Indonesia’s labour market showed continued resilience in August 2025, with unemployment edging down and wages rising modestly, according to data from Statistics Indonesia (BPS).
The national unemployment rate fell slightly to 4.85%, down by 0.06 percentage points from August 2024, showing another year of gradual recovery in the job market. BPS data shows that the total labour force reached 154 million, up 1.89 million from the previous year while employment rose by 1.90 million to 146.54 million people.
“The decline in unemployment reflects steady absorption of workers, particularly in the agriculture and services sectors,” the report noted.
Formal Jobs Grow, Informal Sector Still Dominant
Formal employment continued its gradual rise, with 61.84 million people (42.2%) engaged in formal work up 0.15 percentage points from 2024. The informal sector however, still accounts for the majority of Indonesia’s workforce at 57.8%.
The agriculture, forestry and fishing sector remained the country’s largest employer, absorbing 28.15% of the workforce, followed by wholesale and retail trade (18.73%) and manufacturing (13.86%). The hospitality and food service industry recorded one of the highest employment increases, adding 420,000 new workers year-on-year.
Youth Unemployment Persists
While the overall jobless rate declined, youth unemployment (ages 15–24) remained high at 16.89%, far above the national average. Urban unemployment stood at 5.75%, compared to 3.47% in rural areas.
Average Wages Rise to Rp3.33 Million
Nationwide, the average monthly wage in Indonesia rose by 1.94% to Rp3.33 million (USD 213), up from Rp3.27 million (USD 210) a year earlier.
Men continued to earn more than women, receiving Rp3.59 million (USD 230) compared to Rp2.86 million (USD 183), a gap that highlights ongoing inequality in earnings.
Across industries, the information and communication sector offered the highest average pay at Rp5.28 million (USD 338), while other service activities recorded the lowest average wage at Rp1.97 million (USD 126).
Education also played a major role in wage differences. Employees with university degrees earned around Rp4.80 million (USD 308) per month more than twice the average salary of workers with only primary school education, who earned about Rp2.19 million (USD 140).
By Region and Age
Across provinces, the highest average wages were recorded in Jakarta at Rp5.9 million (around USD 378) and Kepulauan Riau at Rp4.8 million (around USD 308). Meanwhile, several eastern provinces such as Lampung and Nusa Tenggara reported some of the lowest averages, typically between Rp2.5–2.7 million (USD 160–175) per month.
By age, employees aged 50–54 years earned the most at Rp3.92 million (USD 251), reflecting greater experience and seniority while younger workers aged 15–19 years earned just over Rp2 million (USD 128) on average, often entry-level or part-time roles.
Overall, the data points to a steady but modest improvement in Indonesia’s employment landscape, with wage growth slightly outpacing inflation and a continued shift toward more formal jobs. However, the report underscores lingering challenges in youth employment, gender pay disparity, and the dominance of informal work areas that policymakers are expected to prioritize in 2026 labour reforms.
Shahriena Shukri is a journalist covering business and economic news in Malaysia, providing insights on market trends, corporate developments, and financial policies. More about Shahriena Shukri.
