Last weekend, a couple of interesting articles in the Jakarta Globe have highlighted the worrying state of education in Indonesia. As an example, despite USD 33.6 billion allocated to education this year many teachers do not receive their salaries (Time to Change the Way Education is Run). In the province of East Nusa Tenggara, one of the poorest, teachers and school staff have not been paid for more than three months. In the province of Aceh, some teachers have not been paid for six months. The amount of budget allocated to education shows that Indonesia has the necessary financial resources, yet salaries in some case cannot be paid.
The problem of low quality is not caused by a lack of public investment and sufficient budget allocation. Indonesia is spending one-fifth of its total public budget on the education sector. The Government has launched ambitious reforms such as making the first nine years of education free and requiring teachers to undergo an assessment to gain certification (Can Indonesia Educate Itself Out of Middle-Income Status?).
These are symptoms of a larger malaise which is linked to weak governance; that is, how education policies and programmes are actually implemented on the ground.
The result? The country’s students struggling when compared with students from other countries. In 2012 Indonesia was ranked 64 (out of a total of 65 countries) in the PISA ranking which brings together proficiency in Math, Science, and Reading. Only one country, Peru, did worse than Indonesia (Despite Being Ranked as the Happiest, Indonesian Students Score Poorly In PISA Tests).
A struggling education sector (from primary to tertiary education) means that the country is struggling to develop the human capital required for modernizing and keeping the pace of economic development and poverty reduction. A struggling education also means a weak knowledge sector at a time when structural social and economic reforms require one the one hand the supply of high quality research evidence to inform policy decisions and, on the other, a strong demand and understanding of the value of research evidence by policy and decision makers.
This is great loss for Indonesia. Poor quality education results and lower human capital and weaker knowledge sector, thus reducing the chances for Indonesia to move in the right direction and avoid to danger of the middle-income trap, defined by IMF as the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries (Growth Slowdowns and the Middle-Income Trap).
Economic theory suggests that to avoid the middle-income trap, countries need to produce highly skilled workers. The availability of highly skilled workers allows to expand economic production while at the same time achieve a greater sophistication and diversification of manufacturing export goods and be better positioned to compete in the globalized services market.
The highly skilled workforce has also to include policy researchers and policy research institutes contributing and competing in the market of evidence-based policy ideas. In order to succeed in this market, policy researchers need to produce high quality policy research. Policy makers need to have to develop the tools and systems necessary to assess the quality of the research evidence and to put it into use in policy process and reforms.
The middle-income status has brought the need for more evidence-informed policies and reforms. A consequence of the risks posed by the middle-income trap is that the reforms necessary to sustain and expand growth and social development increase in complexity, if not in size and scope. For example, in October 2012 the government passed a new law pledging to provide health insurance to its 240 million citizens from January 2014. This will be the biggest single-payer health system in the world (Indonesia is growing fast, as is the demand for social welfare, but is evidence keeping pace?).
Indonesia has an emerging knowledge sector which needs to move forward and develop further both on the supply of research evidence as well as the demand of research evidence. The education sector can play a very important role in this process. A stronger education sector is the key to higher human capital, better skilled workforce and to reduce the middle-income trap risk for Indonesia. At the same time, a stronger education sector will also lift the knowledge sector to a whole new level, thus contributing to more informed policy and strategic decisions that Indonesia needs to take.