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.
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
Gen Z: Digital and Entrepreneurial Pioneers
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.
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.
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.
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.
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.
Brands operating in Indonesia have a unique opportunity to play an active role in solving employment challenges by:
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.
Indonesia is Southeast Asia’s largest social commerce market, with platforms like TikTok, Instagram, and Shopee playing transformative roles in youth employment and entrepreneurship.
Sweden’s focus on equitable digital infrastructure offers valuable lessons for Indonesia:
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.