World Bank Highlights Sharp Decline in Indonesia's Middle-Class Workers

The World Bank has highlighted what it describes as structural problems in Indonesia’s labour market, despite an increase of 1.9 million jobs between August 2024 and August 2025 and a slight dip in unemployment to 4.9%.

In its June 2026 edition of the Indonesia Economic Prospects report, the institution noted that almost half of the new jobs were absorbed into lower-productivity sectors such as agriculture and accommodation/food services, while higher-skilled sectors like financial services stagnated or contracted.

The Bank also observed a rising trend in disguised unemployment—workers with fewer hours than desired—reaching 32.7%, which it said points to persistent underlying weaknesses in job quality. Meanwhile, real wages for medium and high-skilled workers have fallen by around 1-2% annually since 2018.

The share of workers earning a middle-class income has dropped sharply from 14.5% in 2018 to just over 7% in 2025. The report attributes this to a shortage of formal jobs with decent pay and declining real wages, pushing many from the middle class into vulnerable groups at risk of poverty.

The World Bank concluded that the economy is creating jobs, but not enough productive, well-paying ones to sustain upward mobility and expand the middle class.