Indonesia Becomes Unemployed Champion In Asia

JAKARTA - Indonesia occupies the second position with the highest unemployment rate in Asia after China, based on the April 2025 International Monetary Fund (IMF) report. Indonesia's unemployment rate projection in 2025 reached 5%, higher than the previous year (4.9% in 2024) and is expected to increase to 5.1% in 2026. The growth of the workforce reached 153.05 million people.

The International Monetary Fund (IMF) predicts Indonesia's unemployment rate in 2025 will reach 5 percent. This figure is the second highest in Asia after China, which is projected at 5.1 percent this year.

Based on the April 2025 edition of the World Economic Outlook report, the IMF noted that the unemployment trend in the country continues to rise. In 2024 it is 4.9 percent and this year it is projected to be 5.0 percent.

The Central Statistics Agency (BPS) also noted that the number of unemployed as of February 2025 reached 7.28 million people, an increase of 83,450 people from the previous year. This figure reflects serious challenges in employment,

The Cause of High Unemployment in Indonesia is suspected to be incompatibility with Skills with Industrial Needs (Skills Mismatch), Vocational and Higher Education Graduates dominate unemployment, the Open Unemployment Rate (TPT) data from SMK graduates reached 9.31%, while university graduates were 5.25%. This shows that the education system has not fully answered the needs of the industry, especially in the era of digitization and automation.

The dominance of Informal Workers, as many as 59.4% of Indonesian workers are in the informal sector (farm, trade, services) which tend not to absorb skilled workers. The majority of informal workers only have elementary education and below (35.89%).

The growth of the workforce is not balanced with job creation. Jokowi's administration efforts to boost growth through infrastructure development did not seem to have yielded results. Even efforts to make corrections to the law, such as the Job Creation Law, also did not seem to have resulted. Employment explosion: In February 2025, the workforce increased by 3.67 million people to 153.05 million, but only 7.28 million vacancies were available.

In fact, as the global economy worsened, Mass Layoffs occurred: The Trend of Termination of Employment (PHK) increased by 460% in early 2025, especially in the textile sector due to weakening global demand and high production costs.

Not to mention the impact of Globalization and Automatically at the same time, companies are turning to technology, many industries replacing human labor with machines and AI, have reduced traditional jobs.

Global Competition Heavy Burden: Foreign companies tend to employ workers from their own countries, thereby reducing local job opportunities.

Gender Inequality and Regional Gap

Low Women's Participation, Women's Labor Force Participation Rate (TPAK) is only 56.7%, far below men (84.34%)3.

High Young Unemployment: Age group 15-24 years old has a TPT of 16.16%, showing the difficulty of new graduates entering the job market.

Indonesia's Unemployment Rate Projection

IMF Predictions For Unemployment Continue To Increase, By 2025: 5.0% It Is Predicted To Increase By 2026 To 5.1%

If comparison with other countries: Chinese miss: 5.1%, India: 4.9%, even when compared to other southeastern Asian countries such as Vietnam: 2% and Thailand: 1%. These two countries can maintain growth below 1 percent, especially relying on manufacturing industry and tourism.

The global economic impact occurred, there was a slowdown in Economic Growth: the IMF cut Indonesia's economic growth projection to 4.7% by 2025-2026, far below the government's target. Bank Indonesia (BI) previously estimated Indonesia's growth to be between 4.6% and 5.4%. The IMF forecast is evident, Indonesia's Unemployment Is Increasing by 5 May 2025 The number of unemployed in Indonesia in Indonesia in 2025 reached 7.28 million people as of February 2025 where previously the IMF

The global trade war due to US-China tensions and rising trade rates exacerbated job prospects in the export sector.

Solutions and Recommendations for Policy, education reform and vocational training. Correspondence of the curriculum: Focus on digital skills, entrepreneurship, and foreign languages. Cooperation with industry: internship programs and competency certification to increase the competitiveness of graduates.

One of the experts who agreed to educational reforms, to overcome the unemployment rate and economic crisis, said the economist and DPP PAN, Didik J Rachbini during a discussion entitled "Economic Crisis, Unemployment and Solutions (PAN Visi)" at the PAN DPP Office, Jakarta, Wednesday 5 years ago.

Labor Intensive Investment Encouragement

Incentives for MSMEs and Creative Industries: This sector has the potential to absorb a lot of workforce. Digital Economic Development: Encouraging startups and e-commerce to create new jobs.

Social protection and decent wages, minimum wage adjustment: Labor wages are only IDR 3.09 million/month on average, growing 1.78%, below inflation. Social security for informal workers: expand the BPJS Employment program.

Indonesia's high unemployment rate is influenced by skills mismatch, rapid workforce growth, and the impact of globalization. Without structural intervention, the IMF projection shows unemployment will continue to increase to 5.1% by 2026.

Long-term solutions require education reform, labor-intensive investment, and labor protection. If these steps are consistently implemented, Indonesia can turn demographic bonuses into sustainable economic forces