Jakarta. Indonesia's labor market continued to improve in 2026, with the open unemployment rate falling to 4.65%, approaching its lowest level since 1994, according to the latest data from the Central Statistics Agency (BPS).

The improvement reflects stronger labor absorption amid gains in several key macroeconomic indicators, according to Haryo Limanseto, spokesperson for the Coordinating Ministry for Economic Affairs.

“The government continues to monitor labor market developments as a key indicator of public welfare and the effectiveness of economic policies. The 4.65% unemployment rate reflects the success of various initiatives to stimulate real-sector activity and investment, helping meet labor market demand,” Haryo said.

Under the standard methodology used by the International Labour Organization (ILO) and BPS, the open unemployment rate measures the proportion of unemployed people in the total labor force.

Indonesia's unemployment rate of 4.65% in 2026 is approaching the 4.36% recorded in 1994, indicating the labor market's capacity to absorb workers despite significant growth in the country's working population, the ministry said.

Indonesia's labor force reached 155.41 million people in 2026, nearly double the 83.32 million recorded in the 1990s. Bringing unemployment close to its historical low despite the expansion of the labor force points to increased job creation and employment opportunities across economic sectors, according to the ministry.

The country's unemployment rate has fluctuated considerably over the past three decades. It climbed to 11.24% in 2005 amid weak labor absorption and domestic economic pressures following the Asian financial crisis. The rate rose again to 7.07% in 2020 during the COVID-19 pandemic.

The subsequent decline to 4.65% in 2026 reflects continued economic recovery and improvements in the competitiveness of domestic industries, the ministry said.

The government is also seeking to improve workforce quality through vocational training, upskilling programs and efforts to increase industrial capacity utilization.

“The focus is not only on keeping unemployment low, but also on ensuring quality employment that directly improves people's living standards,” Haryo said.

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