Companies have stopped investing, and a million graduates are out of work

Nikkei Asia, the Japanese business paper that investors across Asia read closely, has put a number on something many families already feel. About a million Indonesian university graduates are out of work, and the reason it gives is not that the graduates are unqualified. It is that companies have stopped moving. Firms are postponing investment and shelving expansion plans, so the jobs never open. Nikkei links that caution to rising regulatory uncertainty, which means a business owner cannot be confident what the rules, taxes and permits will look like in a year. When a company is unsure, it does the safe thing and waits. The new factory, the extra branch, the second production line: all of it stays on paper, and so do the jobs that would have come with it.

One of the people in the story is Ardy Pohan, a 34-year-old cameraman in Jakarta. He lost his job at a national television station and has been looking for work for about a year. Nikkei's point is that there are fewer high-skill openings in Indonesia now than there were, so experience does not help as much as it should.

The squeeze shows up in a World Bank figure the paper cites. The share of Indonesian workers earning a middle-class income fell from 14.5 per cent in 2018 to 7.1 per cent last year. That is close to half in seven years. "Middle-class income" here is a pay level rather than a lifestyle: it means the worker earns enough to cover the basics and still have something left to save or spend. Fewer people at that level means a thinner group of customers for everything beyond food, rent and transport.

Why it matters

If you are finishing a degree this year, the useful question is not which company has the best name but whether it is hiring to grow or only replacing people who left. A hiring freeze is quieter than a layoff and it lasts longer. The shrinking middle-income group also reaches anyone who sells to it, from a warung to a motorbike dealer, because the customers are still there but have less left at the end of the month.