Indonesian Employers Sound Alarm on Youth Unemployment Crisis

Labor Market Challenges Mounting

Indonesian business leaders are drawing attention to the country's growing youth unemployment crisis, highlighting that 67% of the unemployed are young people aged 16-29. This demographic challenge is occurring alongside significant labor market pressures, with 177,000 workers having withdrawn their retirement savings due to layoffs as of October 2025.

Structural Issues in the Labor Market

The Chairman of the Labor Affairs Department at the Indonesian Employers Association (Apindo), Bob Azam, emphasized that the current labor market conditions necessitate a deeper understanding of structural challenges. He pointed out that 60% of Indonesia's workforce remains in the informal sector, while youth unemployment stands at 17% - significantly higher than the overall unemployment rate of 5%.

Economic Implications and Future Concerns

The situation is further complicated by sluggish national productivity growth, which has hovered between 1.5%-2% over the past five years. As the country prepares for potential minimum wage increases ranging from 6.5% to 10%, business leaders are urging policymakers to carefully consider these structural issues to prevent further labor market disruptions.