Indonesia labor market shows declining unemployment but rising informality

Indonesia's open unemployment rate fell to 4.75 percent in August 2026, down from 4.85 percent in the same period the previous year, according to data from the Indonesian Central Statistics Agency (BPS). While the total number of unemployed individuals reached 7.38 million, the overall workforce grew, with the number of employed people increasing by 1.44 million compared to August 2025.

Despite the drop in unemployment, BPS officials noted a concerning trend regarding job quality. The proportion of informal workers rose to 57.93 percent, while formal employment saw a slight proportional decrease to 42.07 percent. Moh Edy Mahmud, Deputy for Balance and Statistical Analysis at BPS, emphasized that increasing formal sector absorption remains a critical priority to provide better employment status for the population.

In Jakarta, the labor market shows a different trend, with formal workers dominating at 63.19 percent. However, even in the capital, the proportion of informal workers saw a slight increase from 36.63 percent in August 2025 to 36.81 percent in August 2026.