Indonesia faces a paradox: 18 million jobs created, yet the middle class is shrinking.
Between 2018 and 2024, 18 million new jobs were created—a remarkable achievement. Yet a closer look reveals a troubling failure: these jobs have not delivered improvements in welfare. The proportion of the population classified as middle class actually fell from 22.5% in 2018 to 17.2% in 2024.
The decline in the middle-class proportion is not merely a statistical anomaly. It reflects fundamental weaknesses in Indonesia’s growth model. Three-quarters of newly created jobs are home-based or informal: low-income and offering no social protection. Only 2.6 million positions are genuinely formal corporate jobs, while government recruitment has stagnated.
This is made more alarming by Indonesia’s poverty profile. Although the poverty rate has fallen below 10%, 24.2% of the population is still considered vulnerable, and 49.2% remain in the “aspiring middle class” category—meaning nearly three-quarters of Indonesians are not economically secure and remain exposed to shocks. Poverty in Indonesia is highly fluid: not only do families just above the poverty line easily slip back into poverty, but families in higher classes remain at risk of falling to lower ones. National Economic and Social Survey indicated that early 40% of those classified as middle class fell into the vulnerable or poor categories within just one year.
Regional Context
Are we seeing the same pattern across the region? Partly, but not universally. While Indonesia’s middle class shrank from 22.5% to 17.2%, China’s grew from 14% to nearly 40% (2012–2022) through formal employment anchored to productivity gains.
The Philippines’ middle class shrank from 43.5% to 39.8% post-COVID. Malaysia’s Middle 40 group is described as “still economically vulnerable,” with a significant share of consumption going to basic necessities.