Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
Education with Production: the world of work and small
enterprise development for formal and nonformal
education
Adele Jones
This article introduces production units and small enterprise
development in Indonesian vocational-technical schools and
training institutions. It sets these developments against a
background of a country which has experienced a massive
economic downturn, a social environment characterised by
redundancy in the formal labour sector and growing unemployment
amongst secondary vocational-school leavers, and a political
situation which remains fragile, at best. Selected small enterprises
which are being developed by a vocational training centre and
senior vocational secondary schools in the midst of this turmoil
are described in the second part of this paper. The development
of these enterprises raises questions for countries in similar
situations and provides a model which could be adapted for other
countries in the Asia-Pacific region.
Introduction
In an earlier edition of Directions, Jones and Mudogo (1994)
discussed the importance of small business education for Pacific
schools. They highlighted the importance of entrepreneurial
studies for many students faced with prospects of unemployment
after completing their schooling. This paper examines a system
of education in Indonesia where curriculum and practical learning
activities revolve around the world of work. This form of education
provides an alternative for hundreds of thousands of young adults
who are faced with unemployment on leaving school.
In Indonesia, a massive downturn in the economy has created
havoc for a country of 200 million people. The country is made up
of 992 settled islands (several involved in serious and ongoing
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
disputes) spread across 6,400 kilometres, people with 250 distinct
languages linked by one national language – bahasa Indonesia.
Apart from the huge population difference (greater than the whole
of the Pacific with Australia and New Zealand included), the
environment sounds somewhat familiar to people in the South
Pacific with their ownissues of distance, language diversity and
unemployment. Perhaps, in somewhat the same way, the economic
situation in Indonesia is forcing the Ministry of Education and Culture
to find new and relevant forms of education and training for young
people who have moved away from a traditional agricultural life
and livelihood.
While the structure of education in South Pacific countries is
different - in so far as Indonesia has a twin path of vocational-
technical and general education at the secondary school level -
there is a model here which could form the basis of more
employment-oriented education. This paper discusses education
with production in Indonesia and presents some examples of how
this operates at senior secondary level in vocational schools,
specifically in regard to small enterprise development.
Education, employment and a country in crisis
The downturn of the apparently booming south-east Asian financial
state, a struggling national economy, and a socio-political situation
which has continued to ferment even after the country’s first free
elections for many decades; this may seem an unusual time for
schools and teacher training institutions in Indonesia to be
establishing small enterprises. As this article points out, a rapidly
changing national and regional economy and growing
unemployment in the formal sector has changed small enterprise
development from a concept within the education system to a
necessity. What has long been accepted in the informal sector is
gaining increased recognition in formal training programs in
Indonesia, where production without practical entrepreneurial
experience is seen as “short changing” students and trainers.
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
Before discussing small enterprise development within the
education sector, some background to this move towards
entrepreneurship and production units in the education sector is
useful. In Indonesia, senior secondary vocational and technical
schools (SMKs) are established to focus on a specialised area of
study such as agriculture, arts and craft, business and commerce,
hospitality and tourism (including clothing and beauty studies),
social work, and technology. Each school is required to set up a
Production Unit (Unit Produksi) which serves the double function
of training and income generation. In turn, these units produce
goods or provide services which can become the basis of small
enterprises in keeping with the school’s specialised curriculum area.
The teacher training and upgrading institutions responsible for each
area are also expected to lead the way with production units.
Unit Produksi are closely linked with the concept of Pendidikan
Sistem Ganda – the dual system of education and training which
requires ‘an active partnership between the school system,
providing cognitive skills, knowledge and preliminary vocational
training, and employers, providing specific job or trade related
competencies, skills and training’ (Djojonegoro 1994a). As
Djojonegoro, a former Minister of Education and Culture (MOEC),
explains,
under this policy MOEC’s vocational education and training
system has been directed to LINK vocational and technical
education and training directly to the labour market, and
MATCH present and future requirements of Indonesia’s
industries … the ultimate aim is to contribute towards
establishing a demand driven “National Vocational
Education and Training System” at the national level to
meet the needs of the entire Indonesian economy”
(Djojonegoro 1997).
The massive changes in Indonesia’s economy are beyond the
scope of this article but clearly there has been a rapid turn-around
from a situation where, ‘in 1995 the gross domestic product (GDP)
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
grew 8.1 per cent, up from 7.5 per cent in 1994’ (Abimanyu 1997),
to the situation in 1999 where the Indonesian government was
relying on loans from the Asian Development Bank, the World
Bank and Japanese Government to help them service foreign
debts and a draft budget ‘based … on assumptions of zero-percent
economic growth, compared to a 13 per cent contraction last year,
and the inflation level would drop to 17 per cent from 77.63 per
cent’ (The Jakarta Post 1999).
The Unit Produksi established in vocational-technical schools are
seen as more crucial for their entrepreneurial aspect than ever
before. Though they are meant to be a vehicle for students to
practice their skills in a ‘work’ environment in addition to industrial
placements, these units are also a vital means of students and
teachers earning, and learning about earning, in the informal
sector. While an oversupply of graduates from the vocational-
technical system was predicted in the early ‘90s, Djojonegoro
(1994b:27) offered some light for the future with his recognition
that ‘opportunities for gainful employment do exist in the informal
labor market’. As never before in this decade, Unit Produksi offer
some hope for Indonesian youth, faced with the real prospects of
unemployment, economic collapse, reduced foreign investments
in their country and increasing business migration out of Indonesia.
Education with production
Education with production (EWP) has seen various models
adapted for different social and political environments. EWP was
practised in its socialist form in China, where high school graduates
worked in factories and on rural communes for at least two years
before proceeding to further study or more selective employment.
In quite a different context, EWP has been incorporated into
western secondary schools curricula in the form of work-
experience attachments (Hoppers 1985; Jones 1995). To some
extent, this idea has been incorporated into the Indonesian ‘link
and match’ where vocational-technical students’ productive ability
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
is enhanced in their final year of study by relevant work experience
‘conducted fully in the partner institution (industry/company) in which
the real process of work is going on’ (National Council for Vocational
Education 1996: 13-16). However, while the MOEC acknowledges
the resemblance of their dual system to the German and Swiss
equivalents, it emphasises the importance for Indonesia to develop
a system relevant to its own culture and world of work (Djojonegoro
1994a: 34).
A model of EWP which is most closely related to the present
discussion on small enterprise development and production units
in vocational and technical schools in Indonesia is that which has
been implemented in South America and is found in schools in
various African countries (Corvalan 1985; Hoppers 1995; Middleton
1991).
In the Indonesian setting, EWP can apply to both work-experience
with education-industry links or to small enterprise or business
experience. Here the focus is specifically on this second aspect of
EWP and production units. As noted above, Unit Produksi are
training units. They also have been designed with the distinct
purpose of raising income for the school and those involved in
‘production’. They are ‘encouraged to be self dependent and fulfill
the financial needs of the operation’ (National Council for Vocational
Training 1996:41). This has become an increasingly important
aspect of Unit Produksi as government funding to schools has
decreased and as teachers and students experience increasing
hardship in the economic crisis.
In this situation, production units function as small enterprises,
raising money for schools and training institutions, the production
unit, and the participating workers. While students may choose to
work in production units instead of work placement in industry, both
experiences are encouraged as necessary for understanding the
world of work. The specific examples, presented below, show how
production units can operate as small enterprises in vocational
education institutions in Indonesia, essential in a system which
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
demands that education and training are linked with the real practice
of the workplace.
Production units in the Indonesian education system
Facilities for production and small enterprise
Because Unit Produksi are seen as integral to vocational-technical
education at the senior level of secondary school (15-18 age group) in
Indonesia, school complexes have generally been built or refurbished
with rooms which can be converted for small enterprises. Many schools
have established restaurants, beauty salons, shops, banks, post offices,
or production workshops in the manufacturing area. Service centres
are usually at the front of the school building with an entrance to the
main road so that the public has easy access. Schools designed for
technical training in the manufacturing field have different facilities to
suit a heavier industrial situation. A similar situation exists in schools
teaching arts and crafts. Schools with a social work focus have
converted rooms for use as child care centres. Agricultural schools
also cater for special production needs such as greenhouses and
workshops for packaging or preserving their products. Because 70
percent of all curriculum in vocational-technical schools is practice
oriented, equipment for production is generally available. In some
cases, schools use limited stocks until they can earn enough money
from their small enterprises to purchase additional materials and
equipment.
Curriculum for production and small enterprise
In each of the three years of vocational school, part of the curriculum
is devoted to entrepreneurship. Discussions with teachers suggest
that this is insufficient to give students the marketing and business
skills they would need to set up a small enterprise, no matter how
good their actual production or service skills might be. In a new broad-
based curriculum to be conducted in 1999, a discrete subject in
entrepreneurship has been introduced for first year (age 15) students,
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
though some believe it would have been better suited later in the
program, and dealt with in more depth and hand-in-hand with a practical
component.
This highlights a problem many schools have in regard to
entrepreneurial studies. As Van Bussel (1998) noted in the Sri Lankan
context, while producers may be skilled in their own technical areas,
they generally have little practical experience in developing small
enterprises. In Indonesia, in those schools where the subjects of
Business and Management are taught, teachers have theoretical
knowledge but are infrequently involved in other departments or in
schools teaching different disciplines.
The development of small enterprises in schools and training
institutions
The final section of this article describes small enterprise ventures
undertaken by a vocational teacher training institution, business/
commerce vocational schools in Borneo, and a hospitality/tourism
vocational school in Irian Jaya (West Papua).
A bakery production unit
One small enterprise established by the Vocational Education and
Development Centre (VEDC) near Jakarta is a bakery and its shop.
The Unit Produksi in the Food Production department had principally
raised income by catering for meetings, training programs, and in-
service activities held at the VEDC campus. Baking bread products
for staff at VEDC ceased in July 1998 due to the rapid increase in flour
prices, and the range of products and number of loaves had been
limited.
Planning exercises with the departmental staff and Asian Development
Bank Vocational-Technical Education project (VOCTEC) specialists
raised new possibilities for a bakery shop outside the campus.
Eventually this targeted a large estate where a large number of
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
expatriates lived. For this market, bread was a principal staple.
Although a restaurant and general store supplied certain needs,
bread products were purchased outside the complex. Therein
began a series of meetings with VEDC staff and management,
a large Jakarta bakery owner who was also a member of VEDC’s
food department industry panel, and the estate management.
VOCTEC and departmental staff worked together in preparing
budget projections. Various types of flour were priced and
monitored closely as costs continued to rise. Questionnaires
were prepared in English and Japanese for likely clients. The
bakery proposal appeared to serve the double purpose of raising
income for VEDC and providing a realistic small enterprise which
could be used in in-service training programs for teachers.
As with any small enterprise currently being planned in
educational institutions in Indonesia, initial questions were raised
regarding personel to operate the bakery and funding to establish
the shop. The directive of the MOEC to establish Unit Produksi
in schools and training institutions has not dealt with issues of
‘staff’ experience and teachers’ workloads. Therefore, the most
feasible alternative for the bakery and bakery shop was that staff
should be hired to deal specifically with these duties. Initially, a
staff member from the Food Production department was released
from other work to act as manager alongside consultants in
establishing the bakery shop. Two bakers from the same
department were co-opted and sent for one months’ intensive
training to the ‘partner’ bakery. Graduates from local vocational
schools were hired and trained to run the bakery shop. Although,
in the initial stages, VOCTEC specialists were actively involved
in arranging contract agreements, setting up the shop and
organizing training for bakers and shops assistants, the process
involved intensive and ongoing discussions with staff from the
department who would eventually take over sole control of this
enterprise. As the accounting skills required were more
sophisticated than those held by people in Food Production, a
staff member from the VEDC accounting department supervised
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
recording and reporting of finances and became integral to a hands-
on training program.
The whole process was documented throughout. Much of this
documentation included working material such as the business
proposal, contract agreements, job descriptions of staff involved,
budgets for a six month period, and a detailed time line. In this way,
the enterprise has become a working example for replication in other
VEDC departments, where small enterprises including a salon and
child care centre are planned as Unit Produksi.
The issue of initial capital to set up the venture was dealt with in two
ways. In this case, salaries of staff (technicians) could be assisted
from the VOCTEC project funds for four months until such time as
the business could take over salary payment and repay the loan.
Costs of outfitting the shop (a pre-existing room on the ground floor
of the estate office block) were shared by VEDC, the housing
complex management and the VOCTEC project. Specialized
equipment, such as refrigerated display cabinet and cash register,
were moved from the Food Production department. Flour products
and pastries which were purchased from the partner bakery for the
first three months, were paid for from the Food Production
department’s current Unit Produksi catering funds.
Shops and general store production units
The next examples of production units are from vocational secondary
schools in Borneo. Vocational schools have generally become quite
successful in setting up small enterprises. Many of them in the
business/commerce stream have small general stores, post office
sales and banking services for the school population. Stores are
generally situated to attract the general public. A typical production
unit at a school in Banjarmasin, on the island of Kalimantan (Borneo)
has a large store built at the front near the main road. It sells
stationery items, dry food products, sewing materials and items
generally found in any general store in Asia or the South Pacific.
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
While two full-time shop attendants are paid from the profits of this
Unit Produksi, third year business/management students take it in
turns to work in the shop. Accounting students are involved in the
book-keeping, while one teacher is the overall manager of the unit.
As noted above, all students study components of entrepreneurship
in each of the three years of their study, though staff generally
believe more exposure to business and marketing is essential if
students are to set up their own businesses on completion of their
studies.
Profits from this store have purchased a photocopier which raises
additional revenue by photocopying for students and the public for
a small fee. A refrigerator and freezer have also been purchased
from profits, so now ice is sold to the public – another income earner
for the school. Twice yearly, profits are divided up between those
who have been involved one way and another in the Unit Produksi.
Another store in a Samarinda business/commerce vocational school
(also on Kalimantan Island) sells telephone cards and post office
supplies. The General Post Office pays commission to its agent,
the production unit, for all stamps sold and mail processed. Mail is
then taken to the distribution post in the centre of town or collected
by the mail van when required. As with the Banjarmasin school,
second and third year business students are involved in the shop’s
operation. If placements for work experience are difficult to arrange
(as is sometimes the case in more remote areas), students can
have prolonged exposure to work through the production unit shops,
although generally staff prefer student exposure to work outside,
even if this means two students sharing or alternating placements
in the shop and in industry.
Both of these schools advertise their services through brochures,
signs and large painted banners flying outside the school fence
and, of course, by the usual word-of-mouth advertising which is
the most common form of marketing in schools.
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
The Merauke airport coffee bar
The production unit described below, is a very recent development
in a vocational school in Irian Jaya (West Papua). Merauke is a
small town by Indonesian standards (with a commercial area about
the size of Labasa in Fiji). It is situated less than 20 kilometres
from the border with Papua New Guinea (PNG) and is a coastal
town about one hour by air from Darwin in Australia. It is a major
stopover for cargo ships. A rapidly developing tourist area, there
are future plans for an international airport at Merauke, though at
present there are three flights for passengers going to Jayapura
(Irian Jaya’s capital) each week, plus several flights to smaller towns
in the interior of the island. Overland travel and trade between
PNG and the Merauke area is permitted for local Papuans.
The vocational school in Merauke which focuses on hospitality/hotel
studies has had intermittent small production activities where
students prepared food for weddings or specific events on request.
As part of a planning workshop on production unit enterprises, small
groups of teachers and VOCTEC consultants conducted field needs
analysis in industry and local businesses. One group met with
management at the local airport and were invited to use an empty
space, initially constructed as a bar/café, inside the airport waiting
room. The situation was ideal for setting up a small business
because there were four flights to Jayapura weekly, with more than
ninety passengers, on average, travelling.
Staff met for detailed planning exercises. Time lines and tasks
were discussed by trainers and allocated to groups of students and
training coordinators. Initial funding to purchase items including
crockery, hot water pots and electric jugs, was made available with
VOCTEC funds. From an enthusiastic base, the “coffee bar” was
ready for operation after one month active planning and
implementation.
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
A group of four students (third year) and a supervising trainer or
production unit coordinator operate the coffee bar for each outgoing
flight. One student from the previous day’s flight works with the
next group of students so that there is a continual turnover of
experience, with students training students. Cakes and savoury
snacks are baked as part of the production unit activities in the
school. Transport of students and products from the school to the
airport several times a week is provided by members of the school
council at the request of the local area education official (Kanwil).
The most important aspect of this new production unit activity has
been careful planning. Before the contract was signed between
the airport and school management, issues of staffing, transport,
and costs for one year were investigated by staff and the production
unit management team. Students were given initial training and
have been involved in developing production and delivery strategies
from the outset. Above all, support from senior education officials
in Meruake and at the provincial level in Jayapura has been
important in establishing this new venture with its high public profile.
In the Indonesian setting, planning and obvious official support or
sponsorship are key factors to successfully establishing small
enterprises in the school environment.
Concluding comments
This paper has selected some typical production unit activities from
vocational institutions in Indonesia. Other ventures could have
been presented. These would be child-care centres for social work
schools, small beauty salons, tailoring shops, art/craft kiosks in
tourist hotels, the sale of agricultural products at local markets
and to hotels and restaurants, or contracts for light machinery
maintenance from the industrial schools. Some schools teaching
travel and tourism arrange guided tours with transport and
accommodation packages for factory workers and other schools
or universities.
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Directions: Journal of Educational Studies Vol. 21 No. 2 Dec. 1999
At times, the experiential aspect predominates, though through it all
the business aspect and profit is highlighted. In the more successful
cases, production units play a major part in teaching and learning,
rather than being a part-time or fringe activity in the school program.
However, as yet, these activities are not articulated formally into further
education and although envisaged as being incorporated into a new
subject called Entrepreneurship, are only considered indirectly for
assessment purposes if replacing industry experience.
One feature to highlight by way of concluding is that a real mind shift
is required on the part of educators who have been brought up to see
the curriculum and formal teaching as the main function of schooling.
The Pacific, too, can document its own cases of education with
production, even in the formal school environment. Small enterprise
development demands a meeting of theory and practice. Indonesia is
attempting this through Unit Produksi.
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