Webinar on “The State of Human Capital in Indonesia Post Covid-19”

In this webinar, Dr Achim Daniel Schmillen explained how human capital has become one of the critical factors for countries’ development, including Indonesia. The Indonesian government has made some progress in advancing the human capital, but with disruptions caused by the Covid-19 pandemic, the government will need to further improve on the existing policies to recover from the losses caused by the pandemic.


Tuesday, 10 October 2023 – ISEAS – Yusof Ishak Institute (ISEAS) invited Dr Achim Daniel Schmillen, World Bank’s Practice Leader for Human Development for Indonesia, and Timor-Leste, to share his opinions on the state of human capital in Indonesia before and after the Covid-19 pandemic. This webinar was moderated by Dr Siwage Dharma Negara, Senior Fellow and Co-Coordinator of the Indonesia Studies Programme at ISEAS.

Dr Achim Daniel Schmillen highlighted the importance of human capital as a key driver of development. This session was moderated by Dr Siwage Dharma Negara. (Credit: ISEAS – Yusof Ishak Institute)

Dr Schmillen’s presentation was divided into three periodisations. The first part laid out an overview of Indonesia’s human capital achievement before the Covid-19 pandemic hit the country. The second part discussed how the pandemic affected the human capital development. The last part advocated future policy directions. In looking at human capital development, Dr Schmillen emphasized three components, namely health and nutrition; education and skills; and social protection. He proceeded to explain the Human Capital Project (HCP) initiated by the World Bank. Human capital is related to the overall economic well-being of a country. Developing human capital is expected to create a more productive generation that is resilient to both financial and health crises. This will further contribute to poverty elimination and economic security. According to the data presented, returns to investments in human capital can be very high.

Before Covid-19, Indonesia was able to make significant progress in terms of improving human capital. The quality of nutrition increased and led to a 10% decline in the chronic malnutrition (“stunting”) rate among children between 2013 and 2019. The Jaminan Kesehatan Nasional (JKN) social health insurance scheme achieved a wide population coverage. Indonesia also witnessed an improvised social protection system, including by moving from previously handing out rice to a cash assistance scheme, which allowed people to have more alternatives for staple products.

However, during the pandemic, Indonesia suffered not only from the direct effects in terms of illness and death but also saw an increase in tuberculosis cases; the immunization rate among infants and children fell as people were too afraid to get out of the house to access healthcare services. The pandemic’s impact on education was also quite dramatic. Before the pandemic, Indonesia’s average learning outcome was already quite low in comparison with other middle-income countries, and the pandemic led to further learning loss. Students from lower-income families were hit the hardest.

Dr Schmillen proposes several aspects where improvement could be made. Firstly, students’ learning should be improved to make up for the lost learning time during the pandemic. Technology can help to expedite the learning recovery process, but it needs to be widely used in all levels of education. Secondly, in providing better public health service, the recently approved Health Omnibus Law can help address issues related to the availability and distribution of doctors. Easier registration, more training for specialist doctors, and cautiously allowing foreign doctors and those trained abroad can all help increase the number of doctors, including in outer islands. Finally, to improve its social protection system, Indonesia could follow other countries’ footsteps and move towards a more integrated or interoperable systems to enhance program delivery.

Bearing in mind the Covid-19 blow to the economy, Dr Schmillen highlighted that the overall challenge would revolve around Indonesia’s ability to maintain fiscal sustainability while achieving human capital goals. Indonesia is still facing difficulty in further improving the stunting rate in the country as well as the quality of education which among factors capture by the HCP has the most potential for improvement. Dr Schmillen believed that further progress could be achieved by having convergence on the ground and more leadership from the top. Nonetheless, Dr Schmillen acknowledged the progress that Indonesia has made in advancing the human capital agenda over the years, even though there are still areas of improvement which the country should work on moving forward.

The webinar was attended by 66 participants from the region. During the Q&A session, the speaker discussed several points over a range of topics. Effects of decentralization, improvements in vocational curriculum, emerging green jobs, and upcoming trends for labour market programme were some of the topics discussed. As much as decentralization is a perennial issue and has affected the education sector, this does not mean that the government should advocate centralization. Instead, more emphasis could be made to further improve on potential gaps such as teacher training and providing adequate resources to all schools in line with needs and performance. Vocational training can be improved by identifying what training is needed for the current labour market and aligning the existing curriculum accordingly. Policies will thus need to be adjusted to the local context, especially since service delivery can be challenging due to the remoteness of certain provinces in Indonesia. The discussion also elaborated on the slow traction of green jobs in Indonesia and what can be done to increase the uptake of these emerging new jobs. Lastly, the speaker also talked about the possibility of using a data-driven approach to improve the outreach of the active labour market program to specific groups such as woman and youth.