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Pandemic reduces middle-class employment, World Bank says
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World Bank economist Maria Monica Wihardja, speaking at an online event on June 30, shares insight from a new World Bank report on employment in Indonesia. (World Bank Twitter account/World Bank)
T
he World Bank says the share of middle-class jobs in Indonesia has shrunk due to the COVID-19 pandemic, while more people now make ends meet in agriculture.
The bank defines middle-class jobs as those that allow people to afford a middle-class way of living that requires Rp 3.75 million (US$258) a month. The share of these jobs declined by 5.2 percentage points to 10.2 percent in August 2020 from a year earlier.
“Indonesia’s structural transformation toward higher-quality jobs could be threatened if this trend is not reversed,” World Bank economist Maria Monica Wihardja said at an online event on Wednesday.
“Although today’s jobs have largely been successful in drawing Indonesians out of poverty, they’re still unable to lead them to the middle class,” she noted, sharing insight from a World Bank report published on Wednesday: Pathways to Middle-Class Jobs in Indonesia.
The report comes at a time when Indonesia is on the brink of falling back to the World Bank’s lower-middle income country classification following its first annual economic contraction last year since the Asian financial crisis. The archipelagic country had moved up to the upper-middle income category just last year.
Read also: Indonesia was briefly an upper middle-income country. Then came the pandemic.
Monica said Indonesia was struggling to create more middle-class jobs partly because the structural transformation that had taken place had not brought about enough additional productivity. Too few workers had moved to productive sectors, and those who had, often had insufficient productivity.
