Affan Kurniawan—a rideshare driver in Jakarta—was struck and killed by a police car during a protest on August 28 2025 and his name became a rallying cry in the subsequent unrest that followed. The protests in Indonesia originated when members of parliament authorized an increase in housing allowances for themselves. Videos of members dancing as the allowances were announced spread online and sparked outrage across Indonesia. The protest and the subsequent fallout revealed a deep-seated anxieties and a paradox within Indonesia’s middle class.
On paper, Indonesia looked remarkably stable with two decades of five percent average growth, resilience through the global financial crisis, taper tantrum, and the COVID-19 pandemic, inflation stable at 2–3 percent, and fiscal deficits held below three percent of GDP. Yet these statistics tell only half the story. Behind them is a fragile lower-middle class, neither poor by official measures nor secure enough to withstand shocks. Excluded from cash transfers, scholarships, and subsidized health insurance, they must fend for themselves, while policy continues to focus largely on the poor. The COVID-19 crisis was a brief exception, when the welfare net expanded far beyond its usual scope. The social protection budget jumped sharply in 2020 because of the pandemic, but then steadily declined through 2023, only to expand again in 2024 ahead of the election, before falling afterward. This expansion and contraction of support left the aspiring middle once more exposed, reinforcing their sense of insecurity and helping to explain why frustrations have boiled over.
Although Affan came from a modest family, a study conducted by the University of Indonesia finds that the average monthly income of rideshare drivers is about Rp3.8 million (approximately $230), well above the government’s poverty line of about 600,000 Indonesian rupiah (Rp) ($36). Therefore, one could assume that Affan was not among the very poorest. The protests that followed his death were less about subsistence issues such as food prices or inflation, which remain relatively low and stable, and more about the anxieties of Indonesia’s fragile and aspiring middle class. Students and young professionals, educated enough to expect upward mobility, yet insecure about jobs, social protection, and fairness, perhaps saw in Affan’s fate a symbol of how ordinary lives can be disregarded. Their anger was sharpened by social media’s exposure of privilege and by issues raised in the protests, tax injustice, corruption, and elite behavior—concerns that are more likely to resonate with the middle class than the poor, who earn too little to pay income tax. In this sense, the tragedy was the spark, but middle-class frustrations were the fuel. Indonesia is not alone. Across Asia and Latin America, middle class frustrations have repeatedly boiled over despite strong macroeconomic indicators.
A few years earlier, Chile had a similar story as Indonesia. Once praised as Latin America’s star, it saw poverty fall and per capita income rise to be the region’s highest. Yet on October 25, 2019, more than 1.2 million Chileans filled Santiago’s streets after a mere four percent metro fare hike. As UCLA’s Sebastián Edwards observed, it was the “Chile Paradox”: Glowing macro indicators alongside a population that felt left behind. When statistics speak of progress, but justice does not move, the streets take the stage. Indonesia today risks walking down the same path.
Unemployment, a “Luxury”
Economic growth reduced poverty and unemployment. But the data can be misleading. Why? Because Indonesia has no unemployment benefit. Only those with savings, assets, or strong family can afford to be unemployed. Aris Ananta of the University of Indonesia argues unemployment is a “luxury good.” Only the rich can stay jobless. The poor? They must work anything, no matter what. And that usually means finding work in the informal sector. This helps explain why most new jobs are informal. Between 2019 and 2024 80 percent of new jobs came from informal sector. The trouble is, wages in the informal sector are low. In 2023, informal workers’ average monthly income was Rp1.9 million ($114) whereas the average minimum wage in the formal sector was Rp 2.9 million ($181).
The fragility of this labor market echoes in the shifting social structure. Back in 2003, only 5 percent of Indonesians could be considered middle class, while 42 percent were in the aspiring middle class, 35 percent were vulnerable, and 17 percent lived in poverty. Then came what can be considered the golden years, 2003–14, when the middle class tripled, the aspiring middle shrank, and poverty fell sharply. But since 2019 the trend has reversed. The middle class dropped to 21 percent, and then further to 17 percent by 2023. The aspiring middle swelled to nearly half the population, while the vulnerable also widened. Many Indonesians quite literally “moved down”: from middle to aspiring, from aspiring to vulnerable. The World Bank notes that the middle and aspiring middle differ not only in size but in character. Consumption patterns are also diverging: Unlike the lower groups, the middle and upper classes are the only ones whose spending on non-food items—health, education, entertainment, and even cars—exceeds their food expenditure. Education levels and formal wage employment mark other sharp dividing lines.
Research by Dartanto and Can of the University of Indonesia reinforces this picture. Between 2019 and 2022, growth disproportionately benefited the extremes: the bottom 20 percent, supported by social protection such as cash transfers, and the top 10 percent, who surged ahead. But the broad middle, especially households in the 50th–80th percentile, experienced negative consumption growth and saw their real incomes decline. At the same time, the number of own-account workers (those who are self-employed without employees) rose steeply, from 16.9 percent of the labor force in 2016 to 23 percent in 2023. The Prabowo administration has inherited a legacy of vulnerabilities from the 2019–24 period, including declining incomes among the middle class (fifth to eighth deciles of the population) and a growing share of informal employment. These issues cannot be resolved overnight but instead require time and the right policies to untangle.
The fragility of jobs translates into fragile consumption. Between 2018 and 2024, Indonesia’s middle class showed signs of strain: Car and motorcycle sales stayed below pre-pandemic levels while the number of overdue vehicle loans rose from 1.4 percent to 2.5 percent; savings weakened as deposit growth in accounts under Rp100 million ($6,024) fell from around 8 percent to under 5 percent and average balances dropped 40 percent; and consumption slowed, with sales of Unilever Indonesia, one of the largest sellers or mass market staples in the country, peaking in 2020 but falling below 2016 levels by 2023.
Inequality Made Visible
Social media now acts as a loudspeaker. It turns a vague sense of inequality into something you can see. The lavish lifestyles of parliamentarians, their mansions, police escorts clearing traffic, and special access to services can be shared on social media in seconds, prompting comparisons. Once inequality is visible, it quickly turns political. This emerging middle is critical and active, demanding better services, fairness, and good governance. This active middle has a positive influence since an engaged and politically active middle class helps keep democracy alive. But when their complaints are ignored, frustration hardens into rage. The government may have calmed the recent protests by cancelling allowances and suspending members of parliament, yet that was only the tip of the iceberg. Beneath it lies the deeper challenge: strengthening the lower middle class.
What Should Be Done?
In the short term, government must broaden the safety net to reduce the immediate pressures on the aspiring middle class. This includes expanding social protection through measures such as electricity tariff discounts for 2200 KWh households, wider cash transfers, and strengthening conditional cash transfer programs, with better targeting through digital technology. Given current fiscal constraints, these interventions need not be overly costly if designed to plug gaps efficiently rather than expand subsidies indiscriminately.
In the long term, the priority must be creating decent jobs in the formal sector. Manufacturing, tourism, and the creative economy can generate higher productivity and wages than the informal sector, but Indonesia has faced deindustrialization for years. Why? One is a high-cost economy, caused by state interference: messy regulation, layered bureaucracy, tangled permits, and legal uncertainty. Indonesia is a small player in manufacturing, a price taker. Goods must be sold at world prices. When domestic costs are high, they cannot be passed on because buyers can switch to cheaper suppliers. Firms have to cut margin, while incentives to invest in manufacturing become lower. Capital shifts toward trading or resource extraction, where returns are higher. This leaves behind a thin manufacturing sector where only the large firms can survive and smaller ones are forced to exit. Deregulation to cut costs is essential to restore competitiveness, attract investment, and create decent formal jobs.
In the natural resources sector, Indonesia is a big player and a price setter. Indonesia’s nickel production, for example, can significantly influence the world’s supply. Here, high costs can be passed on to consumers, negating the need to cut margins. Naturally, investment flows into this sector. But the natural resources sector is capital intensive, not labor intensive, thus creating few jobs, especially for the middle class.
Structural economic reforms in Indonesia are therefore essential to reduce the high-cost economy created by messy regulation, bureaucratic layers, tangled permits, and legal uncertainty. At the same time, while natural resources such as nickel can attract investment, it remains capital intensive and creates few employment opportunities. Sustained growth in middle-class jobs requires addressing these structural barriers. Yet deregulation is never easy. Regulation itself has become a traded good. Firms demand permits and tailored rules and officials supply them often at a price in the form of rents and discretionary favors. Deregulation strips away these rents. It is therefore not surprising that the strongest resistance to deregulation comes from within the bureaucracy, where power and income are at stake.
Realistically, fiscal space is limited. With deficits capped and competing priorities, Indonesia cannot simply spend its way out of the problem. The feasible path is targeted support in the short term, coupled with a credible reform agenda for the long term. This combination offers the best chance to stabilize the fragile middle while setting the stage for inclusive growth
Democracy as a Long Conversation
But economics alone will not suffice. What Chile, Indonesia, Nepal, and Sri Lanka, remind us that reform is also about politics, about the long conversation of democracy.
What has unfolded in Chile, Indonesia, Nepal, and Sri Lanka, seems to carry a deeper message: The rising middle class, as noted earlier, brings with it political-economic implications that cannot be addressed merely with narrow economic prescriptions or simple social-protection policies. They want both needs and aspirations met, and a shift from mere access to reliable, high-quality services. Economic policy cannot stand alone. It must come with political effort and be nurtured by justice. That means transparent governance, honest explanation, communication that does not underestimate citizens. Democracy is a long conversation, and when the conversation breaks, even the best policy is easily misunderstood.
Compared to Bangladesh, Nepal, or Sri Lanka, Indonesia starts from a stronger position, its macroeconomic fundamentals are comparatively solid, external debt burdens are lower, and democratic institutions, however noisy, remain intact. Yet this relative strength should not invite complacency. Sri Lanka’s turmoil showed how quickly fiscal stress and governance failures can erode stability, while Bangladesh and Nepal remind us how fragile middle class gains can be when growth is not matched by inclusion. Indonesia still has room to avoid such a fate, but doing so requires more than good macroeconomic numbers. It must use its fiscal discipline wisely to cushion the aspiring middle, pursue structural reforms that generate decent jobs, and, above all, nurture the trust between state and citizen. What holds a country is not its statistics, but the faith its people keep. From Affan we are reminded that one life can reveal a nation’s fault line between numbers and trust.
