When Labor Supply and Demand Diverge: The Double Trap Facing New Graduates

By: Annisa Nur Hasanah HAR and Nur Eka Sashi

JurnalPost.com - Every year, thousands of students complete their education at universities and vocational schools with high hopes. The diploma earned after years of study is expected to be the foundation for entering the workforce and securing decent employment.

However, the reality of the labor market does not always align with these expectations. Amidst the growing number of graduates, the business and industrial sectors continue to struggle to find workers with the competencies required for their needs.

This condition highlights a gap between labor supply and market demand. On one hand, the number of educated workers continues to rise. On the other, industry needs are evolving with increasingly specific skill requirements.

As a result, educated unemployment remains a persistent issue, while companies simultaneously continue to search for talent with relevant competencies.

From the perspective of labor economics, this condition indicates structural issues in the alignment process between education, workforce skills, and industry needs.

Educated Unemployment Amidst Economic Growth

Data from the Central Statistics Agency (BPS) shows that the unemployment rate for university graduates increased from 5.25 percent in 2024 to 5.39 percent in 2025.

This increase occurred even as the economy continued to grow and job opportunities expanded. This situation demonstrates that the issue of educated unemployment cannot be viewed solely through the lens of available job openings.

The problem also lies in the mismatch between the skills of the available workforce and market requirements.

In other words, the issue is not merely that graduates are unprepared for work. The formal industrial structure has not yet fully managed to provide enough space to absorb the growing number of educated workers.

The mismatch between labor supply and market demand ultimately creates structural unemployment. Therefore, efforts are needed to adjust skills through training, curriculum development, and internship programs that are genuinely connected to the needs of the professional world.

The growth of formal employment has also not fully kept pace with the growth of the workforce. The proportion of female formal workers increased from 45.81 percent to 45.88 percent in the 2024–2025 period. Meanwhile, the proportion of male formal workers rose from 36.32 percent to 36.66 percent.

Despite these increases, the majority of the working population in Indonesia remains in the informal sector, such as self-employed entrepreneurs, freelancers, or various jobs that do not always come with job security, social security, or adequate legal protection.

Many university graduates end up working as ride-hailing drivers, merchants, or freelancers after failing to secure positions in the formal sector.

Such work certainly holds economic value. However, for many graduates, this choice arises not out of personal preference, but because access to formal jobs that align with their education and skills is increasingly limited.

The Double Trap: Waves of Layoffs and Outdated Curricula

New graduates are often perceived as having failed to compete when they do not immediately secure employment. This view seems to frame the issue of unemployment as solely a matter of individual quality.

In reality, there are at least two structural pressures occurring simultaneously, most of which are beyond the control of the graduates.

The first pressure comes from the wave of layoffs.

Data from the Ministry of Manpower records that the number of workers laid off throughout 2025 reached 105,658 people. This figure is an increase of 27,693 people compared to 2024, which recorded 77,965 layoffs.

When companies reduce their workforce, new graduates not only face a shrinking number of vacancies. They must also compete with experienced workers who have re-entered the labor market after being laid off.

This situation makes the position of new graduates increasingly difficult. Companies have a wider pool of candidates, while entry-level job seekers lack the experience of those who have spent years in the industry.

The second pressure stems from the mismatch between educational curricula and industry needs.

Technological and business model changes are happening very rapidly. Companies now require increasingly specific skills, ranging from mastery of various digital tools, data analysis capabilities, and professional communication to problem-solving and an understanding of industrial workflows.

Meanwhile, some educational programs still require a long time to adapt their curricula to these changes.

As a result, a paradox emerges. Companies claim they struggle to find candidates who meet their needs, while many university graduates remain unemployed because their skills are deemed not fully aligned with market demands.

This issue should not be simplified into the assumption that students are lazy about developing their skills.

There are more fundamental issues, such as curricula that are slow to adapt, limited internship programs that are truly connected to industry needs, and suboptimal collaboration between universities and the business world in designing learning processes.

When these two pressures meet, new graduates face what can be called a double trap.

The entry point to the formal sector is narrowing due to layoffs and pressure on several industrial sectors. At the same time, the skills acquired during education are not necessarily fully aligned with the competencies required by the remaining available jobs.

Bridging the Gap, Not Blaming Graduates

Educated unemployment is a systemic issue. Therefore, the solution cannot be placed solely on the shoulders of graduates.

At least three parties must move in unison.

First, universities need to strengthen the alignment of their curricula with the developments in the professional world. Industry practitioners need to be more involved in the preparation of learning materials so that students not only gain theoretical understanding but also know the competencies actually used in the field.

Internship programs also need to be directed as part of the competency-building process, rather than just a formality to meet academic requirements.

Second, the government needs to expand programs for reskilling and upskilling, both for new graduates and workers affected by layoffs.

Training programs must be directed toward skills that have real demand in the labor market. At the same time, the government also needs to maintain the growth of sectors capable of absorbing large numbers of workers so that improvements in human resource quality go hand-in-hand with job creation.

Third, the business world needs to provide greater learning space for new graduates.

Companies cannot constantly expect all candidates to arrive in a fully 'ready-to-use' condition. New graduates need opportunities to gain experience, undergo on-the-job training, and understand work processes firsthand.

Collaboration between campuses, the government, and industry is becoming increasingly important because changes in the labor market are occurring much faster than before.

Without joint efforts from these three parties, the gap between the world of education and the world of work will continue to widen.

Ultimately, a diploma should be more than just a sign that someone has completed their education. Education needs to be a bridge that truly connects knowledge, skills, and job opportunities.

If that bridge is not strengthened, more and more graduates will bring their diplomas to the labor market, yet still struggle to exchange them for decent work.