Indonesia’s Open Unemployment Rate Drops to 4.75% as Informal Sector Continues to Dominate

JAKARTA, Investortrust.id — Indonesia’s labor market registered gradual improvement in August 2026, supported by broader domestic economic expansion, according to official data released by the Central Statistics Agency (BPS) on Thursday.

The nationwide open unemployment rate fell to 4.75% in August 2026, down 0.10 percentage points from 4.85% recorded in August 2025. BPS Deputy for Balance Sheets and Statistical Analysis Moh. Edy Mahmud reported that the total number of unemployed individuals stood at 7.38 million, contracting by roughly 77,000 people compared to the previous year.

“In August 2026, there were 7.38 million unemployed persons, equivalent to an open unemployment rate of 4.75 percent. This figure is lower compared to 4.85 percent recorded in August 2025,” Mahmud said during a press briefing at the BPS headquarters in Jakarta.

Indonesia’s total labor force reached 155.37 million people in August 2026. Of that total, 147.99 million were categorized as employed, marking an increase of 1.44 million working citizens entering the economic fold compared to August 2025.

The modest decline provides a timely snapshot of an economy outpacing regional growth forecasts, yet it underscores a persistent structural vulnerability: nearly 58% of the country’s 148 million-strong workforce remains trapped in precarious informal jobs. While headline joblessness is retreating, the figures reveal that Southeast Asia’s largest economy continues to struggle with generating high-productivity, formal-sector employment capable of lifting households into the middle class.

Agriculture Anchors Jobs Amid Stubborn Informal Dominance

Across economic sectors, agriculture retained its position as the country's primary employment engine, absorbing 28.20% of the total working population. The wholesale and retail trade sector ranked second, employing 17.86% of workers, while manufacturing accounted for 13.75%.

Despite overall employment gains, structural vulnerabilities persist in the composition of Indonesia’s job market. The share of informal workers edged up to 57.93% in August 2026 from 57.80% in August 2025, underscoring that a majority of working Indonesians remain dependent on informal arrangements characterized by lower job security and limited social protections.

Conversely, the proportion of formal workers softened marginally to 42.07% from 42.20%. In absolute terms, however, the formal workforce expanded by 410,000 individuals, climbing from 61.84 million in August 2025 to 62.25 million in August 2026.

Working Hours and Underemployment Dynamics

Applying International Labour Organization (ILO) standards—which classify anyone working at least one hour during the reference week as employed—BPS divided the working population into full-time workers, part-time workers, and the underemployed.

Full-time workers, defined as individuals working at least 35 hours per week, accounted for the vast majority of the employed population at 67.47%, or 99.85 million people.

Part-time workers, who work fewer than 35 hours per week but are neither seeking nor available for additional work, comprised 23.85% of the workforce, or 35.29 million people. Meanwhile, the underemployed—those working fewer than 35 hours per week who are actively looking for or available to take on more work—stood at 12.84 million people, representing 8.68% of total employed citizens.