Investigating the impact of the COVID-19 pandemic and macroeconomic variables on unemployment among university graduates in Indonesia: Regression and Fs-QCA approaches

Nahu Daud, Bayu Taufiq Possumah, Ranggi Aditya Nugraha, Suyanto Sukri Mustofa and Chairullah Amin

Cogent Economics & Finance, 2024, vol. 12, issue 1, 2382350

Abstract: The educated unemployment rate among university graduates (EUUG) in Indonesia has risen steadily, reaching 34.6% during the Covid-19 pandemic (2020-2021), attributed to economic challenges and a national recession. This research aims to analyze the impact of Covid-19 and various macroeconomic variables on educated unemployment across 34 Indonesian provinces. Using panel data regression and Fs-QCA methods, the study found that the pandemic and macroeconomic factors significantly influence educated unemployment. The best configuration for high educated unemployment during the pandemic includes factors such as GDP per capita, inflation, Provincial minimum wage (PMW), investment, and government spending, observed in provinces such as Riau, South Sulawesi, DKI Jakarta, and South Sumatra.This study meticulously investigates the pressing issue of unemployment among educated graduates in Indonesia, offering a comprehensive analysis that spans various provinces and considers the interaction of macroeconomic variables and the effects of the Covid-19 pandemic. The study highlights West Java as having the highest unemployment rate among college graduates, whereas North Kalimantan records the lowest, illustrating significant regional disparities. The analysis robustly determines that macroeconomic factors such as Gross Regional Domestic Product per capita, inflation, minimum wage, investment, government spending, and the Human Development Index all have significant impacts on graduate unemployment. Particularly, it points out that a combination of these factors leads to higher unemployment rates in regions like Riau, South Sulawesi, DKI Jakarta, and South Sumatra. The practical implications of these findings are substantial. The study advises policymakers to utilize these insights for formulating targeted interventions such as economic stimulation measures and educational enhancements to align graduate skills more closely with industry needs. Businesses are encouraged to tailor their investment and workforce development strategies based on regional economic conditions and potential. Educational institutions are urged to adapt curricula to improve student employability through practical skills training and industry partnerships. Additionally, the study recommends that the government focus on creating specialized job opportunities for highly educated individuals and consider minimum wage adjustments based on educational attainment to promote a fair compensation system. It suggests that companies openly communicate wage scales during recruitment to attract and retain highly skilled workers. Graduates are advised to enhance soft skills and consider entrepreneurship as a viable career option. By implementing these recommendations, stakeholders including government bodies, businesses, and educational institutions can collectively foster a more inclusive and resilient labor market, thereby supporting sustainable economic growth and reducing the unemployment rate among university graduates in Indonesia. This study not only provides a foundation for informed decision-making but also outlines a roadmap for future research, which could include exploring the impact of population size on unemployment and differentiating between graduates from public and private institutions.

Date: 2024
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DOI: 10.1080/23322039.2024.2382350

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