Indonesia's Jobs Squeeze: 7.28 Million Unemployed as Young Workers Struggle for Stable Work

In Bekasi, 25,000 Jobseekers Chase 2,000 Positions

A job fair in Bekasi in May 2025 drew 25,000 people seeking just 2,000 positions. Applicants surged into the venue, jostled for access and, in some cases, fainted in the crush. The event offered a stark picture of the pressure facing people looking for work in Indonesia, Southeast Asia's largest economy.

The numbers meant there were more than 12 jobseekers for every advertised position. For those attending, the immediate challenge was getting close enough to an employer to be considered. For the country, the crowd highlighted a larger problem: too many people are competing for too few stable jobs.

Indonesia's Central Statistics Agency, known as BPS, counted 7.28 million unemployed people of working age in February 2025, an increase of 83,000 from a year earlier. The unemployment rate was 4.76 percent, marginally lower than the previous year, while the population of working age grew by 2.79 million.

A falling unemployment rate can sit alongside a rising number of unemployed people because the rate measures their share of the labor force. When the number of people working or seeking work grows, the percentage can decline even while more individuals are jobless.

As of June 16, 2025, the pressure extends beyond people counted as unemployed. Informal work accounts for most employment, young people face much higher unemployment than the national average, and weaker economic growth is making the search for secure work harder. Job fairs, training programs and measures to encourage spending offer assistance, while the shortage of decent work continues to shape daily choices for millions of Indonesians.

What Job Fairs Can Deliver

Job fairs bring employers and applicants together, reducing the time and effort involved in finding vacancies and submitting applications. The crowded scenes in Bekasi show why people continue to attend: access to a possible employer is valuable when opportunities feel scarce.

Anton J Supit of the Indonesian Employers Association, or Apindo, described the overwhelming turnout as evidence of a mismatch between the supply of jobseekers and employers' demand for workers. Connecting people with companies helps with recruitment, but the number of available positions still determines how many applicants can find work.

Some companies reportedly attend fairs as a formality without offering real vacancies. For applicants who spend time and money reaching an event, that practice adds frustration to an already difficult search.

Jahen Fachrul Rezki, deputy director at the University of Indonesia's Institute for Economic and Community Research, said job fairs alone cannot resolve unemployment. Economic weakness, growing informal employment and declining productivity also need attention. Productivity means how much output a worker produces; it matters because businesses need sufficient output and income to sustain jobs.

Why Having Work May Still Mean Insecurity

Informal employment accounted for 59.4 percent of Indonesian workers in February 2025, or about 86.58 million people. That share was slightly higher than a year earlier. Street vending and farming on a small scale are among the activities that provide income when formal employment is unavailable.

These jobs often lack the security, predictable earnings, health insurance and other benefits associated with formal employment. Informal work can keep a household earning, while leaving it exposed when customers disappear, costs rise or illness interrupts someone's ability to work.

Malaysia's informal employment share was 26.8 percent in 2022. Indonesia's February 2025 figure was more than twice that level, although the figures describe different years. The comparison shows how heavily Indonesian workers depend on employment outside formal arrangements.

Teguh Dartanto, an economist at the University of Indonesia, explained that informal workers earning income are not counted as unemployed, even when their circumstances are precarious. A person can therefore have work and still struggle to earn enough or obtain adequate hours.

Informal employment serves as a safety net for people unable to secure formal positions. Its dominance also reflects and contributes to persistent unemployment and underemployment, in which people have work but cannot obtain as much work as they need. Understanding the jobs squeeze requires looking at both access to work and the quality of that work.

Young People Face the Steepest Odds

Unemployment among Indonesians aged 15 to 24 stood at 16.16 percent, more than three times the national rate of 4.76 percent. Youth unemployment has remained high for more than a decade and exceeds levels in many neighboring countries.

University graduates are among those struggling. Marsha Dita is one young graduate unable to secure employment matching her qualifications, illustrating the frustration and disillusionment that can follow years of study without a suitable opening.

Vocational high school graduates record the highest unemployment rates, despite an education intended to prepare them directly for work. That gap points to problems in how classroom learning connects with actual vacancies and employers' requirements.

Students need technical abilities for particular occupations as well as skills such as communication and working with others. Curricula often fail to provide the combination employers demand. Uneven access to quality education, particularly in rural areas, adds another disadvantage for young people entering the labor market.

Ali Marzuki Zebua, an academic at IAIN Kerinci, linked the problem to an outdated education system that struggles to keep pace with technological and economic change. He also identified insufficient vocational training, a lack of innovative teaching methods and recruitment practices that favor connections over competence.

Zebua's proposed reforms include bringing curricula closer to industry needs, strengthening vocational education and integrating technology into teaching and learning. For jobseekers, the practical goal is an education that gives them skills employers can use and a fair opportunity to demonstrate those skills.

Slower Growth and Spending Cuts Add Pressure

Indonesia's economy grew by 4.87 percent in the first quarter of 2025, below expectations and down from 5.11 percent in the same period a year earlier. The World Bank forecast growth of 4.7 percent for 2025, reflecting pressures from abroad and within the country.

Global trade tensions, particularly the trade war between the United States and China, have weakened export demand and foreign investment. For businesses, fewer overseas orders or less investment can mean less reason to expand production and hire staff.

Government budget cuts exceeding 300 trillion rupiah, about US$19 billion, reduced spending by ministries, state agencies and regional administrations. Industries dependent on government contracts felt the effects, including hospitality and manufacturing.

Nearly 74,000 layoffs occurred between January and March 2025 as the spending cuts rippled through the economy. Reduced activity left affected businesses with less income to support their existing workforce.

Consumer spending creates another link between job losses and business conditions. Workers who lose income have less money to spend. Businesses then face weaker demand, which can bring further job cuts and deepen the slowdown.

The main developments unfolded over several months:

• January to March 2025: Nearly 74,000 layoffs occurred amid the effects of government spending cuts.
• February 2025: BPS recorded 7.28 million unemployed people and an unemployment rate of 4.76 percent.
• First quarter of 2025: Economic growth slowed to 4.87 percent from 5.11 percent a year earlier.
• May 2025: The Bekasi job fair attracted 25,000 jobseekers for 2,000 positions.

Factory Closures Put Better Jobs at Risk

Indonesia also faces deindustrialization, a decline in manufacturing's role in the economy. Manufacturing has traditionally provided large numbers of jobs, so factory closures affect the country's ability to offer employment beyond informal activities and less productive services.

The shift toward services and informal work threatens to weaken Indonesia's economic base if investment in new industries and innovation does not keep pace. More people may end up competing for activities that generate relatively little income.

Arief Anshory Yusuf, a member of Indonesia's National Economic Council, warned that premature deindustrialization could increase competition for service jobs with low productivity, reduce incomes and widen social inequality. Premature deindustrialization means manufacturing declines before the economy has developed enough other productive industries to absorb workers.

Yusuf's proposed response includes revitalizing industrial zones, investing in vocational education and promoting research and innovation. Together, those measures aim to connect places where businesses operate, skills workers need and new ways of producing goods and services.

Indonesia's demographic dividend is also at stake. This is the opportunity created when the population of working age is at its peak and can contribute strongly to production and income. That opportunity depends on people being able to find productive work, rather than spending years unemployed or moving between insecure activities.

Prakerja Seeks to Close the Skills Gap

The government's Prakerja program, now in its fifth year, provides opportunities to learn skills, improve existing abilities and retrain for different work. More than 18.9 million participants have accessed over 6,000 training modules.

The subjects range from digital skills to hospitality and engineering. Training is available online and through sessions held in person, giving participants different ways to learn as the economy and employers' needs change.

Denni Purbasari, executive director of the Prakerja Project Management Office, has stressed the program's commitment to workers with limited skills and people without university education. Its inclusion priorities also cover women, people with disabilities and residents of underserved regions.

Prakerja addresses one part of the employment problem: whether people have the abilities required for available work. Its reach makes it a substantial training initiative, while the wider employment challenge also requires businesses that can recruit and retain workers.

Spending Measures Offer Relief to Businesses

The government has rolled back some austerity measures, allowing civil servants to resume travel and meetings at hotels. That change is intended to stimulate sectors affected by the earlier spending restrictions.

Travel discounts and other stimulus programs have also been introduced to encourage domestic consumption. More travel and spending can bring customers back to businesses whose revenues have weakened.

Bhima Yudhistira of the Center of Economic and Law Studies, known as CELIOS, compared the measures with medicine that eases symptoms while deeper causes persist. He described them as:

providing paracetamol

His criticism centers on the difference between temporary relief and measures that address the roots of unemployment. Restoring demand can help businesses through a difficult period, while lasting job creation also depends on investment, relevant skills and stronger productive industries.

Companies and Communities Have Roles to Play

The private sector is participating in workforce development through recruitment and training. Career fairs organized by the American Chamber of Commerce in Indonesia, or AmCham, and United States companies offer job opportunities, workshops to build skills and networking for young professionals.

These events highlight adaptability, interpersonal skills and continued learning throughout a career. They give participants opportunities to meet employers and develop abilities that may help them respond to changing workplace requirements.

PepsiCo's recent investment in a new factory in West Java is expected to create jobs. The project illustrates how foreign direct investment, money invested by an overseas business in operations within a country, can support employment.

Private initiatives need greater scale and broader policy support to make a meaningful difference to the national unemployment rate. A factory or career fair can provide opportunities, while the nationwide shortage requires many more employers able to expand.

Community programs offer another route to earning a living. Productive zakat programs operated by organizations such as Dompet Dhuafa help people start businesses and work toward economic independence, particularly in rural areas. They use charitable support to help people develop income rather than depend solely on immediate assistance.

Creating Work Requires More Than One Policy

Micro, small and medium enterprises, known as MSMEs, account for around 60 percent of employment. Better access to capital, training and markets could help these businesses grow and take on more workers.

Education reform and investment need to move together. Aligning curricula with industry requirements can improve preparation for work, while targeted incentives and infrastructure development can encourage job creation in manufacturing, agriculture and services that employ large numbers of people.

Inclusive training also needs to reach vulnerable groups and respond to the digital economy. Coordination among ministries, regional governments and private businesses would help connect those efforts, so that training, investment and recruitment serve compatible goals.

The political stakes are rising alongside the economic pressures. Public frustration includes concern about unfulfilled campaign promises, including President Prabowo's pledge to create 19 million net new jobs. Net job creation means the increase remaining after jobs lost are subtracted from jobs added.

Political analysts warn that prolonged hardship could weaken trust in government and fuel social unrest. For households, the immediate consequences are more concrete: uncertain earnings, a difficult transition from school to work and limited access to the protections that come with stable employment.

Indonesia's challenge is to create enough quality jobs while equipping people to obtain them. Continued dependence on informal work and a shortage of decent opportunities threaten its economic potential, its chance to benefit from a large population of working age and its position relative to regional peers.

Key Points

• BPS recorded 7.28 million unemployed people in February 2025, up 83,000 from a year earlier.
• The Bekasi job fair drew 25,000 applicants for 2,000 positions in May 2025.
• Youth unemployment was 16.16 percent, compared with a national rate of 4.76 percent.
• Informal employment accounted for 59.4 percent of workers, or about 86.58 million people.
• Economic growth slowed to 4.87 percent in the first quarter of 2025, while spending cuts put pressure on employment.
• Prakerja has reached more than 18.9 million participants with over 6,000 training modules.
• Education reform, productive investment, support for smaller businesses and coordinated policies are central to the proposed response.