Gap between Informal Reality and Formal Statistics? Analysis of (Un)employment in Indonesia

However, Indonesia’s Statistical Agency (Badan Pusat Statistik, BPS) announced that the unemployment rate of Indonesia continued to ease, which –sort of– clashes with the perception of many. And so, it is interesting to delve a bit deeper into this topic.

Reports about Layoffs in Indonesia

For example, during a hearing with members of the House of Representatives' (DPR) Commission XI (which oversees labor, social security and health affairs) in early May 2025, Indonesian Manpower Minister Yassierli stated that over 24,000 Indonesian workers have been laid off in the first five months of 2025, with hardest-hit sectors being manufacturing (particularly textiles, garments and footwear), wholesale and retail trade, and services (including hotels, hospitals and media).

A few weeks later, Indah Anggoro Putri, the Director General of Industrial Relations and Social Security at the Manpower Ministry, raised that number to nearly 26,500 layoffs (so far in 2025), with Central Java, Jakarta and Riau seeing most layoffs.

However, the Indonesian Employers Association (Apindo) reported a much higher number, with a total of nearly 74,000 layoffs having occurred in Indonesia between 1 January and 10 March 2025, alone. This high number is based on membership data taken from the Social Security Agency for Employment (BPJS Ketenagakerjaan).

Meanwhile, Muhammad Zuhri, Chair of the Supervisory Board at the Social Security Agency, warned that potentially layoffs in Indonesia in full 2025 could reach as high as 280,000.

If we look at the factors behind these layoffs, then the following matters play a role:

• Global economic slowdown; weakening global demand and growing economic uncertainty are impacting on Indonesian (export) industries.
• Trade tensions; US-China trade tensions and (looming) new US import tariffs are putting pressure on domestic industries. US-China trade tensions (which have existed since the late-2010s) encourage China to boost exports of goods to non-US countries (Indonesia being a good candidate as it has a huge internal market and is not too far away from China).
• Increased imports; specific government regulations (such as the relaxation of import restrictions and deregulation measures) have facilitated the arrival of imported goods, thereby increasing competition for local industries.
• Company losses and closures; some companies are facing financial difficulties, leading to closures and layoffs (for example textile manufacturer Sritex).
• Relocation of businesses; some companies are relocating the production bases to other countries, as they are in search of a more favourable investment and business environment.
• Technological advancements & automation; adoption of advanced technology is reducing the need for manual labour in certain industries. For example, car component manufacturer Astra Otoparts was reported to be imposing robotic automation in some of its production lines while automated packaging, sorting and processing systems are also becoming common in the food and beverage industry to improve speed, hygiene and efficiency.

[...]

These are the first couple of pages of the article (which covers 19 pages in total). This article discusses various matters including:

• The methodology of BPS to calculate the unemployment rate;
• Part-time and underemployment in Indonesia;
• Sectors absorbing most employment;
• Education level of those who are employed;

The full article is available in our May 2025 report. Want to order this report? It (an electronic report, PDF, in English) can be ordered by contacting us through email and/or WhatsApp:

- info@indonesia-investments.com
- +62(0)882.9875.1125

Price of this report:

Rp 150,000 (or equivalent in other currencies)

Take a glance inside the report here!

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