Indonesia’s Labor Absorption Slows, BI Survey Shows

Indonesia’s Labor Absorption Slows, BI Survey Shows

Indonesia s Labor Absorption Slows BI Survey – According to the most recent Business Activity Survey by Bank Indonesia (BI), employment expansion in Indonesia decelerated during the second quarter of 2026. The survey revealed a net weighted balance (SBT) of 0.14% for job creation, marking a decline from the 0.28% recorded in the previous quarter.

Industry-Specific Employment Trends

Despite the overall slowdown, certain sectors showed resilience. The Mining and Quarrying industry reported a positive SBT of 0.26%, while the Construction sector contributed with a 0.07% increase. These gains aligned with improved business activity in those fields.

“Several business sectors recorded increases, particularly the Mining and Quarrying sector (SBT 0.26 percent) and the Construction sector (SBT 0.07 percent), in line with improved business activity,” Bank Indonesia noted in its report cited on Sunday, July 19.

Wholesale and Retail Trade, as well as the Repair of Motor Vehicles and Motorcycles sector, also saw employment growth. The latter recorded a net SBT of 0.27%, driven by the expansion of vehicle dealerships and showrooms. Meanwhile, the Financial Services sector contributed a 0.29% rise, attributed to the opening of new branch offices.

Manufacturing Sector Sees Sharpest Decline

The Manufacturing sector faced the most significant drop in labor absorption, with a reported SBT of -0.54%. This decline contrasted with the 0.23% positive growth in the Agriculture, Forestry, and Fisheries sector.

The Government Administration, Defense, and Mandatory Social Security sector also recorded a contraction, with an SBT of -0.14%, adding to the challenges in the labor market.

Employment Outlook Improves in Third Quarter

Looking ahead, BI’s survey indicates a more optimistic outlook for employment in the third quarter of 2026. Businesses anticipate a rise in labor absorption, with an expected SBT of 0.95%. This improvement is projected to stem from the Agriculture, Forestry, and Fisheries sector, which is anticipated to contribute a 0.06% growth due to the harvest season for horticultural and plantation products.

Other sectors set to support employment growth include Accommodation and Food and Beverage Service Activities (SBT 0.08%) and Real Estate (SBT 0.12%). The Manufacturing sector is also expected to rebound slightly, though it remains in contraction, with an estimated SBT of -0.14% for the quarter.

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