Education a priority to deal with globalization: World Bank expert

Dadan Wijaksana, The Jakarta Post, Jakarta

As globalization now seems inevitable, access to better education for all should become a priority in any developing country to help mitigate the negative impact of it on workers, World Bank expert Martin Rama says.

"If exposure to international trade and foreign direct investment increases the return to education, thus widening the earnings gap between skilled and unskilled workers, effective education policy should be a priority," Rama said in his presentation paper distributed during a World Bank-sponsored teleconference on globalization on Thursday.

Speaking live from Washington, he also stressed the importance of good macroeconomic management and sound financial regulations coupled with labor market policies to deal with the movement.

"Higher and more evenly distributed levels of schooling would be the key to ensure that gains from globalization are widespread," he added.

Critics have been saying that a wave of globalization would only make Indonesia and other developing nations poorer due to the low competitiveness of its economy and its unskilled workers.

While it can also trigger job creation, globalization can arguably be seen as destroying jobs.

Globalization, which means the increased penetration of imports, exports sales, competition in service and foreign direct investment, could, in principle, have impacts on employment and labor earnings.

To become more competitive, countries may need to dismantle trade barriers, abolish legal monopolies, privatize state-owned enterprises, which all could lead to a massive increases in unemployment.

So, the labor market is one of the main channels through which globalization can affect developing countries.

A drastic increase in unemployment would push the numbers living in poverty higher, something that developing countries, including Indonesia, would want to avoid.

The country's economy, crippled by the prolonged crisis, has so far failed to provide enough working opportunities to cope with increasing numbers of job seekers.

As of last year, the number of unemployed reached 40.2 million.

Worse still, it is expected that the number of drop-out students would also rise by an average of about 1.7 million per year, with 53 percent ending up as job seekers.

By 2004, a staggering 45 million unemployed would flood the market.