Indonesia Labor Market

In Indonesia, employees have the right to organize themselves, but trade union activities are sometimes counteracted by employers. The state sets a minimum wage every year, but it is often the case that employers do not follow it. Trade unions have the right to negotiate collectively. The right to strike applies, with the exception of certain professional groups, such as teachers and civil servants. Child labor is prohibited, but occurs.

More than one in three Indonesians of working age are in agriculture, while about one fifth of the workforce is found in industry. Others work in the growing service sector, for example with tourism and trade.

Nowadays, relatively few people in working-age age lack jobs, but until 2010, Indonesia was plagued by long-term, high unemployment and extensive underemployment.

Many Indonesians lost their jobs during the economic crisis of 1997-1998, mainly in the construction and finance sectors and the manufacturing industry. Open unemployment was just under 10 percent during the first decade of the 2000s, to have fallen below 5 percent at the end of the 2010s. However, analyzes show that a large part of the new jobs have been created in the low-paid service sector.

The proportion of underemployed persons remains high, according to some data, close to one third of the workforce. Women and adolescents are particularly hard hit. Many Indonesians support themselves in the informal (black) sector of the economy with, for example, street sales or shoe repair.

  • COUNTRYAAH: List of key population facts of Indonesia, covering most basic population data, religion statistics, and language profiles.

Indonesia Population

Millions of Indonesians have chosen to look for work abroad, mainly in the Middle East, Malaysia, Taiwan and Hong Kong. Nearly three million Indonesians have legal jobs abroad, while many more lack work permits. It appears that these guest workers are treated poorly by their employers.

Until the fall of President Suharto in 1998, only the government-controlled trade union KSPSI (Confederacy Serikat Pekerja Seluruh Indonesia) was allowed. It was not until 1990 that it was allowed to strike. Following pressure from the United States in 1994, some improvements were made in the labor market, for example, the minimum wage was increased, collective wage negotiations at the individual workplaces became permissible and the military’s powers to dissolve strikes were limited.

The Indonesian labor union for prosperity (Confederacy Serikat Buruh Sejahtera Indonesia, KSBSI) was formed in 1993, but its leader was persecuted by the Suharto regime and only after Suharto’s fall was it approved. Many new trade unions have emerged since then and the trade union movement has grown in strength and influence.



4.4 percent (2019)

Youth Unemployment

16.1 percent (2019)



Hundreds of dead in tsunami

December 22

The Anak Krakatoa volcano in the strait between Sumatra and Java is experiencing a major outbreak, sending a tsunami to the west coast of Java and the southern end of Sumatra. The death toll is around 426, while the number of injured exceeds 7,000. Nearly 1,300 homes are destroyed by the flood and around 40,000 people are evacuated, many of whom are homeless. The area is not covered by Indonesia’s tsunami warning system.

Massages on construction workers

December 7

A separatist group, the West Papua National Liberation Army (TPNPB), is blaming a massacre carried out in Nduga on some 20 Indonesian construction workers. According to the military, 16 dead bodies are found at the workplace. The workers were employed by a state company that builds roads and bridges in Papua. Some Papuans oppose the Indonesian state’s development plans for Papua as they feel they are a way to increase control over the province.

Demonstrations for an independent Papua

1 December

Proponents of an independent Papua demonstrate at several locations around Indonesia on December 1, a date that many Papuans believe should be Papua Independence Day. Around 500 people are arrested during the demonstrations.


Protest against execution of guest workers

October 29th

Indonesian domestic worker Tuti Tursilawati is executed in Saudi Arabia, seven years after she was convicted of murdering her employer. Indonesia submits a protest note that neither the homeland nor its relatives were notified. The Indonesian herself claimed that she took the life of the employer in self-defense because she was subjected to a rape attempt. In 2015, when two Indonesian domestic workers were executed in Saudi Arabia, Indonesia put a stop to new guest worker contracts in 21 countries in the Middle East. The rules have recently been softened, but may now be tightened again.

The World Bank offers loans

October 14

The World Bank offers Indonesia up to a billion dollars in loans for the reconstruction following the earthquake / tsunami at Sulawesi and other natural disasters (over 550 people died during the summer when a series of earthquakes hit the islands of Lombok and Sumbawa).

The search for survivors is interrupted

October 11

The Indonesian authorities are interrupting the search for survivors in Palu and its environs, where thousands of people are feared to be buried in the masses after the earthquake and tsunami (see September 2018). The official death toll now exceeds 2,000.


Thousands dead in natural disaster at Sulawesi

September 28

An earthquake (7.5 on the Richter scale) with a subsequent tsunami strikes Palu on Sulawesi, creating havoc in the city and its environs. The death toll soon rises to around 2,000, while up to 5,000 are reported missing. Rescuers are fighting against the clock to find survivors. Soon it is forced to start digging mass graves because of the risk of contagion. Entire villages are explained as mass graves. The government is calling for international aid, and the UN is asking its member states for just over $ 50 million in immediate relief to the disaster area. About 200,000 people are estimated to need food, clean water, blankets and tents. The UN estimates that 65,000 private homes have been damaged to varying degrees, of which 10,000 have been totally destroyed by the tsunami and 15,000 have been destroyed by the earthquake. Around 700,000 people have in some way been affected by the natural disaster.

The electoral movement begins

September 23

The electoral movement will start before the presidential election on April 17, 2019, when President Widodo will again face the challenger exgeneral Prabowo Subianto. Widodo has been praised and popularized for his large infrastructure investments during his term, but he has been criticized for his economic policies, among other things, the value of rupiahn has fallen sharply. Probable electoral issues will be the economy with concern for growing foreign debt and increased foreign influence over natural resources, as well as widening class divisions and increasing ethnic and religious intolerance within the country.

Stop for new palm oil plantations

September 20

President Widodo puts a stop to the cultivation of new land for palm oil production. The ban will be valid for three years. The goal is to develop a sustainable and climate-smart palm oil production. Indonesia is the world’s largest producer of oil, which is part of everything from biscuits to shampoos and cosmetics. Palm oil plantations in Sumatra, Papua and Kalimantan have grown uncontrollably in recent years in line with rapidly growing demand. This has given big profits to companies and good tax revenue to the state. But the price has been high – destroyed tropical forests and huge forest fires with toxic smoke development throughout the region.


Conservative scribe becomes Widodo’s couple horse in the election

10th August

President Widodo elects the conservative Muslim priest Ma’ruf Amin as his vice presidential candidate. The election is believed to strengthen Widodo among conservative voters, but it may scare away the more progressive. Amin leads Indonesia’s ulama council, which has the power to issue fatwor (religious injunctions) and has some influence over political decisions concerning Islam. Amin was one of the key figures behind the imprisonment of Jakarta’s former governor, Christian Basuki Purnama, for blasphemy 2017. He has made several negative statements about minority groups, including LGBT people.


PDI supports Subianto in the 2019 presidential election

31 July

PDI announces that it will support Gerinda’s candidate Prabowo Subianto in the April 2019 presidential election, making Subianto likely to be the main challenger to President Widodo, who is running for re-election.

IS-loyal network Jad is banned

31 July

Indonesian extremist network Jemaah Ansharut Daulah (Jad) is banned by a court. Jad has sworn allegiance to the Islamic State (IS) and has been behind a number of serious terrorist attacks, including in Jakarta (see January 2016) and Surabaya (see May 2018). The ban means that the police are given increased powers in their search for the network. Jad was formed in 2015 and consists of about 25 groups who all swore allegiance to IS leader Abu Bakr al-Baghdadi. Jad’s spiritual leader Aman Abdurrahman was sentenced to death in June 2018 for the Jakarta act in 2016. Jad is the second radical Islamist group to be declared illegal in Indonesia. In 2008, Jemaah Islamiah was banned.

The state regains control of the Grasberg mine

July 12

The government increases its ownership interest in Grasberg Gold and Copper Mine in Papua from 10 percent to 51 percent and regains control of the mine. However, American Freeport-McMoRan continues to operate the mining industry. The share purchase costs the state nearly $ 4 billion and is to be seen as part of Indonesia’s quest to regain control of its natural resources. At the same time, mining giant Rio Tinto sells its shares in the Grasberg mine, which has often been at the center of the Papuan struggle for independence as it has become a symbol of how the income from Papua’s natural resources passes the population.


Islamist leaders are sentenced to death

June 22

Muslim preacher Aman Abdurrahman is sentenced to death for committing the terrorist act in 2016 when a suicide bomber blasted himself and four other people to death inside a Starbucks cafe in Jakarta. The Islamic State (IS) took on the deed, which was the first in Southeast Asia that the Islamist terrorist group said was behind it. Aman Abdurrahman is the spiritual leader of the local extremist network Jamaah Ansharut Daulah (JAD) and is believed to be the leader of IS supporters in Indonesia. JAD is also believed to have been behind, among other things, a series of suicide bombings in Surabaya in the spring of 2018 when two families, including a nine-year-old girl and a twelve-year-old girl, blew themselves up in a church and at a police station and took 13 others to death.


Attacks against the Sumatra police

May 16

One policeman is killed and two injured when five perpetrators hit a minibus and then attack the police with a samurai sword. The attack takes place at a police station in Riau on Sumatra, and it is unclear if the deed has links to the suicide attacks in Surabaya a few days earlier. Four of the perpetrators were shot dead by police at the scene of the attack. One manages to escape but is later arrested. According to unconfirmed media data, one of the men must have worn a belt with explosives.

Families carry out the death in Surabaya

May 16

The suicide bombing in Surabaya is being carried out by three families, all of whom belong to the same Koran study group, the police report. One of the fathers is a member of the extreme Islamist group Jad.

Motorcycle attack against police headquarters

May 14

About 10 people, including several police, are injured near four perpetrators on two motorcycles driving straight towards a police headquarters in Surabaya. The four perpetrators are killed. An eight-year-old child sitting on one of the motorcycles is injured and taken to hospital.

Suicide bombing against churches in Surabaya

May 13th

Twenty-five people are killed (including 13 suicide bombers) and dozens injured when a four-child family (mother, father, two daughters and two sons) conduct suicide attacks against three churches in Surabaya. The attacks are made in the middle of the mass. The family is a member of the local extreme Islamist group Jad (Jamaah Ansharut Daulah), who sympathizes with the Islamic State (IS). Later in the evening, three people are killed and two injured, all from the same family, when a bomb explodes in a high-rise building in the same city. IS takes on the blame for the attacks on the churches, but no one takes on the apartment murders.


The former president is sentenced to 15 years in prison for bribery

April 24

Former Speaker of the Parliament, Setya Novanto from Golkar’s top tier, is sentenced to 15 years in prison and fines for bribery and embezzlement. Novanto is convicted of receiving the equivalent of millions of dollars in bribes in connection with the introduction of a national system of electronic ID documents (see November 2017). Novanto is also to play a key role when $ 170 million was forfeited from the state ID card project.

Nine years in prison for terrorist acts

April 9

A 38-year-old man is sentenced to nine years in prison for lying behind two concerted blasts in Jakarta in May 2017 in which three police officers were killed and dozens of people injured. The convicted man used to make radical sermons in a mosque that the two suicide bombers often visited. The man says during the trial that he had no knowledge that a suicide attack was planned. In 2011, the man was sentenced to prison for making explosive charges intended for use in terrorist acts. The convicted is believed to have been a student of the radical imam Abdurrahman, who is facing trial for another act of terror (see January 2016). Abdurrahman is suspected to be the leader of an Islamist group with links to the Islamic State (IS).


Disrespect for politicians becomes punishable

March 15th

A new law comes into force that makes it criminal to criticize politicians at the national level. Under the so-called MD3 law, anyone who is “disrespectful to Parliament and its members” can be prosecuted and sentenced to prison. However, the law does not specify a minimum and maximum limit for the prison sentence. The law was passed by the lower house (MPR) as early as February, but President Widodo has refused to sign it. The president has no veto power, but he has requested that the law be tried by the Constitutional Court, a process that can take months. A series of demonstrations are being held around the country in protest of the law, which many view as a setback for democracy. Critics wonder what “disrespect” means and warn that people are at risk of being arrested and prosecuted arbitrarily, for example, for criticism of corruption.


Imprisoned for the spread of communism

January 23

An Indonesian environmental activist is sentenced to ten months in prison for spreading communism, which is illegal in the country. Heri Budiawan has been designated as the organizer of a demonstration held in protest of the opening of a new mine in East Java 2017. In conjunction with the demonstration, several participants must have had banners with the hammer and the cutter, a symbol of communism. The old law against communism is now rarely used, but can give up to twelve years in prison. Previously, it was forbidden to be a communist, but in the 1990s the law was limited to the spread of communism.

Christian man whipped in public in Aceh

January 19

A Christian Indonesia is publicly whipped outside a mosque in the city of Banda Aceh. The punishment takes place in front of a disgruntled audience, including several children, for the man selling alcohol in the province of Aceh, where whipping is permitted in accordance with Muslim Sharia law. He is the third Christian to be sentenced to whip punishment since Sharia law was introduced in Aceh from 2001, when the province was granted special status in connection with a peace agreement. This means that sharia can be applied there, even though the Muslim laws are not applied in the rest of Indonesia. The man is one of ten people, eight men and two women, who are whipped publicly after Friday prayers as punishments for crimes such as robbery, prostitution and illegal gambling. Non-Muslims in Aceh can choose to be sentenced in a Sharia court or ordinary court.

Indonesia Labor Market