To avoid the middle income trap, Indonesia needs to start shifting its economy to higher-value products, which requires a workforce that has an increasingly high level of knowledge, skills, and competencies. This implies that Indonesia needs to put more serious effort into the improvement of the quality of its education system. Currently only 37% of teachers have the appropriate teaching qualification as defined by the 2005 Teacher Law and approximately 15% of all teachers are absent from their class each school day across Indonesia. To set a higher standard for teachers and to upgrade their skills, the government has implemented a massive teacher certification program beginning in 2006. This teacher certification is attached to a professional allowance that effectively doubles certified teachers’ salaries. This has provided an incentive for teachers to upgrade their qualifications and increase their teaching loads to meet the certification requirements. Furthermore, the program has attracted more university graduates to enter the teaching profession and produced a jump in demand for teacher education in Indonesian universities. On the other hand, there is yet to be any clear evidence that the program has had a significant impact on improving students’ overall educational performance and reducing rates of teacher absenteeism. Similarly, other efforts to reduce teacher absenteeism, such as the provision of a special allowance for teachers working in remote areas, have yet to show a significant impact on reducing teacher absenteeism.