Despite a rising employment rate, Indonesian employers continue to grapple with talent shortages, low productivity, and questionable retention practices. Indonesia’s labour force reached 153.05 million in 2025, with 145.77 million employed, a 2.52% year-on-year increase, according to Statistics Indonesia. Yet businesses remain hampered by a persistent shortage of qualified talent. While the unemployment rate dipped slightly to 4.76%, the number of unemployed individuals rose by 1.11% to 7.28 million.
A major obstacle is the education gap. Data from the Indonesian Employers Association (Apindo) reveals that 30% of companies struggle to find high-quality candidates, with only 12.66% of the workforce holding university degrees. Over 36% have no education beyond elementary school. As a result, GDP per labour force member lags behind regional peers at US$23,870.
Compounding the issue is poor employee retention. While companies call for a more dynamic labour market, many resort to regressive practices like withholding workers’ graduation certificates, triggering government intervention. The Manpower Ministry, backed by Parliament, plans to ban this practice and penalise violators through business license suspensions or fines.
HR experts, including ASPHRI chair Yosminaldi, argue that companies must offer more than paychecks. Retaining skilled talent requires better job security, transparent career paths, and meaningful training. Employers relying on a “one falls, a thousand rise” mindset risk losing Gen Z workers who seek purpose-driven employment.
With AI and digitalisation accelerating, employers are urged to bridge workforce skill gaps. As Arsjad Rasjid of the Indonesia Business Council warned, failure to upgrade workforce capabilities will only deepen hiring difficulties in the future.
Source: Asia News Network
