Indonesia has set an ambitious target to create between 2.57 million and 3.49 million new jobs in 2027 as the government seeks to counter a sluggish labor market and boost economic growth. The goal, disclosed by Finance Minister Purbaya Yudhi Sadewa during a meeting with the House Budget Committee on August 27, is part of broader efforts to raise the proportion of formal employment from 37.95% in 2026 to 40.81% in the 2027 State Budget draft.
The government aims for 6% economic growth next year, supported by fiscal and monetary policies as well as strategic investments facilitated by the state asset fund Danantra, officials said. Manpower Minister Yassierli also pledged to support the job creation agenda through expanded internship programs and vocational training.
Despite the optimistic outlook, business groups and economists view the target as challenging. The Indonesian Employers Association (Apindo) described the goal as "quite ambitious" but feasible if economic expansion encourages greater investment, particularly in labor-intensive industries. Apindo chairwoman Shinta Kamdani highlighted the importance of boosting industrialization, especially in manufacturing, which currently employs 61% of its workforce formally. She emphasized the need to improve competitiveness by addressing Indonesia’s ongoing "high-cost economy," including logistics, energy, financing, and compliance burdens.
Shinta also pointed to concerns about regulatory instability, which complicates business planning and investment decisions. She called for comprehensive reforms, including legal certainty through a new Manpower Law, and policies aimed at supporting sectors with high employment absorption capacity. Emerging industries in the services, digital economy, and green transition sectors are also seen as potential job generators, though obstacles remain in translating growth into productivity and quality employment.
Economic researcher Yusuf Rendy Manilet from the Centre of Reform on Economics (CORE) suggested that while reaching the lower bound of 2.57 million new jobs could be realistic, the upper target appears more difficult. Based on recent employment data, Indonesia added approximately 1.9 million workers over the past year, and with employment elasticity relative to economic growth estimated at 0.25, the current 6% growth target is projected to create around 2.2 million new jobs. To meet the 3.49 million target, higher economic growth and improved labor absorption in sectors such as manufacturing would be necessary.
Manilet noted that recent growth has been driven by capital-intensive sectors like mineral downstreaming and commodities, which generate limited employment despite high investment levels. He advocated for reviving labor-intensive industries, reducing costs related to energy and logistics, protecting local businesses from unfair imports, and easing access to working capital. Adjusting fiscal incentives to favor investments with strong job creation potential was also recommended.
Meanwhile, I Dewa Gede Karma Wisana, head of the University of Indonesia’s Demographic Institute, expressed reservations about the quality of jobs likely to be created. He warned that current business pressures make it difficult to ensure that new employment opportunities meet standards for decent and sustainable work. Wisana stressed that expanding labor demand through legal certainty and business growth is crucial to providing quality jobs for the growing workforce.
As Indonesia navigates these challenges, the government’s ability to implement reforms and foster a more conducive investment climate will be critical to meeting its employment targets while improving job quality and formalization.