The Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, stated that the middle class serves as a crucial backbone of Indonesia’s economy. The government continues to implement various measures to ensure the availability of job opportunities for this group. This effort is necessary as the middle class is currently facing multiple pressures, despite its significant contribution to the national economy.

Susiwijono emphasized that the middle class plays a vital role in supporting the economy due to its substantial contribution. However, technological disruptions such as artificial intelligence (AI), along with the shift of jobs from the formal to the informal sector—particularly in services—have increased pressure on this segment.

Data from the National Socioeconomic Survey (Susenas) shows that since 2019, the proportion of middle-class employment in the formal sector has declined. Additionally, the industrial sector, which traditionally absorbs middle-class workers, has seen its contribution drop from 25.64 percent in 2019 to 22.98 percent in 2024. Meanwhile, a survey by the Indonesian Employers Association (Apindo) revealed that 67 percent of companies in Indonesia do not plan to hire new employees in the near future.

The government is working to maintain the resilience of the middle class by creating job opportunities and protecting purchasing power. These programs are not only aimed at low-income groups but also target the middle class, given its essential role in the economy.

Furthermore, Apindo’s internal survey indicates that most companies in Indonesia are reluctant to recruit new workers. This is concerning, considering that approximately 3.5 million new job seekers enter the labor market each year. Ideally, every 1 percent of economic growth could absorb between 200,000 and 400,000 workers, particularly if investments are labor-intensive.

Apindo’s Head of Employment, Bob Azam, explained that if all investments were labor-intensive, up to 400,000 workers could be absorbed per 1 percent economic growth. However, if investments are more capital-intensive, the number could drop to around 100,000–200,000 workers. With an economic growth rate of 5 percent, only about 2 million workers would be absorbed, leaving approximately 1.5 million unemployed.

Bob also noted that around 67 percent of companies in Indonesia have no plans to recruit new employees over the next five years. This issue needs serious attention as it could negatively impact the broader economy.

He suggested that policymakers should encourage more labor-intensive investments while still accommodating capital-intensive ones. This is important because the workforce structure in Indonesia, particularly among lower- and middle-income groups, is still dominated by labor-intensive sectors. Additionally, policies should provide investment flexibility, protect workers, and remain attractive to investors to accelerate investment inflows.

Bob added that investment in labor-intensive sectors has been declining over time, even though such industries remain essential given the composition of Indonesia’s workforce, which is largely dominated by lower- and middle-income groups.