Regional Differences in Indonesia’s Job Market

5 min read|Last Updated: January 18, 2023|
What’s in this article

Indonesia is home to the 16th-largest economy in the world. Approximately 53% of the population produces nearly 74% of the gross domestic product (GDP) of the country. Despite these facts, there are nevertheless job differences in Indonesia’s job market depending on the specific location. The main reasons for such differences are differences in educational qualifications as well as the provision of education in cities and rural areas.

Regional job market differences are affected by the people’s educational achievements. Highly educated people can find a well-paid job quickly and firms are also more likely to lay off less educated and unskilled workers. The pattern of labour force distribution across different regions is a significant contributor to the unequal distribution in Indonesia’s job market.

Thus, people with lower educational qualifications do not make significant contributions towards economic growth. This in turn leads to varying rates of unemployment in various regions. The 2 major cities that are the primary contributors towards the Indonesian GDP are:

  • 1. Jakarta – economic and political capital of Indonesia
  • 2. Denpasar – largest city of Bali and popular tourist site

Differences in Unemployment Rates Across Indonesia’s Job Market

The unemployment rates are different in various region of Indonesia because of the growth of one or two regions as compared to the others. Although the year 2022 has seen a fall in the unemployment rate because of the employment of people in the trade sector have faced difficulties, there are sectors such as:

  • Fishery
  • Agriculture
  • Manufacturing

While the trade and food & beverage industries have increased their employment rates, the agriculture and fishery industries have experienced a decline in employment rates. There is also a higher unemployment rate in rural areas compared to urban areas because of educational differences. Vocational high school graduates and diploma holders mainly contribute towards the unemployed workforce in parts of Indonesia.

The International Labour Organisation (ILO) has issued statements and reports in which it has asked the government to increase the employment rate in all of Indonesia’s regions that are willing to work. This will reduce regional inequalities and salary differences in the Indonesia’s job market.

Most In-Demand Jobs in Indonesia’s Job Market

Indonesia’s job market is uneven across its various regions. Skill-based jobs are mostly in demand in most of the regions across Indonesia. People are seen moving from rural jobs related to agriculture and fishery to careers in the cities. In fact, most of the rural-based workforce are also moving towards the palm oil industry because Indonesia is the world’s largest producer of palm oil.

Indonesia’s job market is uneven across its various regions. Skill-based jobs are mostly in demand in most of the regions across Indonesia. People are seen moving from rural jobs related to agriculture and fishery to careers in the cities. In fact, most of the rural-based workforce are also moving towards the palm oil industry because Indonesia is the world’s largest producer of palm oil.

Most In-Demand Jobs in Indonesia’s Job Market

Many Indonesians as well as foreigners are employed in the tourism sector, particularly in Bali as it is a famous tourist destination. They are also employed in state-owned enterprises as they pay well and also have significant allowances. Those who pass a government-administered test may claim a job in such enterprises.

High demand jobs across Indonesia’s Job market especially in Jakarta and Denpasar includes:

  • Accounting jobs
  • Finance jobs
  • Marketing jobs

Other jobs which attract many Indonesians who have the requisite educational qualifications are those of:

  • IT expert
  • Journalist
  • Doctor
  • Accountant
  • Nurse
  • Editor
  • Customer service representatives

On the other hand, many of those who do not have requisite educational qualifications choose to work lower-income jobs abroad. These people mostly come from low-income rural areas. The less educated people who remain in Indonesia to work often take up jobs such as:

  • Hawker
  • Waiter or Waitress
  • Factory worker
  • Others

Government’s Role to Reduce Employment Inequality Between Various Regions in Indonesia’s Job Market

The unemployment rates differ across various regions in Indonesia because of education and living standards. However, the government of Indonesia is taking concrete measures to reduce this employment inequality. Many of the government’s agencies have devised strategies to provide equal services to both people in urban and rural areas.

By providing educational subsidies and conditional cash transfers, the Indonesian government has assisted the strengthening of social programs. They also used the money it has received through taxes for the reduction of income inequality as well as providing immediate services for the educational and health sectors that helps promote job opportunities and skill-based jobs in the Indonesia’s Job Market.

Besides, the government also plans to reduce the gender gap when distributing wages to workers so that everyone there can lead a high-quality life in Indonesia.

Conclusion

Indonesia’s economy has seen significant changes, especially in the agricultural sector and trade industry. Although there are fundamental regional differences in the Indonesia’s job market and unemployment rates of the country, these differences have been reduces by the government. The country has seen significant growth due to changes made in industries such as:

  • Mining
  • Petroleum
  • Natural gas
  • Rubber
  • Automotive

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Regional Differences in Indonesia’s Job Market FAQs

Which industries of Indonesia employ the most foreigners?2020-04-02T15:12:45+08:00

Due to ongoing stringent rules in Indonesia, the employment rates for foreigners are not particularly high in Indonesia. Nevertheless, there are many rules in place with relate to foreigners in various jobs. For example, all foreigners must be able to speak and read Indonesian before they may enter Indonesia’s job market. Foreigners also ought to learn about basic Indonesian ways of life before entering any of various jobs in Indonesia.

The main sectors which employ foreigners enter are those in tourism, IT, education, and trade. The wood and rubber industries also employ many foreigners. Many expatriates in Indonesia work in foreign companies mainly located in Java, Bali, and Sumatra.

Many foreign investors have been investing in the domestic Indonesian industries because the demand for local products has been on the rise. They also often invest in the exporting and importing of products. Exports and imports are carried out through the largest seaport in Indonesia: the Port of Jakarta. Thus, many foreigners work in the export industry.

Other industries which employ many foreigners include the automotive, chemical, electronics, and engineering industries.

Are there any similarities between each region’s respective job markets?2020-04-02T15:12:15+08:00

The job market in each region of Indonesia contains certain similarities. Common industries in all regions of Indonesia include agriculture, fishery, tourism, petroleum, natural gas, forestry, and mining. However, significant changes occurred after the year 1990. At this point, clear differences between each region’s job market began to set in, particularly regarding shifts in the agricultural sector and service sector.

Sumatra provides job opportunities in petroleum, mining, and agriculture. Sumatra’s primary mined products are gold, silver, and coal, while its leading agricultural products are rubber, coffee, palm oil, tea, tobacco, corn, and rice. North Sulawesi’s job market is also primarily agriculture-based. The main products that come from that region are sugar cane, rice, coffee, coconuts, and nutmeg.

The job market of Java is much more diverse because of its economic prosperity and large population. Industries which are prominent in Java include agriculture, forestry, fishery, livestock, mining, hydrocarbons, and automotive. Leading industries in Kalimantan, meanwhile, include agriculture and fishery.

Which regions of Indonesia contribute the most to the country’s economy?2020-04-02T15:11:14+08:00

The islands of Java and Bali are the primary contributors to the Indonesian economy. The Greater Jakarta area is in Java. Java is the country’s most populous island, with 60% of the Indonesian population residing on the island. It contributes more than 58% of the nation’s total economic production. Bali provides nearly 28%, Sumatra 23.9%, and Kalimantan 8.73%.

The reason Java, Bali, Sumatra, and Kalimantan contribute more towards the national economy is that they are closer to foreign countries such as Malaysia and Singapore. Jakarta and Bali also have many foreign companies and popular domestic brands. Bali is also a well-known tourist destination that also makes it a significant contributor to the country’s economy. The islands of Java, Sumatra, and Kalimantan are also major contributor to the country’s palm oil industry, making these regions essential contributors towards the Indonesian economy.

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