THE rapid development of artificial intelligence (AI) has revived a classical debate in economics regarding technological unemployment.
Will AI innovation bring shared prosperity, or create an unprecedented unemployment crisis?
This is not merely a theoretical inquiry for academic journals. Current AI systems are already demonstrating a capacity for complex reasoning that rivals human experts in high-stakes fields such as business strategy, legal analysis and sophisticated software engineering.
According to the McKinsey Global Institute, the scale of this shift is staggering, with estimates suggesting that up to 375 million workers globally – roughly 14% of the global workforce – will need to transition into entirely new occupational categories by 2030.
As this inevitable force of economic disruption gains momentum, it is imperative to critically assess Indonesia’s strategic preparedness.
While Indonesia’s current policy framework signals a robust commitment to establishing an AI-driven economy, there is a glaring disparity in its focus.
The necessary mitigative measures designed to address the undesirable socio-economic consequences of AI remain dangerously underdeveloped.
At the heart of the nation’s strategy is the proposed Presidential Decree of the National Artificial Intelligence Road Map 2026–2029.
This document is intended to serve as the definitive anchor for Indonesia’s technological trajectory over the next four years, centreing on four primary pillars: strengthening stakeholder involvement, fostering domestic innovation, increasing research capabilities and mitigating systemic risks.
However, a closer look at the road map’s 45 detailed programmes reveals a lopsided priority list.
Approximately 90% of these initiatives are aggressively directed toward “offensive” strategies – preparing AI talent, building innovation ecosystems, expanding physical infrastructure and courting international investment.
In contrast, only five programmes are dedicated to the “defensive” side of the equation: the social and economic risks of displacement.
This composition reveals a single-minded objective: the rapid acceleration of AI adoption at any cost. While proactive adoption is necessary to maintain Indonesia’s global competitiveness, an unmanaged transition will inevitably produce adverse side effects.
If left unmitigated, technological unemployment will not only widen the wealth gap but also risk fracturing the nation’s social and political stability.
The omissions in the current road map are not insignificant; they represent a critical structural gap. As it stands, the document includes no mention of reforming Indonesia’s existing unemployment benefit schemes (such as the Job Loss Insurance programme) to cover the unique challenges of AI-driven job displacement.
Furthermore, there are no specific provisions for the informal sector – a massive segment of the population that constitutes 59.4% of the national workforce and lacks the safety nets afforded to formal employees.
Without dedicated funding mechanisms to bridge the income gap during the “Great Transition”, the promise of AI could quickly turn into a source of national precarity.
Historically, the fear of “the machine” is a recurring anxiety, dating back to the era of David Ricardo and the Luddite protests.
In past technological revolutions, the “optimal solution” for absorbing shocks was consistently found in education.
When manual labour was displaced during the Industrial Revolution, the resulting demand for cognitive and clerical skills was met by a massive expansion in public schooling.
This pattern has largely held true for over a century; as old roles become obsolete, new and once-unimaginable vocations emerge. As noted by economist David Autor, roughly 60% of the jobs held by American workers in 2018 simply did not exist in 1940. Yet, relying on historical precedent may be a dangerous form of survivorship bias.
The unprecedented speed of AI development and its ability to “learn” at an exponential rate suggests that this wave of disruption is fundamentally different from those of the past.
In this new context, traditional reskilling and retraining programmes may hit a ceiling. When AI can be deployed instantly across an entire sector, the “absorption capacity” of the labour market is stretched to its breaking point.
If firms adopt AI to achieve massive gains in efficiency with a fraction of the human capital, entry-level positions involving repetitive cognitive tasks will be the first to vanish.
This is the precise area where Indonesia – already struggling to generate a sufficient volume of high-quality, decent jobs for its youth – is most vulnerable. The honest, albeit uncomfortable, answer is that it is highly improbable for Indonesia to generate new, high-value jobs at a pace that matches the speed of AI displacement.
Even in a scenario where new roles are created, the question of distribution looms large. Competition for the few available AI-enabled roles will be fierce, particularly if the majority of the workforce is pulling from the same standardised government training programmes.
Without significant skill differentiation, workers will likely face stagnant wages and increased workloads as they compete for a shrinking pool of middle-class roles. — The Jakarta Post /ANN
Baginda Muda Bangsa is a political economy analyst at Laboratorium Indonesia 2045. The views expressed here are the writer’s own.
