Indonesia moves up economically, but middle class faces job pressure
Thekabarnews.com—Indonesia has officially entered the upper-middle-income bracket. This is a major turning point in its economic development. But there are signs more recently that employment in the...
Thekabarnews.com—Indonesia has officially entered the upper-middle-income bracket. This is a major turning point in its economic development. But there are signs more recently that employment in the formal sector is starting to slow, particularly for the middle class. As a result, the situation raises questions about whether this progress is sustainable.
Susiwijono Moegiarso, secretary to the coordinating economy minister, said Indonesia’s current position is still at the lower limit of the upper-middle-income category.
“The country’s average gross domestic product (GDP) per capita is about US$5,083 per year, still far from the high-income threshold of about US$14,000,” he said.
The portal uses the World Bank data. Based on that data, the monthly level of expenses is generally used to determine the middle class. Indonesia’s middle class spends Rp2 million to Rp9.9 million a month. Meanwhile, the “aspiring middle class” has monthly expenses ranging from Rp870,000 to Rp2 million.
“Yes, Indonesia is now in the upper-middle income category, but we are still at the lowest level in that group. That’s a big challenge if we want to get closer to high-income status,” he said during a presentation in Jakarta, Wednesday, April 15.
The middle class has shrunk in size even as it moved to a higher income classification during the pandemic. Before the pandemic, the middle class was around 21.5 percent of the population. That has since dropped to about 17 percent.
However, the middle-class aspirant share has seen a marginal increase (from 48 percent to about 49.2 percent). Together these two groups now comprise about 66.3 percent of Indonesia’s population, or about 185 million people.
Economists say the sector is vital for boosting domestic consumption, which makes up around 54–55 percent of the economy. Therefore, any variation in the size or purchasing power of this segment can have major implications for economic growth.
The decreasing availability of formal jobs could erode middle-class families’ financial security and perhaps dampen consumption and upward mobility. The trend indicates the significance of job creation, particularly in those areas that offer stable and well-paying jobs.
Indonesia’s progress to upper-middle-income status is commendable, but experts say structural challenges remain. Improving the labor market, productivity, and the growth of high-quality jobs will be a precondition to sustaining growth. In addition, it will be necessary to advance to a high-income status.
The state of the middle class will be a key indicator of Indonesia’s long-term development and resilience. This will matter as the country navigates its economic transformation.
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