{
    "success": true,
    "data": {
        "id": 1855485,
        "msgid": "jobless-growth-and-the-islamic-economic-solution-1783867854",
        "date": "2026-07-12 21:20:00",
        "title": "Jobless Growth and the Islamic Economic Solution",
        "author": "",
        "source": "CNBC",
        "tags": "",
        "topic": "Economy",
        "summary": "Indonesia faces a paradox of steady macroeconomic growth failing to generate quality employment, with over half the workforce stuck in low-productivity informal sectors. This 'jobless growth' is driven by capital-intensive investments and a skills mismatch, leaving many as the working poor. Islamic economics offers a solution by prioritising real sector development and MSMEs to ensure growth translates into broad-based welfare and human dignity.",
        "content": "<p>Amidst various optimistic reports about the national economy,\nIndonesia is actually facing a paradox that cannot be ignored. Economic\ngrowth remains around 5 per cent, inflation is relatively under control,\ninvestment continues to flow, and various national strategic projects\nare proceeding. On paper, these macroeconomic indicators give the\nimpression that the economy is on a positive track. However, a deeper\nlook into the condition of society reveals a different picture. Economic\ngrowth has not been fully capable of creating quality jobs. Employment\nopportunities have indeed increased, but most are in the informal sector\nwith low productivity and income levels. This phenomenon is known as\njobless growth, where economic growth is not followed by adequate job\ncreation. Data from the Central Statistics Agency (BPS) shows that in\nFebruary 2026, Indonesia\u2019s labour force reached 154.91 million people.\nOf that number, around 147.67 million people were employed, while 7.24\nmillion were still unemployed, resulting in an Open Unemployment Rate of\n4.68 per cent. At the same time, the average wage for Indonesian workers\nonly reached around Rp3.29 million per month. This figure indicates that\nthe problems in Indonesia\u2019s labour market are no longer just about\nquantity, but also about the quality of jobs and the level of welfare\nthey produce. This phenomenon is reinforced by the large proportion of\ninformal workers. BPS noted that more than half of Indonesia\u2019s workforce\nis still employed in the informal sector, which generally has low\nproductivity, uncertain income, limited social protection, and is\nvulnerable to economic shocks. It is therefore unsurprising that the\nphenomenon of the working poor has emerged, where people work every day\nbut their income is insufficient to lift them to a more prosperous life.\nThis paradox shows that economic growth has not been fully qualitative.\nGrowth should not only increase the Gross Domestic Product (GDP), but\nalso expand job opportunities, increase labour productivity, and improve\nincome distribution. When the benefits of growth are concentrated only\nin certain groups or sectors, growth loses its social meaning. The root\nof the jobless growth problem in Indonesia cannot be separated from\nchanges in the national economic structure. In recent years, investment\nhas flowed more into capital-intensive sectors such as mining, mineral\ndownstreaming, the smelter industry, data centres, and various high-tech\nsectors. These sectors are indeed capable of increasing economic added\nvalue and exports, but their labour absorption capacity is relatively\nlimited because they are highly dependent on technology and automation.\nOn the other hand, the manufacturing sector, which for decades was the\nengine of job creation, is actually experiencing a slowdown. The\ncontribution of the manufacturing industry to GDP has continued to\ndecline compared to two decades ago. Yet the experience of East Asian\ncountries shows that industrialisation is the main foundation for\ncreating quality jobs, increasing productivity, and lifting a country\nout of the middle-income trap. Another problem is the skills mismatch.\nThe education system has not been fully able to produce graduates who\nmeet the needs of industry. Many companies struggle to find workers with\nthe required skills, while millions of new graduates find it difficult\nto enter the job market. This condition is further exacerbated by the\ndevelopment of artificial intelligence and automation, which are\nbeginning to replace various routine jobs in the industrial and service\nsectors. As a result, economic growth no longer has a high elasticity\nfor job creation. Every one per cent increase in economic growth now\ngenerates far fewer additional jobs compared to two or three decades\nago. From a conventional economic perspective, this condition is\ngenerally responded to through increased investment, labour market\nderegulation, or the provision of various fiscal incentives. These steps\nare indeed important, but they often do not address the root of the\nproblem, which is how to ensure that economic growth truly produces\nbenefit for the wider community. This is where Islamic economics offers\na different perspective. In Islamic economics, growth is not the\nultimate goal of development, but rather a means to realise maqashid\nsharia, which are the preservation of religion, life, intellect,\nlineage, and property. Therefore, the success of development is not only\nmeasured by high GDP growth figures, but also by the opening of job\nopportunities, the reduction of poverty, the narrowing of inequality,\nand the improvement of public welfare. Islam views work as an activity\nthat has both economic and spiritual dimensions. The Prophet Muhammad\nemphasised that there is no better food than that which comes from the\nwork of one\u2019s own hands. Thus, providing job opportunities is part of\nthe effort to preserve human dignity. The first solution offered by\nIslamic economics is to strengthen the real sector, especially micro,\nsmall, and medium enterprises (MSMEs). Currently, more than 99 per cent\nof business units in Indonesia are MSMEs, and this sector absorbs around\n97 per cent of the national workforce. Therefore, economic policies\nshould be more directed at expanding access to financing, increasing\nproduction capacity, strengthening digitalisation, and broadening market\naccess for MSMEs. The growth of MSMEs will have a far greater job\ncreation effect compared to capital-intensive large industries.<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/jobless-growth-and-the-islamic-economic-solution-1783867854",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}