Indonesia’s unemployment rate continued to decline this year, with 7.46 million people recorded as unemployed as of August 2025, down slightly from the same period last year, according to data from Statistics Indonesia (BPS).

“The number of unemployed declined by around 4,000 people compared with August 2024,” Deputy for National Accounts and Statistical Analysis at BPS, Moh. Edy Mahmud, said during a press conference in Jakarta on Wednesday, November 5, 2025.

Edy reported that Indonesia’s total labor force reached 154 million people in the third quarter of 2025, with 146.54 million employed − an increase of 1.90 million workers from a year earlier.

Of those employed, 98.65 million are classified as full-time workers, 36.29 million as part-time workers, and 11.60 million as underemployed workers.

“The increase in employment indicates that labor absorption remains positive despite ongoing challenges in several industries,” Edy noted.

Layoffs still a major contributor

Edy cited that layoffs continue to contribute to unemployment, with 0.77 percent of total jobless individuals representing workers who had been laid off within the past year.

“These dismissals occurred across various industries, but the three sectors contributing most to layoffs are manufacturing, mining, and trade,” he said.

Despite the layoffs, Edy highlighted signs of labor market recovery, with 9.07 percent of unemployed individuals having already secured new jobs, though they had not yet started work at the time of data collection.

He also clarified that individuals who had been laid off but were in the process of starting their own businesses were still counted as unemployed.

“Those who have been accepted for a job but haven’t started working, or who plan to start a business but haven’t yet begun operations, are included in the unemployment category,” Edy said.

The modest improvement in employment reflects gradual economic recovery following several years of labor market disruptions due to global uncertainty, industry restructuring, and automation in certain sectors.

Finance Minister Purbaya Yudhi Sadewa said that while the declining jobless rate is encouraging, the high number of part-time and underemployed workers suggests that job quality remains an ongoing concern.

"A 5 percent growth rate isn't enough to absorb new entrants to the labor force each year. The unemployment rate is falling, yes, but mostly because people are working in the informal sector. That's not the kind of economy we want to build," Purbaya said at the "Gathering of 100 Indonesian Economists" forum at Menara Bank Mega in Jakarta on Tuesday, October 28, 2025.

Targeting 6.7 percent as Minimum Sustainable Growth, Purbaya suggested that Indonesia's potential growth rate is closer to 6.7 percent, the level needed to effectively absorb new workers into formal, well-paying jobs.

Economists also warn that structural challenges, such as limited high-skill employment opportunities and regional disparities in labor absorption, continue to weigh on Indonesia’s labor market outlook.

Still, the government remains optimistic that stronger investment flows, digital sector growth, and continued infrastructure expansion will sustain employment gains through the end of the year.