Indonesian companies are facing a critical skill shortage in middle management as the lack of talented workers will continue to worsen in the coming years due to a poor educational system and rapid growth of the services sector, a report says.
Global consulting firm The Boston Consulting Group (BCG) estimates that the talent shortage in middle level management, which last year reached 13 percent, would further worsen to reach as high as 56 percent by 2020, despite Indonesia’s bright demographic profile.
The country’s population is predicted to increase to 268 million in 2020 from 237.64 million in 2010, but there will still be a shortage of skilled people. The agency estimates that only about 10 million people will be suitably qualified, insufficient to meet the demand for 15 million people.
“Every time you expand, the middle level management needs to grow accordingly. Say you need a new branch manager, that is part of middle level management; and without fueling this, in quality and quantity, a lot of growth of the organization will be impeded as a result,” BCG partner and managing director Dean Tong said during a press briefing in Jakarta on Tuesday.
According to BCG’s report, both senior level and entry level management will face shortages as well, though not as severe as the ones faced at the middle level. The shortage rate at senior level will rise to 6 percent by 2020, whereas in 2011, the supply and demand were relatively equal.
In the higher level management, the problem did not lie in quantity, but in quality as many executives lacked the necessary global experience, Tong said. “A lot of Indonesian companies are very Indonesian. Not many of them have gone global,” he added.
Meanwhile, in entry level management, the shortage rate will rise to 17 percent by 2020 from 5 percent in 2011. Quality will be a bigger issue than quantity since fresh graduates require a lot of preparation to qualify for employment.
In the report, BCG attributes the future conditions to the expansion of the Indonesian economy into services, with the service sector expected to rise to 41 percent from 36 percent of gross domestic product (GDP) between 2010 and 2015. By 2020, 55 percent of the jobs will be administrative or managerial, compared to 36 percent at present.
However, the firm says, Indonesia is not producing enough graduates to fill the positions and few of today’s graduates are sufficiently qualified. Moreover, almost 60 percent of the graduates switch jobs within their first three years of employment and more than one third switch jobs two or more times in that period, looking for better offers or because they are disengaged in the workplace.
Separately, major institutions such as Bank Mandiri and Astra Group said that the shortage of talent had also hit the two companies’ middle management. “We aim at becoming the fifth biggest bank in the region in 2014 and the third biggest in 2020. but it has become difficult to find the right talent to support the growth target,” said senior vice president for human capital strategy and policy, Alex Denni. As of now, Mandiri has 30,000 employees working at 1,800 branches. The publicly listed bank has launched a work-life balance program in an effort to keep its skilled employees, Alex said. Under the project, for example, the bank’s branches at shopping malls are able to adjust their opening hours to those of the malls. “It has been great. The employees get more time to spend with their families,” he said. According to Astra spokesperson Yulian Warman, the group relies on training programs available at each level to maintain its existing workforce. It currently has 186,000 employees in 177 companies, whose businesses range from automotive to finance.
Source : The Jakarta Post – Tassia Sipahutar