Unemployment Dynamics in the Indonesian Economy

Abstract

This study examines the dynamics of unemployment in Indonesia by addressing the paradox whereby the Open Unemployment Rate (OUR) declines while the absolute number of unemployed individuals continues to increase, and by analysing its implications for social inequality. Adopting a qualitative phenomenological design, the study explores the lived experiences of unemployed individuals to capture the multidimensional consequences of unemployment in psychological, social, and economic terms. Primary data were obtained through in-depth interviews, field observations, and documentation, while secondary data were drawn from official sources, including the National Labor Force Survey (Sakernas) published by BPS, layoff statistics from the Ministry of Manpower, and relevant scholarly literature. The findings indicate that although the OUR fell to 4.76% in February 2025, the absolute number of unemployed rose to 7.28 million, signalling persistent structural pressures within the labour market driven by layoffs and labour force expansion. Drawing on Max Weber’s theory of social stratification, the study finds that unemployment constrains not only economic opportunities, but also social status and access to power. These conditions deepen inequalities in education, healthcare, and economic participation, while also reinforcing stigma, stress, and social exclusion. The study advocates the use of dual unemployment indicators and calls for more inclusive labour policies that integrate vocational training, targeted social assistance, and psychosocial support.