Nandito Putra, Jakarta – Yusuf Rendy from the Center of Reform on Economics (CORE) said Indonesia's declining open unemployment rate (TPT) to 4.68 percent does not necessarily reflect an improvement in the labor market. Instead, he described it as a paradox amid ongoing layoffs across multiple industries.
The Central Statistics Agency (BPS) recorded that the unemployment rate in February 2026 fell by 0.08 percentage points compared to the same period last year. However, Yusuf argued the decline is too marginal to be interpreted as a meaningful labor market recovery.
"Layoffs are still occurring in various sectors, from textiles, electronics, and media to mining. So there is a paradox that needs to be explained," Yusuf said on Thursday, May 7, 2026.
Methodology limits behind the numbers
Yusuf pointed to the way BPS measures employment as a key issue. Under its definition, a person is considered employed if they have worked at least one hour in the past week.
This means workers who have been laid off but still take occasional informal jobs – such as online ride-hailing, small trading, or helping family businesses – are still counted as employed.
"However, in terms of income and economic stability, their condition could be far worse than when they were formally employed," he said.
He added that the unemployment rate only captures job availability, not job quality. As a result, it fails to reflect shifts from formal to informal work, declines in income stability, or transitions from full-time to part-time employment.
Rising informalisation of the labour market
According to Yusuf, Indonesia's labour market is showing increasing signs of informalisation, with informal employment growing faster than formal jobs.
At the same time, the agricultural sector has again become the largest absorber of labour, while the manufacturing sector weakens.
"This is not a sign of healthy economic transformation, but rather an indication that many workers are stuck in low-productivity sectors due to limited formal job opportunities," he said.
He also noted that manufacturing activity remains under pressure, as reflected in the Manufacturing Purchasing Managers' Index (PMI), which has stayed in contraction territory. Many companies continue to cut costs and delay new hiring.
Weak job quality despite lower unemployment
Yusuf said the decline in unemployment is more likely driven by the informal sector's ability to absorb economic pressure, rather than the creation of stable, decent jobs.
He urged the government not to rely solely on the open unemployment rate when assessing labour market conditions.
Indicators such as underemployment, the share of informal workers, real wage growth, and manufacturing performance, he said, provide a more accurate picture of labour market health.
"The main issue in Indonesia's labour market today is not merely whether jobs exist, but the declining quality of those jobs," Yusuf said.
Earlier, BPS reported that Indonesia's working-age population reached 219.54 million in February 2026, up 2.753 million year-on-year. This includes 64.63 million people outside the labour force, an increase of 891,000.
The labour force stood at 154.91 million, rising by 1.862 million people. Of that number, 147.67 million were employed, an annual increase of 1.896 million.
Meanwhile, the number of unemployed stood at 7.24 million, down by 35,000 compared to February 2025.
– Alfitria Nefi Pratiwi contributed to the writing of this article.
Source: https://en.tempo.co/read/2102388/indonesias-lower-unemployment-rate-masks-a-weak-job-marke