Overcoming Unemployment, Fighting Poverty: How Ready Is Indonesia To Welcome 2025?

Illustration. (Photo: Doc. Antara)

JAKARTA - In an introductory speech to the 2025 RAPBN, President Joko Widodo stated a number of important targets related to economic achievement. One of them is the government's target of the unemployment rate to 4.5-5 percent and the poverty rate to 7-8 percent. Is this target realistic?

It seems that the fundamental problem in our labor market is still untouched. How not, recently BPS stated that around 10 million members of Generation Z were unemployed or without busyness (known as NEET: not imported, in education and training).

On the other hand, around 25 million Indonesians are still living in poverty. This indicates that the possibility of both overlapping or having jobs alone does not guarantee that a person can get out of poverty.

Many community members, who even though they are already working, remain trapped in poverty due to low wages and lack of social security that makes it difficult for them to improve their standard of life. Also, most Indonesians are suspected of working in the informal sector that is not touched by labor guarantees.

This condition needs serious attention, especially in looking at the direction of Indonesia's economic development. The Center for Market Education (CME) recently released a report entitled "An Innovation Agenda for the Government of Indonesia" which also highlights the worrying early deindustrialization phenomenon.

The manufacturing sector, which has always been a mainstay in creating formal employment opportunities, continues to experience a decline in its contribution to national GDP. According to the Country Manager Center for Market Education Indonesia (CME-ID), Alfian Banjaransari, this decline has become more significant when compared to neighboring countries in ASEAN, such as Vietnam, which continues to strengthen its manufacturing sector while attracting more foreign investment (FDI).

This downward trend is also reflected in investment contributions to GDP. Although investment still contributes 29.33 percent of GDP, this downward trend indicates that Indonesia may start to lose its attractiveness in the eyes of investors. In fact, manufacturing and investment are key in creating jobs in the formal sector, which is the key to eradicating structural poverty," he said, in a written statement, Wednesday, August 21.

If the trend of deindustrialization and decline in investment continues, according to him, Indonesia risks experiencing long-term economic stagnation, which in turn will hinder the government's efforts to achieve the target of reducing unemployment and poverty.

"What will happen to Indonesia in 2045?" he said.