Bank Mandiri: Improvement of the Labor Market Needs to Be Driven by Upskilling and Reskilling

Bank Mandiri (Bank Mandiri)

JAKARTA - The improvement in the condition of the Indonesian labor market, which is marked by a decrease in the unemployment rate and a shrinking share of informal workers, is considered to contribute significantly to strengthening the national economic structure.

To maintain this positive trend, strengthening the link (link and match) between the world of education and industry needs is a crucial factor in improving the quality of labor growth.

The Bank Mandiri economic team through the Mandiri Institute assessed that the acceleration of improvement of the labor market should be focused on increasing the alignment of graduates' competencies with the needs of the business sector.

This strategy is considered important so that economic acceleration is supported by productive and relevant human resources.

Bank Mandiri Chief Economist Andry Asmoro said that Indonesia's Open Unemployment Rate (TPT) fell to 4.85 percent in August 2025, or decreased by 6 basis points compared to the same period last year.

Meanwhile, the proportion of informal workers decreased to 57.8 percent in 2025 from 58 percent in 2024, reflecting the improvement in the quality of post-pandemic employment opportunities.

However, the Mandiri Institute study shows that there is still room for improvement in the aspect of compatibility between the level of education and the type of work.

Mismatch occurs when workers have higher (overeducated) or lower (undereducated/unqualified) qualifications than the job requirements, which has the potential to hinder productivity and wage growth.

"The decline in the TPT and the reduced proportion of informal workers shows that our labor market is moving in a healthier and more resilient direction. However, to ensure that this improvement is sustainable, the quality of job creation must be further supported by the appropriateness between the competencies of the workforce and the needs of the business sector," said Asmo, a nickname for Andry Asmoro in his statement, Monday, February 16.

Based on the analysis of data from the National Labor Force Survey (Sakernas) of the Central Statistics Agency (BPS), one in two workers in Indonesia still experiences vertical mismatch.

Meanwhile, in 2025, the vertical mismatch rate was recorded at 50 percent, slightly improved compared to 51 percent in 2023.

Mismatch is mainly dominated by the undereducated/unqualified group which reaches 32 percent of the total workers, in line with the composition of the workforce with an equivalent education of elementary school or lower which is still around 33 percent.

Sectorally, the highest level of non-compliance was found in the water procurement and agriculture sectors.

In the water procurement sector, the mismatch is more caused by overeducated workers, while in the agricultural sector, the dominance of undereducated workers reflects the need for improving skills quality.

Meanwhile, the government administration and financial services sectors recorded a relatively high proportion of overeducated workers, influenced by the attractiveness of stability and incentives in the formal sector.

This condition emphasizes the importance of strengthening the labor placement ecosystem so that the competence of graduates can be absorbed more optimally.

Asmo emphasized that employment policies need to be directed at improving the quality of job creation through close synergy between education, industry, and government.

"Strengthening the link and match, expanding the upskilling and reskilling programs based on sector needs, and refining interventions in priority areas will form sustainable advantages in the structure of the national labor market," he added.

As a strategic partner of the government, Bank Mandiri also supports the strengthening of the labor market through various competency development programs that are relevant to industry needs, including participation in the National Internship Program as a means of structured learning for new graduates.

In addition, Bank Mandiri continues to strengthen collaboration with the education sector to improve the quality of human resources. This commitment is carried out through various initiatives that encourage the improvement of the quality of education and strengthen the readiness of future talent that is in line with industry needs.

In the future, the Bank Mandiri economic team considers the consolidation of data-based policies and the strengthening of cross-sector collaboration to be the key to accelerating the increase in labor productivity.

Asmo said that with this step, the improvement in the labor market that has been achieved is expected to be translated into inclusive, competitive, and sustainable economic growth.