A university degree was once considered Indonesia's ticket to the middle class. Today, for many young Indonesians, it is only the beginning of a much longer journey.

In February 2025, more than one million university graduates were unemployed, the highest number recorded in recent years. 1 of 4 Indonesian youth also remain outside education, employment, or training (NEET), limiting their ability to contribute fully to the country's economic growth. At the same time, companies across Indonesia continue to report difficulties finding workers with the right digital, technical and problem-solving skills. 

The contradiction raises an uncomfortable question: How can a country have both unemployed graduates and employers struggling to fill jobs?
 

As Indonesia marks International Youth Day, answering this question has become increasingly urgent. According to Statistics Indonesia (BPS) 2025, Indonesia is home to 66.83 million young people aged 16–30, representing 23.5 percent of the country's population. That is equivalent to the entire population of the United Kingdom.

Indonesia has a unique demographic advantage, in a generation that is more connected, more digitally fluent, and better equipped to navigate an increasingly digital world than any before it. But a demographic dividend is never automatic. It depends on whether young people are equipped not only to graduate, but to thrive in a labour market that is evolving faster than education systems can adapt.

At first glance, the numbers might suggest that higher education is losing its value. They do not. A university education remains one of the most important investments a young person can make. It broadens perspectives, builds knowledge and opens doors that might otherwise remain closed.

The challenge lies elsewhere.

It is the growing distance between what education has traditionally prepared students for and what the world of work increasingly demands.

A Labour Market Under Transformation

Indonesia's labour market is changing at a remarkable speed. Artificial intelligence (AI), automation, digital technologies, and the green transition are reshaping industries, creating new occupations while fundamentally changing existing ones. According to the World Economic Forum's Future of Jobs Report 2025, nearly 40 percent of today's workforce skills are expected to change by 2030, driven by technological advancement and new business models.

For young Indonesians entering the workforce today, the future will look very different from the careers their parents experienced. Many will change professions several times. Some of the jobs they will eventually hold have not yet been invented. Others may disappear altogether.

In this environment, the most valuable qualification may no longer be the degree itself, but the ability to keep learning after the degree has been earned.

That calls for a fundamental shift in how we prepare young people for work. The conversation can no longer focus solely on how many students graduate each year, but on whether they leave education equipped to navigate uncertainty, embrace new technologies, and continue building skills throughout their careers.

No single institution can achieve this alone.

Universities cannot predict every skill employers will need. Employers cannot wait until graduates arrive job-ready. Governments cannot bridge the gap without meaningful collaboration. Preparing Indonesia's future workforce requires education, industry, policymakers and development partners to work together so that learning keeps pace with a rapidly changing economy.

UNDP's Response: Investing in Future-Ready Skills

Thus, if the challenge is that education alone is no longer enough, what should the solution look like?

One answer is to move beyond classroom learning and connect young people with employers, digital skills, entrepreneurship and practical experience before they enter the workforce. This thinking sits behind the Youth Digitalization for Employability and Entrepreneurship Programme (YDEEP), or Skill Our Future, implemented by the United Nations Development Programme (UNDP) in partnership with the Islamic Development Bank (IsDB).

Rather than preparing young people for a single job, YDEEP prepares young Indonesians for the future of work by equipping them with practical skills that are increasingly demanded in the digital economy. The programme combines digital and AI literacy, entrepreneurship, career readiness, mentoring, and work-based learning opportunities while fostering collaboration with universities, employers, tech companies, and government institutions. Through this approach, YDEEP helps young people make a smoother transition from education to employment or entrepreneurship.

Equally important, preparing young people for the future of work is not only about building skills. It is also about ensuring opportunities reach those who have historically faced greater barriers. Women, persons with disabilities, youth in rural and underserved communities, and young people who are not in education, employment or training often encounter unequal access to quality education, digital infrastructure and decent work. By embedding gender equality, disability inclusion and social inclusion across every stage of the programme, YDEEP seeks to ensure that digital transformation creates opportunities for everyone—not just those already positioned to benefit from it.

Indonesia's demographic dividend is often described as one of the country's greatest opportunities. But opportunity alone is never enough. A large youth population, by itself, guarantees nothing. It becomes a true dividend only when young people have access to quality education, relevant skills, meaningful work and equal opportunities to contribute to the country's development.

Perhaps this is the conversation we should be having more often. Instead of asking whether university degrees still matter, we should be asking whether we are preparing young people for a future where learning never truly ends.

Because the degree was never the finish line. It was always the starting point.

As we mark International Youth Day, the conversation should move beyond celebrating the potential of young people. Potential, on its own, changes little. What matters is whether young Indonesians have the opportunity to turn that potential into innovation, meaningful work, entrepreneurship and leadership.

If Indonesia can build an ecosystem where education, industry and government work together to prepare young people not just for their first job, but for a lifetime of change, the country will gain far more than a skilled workforce. It will unlock the full potential of its greatest asset: a generation ready not only to navigate the future, but to shape it.

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Writer: Randa Sandhita, UNDP Indonesia Youth Focal Point

Editor: Nabilla Rahmani