Indonesia Needs Stronger Businesses to Create More Jobs

Indonesia’s economy continues to expand, yet confidence in the labor market has weakened. The economy grew by 5.61 percent in the first quarter of 2026, while realized investment reached Rp498.8tn. During the same period, the Job Availability Index declined for three consecutive months, falling from 108.8 in April to 101.8 in June.

This gap highlights a core issue, investment alone does not guarantee job creation. Companies create jobs when they have sufficient demand, confidence in the policy environment, and a clear path to expansion. Many businesses are still managing higher operating costs, uneven consumer demand and rapid technological change. Under these conditions, retaining existing workers can be just as important as opening new positions.

Indonesia’s employment challenge therefore cannot be separated from the conditions facing businesses. Companies are more likely to invest and hire when they can plan with confidence. Predictable regulation and simpler licensing reduce delays and uncertainty, while competitive energy and logistics costs help businesses remain viable against regional competitors. Access to financing is equally important, particularly for smaller and growing firms that need capital to expand production and recruit more workers. Labor policy should protect workers while giving businesses enough flexibility to respond to changing markets and remain competitive.

Stronger businesses contribute to employment in ways that extend beyond direct hiring. Growing companies create opportunities for suppliers, distributors, contractors, and smaller enterprises across their value chains. They can also support vocational training, apprenticeships and professional certification, helping workers gain skills that reflect actual industry needs.

Their impact also extends to the communities where they operate. Support for small enterprises can strengthen local livelihoods, while investments in health, education and workforce well-being can help more people participate productively in the economy. When these efforts respond to long-term local needs, they can create more durable pathways to income and opportunity.

Closer collaboration among government, businesses and educational institutions will be essential. Training programs need to reflect the technical, digital and managerial skills that employers require, while taking into account the economic potential of each region. Better alignment between investment and workforce readiness would allow more local workers to benefit as new industries and business activities develop.

Indonesia’s growth story will ultimately be judged by whether it creates secure livelihoods and wider opportunities. Sustained growth will depend on businesses that can expand, compete, and invest in people. Without that, better jobs and shared prosperity will remain out of reach.