Indonesia’s increased demand for workers calls for creative solutions and higher salaries. There is a limited pool of skilled workers in Indonesia, especially for positions that require English language proficiency or technological skill. Liberalizing investment policies and increasing FDI will continue to put pressure on the pools of both skilled and unskilled workers. MNCs are struggling to retain the talent that will be key to long-term growth in Indonesia.
In Frontier Strategy Group’s view:
- MNCs need to launch rigorous training programs for both skilled and unskilled employees. Partnerships with local universities, trade schools, and government institutions should be set up to build a pipeline of qualified new hires.
- Creative incentive packages are the key drivers of talent retention. Selected examples FSG has observed include co-signing of car loans or mortgages and provision of scholarships for children study at foreign universities.
- MNCs fearful of wage increases in China who are looking to relocate operations to South East Asia need to consider the long-term implications of high demand for skilled and unskilled workers in Indonesia.