CORE: Downstreaming Projects Must Align with Workforce Skills to Boost Local Employment

Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, stated that downstreaming projects need to be aligned with workforce skills so that the resulting job opportunities can be better absorbed by local workers. He noted that the skill requirements for downstreaming projects must be synergised with the competencies produced by universities and training institutions. “The absorption of labour from downstreaming should actually be synergised between the skill requirements and the quality or skills produced by higher education and training institutions,” Faisal said in Jakarta on Tuesday. According to him, skill matching is important to reduce the gap between the competencies needed by industry and the available workforce capabilities. In February 2026, President Prabowo Subianto announced that the government is preparing 18 priority downstreaming projects with an investment value of Rp618 trillion, projected to create 276,000 quality jobs. These projects cover various sectors, ranging from minerals and coal, agriculture, marine and fisheries, to energy transition and security. On the investment side, the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) recorded that national investment realisation reached Rp1,010.6 trillion in the first half of 2026, absorbing 1,448,862 Indonesian workers. Of this total, downstreaming sector investment reached Rp300.1 trillion, or 29.7 percent. Faisal assessed that job opportunities from downstreaming investment must be accompanied by human resource readiness in the regions so that project labour needs can be met by local workers with appropriate competencies. “So that the jobs created for these downstreaming projects can absorb local labour with suitable skills, meaning there is no skills gap,” he said. He explained that downstreaming, particularly mining-based, has upstream activities that tend to be located in mining-producing areas, while downstream activities can develop in industrial estates or urban areas, including on Java Island. According to Faisal, attention to the quality and suitability of the workforce is increasingly important because the growth of formal employment still tends to be slow compared to the growth in the number of job seekers. “Formal employment growth is slow. The growth in the number of job seekers is much faster, so more and more job seekers are struggling to access formal employment, especially full-time positions,” Faisal said. Data from Statistics Indonesia (BPS) shows that 147.67 million people were employed in February 2026. Formal workers were recorded at 59.93 million, while informal workers reached 87.74 million. Compared to February 2025, formal workers increased from 59.19 million, while informal workers rose from 86.58 million. The Open Unemployment Rate (TPT) in February 2026 was recorded at 4.68 percent, down 0.08 percentage points year-on-year. Faisal assessed that the limited availability of quality jobs has caused some job seekers to enter the informal sector, which faces challenges in terms of wages and job protection. This employment situation, according to him, is also related to the challenge of ensuring that economic growth provides more equitable benefits to the community, including the middle class. Referring to the 2024 National Socio-Economic Survey (Susenas), Faisal said the condition of the middle class has not fully recovered after declining since the start of the COVID-19 pandemic. “So the problem of the middle class declining, being downgraded to the class below, has still not recovered to this day, even though growth is still around 5 percent,” he said. According to him, economic growth of around five percent does not automatically guarantee a fair distribution of economic benefits if it is not accompanied by the creation of quality jobs. “Growth alone does not necessarily cause or have an impact on equitable economic distribution,” Faisal said. Therefore, he assessed that the development of downstreaming must go hand in hand with improving the quality of the workforce and aligning industry needs with education and training so that investment opportunities can be better utilised by local workers. The Ministry of Manpower has appointed 46,103 university graduates as participants in the 2026 National Internship Programme Batch 1, following a registration process that saw 732,483 applicants. For Batch 2 in 2026, the government has increased the National Internship Programme quota to 150,000 participants to broaden work experience for university graduates and accelerate their transition into the workforce. The ministry is also running a National Vocational Training Programme designed with a link-and-match approach to ensure participants’ competencies align with the needs of the business and industrial world. Throughout 2026, the programme targets 70,000 participants funded through the state budget (APBN). In Batch 1, 10,405 participants were declared successful out of 29,850 applicants. Participants receive various facilities, including free training and competency certificates from the National Professional Certification Agency (BNSP).