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. There are almost 55 million skilled workers in the Indonesian economy. According to experts, Indonesia will become the seventh-largest economy in the world by 2030. At that time, around 71% of the population will contribute nearly 86% of the country’s GDP. Despite these facts, there are nevertheless job differences in Indonesia’s job market depending on the location in which one searches for a job. 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 educational achievements of the people. Highly educated people can find a job quickly and earn suitable income. Firms are also more likely to lay off less educated and unskilled workers. The pattern of labor force distribution across different regions is a significant factor that contributes to the unequal distribution in Indonesia’s job market.
Thus, people who have lower educational qualifications do not make particularly significant contributions towards economic growth. This in turn leads to varying rates of unemployment in various regions. Major cities such as Jakarta and Denpasar are the primary contributors towards the Indonesian GDP when compared to other areas of Indonesia because Jakarta is the economic and political capital of Indonesia while Denpasar is the largest city of Bali, a popular tourist destination. In the Denpasar area, a large number of people working there are expatriates; in terms of proportion, there are many more expatriates working in Denpasar than there are in Jakarta. There are more skilled and white-collar job workers in Jakarta and Denpasar as compared to other Indonesian cities.
Differences in Unemployment Rates Across Indonesia
The unemployment rates are different in various parts of Indonesia because of the growth of one or two regions as compared to the country as a whole. Although the year 2019 has seen a fall in the unemployment rate because of the employment of people in the trade sector, there are sectors such as fishery, agriculture, and manufacturing which have faced difficulties.
The unemployment rate is high in rural areas when compared to that of urban areas because of educational differences. Vocational high school graduates and diploma holders mainly contribute towards the unemployed workforce in parts of Indonesia other than Bali and Jakarta. While the trade and food & beverage industries have increased their employment rates, the agriculture and fishery industries as well as government sectors have experienced a decline in employment rates.
The International Labor Organization (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 which are present in Indonesia as well as salary differences in Indonesia’s job market.