One Percent Economic Growth Only Creates 110,000 Jobs

JAKARTA - Director of the Digital Economy Center of Economic and Law Studies (Celios) Nailul Huda assessed that one of the main problems of the Indonesian economy today is the low quality of economic growth.

He explained that the economic growth that occurred was not followed by a significant increase in employment.

"Earlier, one percent of economic growth can absorb up to 400,000 workers. Now, one percent of economic growth can only absorb 110,000 workers," he told VOI, Thursday, November 6.

According to Huda, this condition occurs because growth in labor-intensive economic sectors actually slows down and Indonesia experiences early deindustrialization, where the industrial sector loses its capacity to massively absorb labor.

"Even if we look at it, now what is happening is the massive termination of employment (PHK) from the manufacturing industry," he said.

Meanwhile, he added that the number of workforces continues to increase, but the availability of employment is getting narrower and almost no more factory construction is able to create jobs on a large scale.

Huda said that the growing sector is the service sector, which generally has low labor absorption and in a situation like this, the government's target to create 19 million new jobs is only wishful thinking.

"With such conditions, the aspiration to absorb 19 million jobs is just a figment," he said.

He said that the government claims that the open unemployment rate will decline in 2025.

However, the decline was not due to an increase in formal work, but because of the shift in labor to the informal sector.

Currently, he continued, the proportion of informal labor reaches almost 60 percent of the total national workers. In fact, the informal sector tends to provide very minimal social protection for its workers.

"We are all made to see the absorption of labor that is not quality. In addition, what also happens is that half-income workers also increase. All people who are able to earn under 35 hours a week are counted as workers even though they are half unemployed. So the claim for the achievement of the workforce is just an illusion," he said.

Previously, the Central Statistics Agency (BPS) recorded that the number of unemployed in Indonesia in August 2025 reached 7.46 million people.

BPS Deputy for Balance and Statistics Analysis Moh Edy Mahmud explained, of this number, it showed a decrease of around 4,000 people compared to the same period in the previous year.

"The workforce that is not absorbed by the labor market has become unemployed is 7.46 million people or a decrease of around 4,000 people compared to August 2024," he said at a BPS press conference, Wednesday, November 5.

Furthermore, Edy said the number of working-age population as of August 2025 reached 218.17 million people, or an increase of 2.80 million people compared to the previous year.

Of this number, the workforce reached 154 million people, an increase of 1.89 million people, while non-workforces were recorded at 64.17 million people, an increase of about 0.91 million people.

Edy menyampaikan dari total angkatan kerja itu, 146,54 juta orang di antaranya telah bekerja, bertambah sekitar 1,90 juta orang dibandingkan Agustus 2024.

"Jika dirinci, penduduk yang bekerja terdiri dari yang pertama pekerja penuh yang sebanyak 98,65 juta orang atau bertambah sekitar 0,20 juta orang. Sementara pekerja paruh waktu sebanyak 36,29 juta orang bertambah 1,66 juta orang. Kemudian yang setengah pengangguran yang sebanyak 11,60 juta orang atau bertambah 0,04 juta orang," katanya.

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Edy said that of the total workforce, 146.54 million of them have worked, an increase of about 1.90 million people compared to August 2024.

"If detailed, the working population consisted of the first full worker who was 98.65 million people or an increase of about 0.20 million people. Meanwhile, 36.29 million part-time workers increased by 1.66 million people. Then 11.60 million people or an increase of 0.04 million people," he said.