Indonesia’s middle class lament ‘worsening’ plight, as sharp drop in their population sets off economic alarm bell

JAKARTA:  It has been four years since Mr Muhammad Yudhi last had a steady job. The 33-year-old motorcycle taxi driver used to work at a textile factory one hour east of Jakarta before he was laid off in 2020 due to an economic slowdown brought by the COVID-19 pandemic.

“I have been trying to apply for factory work again but they told me I’m too old. Everyone is looking for youths who are fresh out of high school who they can pay for cheap,” he told CNA.

Being a motorcycle taxi driver does not offer the financial stability and benefits found in factory work, Mr Yudhi said. 

“Even if you are on the road all day, the most you can make is 100,000 rupiah (US$6.51). After petrol and food, the most you take home with you is 70,000 rupiah, often less,” the father of two said.

Mr Yudhi makes around 2 million rupiah a month, barely enough to pay for rent at a congested neighbourhood in the outskirts of Jakarta and feed his children. It is a far cry from his days working at a factory when he earned a monthly salary of 3.5 million rupiah plus health benefits and a yearly bonus. 

“What can you buy for 2 million rupiah?” he bemoaned. “I can’t be a motorcycle taxi driver all my life. There’s no job security, no health insurance, nothing.”

Mr Yudhi is just one of millions of Indonesians who have fallen from the middle class to the aspiring middle class in the past five years.

According to the Indonesian Statistics Bureau (BPS), there used to be 57.33 million middle-class Indonesians in 2019, representing 21.4 per cent of that year’s 267 million population. 

The latest BPS data, which was issued on Aug 28, however showed that the number of people categorised as middle-class has dropped to 47.85 million in 2024, or 17.1 per cent of the country’s current population of 289 million.

The BPS defines the middle class as those having a per capita expenditure of between 2 million and 9.9 million rupiah per month, or 3.5 to 17 times the World Bank’s poverty line.

The majority of those who used to be in the middle-class range have since been downgraded to the aspiring middle class, BPS acting chief Dr Amalia Adininggar Widyasanti said during a parliamentary hearing on Aug 29. 

According to the statistics bureau, the number of aspiring middle class – those who earn 1.5 to 3.5 times the poverty line or between 874,398 and 2.04 million rupiah a month – rose from 128.85 million in 2019 to 137.5 million this year. They form 49.22 per cent of Indonesia’s population.

“I’m sad,” Mr Yudhi said when asked how he felt about being demoted from the middle class demographic. “It feels like we are going backwards as a country. People’s welfare should be improving, not worsening.”

His wife is a part-time house cleaner earning just 600,000 rupiah.  

Their youngest son was supposed to start attending kindergarten this year. But with no money in the bank, the family decided to postpone the four-year-old’s education by another year.

The dwindling of the middle class has raised red flags for some experts, who say their declining number and purchasing power could trigger an economic slump as demand for goods decreases.

“(The decline in Indonesia’s middle class) is an alarm which signals that the economy is in danger,” Mr Bhima Yudhistira, executive director of think-tank Centre for Economic and Law Studies (CELIOS) told CNA.

In 2018, middle-class consumption accounted for 41.9 per cent of total household consumption in Indonesia.

By 2023, this figure had dropped sharply to 36.8 per cent, aligning with an overall slowdown in household consumption, according to data from the Institute for Economic and Community Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI).