International Labour Organization: Employment impact of Covid-19 crisis and recovery policies in Indonesia

Just like the rest of the world, Indonesia and its economy were hit hard by the Covid-19 pandemic. Before the pandemic, the Indonesian economy had been growing well for over 20 years. Unfortunately this led to a recession causing a decrease in Indonesia’s economic growth.

Cambridge Econometrics’ modelling for the International Labour Organization helped to estimate the employment outcomes resulting from the recovery policies implemented in 2021-2022.

Our approach:

The impact that the recovery policies had on the labour market were assessed using Cambridge Econometrics’ macroeconomic E3ME model, policy data from the Global Recovery Observatory (GRO) database and other data sources.

The policies were analysed simultaneously and individually to understand the distinct impacts each policy had on employment.

Key findings:

  • If the recovery policies were implemented, we could see 3 million additional jobs created. The sectors with the biggest increases include:
    • Agriculture, with 700 thousand additional jobs created.
    • Tourism, with 60 thousand additional jobs created.
    • Business services, with over 740 thousand additional jobs created.
  • In the longer-term, the policies allow for sustained additional employment creation. Employment levels could increase by 0.3% (around 500 thousand additional jobs) from 2025-2030.
  • While recovery policies increase emissions in the short-term, new jobs created as a result of the policies produce less emissions than the national average.

Meet the expert

Cornelia-Madalina Suta Principal Economist [email protected]

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