When villages quietly carry the national economy
Factories were supposed to build Indonesia’s modern workforce. But as industrial job growth stalls, village spending, not factory floors, is keeping the economy afloat.
When factories in Indonesia failed to build a modern workforce, villages quietly took on the role of sustaining the nation's economy. Despite industrial job growth stalling, village spending has become crucial in keeping the economy afloat. For decades, the factory floor was the expected destination for economic growth, with agriculture seen as a place where people would eventually leave behind.
However, this narrative has changed, and the economy is now charting a different path. While conventional benchmarks show robust industrial performance, the labor market reveals a stark contrast. Manufacturing employed only 13% of the total workforce in 2025, while agriculture, forestry, and fisheries still employed 42.5 million workers, accounting for nearly 29% of all employment.
This imbalance highlights a structural feature of modern growth: manufacturing has become significantly more productive without absorbing a proportionate amount of labor. Economists refer to this as jobless growth, where output increases but head counts remain flat. With capacity utilization remaining below full production throughout 2025, factories do not require millions of new workers to expand output.
Consequently, the surplus labor finds its way into village spending, quietly carrying the national economy.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
