Millennials and Gen Z, who comprise over half of Indonesia’s population, are leading cultural, economic, and digital transformations in the world’s fourth-largest nation. Yet, significant challenges remain on the path to realizing their potential.
Employment challenges—marked by a persistent skills mismatch and regional inequities—and the struggle for affordable housing remain key barriers. Despite these, Indonesia’s youth continue to innovate, leveraging platforms like TikTok and Instagram to carve out new opportunities through social commerce.
In our collaborative study with Vero Advocacy, we delved into many critical areas, and the two most impactful areas turned out to be employment challenges and social commerce trends. Let’s explore actionable strategies for policymakers and brands to empower this vibrant demographic while unlocking Indonesia’s economic potential.
Demographic Spotlight: Indonesia’s Youth
Millennials (26–41) and Gen Z (10–25) represent over half of Indonesia’s 280 million people. These groups influence societal and economic trends, blending tradition with global modernity.
Millennials: Anchors of the Workforce
- Employment and Education: As established professionals, Millennials dominate manufacturing, public administration, and services. Many hold tertiary degrees but face challenges adapting to automation and technological advancements.
- Housing Aspirations: They view homeownership as a marker of success but often struggle with affordability in urban centers.
Gen Z: Digital and Entrepreneurial Pioneers
- Employment Trends: Gen Z favors flexible, purpose-driven roles, gravitating toward freelancing, digital marketing, and entrepreneurship.
- Social Media Dominance: Platforms like TikTok and Instagram are integral to their self-expression and income-generation efforts, particularly through social commerce.
Employment Challenges: Bridging Skills and Opportunities
For Indonesia’s youth, employment is more than just a livelihood—it’s a pathway to stability, self-expression, and long-term progress. However, systemic barriers such as skills mismatches, urban-rural employment disparities, and limited entry-level opportunities continue to hinder their professional growth. Addressing these challenges is not just critical for empowering youth but also pivotal for Indonesia’s socio-economic future.
Key Challenges in Employment
Skills Mismatch
Indonesia’s education system emphasizes theory over practice, leaving many graduates ill-prepared for job market demands. High-growth sectors like technology and renewable energy struggle with talent shortages due to insufficient vocational training. Over 60% of youth report a skills mismatch, fueling underemployment.
Urban-Rural Employment Divide
Job opportunities remain heavily concentrated in urban hubs like Jakarta, Surabaya, and Bandung, leaving rural youth with limited prospects. Many are forced to migrate to cities, often ending up in low-paying informal jobs that fail to provide long-term stability. This urban-rural divide exacerbates economic inequality and hinders rural regions’ ability to retain talent and foster economic growth.
Youth Unemployment
Despite Indonesia’s projected GDP growth of 5% in 2024, youth unemployment remains high. The report highlights that 88% of Gen Z and 89% of Millennials in Indonesia identify employment as a critical issue. Insufficient entry-level roles, inadequate mentorship programs, and limited internship pathways compound this problem.
Opportunities in Regional Hubs
To address the urban-rural employment divide in Indonesia, brands can play a pivotal role in decentralizing job opportunities by leveraging Indonesia’s emerging regional hubs. Cities like Yogyakarta, Medan, and Makassar offer untapped potential for expanding economic activities and creating localized employment opportunities.
Leveraging Regional Hubs
- E-commerce Fulfillment Centers: Brands like Shopee and Tokopedia can establish logistics hubs in secondary cities to decentralize operations while tapping into local talent pools.
- Tech and Creative Industries: Regional hubs are ideal for developing support centers for tech startups, creative agencies, and digital content production, providing flexible roles suited for Gen Z’s career aspirations.
- Government Collaborations: Brands can partner with local governments and universities to co-develop skill-building programs tailored to regional economic needs.
Example: Yogyakarta as a Regional Model
Yogyakarta, often called the cultural heart of Java, is a city where tradition and innovation coexist. It is famous for its historic temples and vibrant arts scene and is home to leading universities and a thriving creative industry. This unique blend has made Yogyakarta a beacon for young talent, offering opportunities that extend beyond its cultural roots. By embracing digital innovation and cultural entrepreneurship, the city has attracted significant public and private investment, proving that regional hubs can play a pivotal role in youth employment. Yogyakarta’s approach to integrating education, skill-building, and job creation is an inspiring model for other regions in Indonesia.
Notable Initiatives by Indonesia’s Government
The Indonesian government has taken significant steps to address these employment challenges through programs like Prakerja, a vocational training and financial aid initiative that equips participants with skills in digital marketing, entrepreneurship, and technical trades. Since its inception, over 16 million Indonesians have benefitted from Prakerja, showcasing its potential to bridge the skills gap.
Recommendations for Brands in Indonesia
Brands operating in Indonesia have a unique opportunity to play an active role in solving employment challenges by:
- Investing in Skill Development: Partner with universities and vocational schools to co-design industry-relevant curricula and certifications. Focus on high-demand fields like renewable energy, digital marketing, and software development.
- Expanding Regional Opportunities: Establish offices or satellite operations in secondary cities to reduce urban migration pressures and create local economic opportunities. Offer remote and hybrid work options to engage rural youth.
- Supporting Youth Entry into the Workforce: Create structured internship programs and mentorship initiatives to help young professionals transition from education to full-time roles.
The Brand Opportunity
Addressing employment challenges isn’t just a policy imperative—it’s a strategic opportunity for brands to position themselves as champions of youth empowerment. By leveraging regional hubs, investing in skill-building, and creating pathways for employment, brands can foster loyalty and contribute meaningfully to Indonesia’s socio-economic growth.
The Rise of Social Commerce in Indonesia
Indonesia is Southeast Asia’s largest social commerce market, with platforms like TikTok, Instagram, and Shopee playing transformative roles in youth employment and entrepreneurship.
Key Stats and Trends in Social Commerce in Indonesia
- Digital Adoption: Over 50% of Indonesian youth use TikTok and Instagram not just for entertainment but as business platforms to sell products and services.
- Social Commerce Revenue: Social commerce contributes nearly $8 billion annually to Indonesia’s economy, with youth driving this trend.
- Inclusivity: Platforms enable rural entrepreneurs, particularly women and youth, to reach broader markets, bridging urban-rural gaps.
Example: TikTok Shop Indonesia
- Launched in 2021, TikTok Shop empowers small businesses and youth entrepreneurs by integrating shopping features into the platform.
- Success Stories: Thousands of young Indonesians use TikTok to promote and sell handmade crafts, fashion, and beauty products, earning sustainable incomes from their digital storefronts.
Global Inspiration: Sweden’s Digital Inclusion Policies
Sweden’s focus on equitable digital infrastructure offers valuable lessons for Indonesia:
- Universal Broadband Access: Investments ensure rural areas have high-speed internet, fostering inclusivity in digital commerce.
- E-Skills for All Program: This program targets young entrepreneurs, equipping them with digital skills to scale businesses online. Indonesia could adopt similar strategies to enhance rural connectivity and expand social commerce opportunities for underserved communities.
Recommendations for Policymakers in Indonesia
- Bridge the Skills Gap:
- Expand vocational training programs in high-demand sectors like e-commerce, renewable energy, and tech.
- Establish regional centers of excellence to reduce dependency on urban hubs.
- Foster Digital Inclusion:
- Invest in rural broadband infrastructure to enable wider participation in social commerce.
- Launch initiatives to combat misinformation and promote responsible digital use.
- Support Social Commerce:
- Offer tax incentives and grants for youth-led businesses operating on social platforms.
- Collaborate with private companies to create scalable training programs for digital entrepreneurs.
Recommendations for Brands in Indonesia
- Engage in Skill Development:
- Partner with vocational institutions to design industry-specific certification programs.
- Offer structured internships that provide hands-on digital marketing and e-commerce experience.
- Invest in Social Commerce Integration:
- Build immersive shopping experiences on TikTok and Instagram, tapping into Gen Z’s entrepreneurial spirit.
- Highlight sustainability in product offerings, aligning with youth values.
- Create Purpose-Driven Campaigns:
- Collaborate with youth influencers to amplify brand initiatives tied to employment and digital empowerment.
- Use social commerce campaigns to promote locally-made products, fostering community growth.
Final Thoughts
Indonesia’s Millennials and Gen Z are redefining progress through digital innovation and entrepreneurial grit. While challenges like employment gaps and housing inequities persist, the rise of social commerce offers a powerful pathway for youth empowerment.
To foster national growth, policymakers and brands must invest in Indonesia’s youth and align with their aspirations. Bridging gaps and fostering collaboration can transform the nation’s demographic advantage into lasting progress. Download the Full Report
Discover more insights into how Indonesia’s youth are shaping the nation’s future. Download our collaborative report with Vero Advocacy for actionable strategies to empower Millennials and Gen Z. Click here to learn more.
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