However, the reality on the ground tells a more complex, and concerning, story.

A rising wave of layoffs and the persistent expansion of informal and precarious jobs suggest that headline figures alone are no longer sufficient to understand the state of Indonesia’s labor market.

In early 2025, over 18,000 workers were laid off, twice the number from the same period last year. Despite a slight increase in the number of unemployed persons, the unemployment rate fell due to a significant rise in the labor force. With more than 153 million people now classified as economically active and over 7 million unemployed, the rate has technically declined.

But does this represent genuine labor market improvement?

The answer lies in how “employment” is defined. According to International Labour Organization (ILO) standards, anyone who worked at least one hour in the previous week for pay or profit is considered employed.

This broad classification includes a large portion of Indonesia’s informal sector, freelancers, street vendors, online sellers, gig workers, and unpaid family members. While this approach captures labor activity, it can also overstate employment levels while concealing deteriorating job quality.