Two Years of Prabowo: Formal Employment Still Lagging
As the administration of President Prabowo Subianto and Vice President Gibran Rakabuming Raka approaches its second year, Indonesia’s investment realisation continues to rise. However, CORE Indonesia assesses that the high value of these investments has not been accompanied by a proportional increase in formal job creation.
The Ministry of Investment and Downstreaming/BKPM recorded investment realisation throughout 2025 at Rp 1,931.2 trillion, a 12.7% growth compared to the previous year. This investment exceeded the government target of Rp 1,905.6 trillion and was recorded to have absorbed 2.71 million direct workers.
This trend continued into the first semester of 2026. Investment realisation reached Rp 1,010.6 trillion, representing a 7.2% year-on-year growth, equivalent to 49.5% of the 2026 investment target of Rp 2,041.3 trillion. During the same period, BKPM noted that these investments absorbed 1,448,862 Indonesian workers, a 15% increase compared to the first semester of 2025.
The Executive Director of CORE Indonesia, Mohammad Faisal, believes that high investment values are insufficient to judge the quality of investment. One indicator that requires attention is the ability of investment to create formal jobs.
“However, the quality of this investment is not always aligned,” said Faisal when contacted on Sunday (27/9/2026).
According to Faisal, the increase in investment value has not produced growth in formal employment at the same speed. “This high level of investment does not always align with the speed of formal job creation,” he stated.
BPS employment data shows that the number of employed people in February 2026 reached 147.67 million, an increase of approximately 1.90 million compared to February 2025. Of that number, formal workers reached approximately 59.93 million people, while informal workers totalled 87.74 million.
With this composition, about 40.6% of the working population is in the formal sector, while approximately 59.4% works informally. Informal employment includes self-employed individuals, freelancers, and family workers who do not fall into the formal employment category.
“Our labour structure is still 59% informal sector and 41% formal sector,” said Faisal.
Faisal assessed that the large scale of investment does not automatically result in a proportional number of formal jobs. “High investment does not necessarily create as many formal jobs as the value of the investment itself,” he said.
BKPM data shows that investments in the first semester of 2026 flowed heavily into basic metal industries, metal goods, mining, transportation, warehousing, telecommunications, and the property sector. Downstreaming investment alone reached Rp 300.1 trillion, or 29.7% of total national investment.
The volume of incoming investment has not been sufficient to absorb all workers into formal employment. Faisal believes this condition leaves a portion of the population still dependent on informal work.
“Consequently, many people cannot be accommodated in formal jobs and must work informally,” said Faisal.