There is a question that has been increasingly heard in society\nlately: if Indonesia\u2019s economy continues to grow at around five per\ncent, why does finding a job still feel so difficult? This question\nshould not be answered merely by pointing to declining unemployment\nfigures. Behind the relatively good macroeconomic indicators, a much\nmore important structural change is underway; the relationship between\neconomic growth, investment, and job creation is no longer as strong as\nit was in the past. The economy can grow, production can increase,\ninvestment can rise, and even productivity can soar, without generating\nas many formal jobs as we once imagined.<\/p>\n
Recent data illustrates this paradox quite clearly. BPS (Statistics\nIndonesia) recorded that the Indonesian economy grew by 5.29 per cent\nyear-on-year in the second quarter of 2026 and 5.45 per cent throughout\nthe first half of 2026. In May 2026, 148.19 million people were recorded\nas employed, and the open unemployment rate stood at 4.65 per cent.\nStatistically, this is certainly not a picture of an economy losing\njobs. However, about six out of ten Indonesian workers are still\nemployed in the informal sector. Therefore, the issue is not simply\nwhether jobs are available, but what kind of jobs are available.<\/p>\n
This is the difference between having a job and having a good job. A\nperson can be categorised as employed, but their income may be unstable,\ntheir productivity low, they may lack adequate social protection, have\nno career progression, and could lose their source of income at any\ntime. Ride-hailing, micro-enterprises, small-scale trade, freelance\nwork, and various informal economic activities have become vital social\nbuffers. We must appreciate that function. However, a nation aspiring to\nbe a developed country cannot allow informality to become a permanent\ncondition for the majority of its workforce.<\/p>\n
This problem becomes even more complex as we enter a productivity\nrevolution. AI, robotics, automation, machine learning, and\ndigitalisation allow companies to produce much greater output with fewer\nhumans. An activity that once required dozens of people can now be\nperformed by a few people with the aid of technology. Investment is also\nbecoming more capital-intensive. Consequently, the old assumption that\nevery increase in investment is automatically followed by a proportional\nincrease in labour no longer holds true. Technology does not stop\neconomic growth; rather, it can accelerate it. However, technology\nchanges how that growth is translated into employment.<\/p>\n
Therefore, we must not be trapped in a false choice between\ntechnology or labour. Rejecting robots and AI will only cause Indonesian\nindustries to lose competitiveness. Conversely, leaving the entire\ntransformation process to market mechanisms could concentrate the\nbenefits of productivity among capital owners and high-skilled workers,\nwhile pushing other groups into low-productivity jobs. The World Bank\nhas warned that job creation in Indonesia is still concentrated in\nlow-value-added activities, while high-productivity, middle-class wage\njobs are growing too slowly.<\/p>\n
This is where economic policy orientation needs improvement. For a\nlong time, we have been very proud when realised investment reaches\ncertain figures. That is important, but not enough. Every major\ninvestment should also be tested against other questions: how many\nquality jobs are created, what wages are paid, how many local workers\nare trained, how many domestic suppliers grow, and how much technology\ntransfer occurs? We need a sort of \u2018Investment-to-Quality-Jobs\nConversion Ratio\u2019. With this metric, the success of investment is\nmeasured not just by the value of rupiah flowing in, but by the economic\ntransformation it leaves behind.<\/p>\n
Of course, not all investments must be labour-intensive. Data\ncentres, modern smelters, chemical industries, semiconductors, and\nseveral strategic industries do require massive capital with relatively\nfew workers. The nation still needs them. However, the national\ninvestment portfolio must be balanced. Indonesia also needs industries\nwith a high employment multiplier: upgraded agro-industry, food and\nbeverage, textiles and footwear, electronics, furniture, health\nproducts, creative industries, high-quality tourism, and various modern\nservices. The strategy is not to choose between capital-intensive or\nlabour-intensive, but to build a productivity-intensive economy that is\nalso job-rich.<\/p>\n
For this reason, reindustrialisation is vital. We should not view\nmanufacturing merely as factories. A single manufacturing activity can\nsustain raw material suppliers, packaging, transport, warehousing,\nmachine maintenance, design, information technology, financial services,\nand exports. The multiplier effect extends far beyond the factory gates.\nIndonesia requires a new generation of industrialisation, using modern\ntechnology while simultaneously building long domestic supply chains.\nThe more value-added work is performed domestically, the greater the\nemployment opportunities created.<\/p>\n
However, industrial policy without human resource reform will only\nshift the problem. The competitors for Indonesian labour are no longer\njust workers from Vietnam, China, or India. The new competitors are\nhumans using AI, automated machines, and robots. Even a university\ngraduate no longer competes solely with other graduates. They may\ncompete with someone without a high degree who learns continuously\nthrough digital platforms, masters AI, possesses a portfolio, and solves\nproblems more quickly. The monopoly on knowledge by educational\ninstitutions has ended. Degrees remain important, but the ability to\nlearn is far more decisive than before.<\/p>\n
That is why investment in education must be expanded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/when-the-economy-grows-finding-jobs-remains-difficult-1789038494", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }