In January 2018, President Joko Widodo stated that his government would start to focus on improving the country's human resources (Kompas Daily, 3 January 2018). He added that improved human resources is a necessary condition to be able to take full advantage of Indonesia's demographic dividends and be globally competitive.
The president's assessment is correct. Hanushek and Woessmann (2008) find that cognitive skills have large and causal relationships with earnings, distribution of income, and economic growth. In addition, Hanushek et al. (2017) find that returns to these skills are larger in faster growing economies. Since strong economic growth is usually a sign of a dynamic and rapidly changing economy, the authors state that their finding is consistent with the hypothesis that highly skilled individuals are better at adapting to, and taking advantage of change.
The policy implication of the findings in the previous paragraph is straightforward: countries must ensure that their labour markets are highly skilled. From a policymaker's perspective, it means that increasing the educational attainment of the population is a necessity. And, overall, countries have largely succeeded in doing so (Pritchett 2001). The World Bank's Edstats show that the average educational attainment of adults globally has increased from 6.4 years in 1990 to 8.3 years merely two decades later.
The problem, however, is that learning levels remain low for many countries. Pritchett (2013) states that in India, over a quarter of fifth graders could not read a simple sentence while only slightly more than half could perform subtraction. Mullis et al. (2012) find that only 43 per cent of Indonesian eighth grade students have some understanding of whole numbers, decimals, operations, and basic graphs. In contrast, 99 per cent of Singaporean eighth grade students have this knowledge. Therefore, the amount of learning produced by Indonesian and Singaporean education systems in the eight years of schooling are vastly different. In addition, there has been very little improvement among the weak performers. For example, Suryahadi and Sambodho (2013) show that Indonesia's performance in eighth grade TIMSS mathematics has declined between 2003 and 2011. Hanushek and Woessmann (2008) conclude that merely increasing education attainment, without focusing on the amount of learning actually accrued by students, has no correlation with economic growth.
This chapter examines numeracy and literacy levels among fifteenyear- olds in Indonesia and put them in a global perspective.