Indonesia's Job Market: Employment Confidence Index Falls

Bank Indonesia (BI) regularly measures public optimism about economic conditions through its Consumer Survey. One of the indicators used is the Employment Opportunity Index (IKLK), which reflects public perception of the chances of finding a job. Throughout the first half of 2026, IKLK moved as follows.

Technically, a value above 100 still falls within the optimistic zone. However, by June 2026 the gap between IKLK and the pessimistic threshold had grown quite thin. Even though the index didn't decline every single month, since it strengthened briefly in April 2026, the overall trend still points to weakening. Since reaching its peak in February 2026, IKLK has fallen 8.9 points over a four-month span (Bank Indonesia, 2026a; 2026b).

BI's breakdown also shows that this weakening perception isn't felt evenly. In June 2026, respondents with a bachelor's degree (IKLK 109.0) and those with an academy/diploma education (101.2) were still in the optimistic zone. Meanwhile, other education groups had already moved into the pessimistic zone. By age group, respondents above 41 years old had also shown a pessimistic attitude toward job availability (Bank Indonesia, 2026b).

This finding aligns with a statement from the Deputy Minister of Manpower, Afriansyah Noor, who considers the decline in public confidence about jobs a reasonable condition amid global geopolitical pressure. According to him, the surge in energy prices and imported raw material costs has raised production costs, which in turn affects employment conditions (quoted in Kompas.com, 2026).

This picture is also reinforced by employment data, though several figures need to be distinguished by source. Official data from the Ministry of Manpower's Satudata platform recorded 32,389 workers laid off from January to June 2026, with West Java as the province with the highest number of layoffs, at 6,727 cases or 20.77% of the national total (Bisnis.com, 2026; Kementerian Ketenagakerjaan Republik Indonesia, 2026). On a monthly basis, the number of layoffs in this official data actually shows a declining trend, from 7,692 cases in February to 588 cases in June (Bisnis.com, 2026).

Beyond this official data, the Head of the Ministry of Manpower's Agency for Manpower Planning and Development (Barenbang), Anwar Sanusi, offered an estimate that the number of layoff cases through June 2026 could reach around 43,000. He also named manufacturing as one of the biggest contributors to layoffs nationally (Tempo.co, 2026). Separately, the President's Special Advisor for Manpower and Worker Welfare, Said Iqbal, said the actual number of layoffs on the ground is likely higher than the official data, since not all companies report layoff cases to their regional manpower offices (Detik.com, 2026).

Overall, these various indicators show that public perception of job opportunities is indeed weakening, even though the actual scale of layoffs still depends on which data source is used.

Amid this weakening perception of job availability, a different signal appears when looking at demand for certain skills, particularly in artificial intelligence (AI).

One indicator that can be used to observe this development comes from the Artificial Intelligence Index Report 2025, published by Stanford HAI. However, before looking at the results, two things need to be kept in mind. First, the data used comes from LinkedIn, not a labor force census, so it doesn't represent Indonesia's entire workforce. Second, Stanford HAI explicitly notes that Indonesia is among the countries with relatively low LinkedIn membership coverage compared to the size of its workforce, alongside Hungary, India, and South Korea. Because of this, findings for these countries need to be interpreted with caution (Stanford HAI, 2025).

Based on Figure 4.2.18 in the Artificial Intelligence Index Report 2025, Indonesia's AI talent concentration grew 191% over 2016 to 2024. AI talent concentration here refers to the proportion of LinkedIn members who list at least two AI skills and/or who are currently or previously worked in an AI-related job. In the report, Indonesia ranked 10th out of 15 countries shown in a sample of 48 countries.

This finding shows that the proportion of LinkedIn members in Indonesia with AI-related skills or work experience grew fairly rapidly over that period. However, the 191% figure doesn't mean the absolute number of Indonesian AI workers increased by 191%. What's being measured is the growth in concentration, or proportion, of AI talent within LinkedIn's user base.

Methodology note

This article uses the Artificial Intelligence Index Report 2025 because the LinkedIn-based AI talent concentration metric is no longer presented in the 2026 edition. In the newest edition, Stanford HAI switched to using Lightcast data with a different measurement approach, so results from the two editions cannot be directly compared.

This shift is also visible in another source using the same methodology, the LinkedIn Grad Guide 2025. According to that report, the three fastest-growing career paths for university graduates in Indonesia during the period January 2022 to December 2024 were AI Engineer, Security Operations Center Analyst, and Environmental Health Safety Specialist (Jakarta Globe, 2025).

At the same time, the report also noted that the number of job openings available per applicant in Indonesia fell 11% within a year, from March 2024 to March 2025 (Jakarta Globe, 2025).

These two findings, from the same source and methodology, show that the weakening job market isn't happening uniformly. Amid an overall decline in job opportunities, demand for certain skills keeps growing. In other words, the current challenge in the job market isn't just about the number of jobs available, but also about the shift in the types of competencies increasingly required by industry.

In this context, the growth in AI talent doesn't necessarily contradict the weakening of IKLK. Both describe two sides of the same shift: overall job opportunities are becoming more competitive, while demand for certain skills, such as AI, keeps rising. That said, the job base in the AI sector itself is likely still relatively small compared to the scale of Indonesia's workforce, which reaches tens of millions of people. Because of this, a high percentage growth rate isn't necessarily enough to offset the weakening of job opportunities in much larger sectors.

If demand for AI talent keeps rising, the next question is whether Indonesia is ready to meet that demand. So far, the answer is not entirely yet.

The East Ventures-Digital Competitiveness Index (EV-DCI) 2026 report, compiled together with Katadata Insight Center, shows that digital competitiveness improved in 37 of 38 provinces, with the median score rising from 38.8 in 2025 to 42.2 in 2026. Behind this improvement lies one important note. The digital human resources (HR) pillar was the only component that declined in EV-DCI 2026, dropping by 2.5 points (East Ventures, 2026). The gap between regions also remains fairly wide. The digital HR score in Java is roughly 2.3 times higher than in Sumatra and Kalimantan, and nearly three times higher than in Maluku and Papua (East Ventures, 2026).

This finding shows that the progress of technology adoption and digital infrastructure hasn't been fully matched by improvements in the quality or the even distribution of digital talent. This condition doesn't explain what's causing IKLK to weaken, but it does offer a picture of Indonesia's readiness, in terms of talent supply, to meet the shifting skill demands of the job market.

On the ecosystem side, investment in Indonesia's AI sector also continues to grow. According to an East Ventures (2025) report on investment opportunities for AI-based startups, total investment in this sector reached US$542.9 million, or around Rp8.6 trillion, through 2024, up 141.5% compared to 2020.

The government and the private sector have also begun expanding various AI talent development initiatives. Komdigi and Microsoft launched elevAIte Indonesia in December 2024, with a target of equipping one million talents with AI skills. Within eight months, the program had already exceeded its target, reaching 1.2 million participants (Microsoft News Center Indonesia, 2024). Entering its second year, the program was renamed Microsoft Elevate, with a target of training 500,000 certified AI talents by 2026, focusing on educators, nonprofit leaders, and community organizers (Microsoft News Source Asia, 2026).

In addition, Komdigi is also running the Digital Talent Scholarship (DTS) 2025 program, targeting 100,000 graduates across various training tracks, including AI, cybersecurity, cloud computing, and coding throughout the year (Kompas.com, 2025).

A weakening IKLK doesn't mean job opportunities across Indonesia are shrinking evenly. Various data show that demand for certain skills, including AI, keeps rising even as the job market overall is tightening. In other words, the change taking place isn't only about the number of jobs available, but also about the type of skills increasingly required by industry.

Going forward, Indonesia's challenge doesn't lie solely in producing more AI talent. Just as important is making sure demand for these skills can expand more broadly and evenly, so it can open up more job opportunities across different regions and sectors.

References

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Bank Indonesia. (2026b). Survei konsumen: Juni 2026. https://www.bi.go.id/id/publikasi/laporan/Documents/SK-Juni-2026.pdf

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Detik.com. (2026, July 17). 32.389 orang kena PHK sepanjang Januari-Juni! https://finance.detik.com/berita-ekonomi-bisnis/d-8579454/32-389-orang-kena-phk-sepanjang-januari-juni

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