INDEF: Job creation is key to tackling weakening purchasing power

Jakarta (ANTARA) - Head of the Centre for Macro Economy and Finance at the Institute for Development of Economics and Finance (INDEF) M Rizal Taufikurahman stated that job creation is the key to addressing the weakening purchasing power of the public, especially the middle class.

“Government policy needs to focus on strengthening the income of the middle class through the creation of productive jobs in the manufacturing sector and modern services,” Rizal said in Jakarta on Thursday.

According to Rizal, the decline of the middle class in Indonesia is more driven by the pressure of living costs than changes in lifestyle.

Based on data from the Central Statistics Agency (BPS), about 9-10 million middle-class people fell into the aspiring middle class category between 2019 and 2024.

At the same time, he continued, household consumption, which accounts for around 53-54 percent of gross domestic product (GDP), began to slow. This is seen as indicating that cost-of-living pressures have eroded the purchasing power of the middle-class group that has long been the engine of domestic consumption.

Therefore, the government needs to curb living costs through stabilising food prices, improving supply chain efficiency, and housing and transport policies that are more affordable.

On the other hand, Rizal also highlighted more structural problems. Economic growth has not been fully accompanied by the creation of high-wage, quality jobs.