World Bank Warns of Rising Informal Jobs Across East Asia

• Oct 08, 2025

The World Bank has raised alarms over the growing number of informal jobs across East Asia and the Pacific, warning that the shift toward unstable and low-productivity work could undermine the region’s economic resilience. The warning came during the October 2025 East Asia and Pacific Economic Update press briefing, led by Aaditya Mattoo, the World Bank’s Chief Economist for the region.

Mattoo explained that over the past decade, East Asian economies have seen a major change in employment patterns. Many workers have left agriculture and manufacturing — sectors that traditionally generate high productivity — and moved into informal service jobs, including those in the gig economy. “Many people are leaving low-productivity farming, not for high-productivity industries, but for low-productivity service jobs,” Mattoo said on October 8.

The report highlighted Indonesia as one of the most affected countries, with a noticeable rise in informal employment within its services sector. This shift, according to Mattoo, reflects a concerning trend where fewer workers are finding opportunities in industries that offer better wages and job security, such as manufacturing.

The World Bank warned that the expansion of informal and insecure work could increase the vulnerability of the middle class, pushing more households at risk of falling back into poverty. “A large share of people in this region work in informal or low-productivity jobs. The population at risk of falling into poverty now exceeds the size of the middle class in most countries,” the report stated.

Data from Indonesia’s Central Statistics Agency (BPS) supports the World Bank’s findings. As of February 2025, Indonesia had 86.56 million informal workers, representing 59.4% of its total labor force. In contrast, formal employment accounted for 59.19 million workers, or 40.6%. Compared with the same period in 2024, informal employment increased by 0.23 percentage points, while formal jobs declined by the same amount.

Analysts say this trend exposes deep structural weaknesses in Indonesia’s labor market, including limited access to quality employment, weak industrial diversification, and insufficient social protections. The World Bank concluded that governments in East Asia must urgently focus on job creation, workforce training, and strengthening formal employment systems to prevent long-term productivity decline and growing inequality in the region.