World Bank Highlights Indonesia's Shrinking Middle Class

JAKARTA - The World Bank (World Bank) also highlighted the condition of the middle class in Indonesia which is considered to face quite serious pressure. Although the labor market shows improvement, the quality of available jobs is still a structural challenge for the national economy.

In the June 2026 edition of the Indonesia Economic Prospects report, the World Bank noted that Indonesia managed to create around 1.9 million new jobs between August 2024 and August 2025, and the unemployment rate also fell slightly to 4.9 percent. However, most of the new jobs came from sectors with low productivity.

"Almost half of the new jobs come from sectors with lower productivity levels such as agriculture and accommodation/food services. On the other hand, higher skilled sectors such as financial services, are stagnant or contracting," wrote the World Bank report quoted Friday, June 12.

The World Bank also highlighted the increasing number of half-unemployed, which is a condition when workers get less working hours than expected.

Since 2022, this figure has continued to increase and now reaches 32.7 percent, and this condition is considered to reflect the weakness of the quality of jobs available in the Indonesian labor market.

On the other hand, the real wages of workers with medium and high skills have continued to decline by around 1-2 percent per year since 2018, and as a result, the number of workers who are able to earn middle-class equivalent income has shrunk drastically, from 14.5 percent in 2018 to around 7 percent in 2025.

According to the World Bank, this condition is influenced by the limited formal employment with decent income, coupled with the weakening of purchasing power due to a decline in real wages, and the situation encourages some middle-class groups to fall into the vulnerable poor group.

In addition, the World Bank assessed that this trend shows structural problems in the Indonesian economy, even though new jobs continue to be created, the number of productive and high-wage jobs is still not enough to support social mobility and increase the middle class.