From Challenge to Opportunity: Job Creation in the Era of AI and Automation for Developing Countries


As we navigate the era of globalization and the Industry 4.0 revolution, developing nations grapple with a mix of opportunities and challenges. The “young demographic boom,” or demographic bonus, presents significant prospects for economic expansion and innovation. However, the rapid progression of technology, including artificial intelligence (AI) and automation, threatens to transform the job market and challenge the absorption of an expanding young workforce.

Leveraging the Demographic Bonus

Harnessing the demographic bonus to generate jobs necessitates a forward-thinking approach to education and training investment in developing countries. The focus should be on honing digital competencies, problem-solving abilities, and creativity — skill sets that machines struggle to replicate. Moreover, fostering innovation and entrepreneurship could be a powerful job creation engine.

In response to this need, the Indonesian government implemented the Prakerja program in 2020, an online training platform aimed at boosting the work competence of Indonesian citizens, particularly those impacted by the economic consequences of the COVID-19 pandemic.

The Prakerja Program unifies social assistance and job training. Participants are incentivized upon the completion of each training session. Moreover, the program seeks to provide training that aligns with current and future job market demands, particularly in the realm of digital and technological skills.

Training under the Prakerja Program is facilitated through various online platforms like Ruangguru, Skill Academy, Pintaria, Tokopedia, Bukalapak, and more. The curricula encompass various fields such as IT, design, digital marketing, entrepreneurship, and others. Despite being a crucial tool in preparing the populace for the AI and automation era, continuous evaluation and enhancements are necessary to ensure the program’s effectiveness and long-term impact.

Investing in Technology and Digital Infrastructure

The pivotal role of technology and digital infrastructure in the digital economy and job creation cannot be overstated. Investments in this area should include expanding high-speed internet access, encouraging economic sector digitalization, and forming partnerships with private sectors and educational institutions to align training programs with job market requirements.

Broadband infrastructure and equitable internet access across all regions, including rural areas, are fundamental to various digital economy facets like e-commerce, digital financial services, and online education.

Data centers serve as critical infrastructure for storing and processing data vital for various digital services and applications. Developing nations need to ensure the existence and reliability of domestic data centers to bolster digital economic growth.

The adoption of cloud technology, which allows companies and organizations to enhance IT management efficiency and speed up innovation, should be promoted. Policies to support the cloud market’s growth are equally important.

With increased digitalization comes heightened cyberattack risk, necessitating investment in cybersecurity infrastructure and technology to safeguard user data and privacy, and maintain trust and security within the digital ecosystem.

In Indonesia, the government has incentivized domestic data center development through the 2020 Ministerial Regulation, which also includes regulations on data storage on servers and data centers either domestically or abroad. Concerning cybersecurity, the Personal Data Protection (PDP) Law, Law No. 27 of 2022, was enacted, and the National Cyber and Cipher Agency (BSSN) was established to coordinate and synchronize cybersecurity activities.

Potential Sectors for Job Creation

Despite AI and automation adoption challenges, several sectors offer significant job creation potential. These include Information and Communication Technology (ICT), renewable energy, AgTech, creative industries, tourism and hospitality, health and social services, and construction and infrastructure.

In Indonesia, the ICT sector, particularly e-commerce and fintech, has seen rapid growth, with several successful tech startups, including Gojek, Tokopedia, and Traveloka. There is, however, potential for further growth, particularly regarding business and government process digitalization.

The creative industry, encompassing film, music, fashion, and design, has made significant strides in Indonesia. Better education and training and policies supporting creativity and copyright can further drive this sector’s growth.

Social Protection and Job Transition

Developing nations also need to protect workers whose jobs are under threat from AI and automation. This can be achieved through unemployment assistance, retraining, and job placement programs.

The formulation of an effective strategy for job creation and equipping the younger generation for the AI and automation era requires collaboration among various stakeholders, including educational institutions, private sector, and non-governmental organizations. Partnerships can help align educational curriculums with current and future job market needs, reach vulnerable populations and provide alternative pathways to equip the younger generation with practical workplace skills.

Adopting Flexible and Adaptive Policies

Lastly, government policies need to be flexible and adaptive in this dynamic era. Job market needs and available job types will change as technology advances, thus necessitating regular monitoring and timely policy adjustments by the government.

For instance, if demand for jobs in renewable energy technology increases, the government should respond by amplifying funding for education and training in this field. Alternatively, if AI and automation begin replacing jobs in certain sectors, assistance programs and retraining for affected workers need to be prepared.

The Indonesian government has formed Korika in 2020, a collaborative institution involving various entities from the Quad Helix component (Government, Industry, Academics, and Community). This institution is supported by various ministries and institutions, including the Ministry of Information and Communication (Kemenkominfo), Ministry of Education, Culture, Research and Technology (Kemendikbudristek), National Research and Innovation Agency (BRIN), and Associated bodies such as the Indonesian Engineers Association (IIP), the Indonesian Chamber of Commerce (KADIN), as well as prestigious Indonesian universities including Universita Indonesia (UI), Binus University, Bogor Agricultural University (IPB), and Telkom University, actively participate in the initiative. Prominent industry players like Tokopedia, GDP Venture, and Telkom Indonesia also contribute significantly. These entities are at the heart of Korika, fostering an inclusive environment for various communities, industry stakeholders, individuals, and institutions.

Holistic and Integrated Approach

Beyond the discussed strategies, a holistic and integrated approach stands paramount. Creating jobs goes beyond simply inflating employment numbers; it’s about ensuring these positions are of high quality and provide fair compensation. Moreover, such strategies should simultaneously address pivotal issues such as gender equality in the workplace, worker safety, and sustainable development.

By adopting a comprehensive and enduring strategy, developing countries can utilize their demographic advantage to generate sustainable job opportunities in the era of AI and automation. This not only allows them to confront current challenges but also paves the way for a prosperous future for their younger generations.

Tuhu Nugraha
Tuhu Nugraha
Digital Business & Metaverse Expert Principal of Indonesia Applied Economy & Regulatory Network (IADERN)