The unemployment rate of Indonesia is forecast to ease to 6.03 percent (7.24 million people) in 2014 from 6.25 percent (7.39 million people) in August 2013. The Indonesian government expects a reduction in the unemployment rate as the country's economic growth is assumed to grow strongly and thus will provide more job opportunities for Indonesians next year. Various institutions, including the IMF, World Bank and the Indonesian government, expect Indonesia's GDP growth in 2014 to range between 5.3 and 6.0 percent.
|Unemployment in Indonesia
(percentage of total labor force)
Sources: World Bank and Statistics Indonesia
The Indonesian labor force is forecast to increase from 118.2 million people in August 2013 to 119.9 next year. This implies that the number of Indonesians that enter the labor force will become smaller. In 2014, an extra of 1.7 million Indonesians will search for a job, while in previous years about 2 million Indonesians per year were added to the country's labor force. This slowing growth is caused by more Indonesians pursuing education in combination with less Indonesians dropping out from school.
¹ data from August 2013
Source: Statistics Indonesia
In 2013, Indonesia's unemployment rate actually increased from 5.9 percent in March 2013 to 6.25 percent in August as the slowing economy was not able to translate to significant job creation. This was the first time since 2005 that Statistics Indonesia had to release an increased unemployment rate. A worrying sign is that job availability in the country's manufacturing sector has declined (for the first time in five years).