, SkyHive Simon Walker, managing director, National Centre for Vocational Education Research (NCVER), Australia Soon Joo Gog, chief skills officer, SkillsFuture, Singapore Ved Mani Tiwari, chief executive officer, National Skill Development Corporation (NSDC), IndiaBridging the skills gap: Fuelling careers and the economy in the Philippine...
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in the Philippines. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Self-management skills (68%) such as stress tolerance, resilience and flexibility are the most important for employees, closely followed by digital skills (52%).
Within digital skills, advanced skills such as IT support (65.4%), data analysis and visualisation (55.8%) and cybersecurity (59.6%) would be key to supporting growth in the Philippines, and are selected as “must have” capabilities by the employees. Employees in the Philippines prioritise artificial intelligence (AI) and machine learning (ML) skills at higher rates (42.3%) than the regional average (32.8%).
Online courses are a key source of new digital skills for 57%, higher than the regional average (42%). However, poor internet access (41%), lack of time (40%) and high cost of courses (30%) limits employees’ digital upskilling.
A strong post-covid economic recovery1 sets context for the labour market in the Philippines. The country’s economy is expected to grow by 6% in 2023—and by 6.2% in 2024—on the back of rising domestic demand and a post-covid rebound in the services sectors.2
The country’s tech sector is projected to grow rapidly with the estimated value of the digital economy reaching US$150bn in the next decade3 while the internet economy is expected to more than double between 2020 and 2025.4 This massive growth will require the right capabilities and diverse skill sets in the labour market. According to the IT-BPM Association of the Philippines, by 2028 the tech industry is expected to generate 1.1m new jobs in the country, of which 150,000 are developer roles that would need to be filled in the next six years.5
Despite this momentum, many in the Philippines lack even basic skills to contribute effectively. Almost 90% of the country’s population lacks basic ICT skills such as word-processing, internet and email skills.6 The government is taking action to address these gaps. Most recently, the newly established Inter-Agency Council for Development and Competitiveness of Philippine Digital Workforce announced plans to undertake a skills mapping exercise to identify gaps in the area of digital and ICT capabilities such as engineering, cloud computing, artificial intelligence, web development and management, and e-commerce marketing etc.7
Advanced digital skills are rising in importance
According to the Economist Impact survey, 68% of employees in the Philippines pick self-management skills as a top important skill category for workers to acquire, higher than the regional average (53%). These skills encompass aspects such as time management, active learning, resilience, stress tolerance and flexibility. The rising importance of these skills could be an outcome of hybrid working models with demands on managers and teams to work online more adeptly. Doreen Cooper, an independent learning facilitator based in the Philippines, suggests this could also be “due to a deep-rooted culture in the country that could benefit from encouraging self-discipline and a strong work ethic”.
Figure 1: Top skills in demand in the Philippines
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (% of respondents)
Source: Economist Impact, 2023
Digital skills emerge as another important skills category. Basic digital skills are considered a must-have by 71.2% of employees. At the same time, they also prioritise advanced digital skills such as IT support, cybersecurity, and data analysis and visualisation, higher than the regional average. IT skills are essential to the country’s major business process outsourcing (BPO) sector, which contributes nearly US$30 bn to GDP every year to the Filipino economy.8 The Philippines faces a shortage of 200,000 workers with IT skills, as noted by a recent Jobstreet report.9
Figure 2: Must-have advanced digital skills for employees in the Philippines vs APAC
Which specific types of advanced digital skills are a must have for the workforce in your sector today? (% of respondents)
Source: Economist Impact, 2023
Compared to their regional peers (32.8%), employees in the country demonstrate a stronger preference for AI and machine learning skills (42.3%). This reflects the rising government focus on AI: In 2021, the country launched an AI roadmap that aims to accelerate the adoption of AI to “advance industrial development, generate better quality entrepreneurship as well as high-paying opportunities for Filipinos”.10
Fast digitalisation and greater internet usage in the economy means that the country also faces higher security risks, reflected in the importance given to cybersecurity skills – three in four Filipino businesses experienced a cyber incident in 2022, as against a regional average of 59%.11 A 2022 report from USAID noted a possible loss of US$23bn in the business process outsourcing industry in absence of cybersecurity capabilities. One reason, the report found, is a lack of clear definitions of job roles and responsibilities in the area.12
On the other hand, green skills had minor importance for Filipino employees—only 13% ranked them as important, somewhat lower than the regional average (17.7%). This is likely to change however as the Philippines is one of the most vulnerable countries to climate change.13 If no action is taken, the Philippines risks losing 6% of its GDP every year by 2100.14
Infrastructural barriers to upskilling, despite high employee motivations
Employee motivations to upskill vary. Easy access and availability of free online courses (37%) are employees’ biggest motivator to acquire digital skills, followed by higher pay and bargaining power (33%) and exploring new job opportunities (29%). Ms Cooper explains, “by and large, employees want to learn skills that enable them to perform better in their jobs, and earn more as well as get promoted,” aligning with findings that career progression is a significant motivator for employees in the Philippines.
Figure 3: Motivations to acquire different skills
What best describes your motivation to acquire new skills? (% of respondents)
Source: Economist Impact, 2023
Despite high motivations, the biggest barrier to acquiring new digital skills is poor internet access to join online courses (41%). This issue is especially challenging for the country’s upskilling needs as more than half (57%) rely on online courses as a top source of digital upskilling, substantially more than the regional average (42%). Despite having high levels of internet penetration and usage, the Philippines struggles with poor internet performance and high costs. More than 50% of the country’s population could not afford even a basic package of mobile internet, as per a recent study. 15
Another challenge cited by four in ten employees was a lack of time in learning new courses. Employees working in sectors such as media, healthcare, marketing and advertising work report working beyond 40 hours per week.16 Additionally, nearly 50% of the workers from the Philippines in a research said to have experienced workplace stress – the highest percentage in Southeast Asia.17 Besides lack of time and workplace stress, high cost of courses was another challenge highlighted by 30% of employees in our survey in learning new digital skills. The country has one of the most expensive education systems in the Southeast Asian region18, making the cost of courses a big hurdle in upskilling the workforce.
Figure 4: Poor internet access, a lack of time and the high cost of courses are key barriers to upskilling
What are some of the most significant obstacles that you face while learning new digital skills? (% of respondents)
Source: Economist Impact, 2023
Public-private partnerships will be a key driver of progress
According to the Economist Impact survey, employers are considered to have greater responsibility for providing notable recognition such as certificates (64%), information on skills needed for different roles (58%) and financial incentives (55%). Government, on the other hand, is considered most responsible for providing access to diversified skilling programmes by 50% of employees. Ms Cooper highlights the government is already playing some part in this area by offering free seminars and workshops that are available to the public. So are employers– six in ten Filipino firms offer training to their workers, higher than the OECD average (less than 40%).19
Employers have an opportunity to leverage employees’ strong motivation to upskill if they can improve access to online training programmes, but more efforts are needed to integrate skilling into workers’ everyday routines. Ms Cooper adds that, “employees are far more likely to attend training if it is mandated by their employers.” Employers should also look to offer more opportunities for workers to learn on the job. This can enable employers to foster a strong culture of learning, while providing employees with career progression opportunities that drive better results. The government and employers could also do more to provide information on what skills are valuable. Currently, 63% of employees get their information about skills from social media, and only around 48% from government awareness programmes or from events in office and through employers.
Figure 5: Employers have a key role in supporting employees’ upskilling
In your opinion, are the government, your employer or yourself responsible for supporting employees regarding the following issues? (% of respondents)
Source: Economist Impact, 2023
Moving forward, collaboration between the government and private sector could also foster a strong skills ecosystem in the country. For example, the Philippines Skills Framework to upskill and reskill the country’s workforce is built on the partnership of nine government agencies.20 The country is also proactively encouraging public-private partnerships for the growth of specific skill sets. For instance, a 2022 law seeking to develop digital workforce commissions the government to enter into public-private partnerships with stakeholders in the skills ecosystem in order to develop digital careers of the workforce.21
1 https://www.eiu.com/n/philippines-economic-recovery-remains-strong/#:~:text=On%20May%2012th%20the%20Philippines,7.7%25%20in%20the%20previous%20quarter
2 https://www.adb.org/news/philippine-economy-post-robust-growth-2023-2024-despite-inflation-pressures-adb
3 https://www.bworldonline.com/technology/2023/01/05/496484/govt-online-shift-may-boost-philippine-digital-economy/
4 https://accesspartnership.com/growing-digital-economy-philippines/
5 https://mb.com.ph/2022/09/27/bridging-the-skills-gaps/
6 https://www.unescap.org/kp/2022/workforce-we-need-social-outlook-asia-and-pacific
7 https://hrmasia.com/upskilling-the-digital-skills-of-workers-in-the-philippines/
8 https://www.nexford.org/insights/the-future-of-bpos-in-the-philippines-and-growth-opportunities
9 https://www.philstar.com/business/2022/02/03/2158115/higher-demand-seen-tech-professionals
10 https://opengovasia.com/the-philippines-launches-national-ai-roadmap/
11 https://www.kroll.com/en/insights/publications/cyber/apac-state-incident-response/philippines
12 https://www.gmanetwork.com/news/money/companies/854521/cybersecurity-gaps-could-jeopardize-75-of-philippines-bpo-market-usaid-report/story/
13 https://reliefweb.int/report/philippines/philippines-country-climate-and-development-report-2022#:~:text=Multiple%20indices%20rank%20the%20Philippines,for%20the%20past%2010%20years
14 https://niccdies.climate.gov.ph/climate-change-impacts
15 https://www.bworldonline.com/infographics/2022/04/18/442463/philippines-most-internet-poor-in-southeast-asia/
16 https://www.spot.ph/newsfeatures/the-latest-news-features/88589/industries-with-long-work-hours-in-the-philippines-a833-20220211
17 https://www.gallup.com/workplace/349484/state-of-the-global-workplace-2022-report.aspx?thank-you-report-form=1
18 https://www.studocu.com/ph/document/university-of-science-and-technology-of-southern-philippines-claveria/chemistry/the-high-cost-of-education-in-the-philippines-challenges-and-opportunities-article/47434059
19 https://read.oecd-ilibrary.org/education/towards-a-skills-strategy-for-southeast-asia_6db0907f-en#page22
20 https://samarnews.com/news2021/jun/f444.htm
21 https://www.gmanetwork.com/news/topstories/nation/840238/bill-seeking-to-develop-competitive-digital-workforce-lapses-into-law/story/
Bridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
Ready for Anything
Ready for anything: Preparing for overseas child education among mainland China and Hong Kong parents is a report from Economist Impact, supported by HSBC Life. It explores the expectations and realities of parents approaching overseas education for their children, and the challenges and opportunities this represents.
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The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.1
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Bridging the skills gap: fuelling careers and the economy in Asia-Pacific
The nature of jobs and skills requirements are changing rapidly across the Asia-Pacific region (APAC). The fast pace of transformation is forcing business leaders to quickly identify looming skills gaps and prepare their workforces for the future, giving clear direction to employees on how to build the skills they will need to thrive. Getting ahead of these skills gaps will require investment, leadership, and clear communication about the effects of trends like digitisation and automation on future skills needs.
To explore these issues, Economist Impact conducted a research programme consisting of a survey of employees, an extensive literature review, and interviews with employers and industry experts. Focusing on a time frame of three to five years into the future, this research has identified the most important trends driving demand for particular skills, gaps in workforce expertise, and motivations for upskilling and reskilling. This report details these findings and outlines some key steps to address critical skills gaps in APAC.
This research comes at a critical time, when the world of work is changing faster than ever before. Workers are looking for flexible workplaces and a new sense of purpose in their careers, and businesses will need to rethink their priorities and look for top talent in a highly uncertain economic environment.
We would like to thank the following experts for their participation in the research for this project:
Akiko Sakamoto, skills development and employability specialist, International Labour Organisation (ILO) Emre Demokan, lead product manager, SmartRecruiters Gagan Bhargava, vice president, people insights and data excellence, Schneider Electric Kabir Nath, principal, talent strategy, Mercer, Singapore Krishna Raghavan, chief people officer, Flipkart, India Muneaki Goto, representative director, Japan Reskilling Initiative Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia Phil Loveder, executive manager, inform and engage, National Centre for Vocational Education Research (NCVER), Australia Saad Gilani, senior programme officer, International Labour Organisation (ILO) Sean Hinton, chief executive officer and founder, SkyHive Simon Walker, managing director, National Centre for Vocational Education Research (NCVER), Australia Soon Joo Gog, chief skills officer, SkillsFuture, Singapore Ved Mani Tiwari, chief executive officer, National Skill Development Corporation (NSDC), IndiaBridging the skills gap: Fuelling careers and the economy in the Philippine...
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in the Philippines. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Self-management skills (68%) such as stress tolerance, resilience and flexibility are the most important for employees, closely followed by digital skills (52%).
Within digital skills, advanced skills such as IT support (65.4%), data analysis and visualisation (55.8%) and cybersecurity (59.6%) would be key to supporting growth in the Philippines, and are selected as “must have” capabilities by the employees. Employees in the Philippines prioritise artificial intelligence (AI) and machine learning (ML) skills at higher rates (42.3%) than the regional average (32.8%).
Online courses are a key source of new digital skills for 57%, higher than the regional average (42%). However, poor internet access (41%), lack of time (40%) and high cost of courses (30%) limits employees’ digital upskilling.
A strong post-covid economic recovery1 sets context for the labour market in the Philippines. The country’s economy is expected to grow by 6% in 2023—and by 6.2% in 2024—on the back of rising domestic demand and a post-covid rebound in the services sectors.2
The country’s tech sector is projected to grow rapidly with the estimated value of the digital economy reaching US$150bn in the next decade3 while the internet economy is expected to more than double between 2020 and 2025.4 This massive growth will require the right capabilities and diverse skill sets in the labour market. According to the IT-BPM Association of the Philippines, by 2028 the tech industry is expected to generate 1.1m new jobs in the country, of which 150,000 are developer roles that would need to be filled in the next six years.5
Despite this momentum, many in the Philippines lack even basic skills to contribute effectively. Almost 90% of the country’s population lacks basic ICT skills such as word-processing, internet and email skills.6 The government is taking action to address these gaps. Most recently, the newly established Inter-Agency Council for Development and Competitiveness of Philippine Digital Workforce announced plans to undertake a skills mapping exercise to identify gaps in the area of digital and ICT capabilities such as engineering, cloud computing, artificial intelligence, web development and management, and e-commerce marketing etc.7
Advanced digital skills are rising in importance
According to the Economist Impact survey, 68% of employees in the Philippines pick self-management skills as a top important skill category for workers to acquire, higher than the regional average (53%). These skills encompass aspects such as time management, active learning, resilience, stress tolerance and flexibility. The rising importance of these skills could be an outcome of hybrid working models with demands on managers and teams to work online more adeptly. Doreen Cooper, an independent learning facilitator based in the Philippines, suggests this could also be “due to a deep-rooted culture in the country that could benefit from encouraging self-discipline and a strong work ethic”.
Figure 1: Top skills in demand in the Philippines
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (% of respondents)
Source: Economist Impact, 2023
Digital skills emerge as another important skills category. Basic digital skills are considered a must-have by 71.2% of employees. At the same time, they also prioritise advanced digital skills such as IT support, cybersecurity, and data analysis and visualisation, higher than the regional average. IT skills are essential to the country’s major business process outsourcing (BPO) sector, which contributes nearly US$30 bn to GDP every year to the Filipino economy.8 The Philippines faces a shortage of 200,000 workers with IT skills, as noted by a recent Jobstreet report.9
Figure 2: Must-have advanced digital skills for employees in the Philippines vs APAC
Which specific types of advanced digital skills are a must have for the workforce in your sector today? (% of respondents)
Source: Economist Impact, 2023
Compared to their regional peers (32.8%), employees in the country demonstrate a stronger preference for AI and machine learning skills (42.3%). This reflects the rising government focus on AI: In 2021, the country launched an AI roadmap that aims to accelerate the adoption of AI to “advance industrial development, generate better quality entrepreneurship as well as high-paying opportunities for Filipinos”.10
Fast digitalisation and greater internet usage in the economy means that the country also faces higher security risks, reflected in the importance given to cybersecurity skills – three in four Filipino businesses experienced a cyber incident in 2022, as against a regional average of 59%.11 A 2022 report from USAID noted a possible loss of US$23bn in the business process outsourcing industry in absence of cybersecurity capabilities. One reason, the report found, is a lack of clear definitions of job roles and responsibilities in the area.12
On the other hand, green skills had minor importance for Filipino employees—only 13% ranked them as important, somewhat lower than the regional average (17.7%). This is likely to change however as the Philippines is one of the most vulnerable countries to climate change.13 If no action is taken, the Philippines risks losing 6% of its GDP every year by 2100.14
Infrastructural barriers to upskilling, despite high employee motivations
Employee motivations to upskill vary. Easy access and availability of free online courses (37%) are employees’ biggest motivator to acquire digital skills, followed by higher pay and bargaining power (33%) and exploring new job opportunities (29%). Ms Cooper explains, “by and large, employees want to learn skills that enable them to perform better in their jobs, and earn more as well as get promoted,” aligning with findings that career progression is a significant motivator for employees in the Philippines.
Figure 3: Motivations to acquire different skills
What best describes your motivation to acquire new skills? (% of respondents)
Source: Economist Impact, 2023
Despite high motivations, the biggest barrier to acquiring new digital skills is poor internet access to join online courses (41%). This issue is especially challenging for the country’s upskilling needs as more than half (57%) rely on online courses as a top source of digital upskilling, substantially more than the regional average (42%). Despite having high levels of internet penetration and usage, the Philippines struggles with poor internet performance and high costs. More than 50% of the country’s population could not afford even a basic package of mobile internet, as per a recent study. 15
Another challenge cited by four in ten employees was a lack of time in learning new courses. Employees working in sectors such as media, healthcare, marketing and advertising work report working beyond 40 hours per week.16 Additionally, nearly 50% of the workers from the Philippines in a research said to have experienced workplace stress – the highest percentage in Southeast Asia.17 Besides lack of time and workplace stress, high cost of courses was another challenge highlighted by 30% of employees in our survey in learning new digital skills. The country has one of the most expensive education systems in the Southeast Asian region18, making the cost of courses a big hurdle in upskilling the workforce.
Figure 4: Poor internet access, a lack of time and the high cost of courses are key barriers to upskilling
What are some of the most significant obstacles that you face while learning new digital skills? (% of respondents)
Source: Economist Impact, 2023
Public-private partnerships will be a key driver of progress
According to the Economist Impact survey, employers are considered to have greater responsibility for providing notable recognition such as certificates (64%), information on skills needed for different roles (58%) and financial incentives (55%). Government, on the other hand, is considered most responsible for providing access to diversified skilling programmes by 50% of employees. Ms Cooper highlights the government is already playing some part in this area by offering free seminars and workshops that are available to the public. So are employers– six in ten Filipino firms offer training to their workers, higher than the OECD average (less than 40%).19
Employers have an opportunity to leverage employees’ strong motivation to upskill if they can improve access to online training programmes, but more efforts are needed to integrate skilling into workers’ everyday routines. Ms Cooper adds that, “employees are far more likely to attend training if it is mandated by their employers.” Employers should also look to offer more opportunities for workers to learn on the job. This can enable employers to foster a strong culture of learning, while providing employees with career progression opportunities that drive better results. The government and employers could also do more to provide information on what skills are valuable. Currently, 63% of employees get their information about skills from social media, and only around 48% from government awareness programmes or from events in office and through employers.
Figure 5: Employers have a key role in supporting employees’ upskilling
In your opinion, are the government, your employer or yourself responsible for supporting employees regarding the following issues? (% of respondents)
Source: Economist Impact, 2023
Moving forward, collaboration between the government and private sector could also foster a strong skills ecosystem in the country. For example, the Philippines Skills Framework to upskill and reskill the country’s workforce is built on the partnership of nine government agencies.20 The country is also proactively encouraging public-private partnerships for the growth of specific skill sets. For instance, a 2022 law seeking to develop digital workforce commissions the government to enter into public-private partnerships with stakeholders in the skills ecosystem in order to develop digital careers of the workforce.21
1 https://www.eiu.com/n/philippines-economic-recovery-remains-strong/#:~:text=On%20May%2012th%20the%20Philippines,7.7%25%20in%20the%20previous%20quarter
2 https://www.adb.org/news/philippine-economy-post-robust-growth-2023-2024-despite-inflation-pressures-adb
3 https://www.bworldonline.com/technology/2023/01/05/496484/govt-online-shift-may-boost-philippine-digital-economy/
4 https://accesspartnership.com/growing-digital-economy-philippines/
5 https://mb.com.ph/2022/09/27/bridging-the-skills-gaps/
6 https://www.unescap.org/kp/2022/workforce-we-need-social-outlook-asia-and-pacific
7 https://hrmasia.com/upskilling-the-digital-skills-of-workers-in-the-philippines/
8 https://www.nexford.org/insights/the-future-of-bpos-in-the-philippines-and-growth-opportunities
9 https://www.philstar.com/business/2022/02/03/2158115/higher-demand-seen-tech-professionals
10 https://opengovasia.com/the-philippines-launches-national-ai-roadmap/
11 https://www.kroll.com/en/insights/publications/cyber/apac-state-incident-response/philippines
12 https://www.gmanetwork.com/news/money/companies/854521/cybersecurity-gaps-could-jeopardize-75-of-philippines-bpo-market-usaid-report/story/
13 https://reliefweb.int/report/philippines/philippines-country-climate-and-development-report-2022#:~:text=Multiple%20indices%20rank%20the%20Philippines,for%20the%20past%2010%20years
14 https://niccdies.climate.gov.ph/climate-change-impacts
15 https://www.bworldonline.com/infographics/2022/04/18/442463/philippines-most-internet-poor-in-southeast-asia/
16 https://www.spot.ph/newsfeatures/the-latest-news-features/88589/industries-with-long-work-hours-in-the-philippines-a833-20220211
17 https://www.gallup.com/workplace/349484/state-of-the-global-workplace-2022-report.aspx?thank-you-report-form=1
18 https://www.studocu.com/ph/document/university-of-science-and-technology-of-southern-philippines-claveria/chemistry/the-high-cost-of-education-in-the-philippines-challenges-and-opportunities-article/47434059
19 https://read.oecd-ilibrary.org/education/towards-a-skills-strategy-for-southeast-asia_6db0907f-en#page22
20 https://samarnews.com/news2021/jun/f444.htm
21 https://www.gmanetwork.com/news/topstories/nation/840238/bill-seeking-to-develop-competitive-digital-workforce-lapses-into-law/story/
Bridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
From the notebook to the cloud: How EdTech is revolutionizing learning in Latin America
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Fostering exploration and excellence in 21st century schools
The giving chain: How philanthropy is driving progress in Asian education
Education is widely seen as the main driver of long-term social impact in Asia, and educational philanthropists are increasingly targeting innovative projects that help marginalised and deprived communities.
How to contribute wisely to education in Asia? Read the report >>Sparking economic progress through education
Through Q&As with luminaries in a number of sectors across the world, interviews aim to surface insights for policy makers, business leaders and other stakeholders as they consider actions to improve the quality of, and access to, education, to fortify their country’s economic, social and geopolitical fabric.
The series is supported by The International Commission on Financing Global Education Opportunity, which just presented a report urging governments to expand access to education to the UN Secretary-General, Mr Ban Ki-moon, and the Commission Co-Convenors during the UN General Assembly in New York.
The report, entitled "The Learning Generation: Investing in Education for a Changing World,” underscores the importance of quality education to address the social, economic, and security challenges of our time. For more on the report please go to educationcommission.org
직무역량 격차 해소: 한국 경제 성장 견인을 위한 인재 양성의 동력
아태 지역 14개 시장을 중심으로 진행된 이번 설문조사의 응답자 중 11.8%는 Z세대(1997~2012년생), 63.2%는 밀레니얼 세대(1981~1996년생)이며, 25%는 X세대(1965~1980년생)인 것으로 나타났다. 응답자가 종사하는 산업 분야는 다양했다1.
연구에 따르면 아태 지역 전반에 걸쳐 미래에 필요한 직무역량과 이러한 역량을 개발하기 위한 최선의 방법에 관해 기업과 근로자 간 시각 차가 있는 것으로 나타났다. 또한 일부 문항을 보면 기업이 원하는 직무역량과 근로자가 갖고 있는 직무역량이 서로 불일치하는 모습도 드러났다. 미래 경제에 대비된 인적 자원을 배출하기 위해서는 이러한 격차에 대한 이해가 전제되어야 한다.
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Bridging the skills gap: fuelling careers and the economy in Asia-Pacific
The nature of jobs and skills requirements are changing rapidly across the Asia-Pacific region (APAC). The fast pace of transformation is forcing business leaders to quickly identify looming skills gaps and prepare their workforces for the future, giving clear direction to employees on how to build the skills they will need to thrive. Getting ahead of these skills gaps will require investment, leadership, and clear communication about the effects of trends like digitisation and automation on future skills needs.
To explore these issues, Economist Impact conducted a research programme consisting of a survey of employees, an extensive literature review, and interviews with employers and industry experts. Focusing on a time frame of three to five years into the future, this research has identified the most important trends driving demand for particular skills, gaps in workforce expertise, and motivations for upskilling and reskilling. This report details these findings and outlines some key steps to address critical skills gaps in APAC.
This research comes at a critical time, when the world of work is changing faster than ever before. Workers are looking for flexible workplaces and a new sense of purpose in their careers, and businesses will need to rethink their priorities and look for top talent in a highly uncertain economic environment.
We would like to thank the following experts for their participation in the research for this project:
Akiko Sakamoto, skills development and employability specialist, International Labour Organisation (ILO) Emre Demokan, lead product manager, SmartRecruiters Gagan Bhargava, vice president, people insights and data excellence, Schneider Electric Kabir Nath, principal, talent strategy, Mercer, Singapore Krishna Raghavan, chief people officer, Flipkart, India Muneaki Goto, representative director, Japan Reskilling Initiative Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia Phil Loveder, executive manager, inform and engage, National Centre for Vocational Education Research (NCVER), Australia Saad Gilani, senior programme officer, International Labour Organisation (ILO) Sean Hinton, chief executive officer and founder, SkyHive Simon Walker, managing director, National Centre for Vocational Education Research (NCVER), Australia Soon Joo Gog, chief skills officer, SkillsFuture, Singapore Ved Mani Tiwari, chief executive officer, National Skill Development Corporation (NSDC), IndiaBridging the skills gap: Fuelling careers and the economy in Thailand
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all work in a diverse mix of industries.
The research shows that, across the region, common understanding is lacking between employers and employees about future skills and the best ways to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Thailand. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Digital skills (56%) are considered the most important skills category for Thai employees, closely followed by analytical skills (51%). Within the broad category of digital skills, advanced capabilities such as data analysis and visualisation (80.4%), cybersecurity (78.6%) and digital marketing (71.4%) are highly prioritised by workers. Respondents were almost twice as likely (60.7%) to prioritise artificial intelligence (AI) and machine learning (ML) skills than the Asia-Pacific (APAC) average (32.8%). Employees’ motivations to acquire digital skills are driven by the availability of free online courses (29%) and to perform better in their current roles (28%). While employees primarily consider employers key to their upskilling needs such as providing financial incentives for skilling and providing notable recognition (52% each), over half (58%) feel that the government has a key role in making them aware about future skills and trends.Thailand has transitioned from a low to an upper-middle-income country over the past four decades, significantly reducing poverty rates and creating millions of jobs within a generation.1 The country is now looking to transition to a digital economy to enable greater productivity and innovation—and there are signs it is already on this path. In 2020 the European Centre for Digital Competitiveness ranked Thailand as the second-most digitally competitive country in East Asia and the Pacific.2 In addition, digital transformation is expected to add US$79.5bn annually by 2030 to Thailand’s economy.3
Preparedness of the labour market will be a key factor in achieving success from this digitalisation. Between 2010 and 2020, the value of Thailand’s digital services sector expanded by 37%, but the number of digital workers only rose by 26%.4 The absence of the corresponding tech skills to meet the demand driven by this digital transformation will limit businesses’ ability to digitally grow and transform.5 These shortages are particularly apparent in advanced technologies such as AI and data science.6
A strong focus on advanced digital skills
According to the Economist Impact survey, 56% of Thai employees consider digital expertise the most important category of skills that a worker should acquire today, broadly in line with regional trends. Thailand is an outlier in terms of what digital skills are considered priorities. While employees in most APAC markets rank basic digital skills as their top “must-haves”, employees in Thailand show a greater preference for advanced skills such as data analysis and visualisation (80.4%), cybersecurity (78.6%), and digital marketing and e-commerce (71.4%). A majority of employees (60.7%) also consider AI and ML skills as must-haves, almost double the regional average (32.8%).
These findings align with recent research that reveals that 96% of employers are hiring for roles involving advanced digital skills in order to meet their digital transformation plans.7 This growth in demand has also led to sharp rises in salaries for employees with these skills in the country, with a particular premium for digital marketing professionals.8
Figure 1: Digital and analytical skills are top priorities for Thai employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (% of respondents)
Source: Economist Impact, 2023
Experts suggest that the focus on advanced digital skills is likely to be driven by the rapid digitalisation of business operations during and in the aftermath of the covid-19 pandemic. More than half of companies in Thailand in a 2022 Deloitte survey had adopted digital technologies, compared with only 12% pre-pandemic, making advanced digital skills top-of-mind among company leaders and employees.
Figure 2: Data analysis, cybersecurity and digital marketing trump basic digital skills
Which specific types of digital skills are must have, good to have or not needed for the workforce in your sector today? (% of respondents)
Source: Economist Impact, 2023
As the country continues to move online, cybersecurity capabilities will ensure the essential safeguard for its digital infrastructure. This is especially pertinent since cyber threats have jumped globally since the pandemic, and Thailand is no exception. The country experienced a sixfold increase in cyber-attacks between 2021 and 2022.9 Reflecting this, eight in ten (78.6%) employees in our survey consider cybersecurity as a must-have skill. As the businesses continue to digitalise, they will be increasingly vulnerable to these threats, and cybersecurity skills would be key to protecting sensitive information and reduce risks from these online threats.
Other areas considered important by more than half of employees in the survey include analytical skills such as problem solving, project management and critical thinking. Thailand’s workers defy regional trends in terms of the value they place on green skills (26% vs 17.7%). This could be attributed to a new environmental, social and governance reporting mandate for public companies issued by the national securities regulator. 10 The country is also vulnerable to the impacts of climate change. As such, green skills, such as sustainability reporting, sustainable business management and supply chain management, as reported by our survey respondents, will become more important in meeting Thailand’s future climate goals.11
Motivations and barriers to skilling
Employees in Thailand are mostly driven to acquire digital skills due to the availability of free online courses (29%), followed by the ability to perform better in their current job roles (28%). One in four also consider these skills as fundamental to enabling personal and professional progress.
Despite these motivations, employees face upskilling challenges. A lack of time is the biggest barrier to acquiring digital (34%) and analytical (33%) skills. A 2021 study assessing work-life balance in cities ranked Bangkok as the third-most overworked city globally, with nearly 20% of its population working more than 48 hours per week.12
Other barriers to learning new digital skills include the lack of opportunities to practice these skills (29%) and poor internet access (25%) to join the courses. Even with a strong focus on the digitalisation of businesses, nearly a quarter of the population still lacks access to basic internet services.13 And while nearly a third of respondents say that free online courses motivate them, a quarter claim that their high cost (25%) inhibits learning.
A collaborative approach to support employees’ upskilling
Both employers and the government are instrumental in addressing the multiple barriers to upskilling that employees face and play a crucial role in addressing an information gap that is resulting in skills blind spots.
The vast majority (79%) of respondents said that they have a poor understanding of what skills are needed in the market. Identifying future skills is complex, and keeping up with the most relevant market trends is likely to be challenging for most employees.14 Nearly half of employees consider their employers responsible for providing information on the skills that are needed for different job roles.
To help remedy this, employers and the government could map the current and future skills in demand, and communicate this information to the workforce, with options of different upskilling pathways. Second, vested stakeholders like businesses should try to incentivise learning on the job to help retain talent and plug skills gaps. Survey respondents consider employers important across every category ranging from providing financial incentives (52%), and notable recognition through certification (52%) for skilling.
Figure 3: Thai employees expect the most from their employers
In your opinion, who is responsible for supporting employees regarding the following issues? (% of respondents)
Source: Economist Impact, 2023
Three in ten employees (29%) consider the government responsible for providing access to diversified skilling programmes. To do this, policymakers could collaborate with different stakeholders across the skills ecosystem such as universities and businesses. This could also help provide the notable recognition that survey respondents say would help motivate further learning. “Push from the government can persuade universities to collaborate and align with industry needs,” says Agapol Na Songkhla, chief people officer at Thai Beverage. One example is the partnership between King Mongkut University of Technology Thonburi with the private sector to offer courses on 5G ICT skills, in line with the government’s efforts to ramp up its smart city development.15
As Thailand’s economy becomes digitally competitive, there is an urgent need for employees to acquire advanced digital skills. At present, employees expect their employers to support the majority of their reskilling needs. However, the government also plays a key role with more than half (58%) of employees relying on government awareness programmes to gain information on future skills. Government subsidies to cushion the cost to both businesses and their workers could help drive attention towards priority skills at any given time. In turn, this can give momentum to national efforts to focus on particular development and economic growth needs.
1 https://www.worldbank.org/en/country/thailand/overview
2 https://digital-competitiveness.eu/wp-content/uploads/ESCP03_Digital-Riser-Ranking_2020-09-14-1.pdf
3 Ibid.
4 https://www.thestar.com.my/aseanplus/aseanplus-news/2022/09/27/thailands-digital-firms-hire-vietnamese-to-fill-skills-gap-in-workforce
5 https://www.bangkokpost.com/tech/2241723/thai-tech-skills-likely-in-high-demand-this-year
6 https://hr.asia/featured-news/labour-skills-for-thailands-ai-future/
7 https://www.wtwco.com/en-th/insights/2023/02/wtw-reveals-thailands-job-outlook-for-2023-and-ways-to-retain-digital-talent-the-profession
8 Ibid.
9 https://www.bangkokpost.com/thailand/pr/2513529/facing-the-future-of-cyber-security#
10 https://sseinitiative.org/stock-exchange/set/
11 https://documents1.worldbank.org/curated/en/468721645451588595/pdf/Creating-Markets-in-Thailand-Rebooting-Productivity-for-Resilient-Growth.pdf
12 https://www.getkisi.com/work-life-balance-2021
13 https://www.eastasiaforum.org/2022/03/17/is-thailand-ready-for-the-digital-economy/
14 https://impact.economist.com/perspectives/sites/default/files/bridging_the_skills_gap_fuelling_careers_and_the_economy_in_asia_pacific.pdf
15 https://www.ericsson.com/en/press-releases/2/2022/7/ericsson--kmutt-partner-to-build-a-5g-ready-workforce-in-thailand
Bridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
การปิดช่องว่างด้านทักษะ: การพัฒนาอาชีพการงานและระบบเศรษฐกิจของไทย
ผู้ตอบแบบสำรวจมาจาก 14 ตลาดในภูมิภาคนี้ โดยที่ 11.8% เป็นคนเจนซี (Gen Z) (ผู้ที่เกิดในปี 1997-2012), 63.2% เป็นคนกลุ่มมิลเลนเนียล (เกิดในปี 1981-1996) และ 25% เป็นคนเจนเอ็กซ์ (Gen X) (เกิดในปี 1965-1980) บุคคลเหล่านี้ทำงานในอุตสาหกรรมต่างๆ ที่หลากหลาย
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Related content
Bridging the skills gap: fuelling careers and the economy in Asia-Pacific
The nature of jobs and skills requirements are changing rapidly across the Asia-Pacific region (APAC). The fast pace of transformation is forcing business leaders to quickly identify looming skills gaps and prepare their workforces for the future, giving clear direction to employees on how to build the skills they will need to thrive. Getting ahead of these skills gaps will require investment, leadership, and clear communication about the effects of trends like digitisation and automation on future skills needs.
To explore these issues, Economist Impact conducted a research programme consisting of a survey of employees, an extensive literature review, and interviews with employers and industry experts. Focusing on a time frame of three to five years into the future, this research has identified the most important trends driving demand for particular skills, gaps in workforce expertise, and motivations for upskilling and reskilling. This report details these findings and outlines some key steps to address critical skills gaps in APAC.
This research comes at a critical time, when the world of work is changing faster than ever before. Workers are looking for flexible workplaces and a new sense of purpose in their careers, and businesses will need to rethink their priorities and look for top talent in a highly uncertain economic environment.
We would like to thank the following experts for their participation in the research for this project:
Akiko Sakamoto, skills development and employability specialist, International Labour Organisation (ILO) Emre Demokan, lead product manager, SmartRecruiters Gagan Bhargava, vice president, people insights and data excellence, Schneider Electric Kabir Nath, principal, talent strategy, Mercer, Singapore Krishna Raghavan, chief people officer, Flipkart, India Muneaki Goto, representative director, Japan Reskilling Initiative Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia Phil Loveder, executive manager, inform and engage, National Centre for Vocational Education Research (NCVER), Australia Saad Gilani, senior programme officer, International Labour Organisation (ILO) Sean Hinton, chief executive officer and founder, SkyHive Simon Walker, managing director, National Centre for Vocational Education Research (NCVER), Australia Soon Joo Gog, chief skills officer, SkillsFuture, Singapore Ved Mani Tiwari, chief executive officer, National Skill Development Corporation (NSDC), IndiaBridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
Bridging the skills gap: Fuelling careers and the economy in the Philippine...
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in the Philippines. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Self-management skills (68%) such as stress tolerance, resilience and flexibility are the most important for employees, closely followed by digital skills (52%).
Within digital skills, advanced skills such as IT support (65.4%), data analysis and visualisation (55.8%) and cybersecurity (59.6%) would be key to supporting growth in the Philippines, and are selected as “must have” capabilities by the employees. Employees in the Philippines prioritise artificial intelligence (AI) and machine learning (ML) skills at higher rates (42.3%) than the regional average (32.8%).
Online courses are a key source of new digital skills for 57%, higher than the regional average (42%). However, poor internet access (41%), lack of time (40%) and high cost of courses (30%) limits employees’ digital upskilling.
A strong post-covid economic recovery1 sets context for the labour market in the Philippines. The country’s economy is expected to grow by 6% in 2023—and by 6.2% in 2024—on the back of rising domestic demand and a post-covid rebound in the services sectors.2
The country’s tech sector is projected to grow rapidly with the estimated value of the digital economy reaching US$150bn in the next decade3 while the internet economy is expected to more than double between 2020 and 2025.4 This massive growth will require the right capabilities and diverse skill sets in the labour market. According to the IT-BPM Association of the Philippines, by 2028 the tech industry is expected to generate 1.1m new jobs in the country, of which 150,000 are developer roles that would need to be filled in the next six years.5
Despite this momentum, many in the Philippines lack even basic skills to contribute effectively. Almost 90% of the country’s population lacks basic ICT skills such as word-processing, internet and email skills.6 The government is taking action to address these gaps. Most recently, the newly established Inter-Agency Council for Development and Competitiveness of Philippine Digital Workforce announced plans to undertake a skills mapping exercise to identify gaps in the area of digital and ICT capabilities such as engineering, cloud computing, artificial intelligence, web development and management, and e-commerce marketing etc.7
Advanced digital skills are rising in importance
According to the Economist Impact survey, 68% of employees in the Philippines pick self-management skills as a top important skill category for workers to acquire, higher than the regional average (53%). These skills encompass aspects such as time management, active learning, resilience, stress tolerance and flexibility. The rising importance of these skills could be an outcome of hybrid working models with demands on managers and teams to work online more adeptly. Doreen Cooper, an independent learning facilitator based in the Philippines, suggests this could also be “due to a deep-rooted culture in the country that could benefit from encouraging self-discipline and a strong work ethic”.
Figure 1: Top skills in demand in the Philippines
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (% of respondents)
Source: Economist Impact, 2023
Digital skills emerge as another important skills category. Basic digital skills are considered a must-have by 71.2% of employees. At the same time, they also prioritise advanced digital skills such as IT support, cybersecurity, and data analysis and visualisation, higher than the regional average. IT skills are essential to the country’s major business process outsourcing (BPO) sector, which contributes nearly US$30 bn to GDP every year to the Filipino economy.8 The Philippines faces a shortage of 200,000 workers with IT skills, as noted by a recent Jobstreet report.9
Figure 2: Must-have advanced digital skills for employees in the Philippines vs APAC
Which specific types of advanced digital skills are a must have for the workforce in your sector today? (% of respondents)
Source: Economist Impact, 2023
Compared to their regional peers (32.8%), employees in the country demonstrate a stronger preference for AI and machine learning skills (42.3%). This reflects the rising government focus on AI: In 2021, the country launched an AI roadmap that aims to accelerate the adoption of AI to “advance industrial development, generate better quality entrepreneurship as well as high-paying opportunities for Filipinos”.10
Fast digitalisation and greater internet usage in the economy means that the country also faces higher security risks, reflected in the importance given to cybersecurity skills – three in four Filipino businesses experienced a cyber incident in 2022, as against a regional average of 59%.11 A 2022 report from USAID noted a possible loss of US$23bn in the business process outsourcing industry in absence of cybersecurity capabilities. One reason, the report found, is a lack of clear definitions of job roles and responsibilities in the area.12
On the other hand, green skills had minor importance for Filipino employees—only 13% ranked them as important, somewhat lower than the regional average (17.7%). This is likely to change however as the Philippines is one of the most vulnerable countries to climate change.13 If no action is taken, the Philippines risks losing 6% of its GDP every year by 2100.14
Infrastructural barriers to upskilling, despite high employee motivations
Employee motivations to upskill vary. Easy access and availability of free online courses (37%) are employees’ biggest motivator to acquire digital skills, followed by higher pay and bargaining power (33%) and exploring new job opportunities (29%). Ms Cooper explains, “by and large, employees want to learn skills that enable them to perform better in their jobs, and earn more as well as get promoted,” aligning with findings that career progression is a significant motivator for employees in the Philippines.
Figure 3: Motivations to acquire different skills
What best describes your motivation to acquire new skills? (% of respondents)
Source: Economist Impact, 2023
Despite high motivations, the biggest barrier to acquiring new digital skills is poor internet access to join online courses (41%). This issue is especially challenging for the country’s upskilling needs as more than half (57%) rely on online courses as a top source of digital upskilling, substantially more than the regional average (42%). Despite having high levels of internet penetration and usage, the Philippines struggles with poor internet performance and high costs. More than 50% of the country’s population could not afford even a basic package of mobile internet, as per a recent study. 15
Another challenge cited by four in ten employees was a lack of time in learning new courses. Employees working in sectors such as media, healthcare, marketing and advertising work report working beyond 40 hours per week.16 Additionally, nearly 50% of the workers from the Philippines in a research said to have experienced workplace stress – the highest percentage in Southeast Asia.17 Besides lack of time and workplace stress, high cost of courses was another challenge highlighted by 30% of employees in our survey in learning new digital skills. The country has one of the most expensive education systems in the Southeast Asian region18, making the cost of courses a big hurdle in upskilling the workforce.
Figure 4: Poor internet access, a lack of time and the high cost of courses are key barriers to upskilling
What are some of the most significant obstacles that you face while learning new digital skills? (% of respondents)
Source: Economist Impact, 2023
Public-private partnerships will be a key driver of progress
According to the Economist Impact survey, employers are considered to have greater responsibility for providing notable recognition such as certificates (64%), information on skills needed for different roles (58%) and financial incentives (55%). Government, on the other hand, is considered most responsible for providing access to diversified skilling programmes by 50% of employees. Ms Cooper highlights the government is already playing some part in this area by offering free seminars and workshops that are available to the public. So are employers– six in ten Filipino firms offer training to their workers, higher than the OECD average (less than 40%).19
Employers have an opportunity to leverage employees’ strong motivation to upskill if they can improve access to online training programmes, but more efforts are needed to integrate skilling into workers’ everyday routines. Ms Cooper adds that, “employees are far more likely to attend training if it is mandated by their employers.” Employers should also look to offer more opportunities for workers to learn on the job. This can enable employers to foster a strong culture of learning, while providing employees with career progression opportunities that drive better results. The government and employers could also do more to provide information on what skills are valuable. Currently, 63% of employees get their information about skills from social media, and only around 48% from government awareness programmes or from events in office and through employers.
Figure 5: Employers have a key role in supporting employees’ upskilling
In your opinion, are the government, your employer or yourself responsible for supporting employees regarding the following issues? (% of respondents)
Source: Economist Impact, 2023
Moving forward, collaboration between the government and private sector could also foster a strong skills ecosystem in the country. For example, the Philippines Skills Framework to upskill and reskill the country’s workforce is built on the partnership of nine government agencies.20 The country is also proactively encouraging public-private partnerships for the growth of specific skill sets. For instance, a 2022 law seeking to develop digital workforce commissions the government to enter into public-private partnerships with stakeholders in the skills ecosystem in order to develop digital careers of the workforce.21
1 https://www.eiu.com/n/philippines-economic-recovery-remains-strong/#:~:text=On%20May%2012th%20the%20Philippines,7.7%25%20in%20the%20previous%20quarter
2 https://www.adb.org/news/philippine-economy-post-robust-growth-2023-2024-despite-inflation-pressures-adb
3 https://www.bworldonline.com/technology/2023/01/05/496484/govt-online-shift-may-boost-philippine-digital-economy/
4 https://accesspartnership.com/growing-digital-economy-philippines/
5 https://mb.com.ph/2022/09/27/bridging-the-skills-gaps/
6 https://www.unescap.org/kp/2022/workforce-we-need-social-outlook-asia-and-pacific
7 https://hrmasia.com/upskilling-the-digital-skills-of-workers-in-the-philippines/
8 https://www.nexford.org/insights/the-future-of-bpos-in-the-philippines-and-growth-opportunities
9 https://www.philstar.com/business/2022/02/03/2158115/higher-demand-seen-tech-professionals
10 https://opengovasia.com/the-philippines-launches-national-ai-roadmap/
11 https://www.kroll.com/en/insights/publications/cyber/apac-state-incident-response/philippines
12 https://www.gmanetwork.com/news/money/companies/854521/cybersecurity-gaps-could-jeopardize-75-of-philippines-bpo-market-usaid-report/story/
13 https://reliefweb.int/report/philippines/philippines-country-climate-and-development-report-2022#:~:text=Multiple%20indices%20rank%20the%20Philippines,for%20the%20past%2010%20years
14 https://niccdies.climate.gov.ph/climate-change-impacts
15 https://www.bworldonline.com/infographics/2022/04/18/442463/philippines-most-internet-poor-in-southeast-asia/
16 https://www.spot.ph/newsfeatures/the-latest-news-features/88589/industries-with-long-work-hours-in-the-philippines-a833-20220211
17 https://www.gallup.com/workplace/349484/state-of-the-global-workplace-2022-report.aspx?thank-you-report-form=1
18 https://www.studocu.com/ph/document/university-of-science-and-technology-of-southern-philippines-claveria/chemistry/the-high-cost-of-education-in-the-philippines-challenges-and-opportunities-article/47434059
19 https://read.oecd-ilibrary.org/education/towards-a-skills-strategy-for-southeast-asia_6db0907f-en#page22
20 https://samarnews.com/news2021/jun/f444.htm
21 https://www.gmanetwork.com/news/topstories/nation/840238/bill-seeking-to-develop-competitive-digital-workforce-lapses-into-law/story/
Bridging the skills gap: Fuelling careers and the economy in Thailand
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all work in a diverse mix of industries.
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Related content
Bridging the skills gap: fuelling careers and the economy in Asia-Pacific
The nature of jobs and skills requirements are changing rapidly across the Asia-Pacific region (APAC). The fast pace of transformation is forcing business leaders to quickly identify looming skills gaps and prepare their workforces for the future, giving clear direction to employees on how to build the skills they will need to thrive. Getting ahead of these skills gaps will require investment, leadership, and clear communication about the effects of trends like digitisation and automation on future skills needs.
To explore these issues, Economist Impact conducted a research programme consisting of a survey of employees, an extensive literature review, and interviews with employers and industry experts. Focusing on a time frame of three to five years into the future, this research has identified the most important trends driving demand for particular skills, gaps in workforce expertise, and motivations for upskilling and reskilling. This report details these findings and outlines some key steps to address critical skills gaps in APAC.
This research comes at a critical time, when the world of work is changing faster than ever before. Workers are looking for flexible workplaces and a new sense of purpose in their careers, and businesses will need to rethink their priorities and look for top talent in a highly uncertain economic environment.
We would like to thank the following experts for their participation in the research for this project:
Akiko Sakamoto, skills development and employability specialist, International Labour Organisation (ILO) Emre Demokan, lead product manager, SmartRecruiters Gagan Bhargava, vice president, people insights and data excellence, Schneider Electric Kabir Nath, principal, talent strategy, Mercer, Singapore Krishna Raghavan, chief people officer, Flipkart, India Muneaki Goto, representative director, Japan Reskilling Initiative Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia Phil Loveder, executive manager, inform and engage, National Centre for Vocational Education Research (NCVER), Australia Saad Gilani, senior programme officer, International Labour Organisation (ILO) Sean Hinton, chief executive officer and founder, SkyHive Simon Walker, managing director, National Centre for Vocational Education Research (NCVER), Australia Soon Joo Gog, chief skills officer, SkillsFuture, Singapore Ved Mani Tiwari, chief executive officer, National Skill Development Corporation (NSDC), IndiaBridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
Bridging the skills gap: Fuelling careers and the economy in Pakistan
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Pakistan. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Digital skills (57.3%) are a top priority for employees in Pakistan owing to a booming IT sector and the country’s rapidly growing freelancer market, which is the third fastest growing market globally#_ftn1" name="_ftnref1" title="">[1]. Recent acceleration of digitalisation has resulted in higher demand for basic digital skills (72.1%).#_ftn2" name="_ftnref2" title="">[2] #_ftn3" name="_ftnref3" title="">[3] Employees in Pakistan are motivated to acquire digital skills to improve career progression and promotion opportunities (29.3%), as well as to secure better pay and bargaining power (23%). Both the government and employers have important yet distinct roles to play in upskilling Pakistan: while employees expect the government to provide financial incentives, they point to employers as being responsible for providing access to diversified skilling programmes and information on the skills needed for different roles.Despite rising digital penetration in Pakistan in recent years, 46% of the population still lacks internet access.#_ftn4" name="_ftnref4" title="">[4] While 80% of adults live in areas served by mobile broadband, many still do not access the internet.#_ftn5" name="_ftnref5" title="">[5] Out of a total of 182 m mobile subscriptions, only 38 m belong to women.#_ftn6" name="_ftnref6" title="">[6] This could be a result of the low female literacy rate (48%),#_ftn7" name="_ftnref7" title="">[7] which is far below the overall literacy rate of around 60%.#_ftn8" name="_ftnref8" title="">[8] Moreover, the female labour force participation rate is among the lowest globally (25%) and women are mostly employed in the informal sector.#_ftn9" name="_ftnref9" title="">[9] On the other hand, the country struggles with youth unemployment. Almost a third (31%) of the educated youth with professional degrees was unemployed in 2022.#_ftn10" name="_ftnref10" title="">[10]
Amid this backdrop, the government is prioritising digitalisation and implementing initiatives to close the existing skills gap. For instance, Pakistan introduced its “Digital Pakistan” roadmap in 2018, which set out a number of policies and initiatives to help the economy to realise US$59.7 bn (PKR9.7 trn) in annual value by 2030.#_ftn11" name="_ftnref11" title="">[11] The policy targets the upskilling and reskilling of young graduates and the existing workforce to support the country’s growing digital economy and help spur freelance IT sector exports. On this front, it hopes to reach US$3 billion by 2024, up from US$2.12 billion in 2021.#_ftn12" name="_ftnref12" title="">[12]
Infrastructure obstacles—such as inequitable internet access across the country and a lack of sufficient digital skills training—have lowered the pace of digitalisation at workplaces, says Saad Gilani, a senior programme officer at the International Labour Organization (ILO).
Pakistan’s growing freelance economy boosts digital upskilling
More than half of employees (57.3%) in Economist Impact’s survey consider digital skills the most important to acquire. Within this broad category, most employees consider basic digital skills (72.1%) as the most important to have, a trend that reflects the country's struggles with basic digitalisation. Advanced digital skills are also considered must-haves by employees in Pakistan such as data analysis and visualisation (49.2%), digital marketing and e-commerce (47.7%), and IT support (40%).
Apart from the pandemic, which motivated many employees (34.7%) in the country to upskill, free online courses (33.3%) have enabled people to acquire new digital skills. One such initiative, the government's e-rozgaar platform, provides online training to budding freelancers.#_ftn13" name="_ftnref13" title="">[13] #_ftn14" name="_ftnref14" title="">[14] Additionally, Pakistan’s digital freelance market surged by 69% annually in 2020, which registered especially strong gains for women, who often struggle to achieve equity in traditional education and labour force participation.#_ftn15" name="_ftnref15" title="">[15]
For Mr Gilani, the success of the freelance market falls in line with his observations that young employees in Pakistan are highly self-motivated to upskill to remain relevant in the job market. “There are not many employer-led initiatives, so employees are learning by themselves,” he says.
Apart from digital skills, employees in Pakistan point to the importance of self-management (53.3%) and soft skills (46.7%). For example, 71.4% consider adaptability and flexibility a high priority, compared with the regional average of 65.5%. Similarly, 81.5% report communication skills as a “must-have”, higher than the regional average of 70.9%. Mr Gilani suggests these findings reflect the fact that soft skills are applicable across diverse job roles and industries. Soft skills attainment also appears to be linked to digital capabilities—around 81% of employees in Pakistan agree that digital skills have helped them gain confidence and improve in other areas like communication, analysis and critical thinking.
Although green skills (10.7%) are not considered a key priority for employees in Pakistan, Mr Gilani says this is an area for concern given the climate change risks impacting the country.#_ftn16" name="_ftnref16" title="">[16] This vulnerability heightened in 2022, when intense rainfall resulted in devastating flood waters, causing 1,100 deaths and affecting 33m individuals.#_ftn17" name="_ftnref17" title="">[17]
Barriers to upskilling Pakistan
Employees in our survey point to a lack of time (37.3%) and poor workplace culture of learning (32%) as barriers to acquiring new skills. These findings are relevant as most employees report workplace training (54.7%) as a key source of learning new digital skills, emphasising the need for more skilling opportunities in offices.
Another key issue, Mr Gilani says, is the mismatch between university course offerings and industry demand. “There is a high tendency for unemployment among the highly educated youth, stemming from problems in our education system—we don’t see universities inviting companies to tell students what they are looking for and employers aren’t sharing information with educational institutes”. In addition to focusing on university degrees, employers could also consider employees’ skillsets as an important signal for hiring new talent. Nearly 67% of surveyed employees believe that employers in Pakistan are hiring based on skills-based qualifications rather than full-time degrees.
Distinct expectations from government and employers
Faced with the high costs of reskilling and upskilling, more than half (52%) of employees consider the government responsible for providing financial incentives for upskilling. For instance, 29.3% cite government subsidies as a major motivator for acquiring specific skills such as green skills. Providing funding for green skills can bolster Pakistan’s capacity to adapt to a changing climate, says Mr Gilani. He suggests that greater investments in green skills and industries could improve the country’s access to renewable energy sources, reduce its climate resilience and create jobs.
Across all skill types, employers also have an instrumental role in upskilling and reskilling employees. More than four in ten survey respondents say employers have a role to play in providing access to diversified skilling programmes (42.7%) and information on the skills needed for different roles (41.3%). Over a third of employees also consider the government responsible for providing information on skills needed for different roles.
Leaving no one behind
Pakistan is undergoing a pivotal shift in its economy as digital transformation gains momentum. A large part of its success will hinge on leaving no one behind and giving an equal opportunity to everyone including women, young graduates and freelancers, which will boost the country's workforce significantly. Mr Gilani highlights the importance of government’s leadership and direction in providing an overall direction to this skills ecosystem, “If there is consistent leadership, digital skilling policy and an ecosystem, then things can be done.” And while digital skills will continue to be important as the country grows and digitalises in the next few years, analytical and soft skills will be equally important.
#_ftnref1" name="_ftn1" title="">[1]https://dailytimes.com.pk/818869/pakistan-becomes-the-4th-fastest-growin... #_ftnref2" name="_ftn2" title="">[2] Basic digital skills are defined in the survey as the ability to operate basic office software, i.e. Microsoft Office, and/or set up Internet and digital communication tools. #_ftnref3" name="_ftn3" title="">[3] Pakistan is the third-fastest growing freelancer market globally. [Source: http://onlinelabourobservatory.org/oli-supply/] #_ftnref4" name="_ftn4" title="">[4]https://www.pta.gov.pk/en/telecom-indicators #_ftnref5" name="_ftn5" title="">[5] https://www.gsma.com/asia-pacific/wp-content/uploads/2022/11/Making-Digi... #_ftnref6" name="_ftn6" title="">[6] https://onlinelibrary.wiley.com/doi/epdf/10.1111/rode.12994 #_ftnref7" name="_ftn7" title="">[7]#Female_Literacy_Rate_In_Pakistan_2022">https://ilm.com.pk/pakistan/pakistan-information/male-and-female-literac... #_ftnref8" name="_ftn8" title="">[8] https://tribune.com.pk/story/2322073/literacy-and-pakistan #_ftnref9" name="_ftn9" title="">[9] 2021 World Bank estimates, https://www.worldbank.org/en/results/2022/07/07/supporting-legal-reforms... #_ftnref10" name="_ftn10" title="">[10] https://tribune.com.pk/story/2342344/over-31-of-educated-youth-unemployed-reveals-pide #_ftnref11" name="_ftn11" title="">[11] https://accesspartnership.com/pakistans-pkr97-trillion-digital-potential/ #_ftnref12" name="_ftn12" title="">[12] https://www.thenews.com.pk/print/887910-govt-eyes-3bln-from-freelancing-it-exports-by-2024 #_ftnref13" name="_ftn13" title="">[13] https://erozgar.pitb.gov.pk/ #_ftnref14" name="_ftn14" title="">[14] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref15" name="_ftn15" title="">[15] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref16" name="_ftn16" title="">[16] https://edition.cnn.com/2022/08/30/asia/pakistan-climate-crisis-floods-justice-intl/index.html #_ftnref17" name="_ftn17" title="">[17] https://www.weforum.org/agenda/2022/09/pakistan-floods-what-role-did-climate-change-play/Thu hẹp khoảng cách: thúc đẩy nghề nghiệp và nền kinh tế ở Việt Nam
Economist Impact, với sự hỗ trợ của Google, đã thực hiện một cuộc khảo sát với hơn 1.375 người lao động ở khu vực Châu Á-Thái Bình Dương (APAC), trong đó có 100 người ở Việt Nam, từ tháng 11 năm 2022 đến tháng 1 năm 2023. Chúng tôi cũng phỏng vấn các nhà tuyển dụng và chuyên gia trong ngành trên khắp khu vực để hiểu rõ quan điểm của họ về khoảng cách kỹ năng cũng như nguyện vọng đào tạo lại và nâng cao kỹ năng.
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Bridging the skills gap: Fuelling careers and the economy in Australia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Australia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article —one in a series of 12 market reports—examines these issues in Australia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
The rapid digitalisation of businesses in Australia places digital skills (47%) as a key focus area for both employees and employers. Within the broader category of digital skills, advanced capabilities in data analysis and visualisation (38%), cybersecurity (34%) and IT support (34%) are considered must-haves. Australian employees are strongly motivated to upskill, with 40% saying that it highly impacts their ability to find more meaningful careers. For 61% of Australians, meaningful careers trump ones with higher pay (16%) and flexibility (32%). A majority of employees in our survey (67%) consider self-management skills such as time-management and active learning as essential, and more important than all other skills, for the workforce today.As Australian businesses digitalise rapidly, 87% of job roles are expected to require digital literacy.1 The need for digital skills is not only confined to the ICT sector, but also in adjacent industries such as finance, healthcare and government.2 However, demand is outpacing the current supply: every year, only 6,500 IT graduates are available to fill the annual demand for 60,000 workers.3 The National Skills Commission reported that the number of occupations struggling to fill positions had doubled between 2021 and 2022.4 Vacancy rates in tech are 60% higher than the national average and, without appropriate action, Australia will be short on 186,000 workers.5
Moreover, the Australian government and tech sector have jointly committed to create 1.2m tech jobs by 2030, which requires adding 653,000 people to the existing workforce.6
Increased importance of self-management and advanced digital skills
According to the Economist Impact survey, 67% of Australian employees prioritise bettering their self-management7 skills, higher than the regional average (53%). Skills such as time-management and active learning are becoming essential across different industries, highlights Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia. He says “these skills are applicable across all industries and different job roles, and are becoming increasingly important.”
Figure 1: Australian employees prioritise self-management over other skills
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (% of respondents)
Source: Economist Impact, 2023
Nonetheless, almost half (47%) of employees consider digital skills as the most important for the workforce today. Within digital skills, advanced capabilities in data analysis and visualisation (38%), cybersecurity (34%) and IT support (34%) are considered must-haves. Phil Loveder, the executive manager of inform and engage at the National Centre for Vocational Education Research (NCVER), Australia, highlights the rising skills gap in cybersecurity. On this, he explains, “data confidentiality, protection and privacy is a massive issue in Australia, and we can’t get enough cybersecurity people at the moment.” On its current trajectory, Australia will be short of 30,000 cyber professionals by 2026.8
As the Australian tech sector has ballooned to a US$429.6bn market,9 so too has the country’s vulnerability to cybercrime, which costs an estimated US$1bn annually.10 The government has recognised the issue and allocated US$1.35bn to boost growth in the cybersecurity industry.11 This, in turn, has resulted in an industry-wide surge in demand for cybersecurity capabilities, with IT teams looking to drive technological progress.12
Figure 2: Must-have, good-to-have and not needed digital skills for employees in Australia
Indicate the desirability of specific digital skills for the workforce in your sector today? (% of respondents)
Source: Economist Impact, 2023
Australia lags in green skills uptake, with only 12% of employees considering these essential to acquire. The country has grappled with perceptions of being a laggard on climate action when compared with other developed OECD economies.13 14 This is likely to change in the coming years, as Australia has committed to ambitious carbon emissions targets.15 Mr Loveder adds that a “substantial move towards green technologies” will create greater momentum, which will in turn drive up green reskilling.
Australians know that upskilling has real benefits, but barriers remain
Across all skillsets, Australian employees demonstrate a strong sense of personal initiative to upskill—for career progression, promotion opportunities and to improve their current job performance. Updating their skillset has positively impacted their salaries and bargaining power (71%) as well as their ability to find more meaningful careers (71%).
Figure 3: Upskilling has a high impact on Australians’ salaries, bargaining power and careers
Based on your experience, rate the impact that upskilling and reskilling have had on your role or career? (% of respondents)
Source: Economist Impact, 2023
Yet, barriers limit Australians’ access to skilling resources. When it comes to acquiring digital or analytical skills, Australian employees cite the high cost of courses as the biggest barrier, picked by 32% and 36% of respondents respectively. Soaring university fees16 could limit employees’ access to analytical skills, which respondents report are largely acquired in-person at the tertiary level or at coaching institutes (32%). Meanwhile, 34% of employees found it challenging to acquire soft skills due to difficulties in attending in-person courses, leading most to rely on self-learning (46%) to upskill in this area.
Figure 4: Employees face barriers to upskilling due to a lack of resources and time
What are the top barriers you face in learning digital, analytical and soft skills? (% of respondents)
Source: Economist Impact, 2023
Public-private partnerships bolster access to information and funding
To address these barriers, experts reinforce the key role of employers in creating the right environment for learning. Employers could enable employees to retrain through online programmes, which tend to be less resource-intensive than in-person courses and can be especially effective for mass upskilling, says Mr Kidd. Despite these advantages, only 30% of employees in our survey believe that employers value online certificates. However, this could change, as 61% of employees also say their employers are shifting the focus of hiring from valuing full-time degrees to skill-based qualifications, a shift to focusing on the skills themselves rather than methods of learning.
While employees in our survey place the primary responsibility of upskilling on employers, they also consider the government as playing an important role through providing financial incentives (48%) and access to diversified reskilling programmes (44%). In recent years, the government has allocated around US$1bn towards supporting free or low fee training for jobseekers and young people.17 “Other examples cited by Mr Loveder include financial supports by governments aimed at easing the costs to students undertaking higher-level training in courses that address workplace and industry needs”.
The government and employers can also work together to address the information gap on skills. Currently, 63% of employees look to their employer for information on the skills needed for different roles, compared with 37% who consider the government most responsible. Given the government’s greater access to data and cross-industry information, it could support the business community by better defining a skills taxonomy to support hiring processes and employees’ upskilling plans. Doing so would also help in developing diverse skilling programmes that target the skills gap.
As Australia looks ahead, employees will continue to chase careers that are meaningful (61%) over ones with higher pay (16%) and flexibility (32%). Moreover, as demand for more advanced skills rises, training providers need to prioritise programmes that directly address the digital skills shortages facing Australia today without neglecting the importance of highly prioritised self-management skills. “We need to do more to broaden the scope of the training experience to encourage problem solving and adaptability,” says Simon Walker, the managing director of NCVER.
References
1 https://www.smh.com.au/business/workplace/on-the-way-up-the-rise-of-fast-skills-in-the-digital-workplace-20220210-p59vix.html
2 https://techcouncil.com.au/wp-content/uploads/2022/08/2022-Getting-to-1.2-million-report.pdf
3 https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-australias-digital-pulse-2021-160621.pdf
4 https://www.theguardian.com/australia-news/2022/oct/06/staggering-occupations-facing-skills-shortages-in-australia-almost-doubled-in-past-year
5 https://techcouncil.com.au/wp-content/uploads/2022/08/2022-Getting-to-1.2-million-report.pdf
6 https://techcouncil.com.au/wp-content/uploads/2022/08/2022-Getting-to-1.2-million-report.pdf
7 According to the Economic Impact survey, self-management skills comprise ability with time management, active learning, resilience, stress tolerance and flexibility.
8 https://www.afr.com/technology/cyber-skills-shortage-to-hit-30-000-in-four-years-20220912-p5bhde
9 https://techcouncil.com.au/wp-content/uploads/2022/08/Turning-Australia-into-a-regional-tech-hub_Report-2022.pdf
10 https://www.afr.com/technology/cyber-skills-shortage-to-hit-30-000-in-four-years-20220912-p5bhde
11 https://online.adelaide.edu.au/blog/cyber-security-australia
12 Ibid
13 https://www.theguardian.com/environment/2021/aug/09/australia-lagging-at-the-back-of-the-pack-of-oecd-countries-on-climate-action-analysis-finds
14 https://www.bain.com/insights/sustainability-from-surviving-to-thriving-in-australia/
15 https://www.bain.com/insights/sustainability-from-surviving-to-thriving-in-australia/
16 https://www.abc.net.au/news/2022-05-01/higher-education-key-driver-of-nsw-inflation-job-ready-changes/101028510
17 https://www.dewr.gov.au/skills-reform/jobtrainer-fund
Bridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
Bridging the skills gap: Fuelling careers and the economy in Pakistan
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Pakistan. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Digital skills (57.3%) are a top priority for employees in Pakistan owing to a booming IT sector and the country’s rapidly growing freelancer market, which is the third fastest growing market globally#_ftn1" name="_ftnref1" title="">[1]. Recent acceleration of digitalisation has resulted in higher demand for basic digital skills (72.1%).#_ftn2" name="_ftnref2" title="">[2] #_ftn3" name="_ftnref3" title="">[3] Employees in Pakistan are motivated to acquire digital skills to improve career progression and promotion opportunities (29.3%), as well as to secure better pay and bargaining power (23%). Both the government and employers have important yet distinct roles to play in upskilling Pakistan: while employees expect the government to provide financial incentives, they point to employers as being responsible for providing access to diversified skilling programmes and information on the skills needed for different roles.Despite rising digital penetration in Pakistan in recent years, 46% of the population still lacks internet access.#_ftn4" name="_ftnref4" title="">[4] While 80% of adults live in areas served by mobile broadband, many still do not access the internet.#_ftn5" name="_ftnref5" title="">[5] Out of a total of 182 m mobile subscriptions, only 38 m belong to women.#_ftn6" name="_ftnref6" title="">[6] This could be a result of the low female literacy rate (48%),#_ftn7" name="_ftnref7" title="">[7] which is far below the overall literacy rate of around 60%.#_ftn8" name="_ftnref8" title="">[8] Moreover, the female labour force participation rate is among the lowest globally (25%) and women are mostly employed in the informal sector.#_ftn9" name="_ftnref9" title="">[9] On the other hand, the country struggles with youth unemployment. Almost a third (31%) of the educated youth with professional degrees was unemployed in 2022.#_ftn10" name="_ftnref10" title="">[10]
Amid this backdrop, the government is prioritising digitalisation and implementing initiatives to close the existing skills gap. For instance, Pakistan introduced its “Digital Pakistan” roadmap in 2018, which set out a number of policies and initiatives to help the economy to realise US$59.7 bn (PKR9.7 trn) in annual value by 2030.#_ftn11" name="_ftnref11" title="">[11] The policy targets the upskilling and reskilling of young graduates and the existing workforce to support the country’s growing digital economy and help spur freelance IT sector exports. On this front, it hopes to reach US$3 billion by 2024, up from US$2.12 billion in 2021.#_ftn12" name="_ftnref12" title="">[12]
Infrastructure obstacles—such as inequitable internet access across the country and a lack of sufficient digital skills training—have lowered the pace of digitalisation at workplaces, says Saad Gilani, a senior programme officer at the International Labour Organization (ILO).
Pakistan’s growing freelance economy boosts digital upskilling
More than half of employees (57.3%) in Economist Impact’s survey consider digital skills the most important to acquire. Within this broad category, most employees consider basic digital skills (72.1%) as the most important to have, a trend that reflects the country's struggles with basic digitalisation. Advanced digital skills are also considered must-haves by employees in Pakistan such as data analysis and visualisation (49.2%), digital marketing and e-commerce (47.7%), and IT support (40%).
Apart from the pandemic, which motivated many employees (34.7%) in the country to upskill, free online courses (33.3%) have enabled people to acquire new digital skills. One such initiative, the government's e-rozgaar platform, provides online training to budding freelancers.#_ftn13" name="_ftnref13" title="">[13] #_ftn14" name="_ftnref14" title="">[14] Additionally, Pakistan’s digital freelance market surged by 69% annually in 2020, which registered especially strong gains for women, who often struggle to achieve equity in traditional education and labour force participation.#_ftn15" name="_ftnref15" title="">[15]
For Mr Gilani, the success of the freelance market falls in line with his observations that young employees in Pakistan are highly self-motivated to upskill to remain relevant in the job market. “There are not many employer-led initiatives, so employees are learning by themselves,” he says.
Apart from digital skills, employees in Pakistan point to the importance of self-management (53.3%) and soft skills (46.7%). For example, 71.4% consider adaptability and flexibility a high priority, compared with the regional average of 65.5%. Similarly, 81.5% report communication skills as a “must-have”, higher than the regional average of 70.9%. Mr Gilani suggests these findings reflect the fact that soft skills are applicable across diverse job roles and industries. Soft skills attainment also appears to be linked to digital capabilities—around 81% of employees in Pakistan agree that digital skills have helped them gain confidence and improve in other areas like communication, analysis and critical thinking.
Although green skills (10.7%) are not considered a key priority for employees in Pakistan, Mr Gilani says this is an area for concern given the climate change risks impacting the country.#_ftn16" name="_ftnref16" title="">[16] This vulnerability heightened in 2022, when intense rainfall resulted in devastating flood waters, causing 1,100 deaths and affecting 33m individuals.#_ftn17" name="_ftnref17" title="">[17]
Barriers to upskilling Pakistan
Employees in our survey point to a lack of time (37.3%) and poor workplace culture of learning (32%) as barriers to acquiring new skills. These findings are relevant as most employees report workplace training (54.7%) as a key source of learning new digital skills, emphasising the need for more skilling opportunities in offices.
Another key issue, Mr Gilani says, is the mismatch between university course offerings and industry demand. “There is a high tendency for unemployment among the highly educated youth, stemming from problems in our education system—we don’t see universities inviting companies to tell students what they are looking for and employers aren’t sharing information with educational institutes”. In addition to focusing on university degrees, employers could also consider employees’ skillsets as an important signal for hiring new talent. Nearly 67% of surveyed employees believe that employers in Pakistan are hiring based on skills-based qualifications rather than full-time degrees.
Distinct expectations from government and employers
Faced with the high costs of reskilling and upskilling, more than half (52%) of employees consider the government responsible for providing financial incentives for upskilling. For instance, 29.3% cite government subsidies as a major motivator for acquiring specific skills such as green skills. Providing funding for green skills can bolster Pakistan’s capacity to adapt to a changing climate, says Mr Gilani. He suggests that greater investments in green skills and industries could improve the country’s access to renewable energy sources, reduce its climate resilience and create jobs.
Across all skill types, employers also have an instrumental role in upskilling and reskilling employees. More than four in ten survey respondents say employers have a role to play in providing access to diversified skilling programmes (42.7%) and information on the skills needed for different roles (41.3%). Over a third of employees also consider the government responsible for providing information on skills needed for different roles.
Leaving no one behind
Pakistan is undergoing a pivotal shift in its economy as digital transformation gains momentum. A large part of its success will hinge on leaving no one behind and giving an equal opportunity to everyone including women, young graduates and freelancers, which will boost the country's workforce significantly. Mr Gilani highlights the importance of government’s leadership and direction in providing an overall direction to this skills ecosystem, “If there is consistent leadership, digital skilling policy and an ecosystem, then things can be done.” And while digital skills will continue to be important as the country grows and digitalises in the next few years, analytical and soft skills will be equally important.
#_ftnref1" name="_ftn1" title="">[1]https://dailytimes.com.pk/818869/pakistan-becomes-the-4th-fastest-growin... #_ftnref2" name="_ftn2" title="">[2] Basic digital skills are defined in the survey as the ability to operate basic office software, i.e. Microsoft Office, and/or set up Internet and digital communication tools. #_ftnref3" name="_ftn3" title="">[3] Pakistan is the third-fastest growing freelancer market globally. [Source: http://onlinelabourobservatory.org/oli-supply/] #_ftnref4" name="_ftn4" title="">[4]https://www.pta.gov.pk/en/telecom-indicators #_ftnref5" name="_ftn5" title="">[5] https://www.gsma.com/asia-pacific/wp-content/uploads/2022/11/Making-Digi... #_ftnref6" name="_ftn6" title="">[6] https://onlinelibrary.wiley.com/doi/epdf/10.1111/rode.12994 #_ftnref7" name="_ftn7" title="">[7]#Female_Literacy_Rate_In_Pakistan_2022">https://ilm.com.pk/pakistan/pakistan-information/male-and-female-literac... #_ftnref8" name="_ftn8" title="">[8] https://tribune.com.pk/story/2322073/literacy-and-pakistan #_ftnref9" name="_ftn9" title="">[9] 2021 World Bank estimates, https://www.worldbank.org/en/results/2022/07/07/supporting-legal-reforms... #_ftnref10" name="_ftn10" title="">[10] https://tribune.com.pk/story/2342344/over-31-of-educated-youth-unemployed-reveals-pide #_ftnref11" name="_ftn11" title="">[11] https://accesspartnership.com/pakistans-pkr97-trillion-digital-potential/ #_ftnref12" name="_ftn12" title="">[12] https://www.thenews.com.pk/print/887910-govt-eyes-3bln-from-freelancing-it-exports-by-2024 #_ftnref13" name="_ftn13" title="">[13] https://erozgar.pitb.gov.pk/ #_ftnref14" name="_ftn14" title="">[14] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref15" name="_ftn15" title="">[15] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref16" name="_ftn16" title="">[16] https://edition.cnn.com/2022/08/30/asia/pakistan-climate-crisis-floods-justice-intl/index.html #_ftnref17" name="_ftn17" title="">[17] https://www.weforum.org/agenda/2022/09/pakistan-floods-what-role-did-climate-change-play/Bridging the skills gap: Fuelling careers and the economy in Vietnam
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
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Bridging the skills gap: Fuelling careers and the economy in Australia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Australia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article —one in a series of 12 market reports—examines these issues in Australia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
The rapid digitalisation of businesses in Australia places digital skills (47%) as a key focus area for both employees and employers. Within the broader category of digital skills, advanced capabilities in data analysis and visualisation (38%), cybersecurity (34%) and IT support (34%) are considered must-haves. Australian employees are strongly motivated to upskill, with 40% saying that it highly impacts their ability to find more meaningful careers. For 61% of Australians, meaningful careers trump ones with higher pay (16%) and flexibility (32%). A majority of employees in our survey (67%) consider self-management skills such as time-management and active learning as essential, and more important than all other skills, for the workforce today.As Australian businesses digitalise rapidly, 87% of job roles are expected to require digital literacy.1 The need for digital skills is not only confined to the ICT sector, but also in adjacent industries such as finance, healthcare and government.2 However, demand is outpacing the current supply: every year, only 6,500 IT graduates are available to fill the annual demand for 60,000 workers.3 The National Skills Commission reported that the number of occupations struggling to fill positions had doubled between 2021 and 2022.4 Vacancy rates in tech are 60% higher than the national average and, without appropriate action, Australia will be short on 186,000 workers.5
Moreover, the Australian government and tech sector have jointly committed to create 1.2m tech jobs by 2030, which requires adding 653,000 people to the existing workforce.6
Increased importance of self-management and advanced digital skills
According to the Economist Impact survey, 67% of Australian employees prioritise bettering their self-management7 skills, higher than the regional average (53%). Skills such as time-management and active learning are becoming essential across different industries, highlights Patrick Kidd, chief executive officer, Digital Skills Organisation, Australia. He says “these skills are applicable across all industries and different job roles, and are becoming increasingly important.”
Figure 1: Australian employees prioritise self-management over other skills
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (% of respondents)
Source: Economist Impact, 2023
Nonetheless, almost half (47%) of employees consider digital skills as the most important for the workforce today. Within digital skills, advanced capabilities in data analysis and visualisation (38%), cybersecurity (34%) and IT support (34%) are considered must-haves. Phil Loveder, the executive manager of inform and engage at the National Centre for Vocational Education Research (NCVER), Australia, highlights the rising skills gap in cybersecurity. On this, he explains, “data confidentiality, protection and privacy is a massive issue in Australia, and we can’t get enough cybersecurity people at the moment.” On its current trajectory, Australia will be short of 30,000 cyber professionals by 2026.8
As the Australian tech sector has ballooned to a US$429.6bn market,9 so too has the country’s vulnerability to cybercrime, which costs an estimated US$1bn annually.10 The government has recognised the issue and allocated US$1.35bn to boost growth in the cybersecurity industry.11 This, in turn, has resulted in an industry-wide surge in demand for cybersecurity capabilities, with IT teams looking to drive technological progress.12
Figure 2: Must-have, good-to-have and not needed digital skills for employees in Australia
Indicate the desirability of specific digital skills for the workforce in your sector today? (% of respondents)
Source: Economist Impact, 2023
Australia lags in green skills uptake, with only 12% of employees considering these essential to acquire. The country has grappled with perceptions of being a laggard on climate action when compared with other developed OECD economies.13 14 This is likely to change in the coming years, as Australia has committed to ambitious carbon emissions targets.15 Mr Loveder adds that a “substantial move towards green technologies” will create greater momentum, which will in turn drive up green reskilling.
Australians know that upskilling has real benefits, but barriers remain
Across all skillsets, Australian employees demonstrate a strong sense of personal initiative to upskill—for career progression, promotion opportunities and to improve their current job performance. Updating their skillset has positively impacted their salaries and bargaining power (71%) as well as their ability to find more meaningful careers (71%).
Figure 3: Upskilling has a high impact on Australians’ salaries, bargaining power and careers
Based on your experience, rate the impact that upskilling and reskilling have had on your role or career? (% of respondents)
Source: Economist Impact, 2023
Yet, barriers limit Australians’ access to skilling resources. When it comes to acquiring digital or analytical skills, Australian employees cite the high cost of courses as the biggest barrier, picked by 32% and 36% of respondents respectively. Soaring university fees16 could limit employees’ access to analytical skills, which respondents report are largely acquired in-person at the tertiary level or at coaching institutes (32%). Meanwhile, 34% of employees found it challenging to acquire soft skills due to difficulties in attending in-person courses, leading most to rely on self-learning (46%) to upskill in this area.
Figure 4: Employees face barriers to upskilling due to a lack of resources and time
What are the top barriers you face in learning digital, analytical and soft skills? (% of respondents)
Source: Economist Impact, 2023
Public-private partnerships bolster access to information and funding
To address these barriers, experts reinforce the key role of employers in creating the right environment for learning. Employers could enable employees to retrain through online programmes, which tend to be less resource-intensive than in-person courses and can be especially effective for mass upskilling, says Mr Kidd. Despite these advantages, only 30% of employees in our survey believe that employers value online certificates. However, this could change, as 61% of employees also say their employers are shifting the focus of hiring from valuing full-time degrees to skill-based qualifications, a shift to focusing on the skills themselves rather than methods of learning.
While employees in our survey place the primary responsibility of upskilling on employers, they also consider the government as playing an important role through providing financial incentives (48%) and access to diversified reskilling programmes (44%). In recent years, the government has allocated around US$1bn towards supporting free or low fee training for jobseekers and young people.17 “Other examples cited by Mr Loveder include financial supports by governments aimed at easing the costs to students undertaking higher-level training in courses that address workplace and industry needs”.
The government and employers can also work together to address the information gap on skills. Currently, 63% of employees look to their employer for information on the skills needed for different roles, compared with 37% who consider the government most responsible. Given the government’s greater access to data and cross-industry information, it could support the business community by better defining a skills taxonomy to support hiring processes and employees’ upskilling plans. Doing so would also help in developing diverse skilling programmes that target the skills gap.
As Australia looks ahead, employees will continue to chase careers that are meaningful (61%) over ones with higher pay (16%) and flexibility (32%). Moreover, as demand for more advanced skills rises, training providers need to prioritise programmes that directly address the digital skills shortages facing Australia today without neglecting the importance of highly prioritised self-management skills. “We need to do more to broaden the scope of the training experience to encourage problem solving and adaptability,” says Simon Walker, the managing director of NCVER.
References
1 https://www.smh.com.au/business/workplace/on-the-way-up-the-rise-of-fast-skills-in-the-digital-workplace-20220210-p59vix.html
2 https://techcouncil.com.au/wp-content/uploads/2022/08/2022-Getting-to-1.2-million-report.pdf
3 https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-australias-digital-pulse-2021-160621.pdf
4 https://www.theguardian.com/australia-news/2022/oct/06/staggering-occupations-facing-skills-shortages-in-australia-almost-doubled-in-past-year
5 https://techcouncil.com.au/wp-content/uploads/2022/08/2022-Getting-to-1.2-million-report.pdf
6 https://techcouncil.com.au/wp-content/uploads/2022/08/2022-Getting-to-1.2-million-report.pdf
7 According to the Economic Impact survey, self-management skills comprise ability with time management, active learning, resilience, stress tolerance and flexibility.
8 https://www.afr.com/technology/cyber-skills-shortage-to-hit-30-000-in-four-years-20220912-p5bhde
9 https://techcouncil.com.au/wp-content/uploads/2022/08/Turning-Australia-into-a-regional-tech-hub_Report-2022.pdf
10 https://www.afr.com/technology/cyber-skills-shortage-to-hit-30-000-in-four-years-20220912-p5bhde
11 https://online.adelaide.edu.au/blog/cyber-security-australia
12 Ibid
13 https://www.theguardian.com/environment/2021/aug/09/australia-lagging-at-the-back-of-the-pack-of-oecd-countries-on-climate-action-analysis-finds
14 https://www.bain.com/insights/sustainability-from-surviving-to-thriving-in-australia/
15 https://www.bain.com/insights/sustainability-from-surviving-to-thriving-in-australia/
16 https://www.abc.net.au/news/2022-05-01/higher-education-key-driver-of-nsw-inflation-job-ready-changes/101028510
17 https://www.dewr.gov.au/skills-reform/jobtrainer-fund
Bridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
Bridging the skills gap: Fuelling careers and the economy in Pakistan
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Pakistan. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Digital skills (57.3%) are a top priority for employees in Pakistan owing to a booming IT sector and the country’s rapidly growing freelancer market, which is the third fastest growing market globally#_ftn1" name="_ftnref1" title="">[1]. Recent acceleration of digitalisation has resulted in higher demand for basic digital skills (72.1%).#_ftn2" name="_ftnref2" title="">[2] #_ftn3" name="_ftnref3" title="">[3] Employees in Pakistan are motivated to acquire digital skills to improve career progression and promotion opportunities (29.3%), as well as to secure better pay and bargaining power (23%). Both the government and employers have important yet distinct roles to play in upskilling Pakistan: while employees expect the government to provide financial incentives, they point to employers as being responsible for providing access to diversified skilling programmes and information on the skills needed for different roles.Despite rising digital penetration in Pakistan in recent years, 46% of the population still lacks internet access.#_ftn4" name="_ftnref4" title="">[4] While 80% of adults live in areas served by mobile broadband, many still do not access the internet.#_ftn5" name="_ftnref5" title="">[5] Out of a total of 182 m mobile subscriptions, only 38 m belong to women.#_ftn6" name="_ftnref6" title="">[6] This could be a result of the low female literacy rate (48%),#_ftn7" name="_ftnref7" title="">[7] which is far below the overall literacy rate of around 60%.#_ftn8" name="_ftnref8" title="">[8] Moreover, the female labour force participation rate is among the lowest globally (25%) and women are mostly employed in the informal sector.#_ftn9" name="_ftnref9" title="">[9] On the other hand, the country struggles with youth unemployment. Almost a third (31%) of the educated youth with professional degrees was unemployed in 2022.#_ftn10" name="_ftnref10" title="">[10]
Amid this backdrop, the government is prioritising digitalisation and implementing initiatives to close the existing skills gap. For instance, Pakistan introduced its “Digital Pakistan” roadmap in 2018, which set out a number of policies and initiatives to help the economy to realise US$59.7 bn (PKR9.7 trn) in annual value by 2030.#_ftn11" name="_ftnref11" title="">[11] The policy targets the upskilling and reskilling of young graduates and the existing workforce to support the country’s growing digital economy and help spur freelance IT sector exports. On this front, it hopes to reach US$3 billion by 2024, up from US$2.12 billion in 2021.#_ftn12" name="_ftnref12" title="">[12]
Infrastructure obstacles—such as inequitable internet access across the country and a lack of sufficient digital skills training—have lowered the pace of digitalisation at workplaces, says Saad Gilani, a senior programme officer at the International Labour Organization (ILO).
Pakistan’s growing freelance economy boosts digital upskilling
More than half of employees (57.3%) in Economist Impact’s survey consider digital skills the most important to acquire. Within this broad category, most employees consider basic digital skills (72.1%) as the most important to have, a trend that reflects the country's struggles with basic digitalisation. Advanced digital skills are also considered must-haves by employees in Pakistan such as data analysis and visualisation (49.2%), digital marketing and e-commerce (47.7%), and IT support (40%).
Apart from the pandemic, which motivated many employees (34.7%) in the country to upskill, free online courses (33.3%) have enabled people to acquire new digital skills. One such initiative, the government's e-rozgaar platform, provides online training to budding freelancers.#_ftn13" name="_ftnref13" title="">[13] #_ftn14" name="_ftnref14" title="">[14] Additionally, Pakistan’s digital freelance market surged by 69% annually in 2020, which registered especially strong gains for women, who often struggle to achieve equity in traditional education and labour force participation.#_ftn15" name="_ftnref15" title="">[15]
For Mr Gilani, the success of the freelance market falls in line with his observations that young employees in Pakistan are highly self-motivated to upskill to remain relevant in the job market. “There are not many employer-led initiatives, so employees are learning by themselves,” he says.
Apart from digital skills, employees in Pakistan point to the importance of self-management (53.3%) and soft skills (46.7%). For example, 71.4% consider adaptability and flexibility a high priority, compared with the regional average of 65.5%. Similarly, 81.5% report communication skills as a “must-have”, higher than the regional average of 70.9%. Mr Gilani suggests these findings reflect the fact that soft skills are applicable across diverse job roles and industries. Soft skills attainment also appears to be linked to digital capabilities—around 81% of employees in Pakistan agree that digital skills have helped them gain confidence and improve in other areas like communication, analysis and critical thinking.
Although green skills (10.7%) are not considered a key priority for employees in Pakistan, Mr Gilani says this is an area for concern given the climate change risks impacting the country.#_ftn16" name="_ftnref16" title="">[16] This vulnerability heightened in 2022, when intense rainfall resulted in devastating flood waters, causing 1,100 deaths and affecting 33m individuals.#_ftn17" name="_ftnref17" title="">[17]
Barriers to upskilling Pakistan
Employees in our survey point to a lack of time (37.3%) and poor workplace culture of learning (32%) as barriers to acquiring new skills. These findings are relevant as most employees report workplace training (54.7%) as a key source of learning new digital skills, emphasising the need for more skilling opportunities in offices.
Another key issue, Mr Gilani says, is the mismatch between university course offerings and industry demand. “There is a high tendency for unemployment among the highly educated youth, stemming from problems in our education system—we don’t see universities inviting companies to tell students what they are looking for and employers aren’t sharing information with educational institutes”. In addition to focusing on university degrees, employers could also consider employees’ skillsets as an important signal for hiring new talent. Nearly 67% of surveyed employees believe that employers in Pakistan are hiring based on skills-based qualifications rather than full-time degrees.
Distinct expectations from government and employers
Faced with the high costs of reskilling and upskilling, more than half (52%) of employees consider the government responsible for providing financial incentives for upskilling. For instance, 29.3% cite government subsidies as a major motivator for acquiring specific skills such as green skills. Providing funding for green skills can bolster Pakistan’s capacity to adapt to a changing climate, says Mr Gilani. He suggests that greater investments in green skills and industries could improve the country’s access to renewable energy sources, reduce its climate resilience and create jobs.
Across all skill types, employers also have an instrumental role in upskilling and reskilling employees. More than four in ten survey respondents say employers have a role to play in providing access to diversified skilling programmes (42.7%) and information on the skills needed for different roles (41.3%). Over a third of employees also consider the government responsible for providing information on skills needed for different roles.
Leaving no one behind
Pakistan is undergoing a pivotal shift in its economy as digital transformation gains momentum. A large part of its success will hinge on leaving no one behind and giving an equal opportunity to everyone including women, young graduates and freelancers, which will boost the country's workforce significantly. Mr Gilani highlights the importance of government’s leadership and direction in providing an overall direction to this skills ecosystem, “If there is consistent leadership, digital skilling policy and an ecosystem, then things can be done.” And while digital skills will continue to be important as the country grows and digitalises in the next few years, analytical and soft skills will be equally important.
#_ftnref1" name="_ftn1" title="">[1]https://dailytimes.com.pk/818869/pakistan-becomes-the-4th-fastest-growin... #_ftnref2" name="_ftn2" title="">[2] Basic digital skills are defined in the survey as the ability to operate basic office software, i.e. Microsoft Office, and/or set up Internet and digital communication tools. #_ftnref3" name="_ftn3" title="">[3] Pakistan is the third-fastest growing freelancer market globally. [Source: http://onlinelabourobservatory.org/oli-supply/] #_ftnref4" name="_ftn4" title="">[4]https://www.pta.gov.pk/en/telecom-indicators #_ftnref5" name="_ftn5" title="">[5] https://www.gsma.com/asia-pacific/wp-content/uploads/2022/11/Making-Digi... #_ftnref6" name="_ftn6" title="">[6] https://onlinelibrary.wiley.com/doi/epdf/10.1111/rode.12994 #_ftnref7" name="_ftn7" title="">[7]#Female_Literacy_Rate_In_Pakistan_2022">https://ilm.com.pk/pakistan/pakistan-information/male-and-female-literac... #_ftnref8" name="_ftn8" title="">[8] https://tribune.com.pk/story/2322073/literacy-and-pakistan #_ftnref9" name="_ftn9" title="">[9] 2021 World Bank estimates, https://www.worldbank.org/en/results/2022/07/07/supporting-legal-reforms... #_ftnref10" name="_ftn10" title="">[10] https://tribune.com.pk/story/2342344/over-31-of-educated-youth-unemployed-reveals-pide #_ftnref11" name="_ftn11" title="">[11] https://accesspartnership.com/pakistans-pkr97-trillion-digital-potential/ #_ftnref12" name="_ftn12" title="">[12] https://www.thenews.com.pk/print/887910-govt-eyes-3bln-from-freelancing-it-exports-by-2024 #_ftnref13" name="_ftn13" title="">[13] https://erozgar.pitb.gov.pk/ #_ftnref14" name="_ftn14" title="">[14] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref15" name="_ftn15" title="">[15] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref16" name="_ftn16" title="">[16] https://edition.cnn.com/2022/08/30/asia/pakistan-climate-crisis-floods-justice-intl/index.html #_ftnref17" name="_ftn17" title="">[17] https://www.weforum.org/agenda/2022/09/pakistan-floods-what-role-did-climate-change-play/Bridging the skills gap: Fuelling careers and the economy in the Philippines
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
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Bridging the skills gap: Fuelling careers and the economy in Indonesia
Economist Impact, supported by Google, conducted a survey of 1,375 employees across Asia-Pacific (APAC), including 100 employees from Indonesia, between November 2022 and January 2023. It also interviewed employers and industry experts across the region to understand their perspectives on skills gaps, as well as reskilling and upskilling aspirations.
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Indonesia. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Indonesian employees consider digital skills (60%) the top focus area for upskilling. Among these, basic digital skills are foundational for 88.3% of Indonesian workers. As digitalisation spreads across the archipelago, the country will increasingly demand more advanced skills. Employees consider capabilities with data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as the most important advanced tech skills to have. Workers have the highest expectations for their employers, believing they should support their development by providing information on skills (57%), through financial incentives (54%), recognition (43%) and supporting their mental well-being (35%).Indonesia is one of Southeast Asia’s fastest-growing internet economy. Between 2015 and 2019, its technology sector grew at an average rate of 49% a year, alongside rapid e-commerce adoption by both large and small businesses.1 The economy’s digitalisation has enabled many in the workforce, especially the young, to participate as freelancers, particularly in the transportation and delivery sectors.2
However, many have been left out due to uneven internet connectivity and low literacy rates. For instance, most internet users tend to be concentrated in urban centres and are young—only 21% are over 50 years old.3 The issues are not just limited to the older population, as almost a quarter of young people (22.5%) in Indonesia are not in education, employment or training4 and the World Bank estimates that only 19% of 25-34 year olds had a tertiary qualification in 2021, much lower than the global average of 47%.5
The future of Indonesia’s economy is digital
Most Indonesian employees (60%) consider digital skills the most important to acquire. This is in sync with the digitalisation underway in the economy — Indonesia’s digitally skilled workers are forecast to contribute US$303.4bn to its GDP by 2030, accounting for 16% of GDP.6
Government analysis shows that the expanding technology sector could create 20m-45m new jobs in Indonesia.7 Between 2019 and 2030, non-tech sectors such as professional services, manufacturing and construction — are expected to see the highest growth in GDP contributions from digitally skilled workers, as these sectors increasingly adopt technology to improve their productivity.8
Figure 1: Digital skills are a top priority for Indonesian employees
Which skill categories do you think are the most important for the workforce in your sector to acquire today? (%)
Source: Economist Impact, 2023
Within the broad category of digital skills, employees in our survey consider advanced digital skills such as data analysis and visualisation (56.7%), IT support (51.7%), and digital marketing and e-commerce (48.3%) as must-have skills. Employees also said the same for coding and programming (26.7%) and artificial intelligence (AI) and machine learning (25%). The importance given to these advanced skills possibly reflects a skills gap, as data from 2020 suggest that less than 1% of the workforce in the country possessed advanced digital skills.9
Advanced digital skills are becoming more important for various sectors too. For instance, big data analytics skills are increasingly used in the banking sector to understand customers’ spending patterns and preferences, to cross-sell products and for fraud management.10 Similarly, AI is expected to improve care delivery and hospital operations.11 Meanwhile, farmers are benefitting in myriad ways from real-time monitoring and prediction systems with Internet of Things-enabled tools.12
Cybersecurity is another must-have advanced digital skill for 36.7% of employees, reflecting Indonesia’s struggles with digital risks. The country was ranked the most vulnerable in Southeast Asia for cyber risks, and faced more than 11m attacks in the first quarter of 2022 alone.13
Although green skills such as sustainability reporting, sustainable business management and supply chain management are considered less important at present(15%), these skills would gain importance due to the country's rising sustainability concerns. Indonesia is ranked among the top countries exposed to climate risks with high vulnerability to all types of flooding and extreme heat. 14
Figure 2: Advanced digital skills such as data analysis and visualisation, and IT support are must-haves
Indicate which specific types of digital skills are must-have, good to have or not needed for the workforce in your sector today (%)
Source: Economist Impact, 2023
Infrastructure and high costs complicate access to skilling
Employees in Indonesia are strongly motivated to acquire new skills. Nearly half (49%) of the employees agree that upskilling or reskilling has had a high impact in improving performance in their current roles, and 54% report a high impact in exploring new roles and areas of interest. Despite these motivations, more than one in four (27%) employees cite poor internet access as a barrier in acquiring new digital skills. Nila Marita, director and head of external affairs at GoTo—the holding company of two major Indonesian startups, Gojek and Tokopedia—agrees that internet connectivity is “crucial to increase access to important learning opportunities in Indonesia and bridging this gap will enable more Indonesians to acquire digital skills.” Addressing access is important, as employees utilise online courses for learning. Indeed, 54% of employees say they obtain digital skills outside of the workplace via online courses.
High costs (42%) are also a major hurdle in Indonesians’ ability to digitally upskill, and companies are not investing enough to provide workers with on-the-job training.15 Additionally, Indonesia has a large, informal sector made up of low-income workers, creating challenges for employees to afford skilling programmes and for the government to reach them.16 17
Figure 3: Key skilling obstacles for employees across skills types
What are the top three significant obstacles that you face while learning new skills?
Source: Economist Impact, 2023
Another challenge that employees cite across most skill sets is a lack of time in learning new courses. Indonesian workers have reported experiencing higher workload after the Covid-19 pandemic.18 This also aligns with the higher importance that employees in our survey assign to self-management skills like time management, resilience and stress tolerance (49%).
High expectations from employers
According to our survey respondents, employers are the most responsible for supporting their development across every category apart from providing access to diversified skilling programmes. In particular, they see their employers as a key source of providing information on skills (57%), financial incentives (54%), recognition (43%) and support for their mental well-being (35%).
Employers could address many of the obstacles that employees face such as high costs and time restrictions by subsidising access to training programmes and integrating more workplace training sessions. “Both the government and private sector in Indonesia have been scaling up efforts to develop the country’s talent pool in recent years,” says Ms Marita from GoTo. For instance, organisations and the government are increasingly collaborating with universities to prepare university students with in-demand skills. Private sector companies are also training the trainers and working together with them to design the curriculum based on companies’ skills needs.
Figure 4: Employers are considered the most responsible for upskilling Indonesians
In your opinion who is responsible for supporting employees regarding the following issues? (%)
Source: Economist Impact, 2023
Seventy-seven percent of employees, substantially higher than the regional average (66.5%), believe that employers now lean towards skills-based hiring over paper qualifications. In this context, efforts by government, educational institutions and companies to communicate what skills are in-demand will help the workforce prioritise which ones to learn. While most workers rely on social media and advertisements (73%) for information on valuable skills, government awareness programmes are also an important source for 50% of employees.
Multi-stakeholder collaboration key to closing skills gaps
Overcoming access and infrastructure gaps is integral to realising Indonesia’s digital economic potential. The government has made efforts to counteract these issues through various programmes such as Kartu Prakerja, an online upskilling programme targeted at retraining one million unemployed and low-income adults who are 18-64 years old.19 20 The programme takes an end-to-end approach, providing access to upskilling and reskilling subsidies, courses and job vacancies. Subsidies can also be useful in driving the uptake of green skills, which acts as the biggest motivation to acquire these skills for one in three surveyed employees. Another programme provided by Indonesia’s Ministry of Communications and Information is the Digital Talent Scholarship (DTS). It aims to develop the skills and competitiveness of the country’s workforce in the information and communication technology sector.21
For Indonesia to fully unlock the economic potential of digital skilling, it must extend this kind of opportunity to workers at micro, small and medium enterprises which employ 97% of the country’s workforce.22
Another government programme is Making Indonesia 4.0, a roadmap launched in 2018 to accelerate digitalisation.23 Elements of this roadmap are geared towards training and reskilling workers as technology becomes more ingrained in industrial processes. Additionally, attempts to broaden equitable access to digital skilling opportunities could close the skills gaps.
References
1 https://digitalcfoasia.com/2023/01/10/addressing-the-critical-skill-gaps-in-indonesia/
2 https://fair.work/wp-content/uploads/sites/17/2021/12/Fairwork-Report-Indonesia-2021-accessible.pdf
3 https://smeru.or.id/en/publication/diagnostic-report-digital-skills-landscape-indonesia
4 https://data.worldbank.org/indicator/SL.UEM.NEET.ZS?locations=ID
5 https://gpseducation.oecd.org/CountryProfile?primaryCountry=IDN&treshold=5&topic=EO
6 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
7 https://opengovasia.com/creating-million-new-jobs-through-digital-technology-in-indonesia/
8 https://accesspartnership.com/wp-content/uploads/2023/03/skills-for-the-future-executive-summary-in-english.pdf
9 https://pathwayscommission.bsg.ox.ac.uk/sites/default/files/2022-03/FINAL_Diagnostic%20Report_Accessible.pdf
10 https://www.sciencedirect.com/science/article/pii/S1877050915005992
11 https://www.usa.philips.com/healthcare/nobounds/phoenix-childrens-benefits-of-ai-in-healthcare#_continue-reading
12 https://www.xcubelabs.com/blog/benefits-of-iot-in-agriculture-and-smart-farming/
13 https://en.antaranews.com/news/227061/indonesia-faces-11-mln-cyber-attacks-in-2022-first-quarter
14 https://www.adb.org/sites/default/files/publication/700411/climate-risk-country-profile-indonesia.pdf
15 https://www.weforum.org/agenda/2022/11/indonesia-edtech-financial-inclusion/
16 An informal economy broadly refers to any part of the economy that is unregistered, meaning that they are not covered or are insufficiently covered by formal employment arrangements. In most of these cases, companies remain largely unaccountable to any regulation as workers are not officially classed as employees, limiting their access to government services, including welfare, labour rights protections and public programmes. In Indonesia, 60% of the workforce is employed by the informal sector and accounts for 22.7% of national GDP (US$776 billion).
17 https://www.ilo.org/jakarta/areasofwork/informal-economy/lang--en/index.htm
18 https://en.prnasia.com/releases/apac/68-of-indonesia-s-employees-willing-to-forgo-higher-salaries-or-job-promotions-for-work-life-balance-michael-page-366002.shtml
19 https://www.prakerja.go.id/
20 https://money.kompas.com/read/2023/01/06/123000126/kartu-prakerja-2023-target-anggaran-dan-pelaksanaan-pelatihannya-
21 https://digitalent.kominfo.go.id/program
22 https://www.weforum.org/agenda/2022/05/digitalization-growth-indonesia-msmes/
23 https://kemenperin.go.id/artikel/23388/Kemenperin:-Revolusi-Industri-4.0-Optimalkan-Potensi--Indonesia-di-Sektor-Manufaktur
Bridging the skills gap: Fuelling careers and the economy in Pakistan
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article—one in a series of 12 market reports—examines these issues in Pakistan. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key findings
Digital skills (57.3%) are a top priority for employees in Pakistan owing to a booming IT sector and the country’s rapidly growing freelancer market, which is the third fastest growing market globally#_ftn1" name="_ftnref1" title="">[1]. Recent acceleration of digitalisation has resulted in higher demand for basic digital skills (72.1%).#_ftn2" name="_ftnref2" title="">[2] #_ftn3" name="_ftnref3" title="">[3] Employees in Pakistan are motivated to acquire digital skills to improve career progression and promotion opportunities (29.3%), as well as to secure better pay and bargaining power (23%). Both the government and employers have important yet distinct roles to play in upskilling Pakistan: while employees expect the government to provide financial incentives, they point to employers as being responsible for providing access to diversified skilling programmes and information on the skills needed for different roles.Despite rising digital penetration in Pakistan in recent years, 46% of the population still lacks internet access.#_ftn4" name="_ftnref4" title="">[4] While 80% of adults live in areas served by mobile broadband, many still do not access the internet.#_ftn5" name="_ftnref5" title="">[5] Out of a total of 182 m mobile subscriptions, only 38 m belong to women.#_ftn6" name="_ftnref6" title="">[6] This could be a result of the low female literacy rate (48%),#_ftn7" name="_ftnref7" title="">[7] which is far below the overall literacy rate of around 60%.#_ftn8" name="_ftnref8" title="">[8] Moreover, the female labour force participation rate is among the lowest globally (25%) and women are mostly employed in the informal sector.#_ftn9" name="_ftnref9" title="">[9] On the other hand, the country struggles with youth unemployment. Almost a third (31%) of the educated youth with professional degrees was unemployed in 2022.#_ftn10" name="_ftnref10" title="">[10]
Amid this backdrop, the government is prioritising digitalisation and implementing initiatives to close the existing skills gap. For instance, Pakistan introduced its “Digital Pakistan” roadmap in 2018, which set out a number of policies and initiatives to help the economy to realise US$59.7 bn (PKR9.7 trn) in annual value by 2030.#_ftn11" name="_ftnref11" title="">[11] The policy targets the upskilling and reskilling of young graduates and the existing workforce to support the country’s growing digital economy and help spur freelance IT sector exports. On this front, it hopes to reach US$3 billion by 2024, up from US$2.12 billion in 2021.#_ftn12" name="_ftnref12" title="">[12]
Infrastructure obstacles—such as inequitable internet access across the country and a lack of sufficient digital skills training—have lowered the pace of digitalisation at workplaces, says Saad Gilani, a senior programme officer at the International Labour Organization (ILO).
Pakistan’s growing freelance economy boosts digital upskilling
More than half of employees (57.3%) in Economist Impact’s survey consider digital skills the most important to acquire. Within this broad category, most employees consider basic digital skills (72.1%) as the most important to have, a trend that reflects the country's struggles with basic digitalisation. Advanced digital skills are also considered must-haves by employees in Pakistan such as data analysis and visualisation (49.2%), digital marketing and e-commerce (47.7%), and IT support (40%).
Apart from the pandemic, which motivated many employees (34.7%) in the country to upskill, free online courses (33.3%) have enabled people to acquire new digital skills. One such initiative, the government's e-rozgaar platform, provides online training to budding freelancers.#_ftn13" name="_ftnref13" title="">[13] #_ftn14" name="_ftnref14" title="">[14] Additionally, Pakistan’s digital freelance market surged by 69% annually in 2020, which registered especially strong gains for women, who often struggle to achieve equity in traditional education and labour force participation.#_ftn15" name="_ftnref15" title="">[15]
For Mr Gilani, the success of the freelance market falls in line with his observations that young employees in Pakistan are highly self-motivated to upskill to remain relevant in the job market. “There are not many employer-led initiatives, so employees are learning by themselves,” he says.
Apart from digital skills, employees in Pakistan point to the importance of self-management (53.3%) and soft skills (46.7%). For example, 71.4% consider adaptability and flexibility a high priority, compared with the regional average of 65.5%. Similarly, 81.5% report communication skills as a “must-have”, higher than the regional average of 70.9%. Mr Gilani suggests these findings reflect the fact that soft skills are applicable across diverse job roles and industries. Soft skills attainment also appears to be linked to digital capabilities—around 81% of employees in Pakistan agree that digital skills have helped them gain confidence and improve in other areas like communication, analysis and critical thinking.
Although green skills (10.7%) are not considered a key priority for employees in Pakistan, Mr Gilani says this is an area for concern given the climate change risks impacting the country.#_ftn16" name="_ftnref16" title="">[16] This vulnerability heightened in 2022, when intense rainfall resulted in devastating flood waters, causing 1,100 deaths and affecting 33m individuals.#_ftn17" name="_ftnref17" title="">[17]
Barriers to upskilling Pakistan
Employees in our survey point to a lack of time (37.3%) and poor workplace culture of learning (32%) as barriers to acquiring new skills. These findings are relevant as most employees report workplace training (54.7%) as a key source of learning new digital skills, emphasising the need for more skilling opportunities in offices.
Another key issue, Mr Gilani says, is the mismatch between university course offerings and industry demand. “There is a high tendency for unemployment among the highly educated youth, stemming from problems in our education system—we don’t see universities inviting companies to tell students what they are looking for and employers aren’t sharing information with educational institutes”. In addition to focusing on university degrees, employers could also consider employees’ skillsets as an important signal for hiring new talent. Nearly 67% of surveyed employees believe that employers in Pakistan are hiring based on skills-based qualifications rather than full-time degrees.
Distinct expectations from government and employers
Faced with the high costs of reskilling and upskilling, more than half (52%) of employees consider the government responsible for providing financial incentives for upskilling. For instance, 29.3% cite government subsidies as a major motivator for acquiring specific skills such as green skills. Providing funding for green skills can bolster Pakistan’s capacity to adapt to a changing climate, says Mr Gilani. He suggests that greater investments in green skills and industries could improve the country’s access to renewable energy sources, reduce its climate resilience and create jobs.
Across all skill types, employers also have an instrumental role in upskilling and reskilling employees. More than four in ten survey respondents say employers have a role to play in providing access to diversified skilling programmes (42.7%) and information on the skills needed for different roles (41.3%). Over a third of employees also consider the government responsible for providing information on skills needed for different roles.
Leaving no one behind
Pakistan is undergoing a pivotal shift in its economy as digital transformation gains momentum. A large part of its success will hinge on leaving no one behind and giving an equal opportunity to everyone including women, young graduates and freelancers, which will boost the country's workforce significantly. Mr Gilani highlights the importance of government’s leadership and direction in providing an overall direction to this skills ecosystem, “If there is consistent leadership, digital skilling policy and an ecosystem, then things can be done.” And while digital skills will continue to be important as the country grows and digitalises in the next few years, analytical and soft skills will be equally important.
#_ftnref1" name="_ftn1" title="">[1]https://dailytimes.com.pk/818869/pakistan-becomes-the-4th-fastest-growin... #_ftnref2" name="_ftn2" title="">[2] Basic digital skills are defined in the survey as the ability to operate basic office software, i.e. Microsoft Office, and/or set up Internet and digital communication tools. #_ftnref3" name="_ftn3" title="">[3] Pakistan is the third-fastest growing freelancer market globally. [Source: http://onlinelabourobservatory.org/oli-supply/] #_ftnref4" name="_ftn4" title="">[4]https://www.pta.gov.pk/en/telecom-indicators #_ftnref5" name="_ftn5" title="">[5] https://www.gsma.com/asia-pacific/wp-content/uploads/2022/11/Making-Digi... #_ftnref6" name="_ftn6" title="">[6] https://onlinelibrary.wiley.com/doi/epdf/10.1111/rode.12994 #_ftnref7" name="_ftn7" title="">[7]#Female_Literacy_Rate_In_Pakistan_2022">https://ilm.com.pk/pakistan/pakistan-information/male-and-female-literac... #_ftnref8" name="_ftn8" title="">[8] https://tribune.com.pk/story/2322073/literacy-and-pakistan #_ftnref9" name="_ftn9" title="">[9] 2021 World Bank estimates, https://www.worldbank.org/en/results/2022/07/07/supporting-legal-reforms... #_ftnref10" name="_ftn10" title="">[10] https://tribune.com.pk/story/2342344/over-31-of-educated-youth-unemployed-reveals-pide #_ftnref11" name="_ftn11" title="">[11] https://accesspartnership.com/pakistans-pkr97-trillion-digital-potential/ #_ftnref12" name="_ftn12" title="">[12] https://www.thenews.com.pk/print/887910-govt-eyes-3bln-from-freelancing-it-exports-by-2024 #_ftnref13" name="_ftn13" title="">[13] https://erozgar.pitb.gov.pk/ #_ftnref14" name="_ftn14" title="">[14] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref15" name="_ftn15" title="">[15] https://pubs.payoneer.com/docs/2020-gig-economy-index.pdf #_ftnref16" name="_ftn16" title="">[16] https://edition.cnn.com/2022/08/30/asia/pakistan-climate-crisis-floods-justice-intl/index.html #_ftnref17" name="_ftn17" title="">[17] https://www.weforum.org/agenda/2022/09/pakistan-floods-what-role-did-climate-change-play/Bridging the skills gap: fuelling careers and the economy in Hong Kong
The survey respondents were drawn from across 14 markets in the region, out of which 11.8% were Gen Z (born in 1997-2012), 63.2% were Millennials (1981-96) and 25% were Gen X (1965-80). They all worked in a diverse mix of industries.
The research shows that across the region, common understanding is lacking between employers and employees about future skills and the best way to develop them. In some instances, there is also an expectation mismatch between what employers want and what employees see as being important. Understanding these gaps will be instrumental in creating a workforce that is prepared for the economy of the future.
This article —one in a series of 12 market reports—examines these issues in Hong Kong. This series complements a research paper that looks at the reskilling and upskilling imperative across APAC.
Key takeaways:
Almost half (47%) of employees in Hong Kong report a poor understanding of what skills are needed in the market. Although analytical (66%) and self-management (65%) skills are top priorities for employees due to their wide application, advanced digital skills will be key to supporting Hong Kong’s digital economy aspirations. Hong Kong employees view cybersecurity (64.9%) and data analysis and visualisation (54.1%) as must-have advanced digital capabilities. Over half (51%) of employees in Hong Kong report that their employers are shifting their hiring processes to refocus on skills-based qualifications rather than full-time degrees, placing more importance on the role of employers and the government to provide support and clarity into what skills are needed in the market.Despite being a major global business hub, the city’s intensifying talent crunch#_ftn1" name="_ftnref1" title="">[1] is severely impacting its companies’ access to workers with a specific set of skills. Without action, the economy could lose out on US$220bn in unrealised value due to lack of talent by 2030.#_ftn2" name="_ftnref2" title="">[2]
The government has acknowledged the decline in the city’s workforce in the past couple of years and developed policies aimed at attracting high-skilled talent.
The future of the city’s workforce is further complicated by a rapidly ageing population.#_ftn3" name="_ftnref3" title="">[3] By 2050 roughly 40% of citizens will be aged 65 years or above.#_ftn4" name="_ftnref4" title="">[4] With longer life expectancies keeping people in the workforce for longer, sustaining Hong Kong’s economy will require a focus on empowering older workers and bolstering their skills with re-education where required.
Hong Kong employees consider analytical and self-management skills as most important
Similar to their counterparts in Australia, the Philippines and Taiwan, Hong Kong employees consider analytical (66%) and self-management (65%) skills as priority areas. This is likely due to their high degree of transferability and cross-role application (Figure 1). Apart from these skills, more than half of employees in Hong Kong consider advanced digital skills like cybersecurity (64.9%) and data analysis and visualisation (54.1%) as “must haves” (Figure 2). Hong Kong is especially vulnerable to cyber-attacks as a result of low awareness among businesses to monitor these threats. This, along with the rising cost of breaches, is driving more demand for cybersecurity skills.#_ftn5" name="_ftnref5" title="">[5]
Employees are unsure of in-demand skills
Motivations to pursue skills vary. Career progression and promotion opportunities are major drivers for workers to acquire analytical and digital skills, demonstrating their widespread application to different occupations (Figure 2). In comparison, 33% report that their pursuit of soft skills is motivated by personal development and lifelong learning. When asked about the benefits of upskilling and reskilling for their jobs, employees report significant boosts to their salaries and bargaining power (63%) and high improvements in their performance in their current role (55%).
Despite these net positives, many workers in Hong Kong report insufficient time to pursue upskilling and reskilling due to long working hours and other commitments - a trend common across all skill sets. Nearly half (47%) of surveyed employees have a poor understanding of what skills are needed in the market. Mr Jim So, regional development manager of Asia at Skills Consulting Group, shares that even when employees are offered upskilling opportunities, many choose not to pursue them because they “don’t necessarily see the direct benefits”. This might explain why only 18% of Hong Kong employees prioritise green skills, as the applications are still nascent.
The workplace’s key role in upskilling
Employers can play a central role in filling these gaps, as workplace training remains an important source for workers to acquire digital (44%), analytical (37%) and soft (32%) skills. Online courses offer another recourse to employees’ lack of time, offering flexibility and affordability. More than half (52%) of workers in our survey believe that employers now value online certificates. Experts agree. Over half (51%) of employees in Hong Kong report that their employers are shifting their hiring processes to refocus on skills-based qualifications rather than full-time degrees. In addition, recruiters are increasingly prioritising “experience, attitude and skills over paper”, according to Mr So.
Employees also expect their employers to provide information on emerging skills (65%) and offer financial incentives (62%) to reskill and support their mental well-being (44%). To remain competitive, firms could build working environments that appeal to employees’ changing needs—for instance, understanding employees’ needs and providing them with flexibility for working and learning. Furthermore, creating the right policies to enable further learning and embedding incentives would help encourage the upskilling they need to plug labour gaps. For instance, employers should look to align remuneration with skills, especially as the higher skills-based pay is a motivator for digital (25%) and analytical (30%) upskilling.
Government support can reshape Hong Kong upskilling
While employers play a crucial role in supporting the upskilling of their workforces, the government could pivot the macro-environment to incentivise and enable upskilling. One way they can do this is with financial incentives and subsidies. Several initiatives such as the Continuing Education Fund grants HK$25,000 (US$3185) to eligible adults to upskill or reskill. Recently, Hong Kong’s Innovation and Technology Commission established a programme#_ftn6" name="_ftnref6" title="">[6] that will subsidise local firms’ efforts to upskill their employees in advanced technologies.
One key role for the government is to raise awareness of in-demand skills. At present, only a quarter of Hong Kong employees receive information about future skills from government awareness programmes compared with the regional average of 42.5%. Almost a quarter of employees (27%) also identify lack of information as a significant obstacle to learning. To overcome the communication gap, the government could provide clarity on valuable future skills by publishing reports that identify in-demand skills. Working with firms and industry associations, the government could better promote specific reskilling courses that are on offer. Doing so would also support the government’s efforts to bolster its digital economy and solve its tech talent crunch.#_ftn7" name="_ftnref7" title="">[7]
There is room for improvement around developing green skills. While most employees in Hong Kong are aware of sustainability issues, says Mr So, companies could do much more to prioritise green skills and increase awareness of the commercial as well as environmental benefits they can bring. The city’s scramble for talent has accelerated with the requirement of Hong Kong-listed firms to disclose sustainability reports. However, the shortfall in talent is a significant break on the city’s aspiration to become a sustainability hub.#_ftn8" name="_ftnref8" title="">[8] In addition, most green upskilling is currently motivated by personal interest (25%). Mr So remarks that there is an opportunity for the government to step into this gap and provide “investment and support” for learners “to be able to anticipate and adapt” to a changing marketplace and environment.
#_ftnref1" name="_ftn1" title="">[1]https://focus.kornferry.com/leadership-and-talent/hong-kong-must-use-its-competitive-advantages-to-close-the-skills-gap/ #_ftnref2" name="_ftn2" title="">[2] Ibid. #_ftnref3" name="_ftn3" title="">[3] https://www.reuters.com/breakingviews/brain-drain-solution-is-staring-hong-kong-face-2022-10-19/ #_ftnref4" name="_ftn4" title="">[4] https://www.weforum.org/agenda/2023/02/world-oldest-populations-asia-health/ #_ftnref5" name="_ftn5" title="">[5] https://www.scmp.com/tech/tech-trends/article/3188979/hong-kong-organisations-are-easy-targets-hackers-more-cyberattacks #_ftnref6" name="_ftn6" title="">[6] https://www.itf.gov.hk/en/funding-programmes/nurturing-talent/rttp/ #_ftnref7" name="_ftn7" title="">[7]https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3201238/where-are-all-tech-experts-hong-kongs-got-plenty-jobs-not-enough-talent-and-employers-are-fed #_ftnref8" name="_ftn8" title="">[8] https://asia.nikkei.com/Business/Business-trends/Hong-Kong-races-to-hire-ESG-talent-amid-green-hub-push