Agência para o Investimento e Comércio Externo de Portugal


According to the report, middle-class jobs are high-quality jobs that allow an average Indonesian family to afford a middle-class life.


From 2009 to 2019, Indonesia created an average of 2.4 million new jobs each year. In 2019, the unemployment rate reached its lowest level in two decades, falling to 5.2 percent. Job creation at this scale has contributed to the country’s economic growth and lifted many Indonesians out of poverty while reducing their vulnerability. While 49 percent of the population was classified as poor or vulnerable to falling into poverty in 1990, by 2018 this had dropped to 30 percent. However, the COVID19 pandemic is likely to reverse some of the gains that Indonesia has benefited from the creation of jobs in the past couple of decades.


The report recommends three policy reforms for Indonesia to create middle-class jobs. The first recommendation is to accelerate across-the-board productivity growth through effective implementation of policies that unlock new firm entry and growth to create competition and innovation.    


Second, direct investment promotion strategies at sectors that are likely to create middle-class jobs, such as the manufacturing sector. Complementary support, including labor market information system and unemployment insurance to finance job search and relocation, could further help workers transition towards middle-class jobs.


The third recommendation is to facilitate learning and training across the workforce and provide tailored support to special groups, in particular women and youth. Legislative changes would also be needed to allow work-life balance and support the increased participation and success of women in the labor market.