Indonesia targets up to 3.5 million jobs in 2027, but businesses warn of hurdles

Indonesia is targeting more than three million new jobs in 2027, a goal employers and economists have called ambitious given a labour market that has been slow to absorb new entrants.

Finance Minister Purbaya Yuddhi Sadewa told the House Budget Committee (Banggar) that the government is aiming to create between 2.57 million and 3.49 million jobs next year. The 2027 State Budget draft also introduces the share of formal employment as a development indicator, with the proportion set to rise from 37.95% this year to 40.81%. Purbaya said the accompanying 6% growth target would be pursued through fiscal and monetary policy, and by pushing the state asset fund Danantara towards strategic investments. Manpower Minister Yassierli said his ministry would back the target through internship programmes and vocational education.

The Indonesian Employers Association (Apindo) described the goal as attainable if growth translates into business expansion and investment in the real sector. But its chairwoman, Shinta Kamdani, said that the harder task was creating decent work on a sustained basis, with two million to four million people entering the workforce each year and the employment structure still weighted towards informal work.

Manufacturing, she argued, should be the focus, citing its formal employment rate of 61%. Jobs are also emerging in services, accommodation and food and beverage, the digital economy, and industries tied to the green transition, though Shinta said it remained unclear whether growth in those areas would translate into higher productivity, better workforce skills, and more formal jobs.

Employers, meanwhile, continue to contend with what Shinta called Indonesia’s high-cost economy, spanning logistics, energy, financing and compliance, alongside regulatory changes frequent enough to complicate medium- and long-term budgeting. “At the end of the day, these factors will affect organisations’ decisions to increase investment and recruit new talent,” she said. Apindo has called for parallel reforms, including a Manpower Law geared towards competitiveness and job creation, simpler licensing, and policies that support labour-intensive sectors most exposed to rising production costs.

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The arithmetic drew scrutiny from the Centre of Reform Economics (CORE). Researcher Yusuf Rendy Manilet said that the lower bound of the target was relatively realistic, while the upper bound was not, noting that Indonesia added only 1.9 million employees between February 2025 and February 2026. With an employment elasticity of roughly 0.25, he calculated that 6% growth would yield around 2.2 million jobs; reaching 3.49 million would require an elasticity of 0.36 to 0.4. Growth, he said, is increasingly driven by capital-intensive activity such as mineral downstreaming, where investment is large but labour absorption is limited.

I Dewa Gede Karma Wisana, Head of the University of Indonesia’s Demographic Institute, questioned whether the jobs created would be good ones, and said the deeper constraint was demand for labour. Without large-scale or labour-intensive enterprises that can use the skills already in the workforce, he said, quality opportunities would remain scarce, reported The Jakarta Post.

Indonesia’s ability to turn growth into jobs – and jobs into decent, formal work – will be among the questions in play at CHRO Series Indonesia, part of HRM Asia’s CHRO Series, taking place at Park Hyatt Jakarta from 29 September to 1 October 2026. Held under the theme Beyond Jakarta: Unlocking the Workforce Engine of an Archipelagic Economy, the programme brings senior HR leaders together around the practical side of that challenge: aligning cost discipline with talent investment, closing the skills gaps holding organisations back, and planning for a workforce spread across a vast and unevenly developed archipelago.

Registration is open at https://chroseries.com/country/indonesia/.