Key insights

• VAT Reversal and Economic Strategy

  • 🎯 The government reversed a planned VAT increase to 12% due to public discontent.
  • 🎯 Manufacturing sector struggles contribute to low middle-class job opportunities.
  • 🎯 Youth protests demand good jobs and education, highlighting government policies affecting youth welfare.

• Government Response to Economic Challenges

  • 📉 President Prabowo's administration faces backlash over education budget cuts.
  • 📉 Economic measures include a $28 billion free meals program and tax exemptions for small businesses.
  • 📉 Concerns about job losses due to automation and AI highlight the need for the middle class to adapt.

• Economic Industrialization and Poverty

  • 📉 Industrialization aims to leverage natural resources for economic growth but hasn't created quality middle-class jobs.
  • 📉 The growth of the aspiring middle class raises concerns about rising poverty levels.
  • 📉 Julian did not vote for Prabowo but hopes the new president will effectively address public aspirations.

• Mismatch in Labor Skills

  • 🔄 Educated youths are expected to strengthen the middle class upon entering the workforce.
  • 🔄 The mismatch of skills and labor market needs is a significant challenge for young job seekers.
  • 🔄 Manufacturing jobs have been declining since 2019, contributing to lower middle-class job opportunities.
  • 🔄 Indonesia has shifted to a commodity-based economy, limiting job growth.

• Challenges for Young Graduates

  • 📉 High unemployment among recent graduates is over 20%.
  • 📉 Julian Reihandika represents concerns of young job seekers in Indonesia.
  • 📉 Lack of support and security nets leads many to sell assets.

• Economic Impact of the Pandemic

  • 💔 The pandemic severely impacted Indonesia's economy, with 2020 seeing a GDP dip of 2.07%.
  • 💔 Unemployment rose to over 7%, the highest since 2011.
  • 💔 A significant portion of the workforce is in the informal sector (59.11% in 2023).
  • 💔 Average savings in Indonesian bank accounts are low (only 14 million rupiah), putting the middle class at risk during crises.

• Decreased Purchasing Power

  • 📉 Recent surveys show nearly half of middle class respondents report a decline in purchasing power.
  • 📉 85% attribute this decline to rising prices for essentials: food, energy, and transport.
  • 📉 Individuals like Medy reduce spending due to financial burdens from mortgages and new taxes.
  • 📉 Dini, a freelance content producer, faces debt and financial struggles post-pandemic despite returning to work.

• Declining Middle Class

  • 📉 Indonesia's middle class has shrunk from 60 million in 2018 to 48.4 million in 2024.
  • 📉 Individuals like Medy Soemarto are adapting to new economic realities as ride-hailing drivers due to economic pressures.
  • 📉 Only a fifth of the population is considered middle class, highlighting economic disparities.

Q&A

• What is the significance of the recent presidential election for the middle class? 🗳️

  The recent presidential election holds significant importance for the middle class as it raises hopes for policies that can effectively address their needs, especially in education and job creation. With a large portion of the electorate being younger voters, the aspirations for improved job opportunities and economic conditions are paramount for addressing growing economic disparities in the country.

• What are the long-term implications for the middle class in Indonesia? 🌏

  The long-term implications for the middle class in Indonesia are concerning, as ongoing economic challenges including job stagnation in manufacturing, potential impacts from global trade wars, and rising living costs threaten their economic stability. Achieving the government's vision of becoming a top economy by 2045 will require meaningful investments in job creation and support for the middle class.

• How does the quality of economic growth relate to poverty reduction in Indonesia? 📉

  While industrialization efforts, such as nickel processing, have boosted economic growth, they have not significantly contributed to the creation of quality middle-class jobs. There is a critical need for high-value manufacturing investments for effective poverty reduction, and rising aspirations for middle-class status among Indonesians highlight the growing economic concerns.

• What measures is the Indonesian government taking to support the middle class? 🎯

  The Indonesian government has introduced several measures to support the middle class, including reversing a planned VAT increase to alleviate public discontent, implementing a free meals program worth $28 billion, and offering tax exemptions for small businesses. However, ongoing job losses due to automation and AI remain a pressing concern that requires continued attention.

• What challenges do young graduates face in today's Indonesian job market? 🔄

  Young graduates face significant challenges due to a mismatch between their skills and the labor market needs. With high unemployment rates, particularly among recent graduates exceeding 20%, the decline of manufacturing jobs since 2019 has resulted in fewer opportunities for stable, middle-class employment. This is compounded by the shift towards a commodity-based economy which limits job creation in these sectors.

• What are the financial struggles faced by individuals like Medy and Dini? 📉

  Individuals like Medy and Dini are grappling with financial burdens stemming from rising living costs. Medy has transitioned to working as a ride-hailing driver, while Dini, a freelance content producer, experiences job instability and debt despite returning to work. Many middle-class families are reducing their spending on non-essential goods and struggling to manage mortgages and taxes.

• How has the pandemic affected middle-class workers in Indonesia? 💔

  The pandemic severely impacted the economy, leading many middle-class workers to turn to informal jobs and depleting their savings. Although there been a slight recovery, many remain vulnerable, facing challenges such as increased debt and limited job opportunities in the formal sector. The unemployment rate spiked, reaching over 7%, which is the highest since 2011.

• What is causing the decline of Indonesia's middle class? 📉

  The decline of Indonesia's middle class can be attributed to various economic challenges, including rising costs of essential goods, decreased purchasing power, and the aftermath of the COVID-19 pandemic, which led to high unemployment rates and financial insecurity. The number of middle-class individuals has dropped from 60 million in 2018 to 48.4 million in 2024.

• 00:03 Indonesia's middle class is declining, having lost about 10 million members in the last five years, with individuals like Medy Soemarto adapting to new economic realities as ride-hailing drivers. 📉
• 06:10 The shrinking Indonesian middle class is experiencing decreased purchasing power due to rising costs of essential goods, leading to tighter spending. This trend raises concerns despite economic growth, as individuals like Medy and Dini face financial burdens and increased debt. 📉
• 14:39 The pandemic severely impacted Indonesia's economy, particularly hitting the middle class hard, with many turning to informal jobs and draining their savings to survive. The unemployment rate increased, and while there's a slight recovery, many remain vulnerable due to limited savings. 💔
• 18:54 The diminishing middle class in Indonesia, exacerbated by COVID-19, is leading to reduced purchasing power and increased unemployment, particularly among young graduates, raising concerns for their future. 📉
• 24:36 The mismatch between educated youths' skills and the labor market needs, along with the decline of manufacturing jobs in Indonesia, poses challenges for the middle class. The country is shifting towards a commodity-based economy, which limits job creation, although efforts are being made to boost industrialization. 🔄
• 28:26 Exploring Indonesia's economic industrialization reveals a disconnect between resource growth and poverty reduction. While nickel processing has boosted the economy, it hasn't created quality middle-class jobs, highlighting the need for high-value manufacturing investments. The growing number of individuals aspiring to the middle class raises concerns about rising poverty levels. With the recent presidential election, the hopes are high for addressing these issues effectively. 📉
• 32:57 After 100 days in office, President Prabowo faces protests over education budget cuts while retrenched professionals seek support through Move On Game On. The government implements measures to improve economic conditions for the middle class amid rising job losses due to automation and AI. 📉
• 38:38 The Indonesian government reversed a planned VAT increase to support public sentiment, while facing challenges like manufacturing stagnation and potential impacts from global trade wars, which threaten middle-class job opportunities as the country aims for economic growth by 2045. 🎯