Decreased Unemployment Rate Doesn't Mean Showing Prosperous Communities

Informal workers put the goods sent into a truck at one of the expedition services in the Tanah Abang area, Jakarta. (ANTARA/Reno Esnir/wpa/am)

JAKARTA President Prabowo Subianto claims Indonesia's unemployment percentage has dropped to its lowest level since the 1998 crisis. However, a number of observers said Prabowo's statement was different from the reality on the ground.

This statement was conveyed by Prabowo during a speech at the Annual Session of the People's Consultative Assembly (MPR) and the Joint Session of the House of Representatives (DPR) and the Regional Representative Council (DPD) on Friday (15/8/2025).

"Alhamdulillah, today the national unemployment rate has managed to drop to its lowest level since the 1998 crisis," said Prabowo.

Prabowo's statement refers to the results of the National Labor Force Survey released by the Central Statistics Agency (BPS). From this data, the open unemployment rate (TPT) in February 2025 was 4.76 percent, down 0.06 percent compared to the same period in 2024. In comparison, at the peak of the 1998 crisis, the unemployment rate was recorded at 5.46 percent.

However, Prabowo's claim was again evacuated by a number of observers, because it was considered not in accordance with the facts on the ground. Moreover, the chairman of the Gerindra Party still uses the BPS problematic indicator in defining work.

In a state speech at the MPR/DPR Building last week, President Prabowo Subianto linked the national unemployment rate to the establishment of Danantara, the Investment Management Agency that manages assets of more than US$1 trillion to open millions of jobs, especially in the downstream sector.

However, Director of the Center of Economic and Law Studies (CELIOS) Bhima Yudhistira assessed that Prabowo's claim regarding the lowest national unemployment rate since the 1998 crisis needs to be seen more deeply.

He assessed that the quality of investment that absorbs labor has actually decreased in the past decade.

"Each IDR 1 trillion investment in 2025 absorbs less labor than 2015. So, claims for reducing unemployment cannot be considered a success if it is not accompanied by improvements in the quality of investment," said Bhima.

: Work seekers visit the Bekasi Job Fair job vacancy exchange Must Work 2025 at the President University Convention Center Jababeka, Tuesday (27/5/2025). (ANTARA/Pradita Kurniawan Syah)

Bhima assessed that the relationship between the decline in TPT and the existence of Danantara is not yet relevant. In addition, Bhima also highlighted the governance of the Danantara, ranging from project selection transparency to low public participation.

The Antara is still in the transition phase and project offerings. In fact, several strategic projects such as downstream agriculture and the opening of new rice fields are hampered, one of which is due to funding problems in the Antara," he said.

It is unclear whether project selection is based on employment absorption, availability of financing, or sustainability. If Danantara chooses a project that has minimal labor absorption, the impact will be significant on the state budget," said Bhima.

Furthermore, Bhima emphasized, using BPS data to show the decline in unemployment in Indonesia is irrelevant. Recently, CelIOS also reported BPS to the United Nations because the agency was considered to have issued inaccurate economic growth data. The economic research institute and independent law urged the United Nations to invest in BPS.

Returning to the unemployment rate that Prabowo claims, according to Bhima, the data should be confronted with other indicators to then be able to explain the reality on the ground.

Some of these indicators, among others, are data that the majority of Indonesia's workforce currently works in informal sectors with the absence of social protection, small wages, but longer working hours.

"The government should not use macro claims. This makes the lowest unemployment claim since 1998 questionable because it must be confronted with various other labor indicators," said Bhima.

Meanwhile, labor observer from the National Research and Innovation Agency (BRIN) El Bram Apriyanto believes that the method of calculating the unemployment rate used by BPS, which is then quoted by Prabowo, has limited indicators, problems, and is unable to describe the reality of society.

One indicator of the problem with BPS is defining someone who works at least one hour a week into the working community group and is not unemployed.

"If someone only works an hour a week, can it meet the needs of life?" said Bram.

This definition, Bram continued, is in line with the 94 International of Labour Statisticians (ICLS) ILO which was agreed upon in 1982. But this definition is too old, over 40 years old.

Definition of working at least one hour a week can be used for statistical purposes and facilitates global comparison. However, if this definition is used to interpret the welfare of the community, then it is irrelevant.

To understand the previous labor conditions, according to Bram, the government needs to look at other indicators such as the underemployment level or half unemployment, which shows that a person works but the income is insufficient. The condition of thisunderemployment itself is not classified by BPS as unemployment.

In addition, the government also needs to look at the number of informal jobs; median wages compared to the minimum wage; what percentage of workers have contracts; the number of workers who have registered social security; and how quality of life they live.

"This is the limitation of the TPT (Open Unemployment Rate) indicator. The TPT number can go down, but not immediately means that welfare will improve. Other indicators are needed," said Bram.

"Just saying that the unemployment rate has not automatically decreased, the people are more prosperous," he concluded.