Indonesia Faces Rising Underemployment Among Youth

Jakarta – The Institute for Research on Economics and Society, faculty of Economics and Business, University of Indonesia (LPEM FEB UI) has highlighted the growing issue of underemployment among young people in Indonesia. This phenomenon, also known as underutilization of labor, describes a situation where individuals are not working to their full potential.

LPEM FEB UI emphasizes that many young Indonesians are working short hours, earning low wages, and holding positions that don’t fully utilize their skills and education. This isn’t a matter of choice, but rather a reflection of limited opportunities.

A recent Labor Market Brief (Volume 6, number 10, October 2025) report from LPEM FEB UI points to a paradox in the Indonesian job market: despite a decline in open unemployment rates as the pandemic, the quality of available jobs hasn’t seen a corresponding advancement. This situation is particularly prevalent in the informal and rural sectors, and disproportionately affects young people and those with lower levels of education.

“To many policymakers, this looks like a signal that the economic recovery is starting to find its way. But are we really on the road to a healthy jobs market?” asked researchers Muhammad hanri, PhD and Nia Kurnia Sholihah, ME in their report, as quoted on Saturday (November 8, 2025).

What is Underemployment or Semi-Unemployment?

Underemployment describes individuals who are employed but only have access to limited work hours each week. It also includes workers with specific qualifications and skills who are forced to accept positions in the informal sector, characterized by low wages and job insecurity.

“They are not categorized as unemployed, because they technically have jobs. On the other hand, they have not been fully absorbed by the job market,” the researchers explained in their report.

Underemployment indicator

Statistics Indonesia (BPS) measures underemployment using two key indicators. The first is the number of people working less than 35 hours per week who desire additional working hours. The second is those working part-time not by personal preference, but due to a lack of option employment options.

“Why is this important? Because underemployment indicates the quality of work available.”