Lower Unemployment Must Be Accompanied by More Formal and Productive Jobs

Press Release

Jakarta, August 7, 2026

Indonesia’s open unemployment rate declined from 4.68 percent in February 2026 to 4.65 percent in May 2026. This positive development was discussed on Kompas Bisnis, with a focus on the quality and sustainability of employment in Indonesia.

According to Statistics Indonesia (BPS), the national labor force reached 155.41 million people in May 2026, consisting of 148.19 million employed individuals and 7.22 million unemployed individuals. Compared with February 2026, the number of employed people increased by approximately 522,000, while the number of unemployed people decreased by around 24,000.

The decline in unemployment indicates that the economy continues to absorb additional workers. However, the relatively modest decrease of 0.03 percentage points also shows that labor-market improvement remains gradual.

A lower unemployment rate does not automatically mean that workers have access to stable employment, adequate income, social protection, and opportunities for productivity growth. Labor-market progress must therefore be assessed through both the number and quality of jobs created.

The growing number of independent workers may reflect stronger entrepreneurial activity and greater workforce flexibility. At the same time, it may also indicate that formal employment opportunities remain limited, encouraging some workers to rely on self-employment as their primary source of income.

Independent workers require better access to financing, training, digital infrastructure, markets, and social protection. These forms of support are essential to improve productivity, income stability, and economic resilience.

Sustainable employment growth also requires stronger real-sector activity and closer alignment between workforce skills and industry needs. Labor-intensive industries, manufacturing, services, and emerging sectors must be encouraged to expand and create jobs that provide greater stability, clear career development, and higher productivity.

Improving vocational education, strengthening reskilling and upskilling programs, supporting business expansion, and maintaining a favorable investment climate are essential to translate economic growth into broader and higher-quality employment opportunities.

The success of employment policy should not be measured solely by a declining unemployment rate. A healthy labor market must create sufficient formal, productive, and sustainable jobs while providing adequate income, economic security, and opportunities for upward mobility.

Watch the full discussion on KompasTV’s YouTube channel:

https://www.youtube.com/watch?v=yVTRvHuQ61s