That conversation reflects Indonesia’s economic puzzle: a young, ambitious population overflowing with potential, but a labor market that hasn’t caught up.

Indonesia is currently in the midst of a demographic sweet spot: 70 percent of its population is of working age, according to Statistics Indonesia (BPS) data. Economists call this a "demographic dividend"; that is, when a country has more workers than dependents, economic growth can accelerate. However, this dividend must be earned.

Despite its abundance of resources, Indonesia’s trajectory is increasingly uncertain. While the potential for 8 percent annual growth has been suggested, many economists see a more modest 5 percent as likely.

The key question is: Can Indonesia unlock the full promise of its demographic advantage, or will structural weaknesses hold it back?

At the heart of this dilemma is the shrinking middle class. Once hailed as the engine of Indonesia’s consumption-driven economy, this group is showing signs of strain. This segment comprises over 66 percent of the population and contributes to more than 81 percent of national consumption, according to BPS.

The World Bank notes that middle-class consumption fueled 12 percent growth in Indonesia's economy and accounts for over 50 percent of national tax revenue. However, studies by the National Research and Innovation Agency (BRIN) in 2024 revealed a concerning trend: Millions have fallen out of the middle-income bracket since 2018.