The Real Talent Shortage in Indonesia: Skills, Not Headcount

Many HR teams in Indonesia feel stuck not from lack of applicants, but from a growing skills gap and slow hiring decisions.

Indonesia’s hiring crisis isn’t about headcount—it’s a skills mismatch and slow decisions that cause companies to lose the right talent. Photo by Canva

The Real Talent Shortage in Indonesia: Skills, Not Headcount

If you talk to hiring managers in Indonesia right now, you’ll hear the same line over and over:

“Gak ada talent… we can’t find good people.”

But the numbers tell a different story.

• Labour force: 153.05 million people in early 2025, up 3.67 million from the year before.
• Educational attainment: only 12.66% of the workforce holds a university degree.
• Employer reality: around 30% of companies say they struggle to find quality talent, despite this huge labour pool.
• Government, World Bank, ILO and OECD reports all highlight the same problem: skills mismatch – what workers can do vs what employers actually need.

So the real issue isn’t “no people”. It’s misaligned skills, outdated roles, and hiring processes that weren’t built for today’s market.

This article breaks down three big reasons employers feel a “talent shortage” – and how Elitez Indonesia tackles them with a skills-first, not CV-first, approach.

1) Roles Designed Around Old Org Charts, Not Current Work

A lot of Indonesian companies are still hiring to fill boxes on an org chart, not to solve today’s business problems.

Meanwhile, the labour market has shifted:

• Indonesia is “stuck with low labour productivity and a mismatch between the skills possessed by workers and those demanded by employers,” according to a 2025 labour market profile.
• Structural changes in the economy (manufacturing decline, rise of services and capital-intensive commodities) mean the type of work is changing faster than job descriptions.

What this looks like inside your company:

• Job descriptions copy-pasted from 2015 – same role, but the tools, reporting lines, and customer expectations are completely different.
• One role trying to cover three functions (e.g. sales + analytics + admin) simply because “that’s how the org chart looks”.
• New digital or data responsibilities silently added, but the hiring criteria never updated.

Result:
You’re searching for a “unicorn” that hardly exists in the current labour market – or, if they do exist, they can work anywhere and won’t choose a vague or overloaded role.

✅ How to fix this (and how Elitez Indonesia does it):

Before we even talk about candidates, Elitez Indonesia re-scopes the role with you:

• Start from outcomes, not titles
  • What must this role deliver in the next 12–18 months?
  • How will you measure success? Revenue? Cycle time? Error rates?
• Map outcomes → skills, not → job title
  • E.g. “reduce stock-out incidents by 30%” → needs data literacy, coordination with suppliers, basic forecasting skills – not just “3–5 years in logistics”.
• Split unrealistic combos
  • If the role requires two different skill sets that rarely sit in one person (say, deep data analysis and field sales), we recommend splitting or redesigning instead of spending six months chasing a fantasy profile.

This skills-and-outcomes mapping means Elitez consultants are searching in the right talent pool from day one, instead of burning cycles on candidates who were never a true match.

2) Hiring Still Degree-Based, Not Skills-Based

Indonesia’s education and labour market gap is well documented:

• Many graduates are over- or under-qualified for the jobs they hold; an OECD review estimated about 51.5% of workers are underqualified and 8.5% overqualified for their roles.
• A World Bank study found that only around half of university graduates work in jobs related to their field of study, signalling serious mismatch between degrees and labour demand.
• ILO and government reports repeatedly point to skills mismatch as a key driver of youth unemployment and underemployment.

At the same time, many employers are still screening like this:

“Top 3 universities only, specific major, minimum GPA, 3–5 years experience in exactly this industry.”

That made sense when degrees closely reflected skills and when career paths were linear. It doesn’t fit today, where:

• People switch fields, learn skills through non-formal routes, and pick up digital tools on the job.
• A candidate with the “right degree” may be much less capable than one with the “wrong degree” but strong practical skills.
• Young workers often end up underemployed in low-skill roles, even with post-secondary qualifications, simply because entry-level openings demand experience they don’t have.

What degree-first hiring is costing you

• Missed talent: capable candidates filtered out by a degree or GPA checkbox.
• Longer time-to-hire: artificially tiny shortlists.
• Higher salary pressure: everyone fights for the same “brand-name” profiles.

✅ How to fix this (and how Elitez Indonesia does it):

Elitez Indonesia deliberately de-emphasises degree as the main gate and focuses on evidence of skills:

1. Competency blueprint
   For each role, we define 5–7 critical skills or behaviours (e.g. stakeholder management, numerical reasoning, written communication, troubleshooting).
2. Structured screening questions
   Our recruiters use behavioural and situational questions tied to those competencies – not “walk me through your CV” only.
   • Example: “Tell me about a time you had to fix a stock discrepancy under time pressure. What did you do?”
3. Portfolio & practical indicators
   Where applicable, we look at:
   • Work samples (reports, dashboards, campaigns, SOPs).
   • Concrete outcomes (“reduced error rate by 20%”, “grew key account revenue by 15%”).
   • On-the-job learning (e.g. self-taught Excel/SQL, internal certifications).
4. Shortlist reports that talk about skills, not just titles
   Instead of only “5 years in Company X”, Elitez’s candidate notes highlight:
   • strengths against each key competency,
   • gaps and how coachable they are,
   • examples of past performance.

This helps your hiring managers see beyond the degree, and often opens up candidates they would never have considered but who perform strongly once hired.

3) Slow Decision Cycles That Bleed Good Candidates

Even when the right skills are in the market, companies often take too long to decide.

The macro context:

• Indonesia’s labour force is growing, but only a small share have higher education, and 30% of employers already say they struggle to find and retain skilled talent.
• Reports from universities and labour economists warn about mismatch between skills and vacancies – and that small increases in “discouraged workers” can signal deeper problems in participation and informality.
• At the same time, as the economy restructures and some sectors shed jobs (e.g. textiles, manufacturing), skilled workers become more mobile and will move quickly for good offers.

In this environment, a candidate with strong skills typically:

• Has multiple processes running at once.
• Expects clear timelines and honest communication.
• Interprets slow or silent employers as disinterest or disorganisation.

What slow hiring looks like on the ground

• Week 1: CV approves →
• Week 2–3: scheduling first interview →
• Week 4: panel interview →
• Week 5–7: internal discussions, budgeting, “waiting for director” →
• Week 8: finally decide to offer… candidate already accepted somewhere else.

From your side, it looks like “talent is scarce”.
From the candidate’s side, it looks like you weren’t serious.

✅ How to fix this (and how Elitez Indonesia does it):

When Elitez Indonesia manages a search, we treat speed as part of the value proposition:

1. Process mapped upfront
   • We agree on the number of stages, who decides, and what “good” looks like before the search starts.
   • If multiple stakeholders must sign off, we build a realistic timeline with them.
2. Shortlist aligned before interviews
   • We don’t send 20 random CVs.
   • We send a small, well-matched shortlist, with clear notes so line managers can make quick decisions on who to meet.
3. Time-bound stages
   • Clear expectations: e.g. feedback within 48–72 hours after each interview.
   • We nudge stakeholders, bundle feedback, and keep everyone moving.
4. Candidate management
   • We keep candidates warm with honest updates.
   • If they are juggling multiple offers, we flag this early, so you can accelerate where needed.

The goal is simple: you don’t lose good people just because your process was slower than your competition’s.

So Is There a Talent Shortage in Indonesia?

Yes – but not the way most headlines suggest.

The data shows:

• A huge and growing labour force, but only a small share with higher education and job-ready skills.
• Significant skills mismatch – many workers and graduates are in roles below their qualification level or outside their field.
• Employers struggling to find people who match what’s written on their outdated job descriptions, not necessarily what the job truly requires.

So the real shortage is of:

• Roles that are properly scoped for the work that actually needs to be done.
• Hiring processes that focus on skills and outcomes, not just degrees and previous job titles.
• Decision cycles fast enough to land top candidates in a competitive market.

How Elitez Indonesia Helps Employers Move From “No Talent” to “Right Talent”

At Elitez Indonesia, our entire approach is built around skills, speed and structure:

1. Skills-First Job Scoping
   • We work with your HR and hiring managers to redesign roles around outcomes and competencies.
   • We challenge unrealistic requirements and help you see alternative profiles that can deliver.
2. Competency-Based Screening & Shortlisting
   • Behavioural questions, performance evidence, and practical indicators – not just degree filters.
   • Shortlists that explain why each candidate fits, in skill terms.
3. Time-Bound Hiring Process
   • Agreed stages and timelines upfront.
   • Active management of schedules, feedback and candidate expectations.
4. Flexible Engagement Models
   • Permanent recruitment and executive search.
   • Contract staffing and project manpower when you need flexibility.
   • Payroll outsourcing and Employer of Record (EOR) when you want to hire in Indonesia without building a full HR structure.

Planning Your 2026 Hiring?

If your team is saying “there’s no talent” in Indonesia right now, it might be time to:

• Re-look at your role design,
• Shift to a skills-first selection approach, and
• Tighten your time-to-offer.

Elitez Indonesia can partner with you to diagnose where the bottleneck really is – skills, structure, or speed – and build a hiring strategy that works in today’s labour market, not last decade’s.

📌 Talk to our consultants today

• 🌐 www.elitez.asia/indonesia/
• 💬 Chat with us on WhatsApp