Peer reviewed analysis from world leading experts

Improving the quality of Indonesia’s education spending

Reading Time: 4 mins

In Brief

Indonesia has made an extraordinary commitment to education in the past decade. Since 2002 the government has had a constitutional mandate to allocate at least 20 per cent of its budget to education, a figure it achieved in 2009.

This rule has led to one of the most rapid increases in resources for education in the world

Share

  • A
  • A
  • A

Share

  • A
  • A
  • A

— spending has almost tripled in real terms in 10 years. Increased spending has been accompanied by fundamental changes in the way the education sector is managed. Most management decisions have been decentralised and a majority of spending now goes directly to district governments and schools. The reforms have led to impressive advances in access to all levels of education, especially for the poorest segments of the population.

The increases in access and equity are truly remarkable. Children from poor families are enrolling earlier and staying in school longer than ever. The share of the poorest 15 year olds who are enrolled in school increased from 60 to 80 per cent between 2006 and 2010. The percentage of job market entrants with at least a senior secondary education surpassed 50 per cent in 2008 for the first time. Indonesia’s labour force is becoming educated fast, and the country has very ambitious plans to make it even more capable in the future.

Yet there is a growing concern that improvements are not developing in proportion to the increase in resources. Enrolment rates in early childhood education, senior secondary and higher education are still low by regional standards. Few poor students complete senior secondary education and even fewer reach higher education. Moreover, the quality of Indonesian education does not seem to be improving; the country scored poorly in maths and science in the latest round of the OECD’s Programme for International Student Assessment, which tests 15 year olds in language, maths and science. This low level of skill is confirmed by employer surveys, which reveal that many recent graduates are not meeting employers’ expectations. This points to the biggest challenge in education in Indonesia at the moment: improving the quality of education.

An upcoming study by the World Bank, Spending More or Spending Better: Improving Education Financing in Indonesia, suggests that disappointing trends in the quality of Indonesia’s education sector can partly be explained by the way Indonesia spends its resources. The report found that additional resources are often allocated across levels of education in the same way as previous spending. This means that 9 years compulsory education receive a majority of additional resources. Comparing Indonesia to other countries in the region, it is clear that this composition will have to change in the future. Indonesia currently spends a significantly higher share of its resources on basic education than does Thailand and Malaysia, let alone Singapore or South Korea.

More importantly, almost two-thirds of additional resources have gone to teacher salaries as the number of teachers increased and the government introduced a teacher certification program that doubles the teacher’s salary upon completion. Indonesia already had one of the lowest student–teacher ratios in the world in 2005, and this ratio has only decreased since then. Yet recent evidence shows that adding new teachers does not lead to better learning outcomes for Indonesian students. The impact of the teacher certification program is not promising either. An ongoing evaluation of the program shows that the certification allowance improved the lives of teachers because higher salaries made them less likely to hold second jobs, but did not affect the results of their students.

The budgetary implications of increased salary spending are not yet fully apparent. Indonesia relies heavily on contract teachers, who represent around 40 per cent of the teaching body and who generally receive about half the starting salary of a civil servant. The low percentage of certified teachers has also kept the salary bill affordable. But the share of contract teachers is now likely to decline while the number of certified teachers will undoubtedly increase. This will have a drastic effect on the budget in the near future.

The World Bank report points to two main reasons for Indonesia’s excess of teachers: the way money is transferred from central to district governments provides an incentive to hire teachers; and there are generous teacher entitlement formulas for small schools, with small schools proliferating in Indonesia. These reasons are relatively well known, but the solutions are not straightforward. They are complex and will require stronger collaboration across different ministries and levels of government, as well as innovative approaches to teacher management.

The education challenge is big, but if Indonesia gets it right, the pay-off is likely to be bigger. The future of the Indonesian economy depends on a well-educated labour force. That, in turn, depends on improving the quality of spending now.

Pedro Cerdan-Infantes is an economist at the Human Development Department, the World Bank, Jakarta. The views expressed in this article are his own and not necessarily those of the World Bank. 

2 responses to “Improving the quality of Indonesia’s education spending”

  1. It’s the right idea that Indonesia’s education must be improved. This is not only a government task but also a task for all citizens in this country. If our education doesn’t have good quality how we can create a good future for the next generation. Indonesia’s education must be improved right across the country not only in big cities but also in small cities so all people in this country will have assets built on knowledge.

    • I think we need to discuss Indonesia’s education from 1945 to 1995 and from 1995 to this date. The living standard of Indonesia was much better till 1995 as so called ‘full democracy’ was not present. With full democracy, more leaders came up and every one started asking for their share. To win the vote leaders, like their Indian counter part, started working on vote bank policy. Local and foreign investment went down and together with it, everything.
      This is my view that large and semi illiterate countries like Indonesia, India etc do not need full democracy. They need iron fist government. Many intelligent may not like this appraoch, but this looks it is a fact.

Support Quality Analysis

Donate
The East Asia Forum office is based in Australia and EAF acknowledges the First Peoples of this land — in Canberra the Ngunnawal and Ngambri people — and recognises their continuous connection to culture, community and Country.

Article printed from East Asia Forum (https://www.eastasiaforum.org)

Copyright ©2024 East Asia Forum. All rights reserved.