Economist flags informal workers’ income squeeze in Indonesia

Income growth among Indonesia’s informal workers has fallen behind inflation, weakening their purchasing power despite the economy’s expansion, senior economist Raden Pardede said. The founder of CReco Research Institute questioned whether third-quarter 2026 growth of 5.47 per cent year on year was of sufficient quality.

In remarks on the Cuap Cuap Cuan programme cited on 11 November, Raden linked the quality of economic expansion to decent formal jobs and earnings that outpace inflation. He said the informal-sector data he had reviewed showed income increases below inflation.

Raden also cited families falling out of the middle class, which he described as households with monthly incomes of Rp11 million to Rp30 million. His compiled data put the growing population approaching middle-class status at 143 million. He said those people received no social assistance but did not have sufficient income to meet their living needs.

Although Raden considered macroeconomic indicators relatively good, he said improvements were still needed at the microeconomic level, including a more even distribution of growth.

Statistics Indonesia (BPS) announced on 5 November that the economy expanded 1.59 per cent quarter on quarter in the third quarter. Annual growth of 5.47 per cent exceeded the second quarter’s 5.29 per cent but remained below the first quarter’s 5.61 per cent.

BPS deputy Moh. Edy Mahmud said GDP growth described aggregate economic conditions rather than every individual’s or group’s circumstances. Different rates of expansion across sectors could account for why some people had not experienced an improvement, he said.