Jakarta, Indonesia —
A recent study conducted by the Institute for Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) has revealed a stark reality: Indonesia's economic growth is slowing down, with a sharp rise in unemployment. The report highlights that over 7 million Indonesians are currently unemployed, reflecting the deepening challenges facing the nation’s labor market.
The research identifies several contributing factors to this economic deceleration. Global economic uncertainty, declining export demand, fluctuating commodity prices, and weak domestic consumption have collectively hindered Indonesia’s recovery post-pandemic. While the country had shown signs of rebound in previous quarters, the momentum appears to have faltered, leaving a growing number of citizens without stable employment.
Structural Weaknesses in the Labor Market
According to LPEM UI, many sectors such as manufacturing, retail, and construction have experienced stagnation or decline, leading to job losses. The informal sector, which employs a significant portion of the population, is also under pressure due to inflation and rising cost of living. Youth and fresh graduates are among the hardest hit, facing limited job opportunities and a mismatch between their skills and market needs.
Policy Implications and Recommendations
LPEM UI urges the government to take proactive fiscal and monetary actions to stimulate economic activity. Recommendations include increased investment in infrastructure, incentives for SMEs and startups, labor retraining programs, and a focus on green economy transitions. The report emphasizes the importance of innovation, digital transformation, and inclusive growth strategies to absorb the growing labor force and reduce unemployment sustainably.
Public Response and Future Outlook
The findings have sparked concerns among economists and policymakers, with public discourse focusing on the need for long-term structural reforms. As Indonesia aims to achieve higher economic resilience, the report serves as a critical reminder of the urgent need to realign growth strategies with inclusive employment generation.