The Myth of Merit: Indonesia’s Troubling Tale of Social Mobility

Having a job, a decent living standard, and an adequate access to opportunities is a dream for some people, while some others are living in a bed of roses, taking for granted everything the poor wish for. This concern is later supported by the data of a shrinking middle class in Indonesia from 47.9 million people in 2024 to 46.7 million in 2025, and at the same time, the aspiring middle class (AMC) increased by 4.5 million people and now accounts for 50.4 percent of the population (Mandiri Institute, 2026). A 1.2 million fall might seem small, but it depicts how the security, the living standard, and the vulnerability of 1.2 million people are being risked. Not fragile enough to be fully babied by the government, but not rigged out enough to climb the ladder of social mobility.

        Adding more to the irony, some people work 8 to 10 hours per week just to be handed five million rupiah monthly, while some nepo-babies are only satisfied with a job offer from their parents if it pays them well enough. The ridicule is that what drives some people to work is just the purpose of surviving life, and what drives some others is just an opportunity for a CV completer. Although each individual’s starting line differs from one to another, it becomes concerning when the road to closing that gap grows increasingly difficult to access. It doesn't help that opportunities increasingly depend on who you know rather than what you can do, blurring the line between networking and nepotism. If so, does merit still draw breath or is it losing its power to the thick glass barricade of inequality?

Understanding Social Mobility

Social mobility describes the movement of individuals or groups within or between social strata (Gloster et al. 2015). It is commonly analyzed through absolute and relative mobility. Absolute mobility measures whether individuals achieve a higher standard of living than their parents, while relative mobility examines more on how socioeconomic outcomes remain influenced by family background. In a highly mobile society, circumstances at birth are less decisive in determining where individuals eventually end up.

The importance of social mobility extends beyond individual success. When access to the 3 “main pillars” of upward mobility (education access, education quality and equity, and work opportunities) becomes strongly associated with family circumstances, efforts may not reach the opportunities where it can be most productive. These disadvantages can then carry into the next generation, turning economic inequality into inequality of opportunity and limiting both individual potential and broader economic development (OECD, 2026).

Traditionally, the social mobility process lies in the education and labor market. Education provides the knowledge that is needed, while the labor market translates that knowledge into employment and earnings. Together, they provide pathways for individuals to move beyond their socioeconomic status. However, when access to these pathways is clouded by inequality, social mobility becomes increasingly constrained. This relationship between inequality and social mobility is illustrated by what is known as the Great Gatsby Curve. 

Figure 1. The Great Gatsby Curve

Source: The Global Social Mobility Report 2020 from World Economic Forum (2020)

Figure 1 describes this relationship, which demonstrates a strong negative correlation between income inequality and intergenerational mobility. The curve compares a country's level of income inequality with the extent to which parents' income predicts their children's future income. Countries such as Finland, Norway, and Denmark tend to exhibit both lower levels of inequality and higher levels of social mobility. In contrast, countries such as Brazil and India are characterized by greater inequality and lower mobility. This pattern suggests that as economic disparities widen, an individual's socioeconomic background becomes increasingly influential in shaping future outcomes.

The significance of the Great Gatsby Curve extends beyond differences in income distribution alone. It highlights how unequal access to resources and opportunities can strengthen the persistence of socioeconomic status across generations, making it more difficult for individuals to move beyond the circumstances into which they were born. In this sense, inequality is not only a reflection of current economic conditions but also an indication of how strongly future opportunities are linked to family background. As John Rawls and Amartya Sen argue, a society should enable individuals to prosper regardless of their background or personal circumstances. The Great Gatsby Curve suggests that achieving this ideal becomes increasingly challenging as inequality rises (Battiston et al., 2026).

Despite this relationship, inequality doesn't necessarily determine the extent of social mobility. The real question is whether or not the channels of mobility, education and the labor market, still remain accessible and capable of uplifting someone's socioeconomic status. So, how exactly do education and the labor market uplift someone’s life? And how well do they work in Indonesia?

How Social Mobility Works through Education and the Labor Market

Education is a critical driver of social mobility, but can also reify existing inequalities in human capital. In the wake of rising educational standards yet an increasingly competitive labor market in Indonesia, social mobility scholarship can further inform the role of education policy in the coming years.

The link between education and social mobility is well documented in economics literature. After all, in a strictly merit-based system, higher education is believed to provide capable individuals with the skills, network, and societal signals necessary to attain high-quality jobs in the labor market (Haveman and Sneeding, 2006). Education is commonly viewed as a great equalizer for this reason – barring practical limitations, anyone capable enough to access and thrive in higher education can theoretically achieve social mobility (Holmlund and Nybom, 2023).

In renowned economist Gary Becker’s foundational theory on human capital, he emphasizes the importance of investing in activities that enhance individuals’ resources, future income, and, consequently, their quality of life. Formal education, Becker’s research demonstrates, has high rates of return in an individual’s earnings, employment, and productivity (Becker, 1964).  This theory is supported by Pew Charitable Trusts data, which showed that students raised in the bottom economic quintile were over three times more likely to rise to the top quintile with a college degree, and over four times more likely to remain in the bottom quintile without a degree (Pew, 2012).

In addition to income and employment metrics, occupational prestige plays a non-negligible role in assessing the impact of education on social mobility. Occupational prestige, as extended from Anderson et. al (2015) analysis of social status, is the voluntary respect and social deference an individual receives based on the perceived value of their occupation. This prestige, in combination with several other metrics of socioeconomic status, can influence an individual’s development, health, cognition, and well-being (Hughes et. al., 2024). Hughes et. al. (2024) found that occupations that are results-oriented, cognitively challenging, and require highly specialized training were typically associated with high prestige. Such a result may indicate that achieving mobility in societal standing is also tied to education and access to robust human capital investments.

Despite education’s role in reducing social stratification over generations, Becker also acknowledges that wealthy families can invest more time, capital, and influence in wealth-producing activities like education for their children, thus reifying existing economic divides across generations (Becker, 1979). On the other hand, students in poor and minority neighborhoods often lack access to high-quality primary and secondary education, college admissions knowledge, and funding for college tuition (Haveman and Sneeding, 2006). In the United States, for example, 14.5 percent of students in the bottom socioeconomic quartile earned a bachelor’s degree over 10 years, while 61 percent of students in the top income quartile graduated with a degree (Brookings, 2014). Thus, when access to education is divided along class lines, it can reflect rather than diminish socioeconomic divides.

The Shaky Crown of Education as Merit’s Great Equalizer

Less than a year ago, President of Indonesia Prabowo Subianto (2025) emphasized the importance of education and how Indonesia projects to prioritize said field, the reality somehow contradicts this. Indonesia, although it was said to have a decentralized education system, actually has a disparity in its schooling system as shown by the data below.

Figure 2. The Education Quality Disparity in Indonesia 

Source : Suryadarma & Dharmawan (2021)

       Though Indonesia owns more than 250,000 schools all over the nation (World Bank Group, 2014), the inequality in education quality across districts remains high. When analyzed based on standardized exam scores, two-thirds of the top decile districts are shown to be located in the islands of Java and Bali, depicting the imbalance of education quality. On the other side of the room, the Highland Papua district ranks as the lowest education level, including a high illiteracy rate due to severe geographic isolation, infrastructure deficits, and high absentee rates among teachers (Human Rights News, 2025). 

     Most importantly, education has a strong correlation with an area’s economic growth. As Gary Becker noted how education is essential for facing income inequality and improving economic development because they increase the productivity of human resources. From this perspective,  Indonesia's uneven educational opportunities may risk widening economic disparities across the region, a risk that is highly concerning given the substantial differences between the economic growth of Java Island at 4.99 percent, accompanied by the fact that Maluku and Papua stand only at 1.69 percent (Statistics Indonesia, 2025). 

     The education inequality in Indonesia is worsened by the competition to top state universities, which benefits the wealthy. To pass the national test for state universities, the system benefits the students who have the money to pay at least 18 million rupiah for tutoring institutions. Making these advantaged students more eligible and equipped in the war zone of the entrance examination. What awaits those who are not financially well-off enough are either joy of luck or mourn of defeat.

         Just getting access to top universities is hard enough, it gets even more complex when one doesn’t have the required amount of financial ability to purchase the ticket to the train of merit’s first stop—education. In 2026, 60.000 prospective students of state universities did not re-register. Though the real reason varies, Eduart Wolok, chairman of the National Student Admissions Selection Committee for 2026, states that tuition fees remained a contributing factor to the hesitation of that enormous number of ex-future students. This criticizes education’s role as the great equalizer of merit, considering how the entrance to a decent education system has become a barrier to the real match. 

       These issues later add up and turn into a big lump of fundamental muddle of the country’s education system. First, it is how education’s disparity in some under-represented regions are factorized by the underlooked infrastructure and weak digitalization, therefore leading to the inability of these poor areas to incentivize high-quality teachers to transfer the knowledge needed, making it hard for the region locals to compete in university entrance exams. Second, as will be discussed in the next point, having a decent and an adequate degree does not solely secure one’s job opportunities. Thus, education as the long-crowned “great equalizer” of merit is stumbling upon its own accolade

Labor Market Issue in Indonesia 

Indonesia’s open unemployment rate has been rising at 5.4 percent until 2024, slowing down in 2025 to 4.65 percent (BPS Statistics Indonesia, 2025). Youth unemployment remains high at 25 percent (World Bank, 2011). While the past year has seen a decrease in the open unemployment rate, over 1.03 million university graduates remain actively unemployed. This rate is higher than the unemployment rate for vocational degree holders, exposing a structural divergence (Pratiwi, 2025), and does not reveal whether a drop in the unemployment rate implies more formal employment, more informal employment, or an increase in labor force exit. Data from SAKERNAS 2019-2025 show that employment expansion is heavily concentrated in low-skilled and low-productivity labor segments, such as agriculture, forestry, and fishing (28.15 percent of total workforce), wholesale and retail trade (18.73 percent), as well as accommodation and food services (7-9 percent).

In February 2025, approximately 86.58 million workers in the informal sector exceeded the 59.19 million in the formal sector. Most of the low-skilled segments that absorb a significant portion of Indonesia’s total workforce rely heavily on small-scale operations, micro enterprises, and independent sellers in the gig economy. Additionally, a university graduate, beyond his/her likelihood of entering the informal sector, is increasingly waiting longer to find employment, with an average 11-12 months waiting time post-graduation.

Much of the current issue is explained by both labor supply and demand problems. On the demand side, there is a rising job-mismatch. SAKERNAS data shows that while graduates eventually find a job, 53 percent work in their field of study, and 62 percent accept work well below their qualifications (BPS Statistics Indonesia, 2025). This is caused partly by a growing economy without high-skilled job creation, as the Indonesian annual industry job growth rate has historically averaged from 1.5-2 percent over the long-term (World Bank Development Indicators, 2025). 

        On the other hand, the number of Indonesian graduates from higher education is rising, and generating a credential inflation problem, where more graduates implies less distinctive degrees (Collins, 1979). Every year, over one million university graduates flood the labor market in search of a job. Moreover, the total university-educated pool of workers reached over 15.88 million in 2025, and the tertiary gross enrollment ratio more than doubled between 2000 and 2023 (BPS Statistics Indonesia, 2025). When large numbers of young children are suddenly enrolled in the public education system without any structural change in the quality of the education itself, primary and secondary schools could be pressured to graduate students with inflated grades and credentials for a higher appearance of achievement (McMahon, 2019; Ciftci & Karadeg, 2024). In that situation, the expansion of educational attainment, not followed with quality control, has weakened the signalling value of education, further complicating the credential inflation problem.

The problem is further exacerbated with how public universities' revenue structures are.  As public universities in Indonesia operate on a tiered government-subsidized tuition framework, the Uang Kuliah Tunggal (UKT), their incentive changes. From 1975 to 2012, higher education student enrollment rose from 200,000 to 4.5 million students. Every year, the number of slots for accepted students increases, as universities want to accept a larger number of more profitable students who can pay the university tuition. This might be a hypothesis for why it appears that credential loss is a widespread problem in Indonesia. 

          In contrast, Beatty et al. (2021) used the Indonesia Family Life Survey data between 2000 and 2014 to find that learning outcomes declined when junior and secondary enrollment rose sharply, indicating a quality issue in early education transmitted all the way to university graduation.

It is clear that both the conditions for demand and the quality of labor supply have affected social mobility for young people in Indonesia. Therefore, employers find it difficult to fill entry-level gaps, as a 2018 British Council report found 29 percent of 150 surveyed Indonesian employers documented difficulties in hiring, with 77 percent citing that candidates lacked the desired qualifications, and 49 percent declaring that applicants lacked hard skills. Similarly, a World Bank survey saw 25 percent of employers had to retrain employees for the job (Kruse et al., 2011). However, limited upwards social mobility may possibly be better explained beyond the credential loss problem. 

Inequitable access to early childhood education through K-12 is a well-documented strain on labor quality in Indonesia. First, the urban and rural divide translates to very different facilities and outcomes. Urban youth are twice as likely to rural youth to complete secondary education and transition into tertiary education, due to school proximity, more teaching staff, and better facilities; while rural youth face obstacles to education such as poverty, malnutrition, large distances to affordable schools, and child labor needs in families inhibits access to education (Saekapraya & Pandin, 2026).   

Secondly, there exists the archipelago divide between the West and the East. One study on regional disparities between eastern and western provinces found that disparities in educational outcomes were directly caused by unequal economic development (Azzizah, 2015), reflected by the high illiteracy rates that can reach 31.68 percent in the central region of Papua (BPS Statistics Indonesia, 2025).

The Limits of Meritocracy

Meritocracy promises that success should reflect ability and effort rather than wealth, family background, or even connections. But this statement becomes harder to defend when people do not begin from the same starting line. Merit is shaped long before it is measured. Lie et al. (2024) show how family circumstances influence the resources available to develop it, from better schools and supplementary learning to cultural and educational capital. Their findings expose a striking contradiction where 91.9 percent of Indonesian teachers believed their students could surpass their parents through hard work, yet only 63.8 percent believed the same when presented with a girl that comes from a poor background. This gap reveals a certain limit to the meritocratic promise on how hard work matters, but the conditions that allow it to translate into achievement are not equally shared. The same university admission or hiring criteria may apply to everyone, while the resources needed to compete for them do not. 

Moreover, disparities do not necessarily disappear once people become qualified. Indonesia has formally adopted merit-based systems precisely to reduce political intervention and nepotism, but its practice remains incomplete. Mirayanti et al. (2025) found that Indonesia’s open selection for senior public leadership was generally merit-based during examinations and interviews, but political connections became more influential closer to the final appointment. Respondents reported cases in which politically backed candidates prevailed despite the presence of more qualified competitors, while family ties could provide further advantage when combined with political influence. 

The tension is visible beyond the study itself. In June 2026, the appointment of 28-year-old Ginka Febriyanti Ginting as Commissioner of PT Pertamina Retail drew public attention. Her publicly reported background included degrees in accounting and management, but also leadership in BISON Indonesia, an organization associated with volunteers supporting Prabowo-Gibran in the 2024 presidential election (Lidyana, 2026). The controversy was therefore not simply about her age, but about a larger question surrounding public appointments: how much should political proximity matter when positions of economic influence are at stake? This places Indonesia’s persistent problem of corruption, collusion, and nepotism (KKN) squarely within the debate on social mobility. Connections can indeed do more than merely open doors. When they influence who ultimately receives scarce positions, they shape access to income, power, and all the opportunities that may follow. 

Hence, the limits of meritocracy extend beyond nepotism alone. They begin with unequal access to the resources that shape achievement and continue when connections influence how opportunities are distributed. Connections are not inherently problematic. The line is crossed when they begin to determine the outcome of competition itself. In that sense, a meritocratic system cannot be judged simply by whether everyone faces the same formal rules, but by whether people have a fair chance both to compete and to be rewarded for what they bring to the table.

Comparative Analysis with Other Countries

Although Indonesia illustrates concerns with social mobility clearly, the pattern is not unique to the country and reflects a broader regional problem. Across Southeast Asia, social background continues to influence whether individuals can access higher levels of education and, consequently, better employment and income opportunities. 

One major reason for such inequity in ASEAN is the gap between rural and urban development. Across ASEAN countries, the average tertiary attendance rate is only 18.6 percent in rural areas, compared with 41.9 percent in urban areas, creating a substantial gap of 23.3 percentage points. Rural populations, therefore, have less access to universities, better schools, transportation, digital infrastructure, and skilled employment. Young people from rural households remain concentrated in lower-productivity occupations, making it more difficult for them to move into higher-income social groups. Another key reason behind inequity is household wealth. Across Southeast Asia, individuals from the richest household quintile have an average tertiary attendance rate of approximately 57.3 percent, while only around 7.3 percent of learners from the poorest quintile attend tertiary education. Therefore, the extent to which social mobility genuinely functions as a pathway for disadvantaged groups remains questionable.

Access to the job market fares no better. Vietnam has achieved rapid economic and manufacturing growth, but this transformation has not been fully matched by the development of skills and formal employment opportunities. Youth unemployment reached around 6.2 percent in 2025, while 10.3 percent of young people were NEET and approximately 67.7 percent of employment remained informal, demonstrating that economic expansion does not automatically translate into secure and upwardly mobile employment. The Philippines illustrates a further contradiction: despite having the highest tertiary education enrolment among these ASEAN countries, at around 47.4 percent, youth unemployment remains approximately 7 percent, and 12.4 percent of young people are NEET, suggesting that access to education alone does not guarantee a successful transition into productive employment. Across all four countries, therefore, the issue is not simply whether young people can obtain education or employment, but whether their economies provide sufficient opportunities to convert these advantages into long-term socioeconomic advancement. This also helps explain the growing willingness of young people to seek opportunities abroad, particularly in Thailand and the Philippines. 

After understanding ASEAN’s experience, it is clear that social mobility cannot be understood only as a matter of individual effort. A person may possess the ability and determination to succeed, but merit can only generate mobility when institutions and labour markets provide opportunities for that merit to be rewarded. A genuinely meritocratic system requires not only equal rules at the point of competition, but also reasonably equal conditions for developing talent and a labour market capable of rewarding it.

Policy Recommendations

Given Indonesia’s struggle with achieving social mobility, the following policy recommendations can be made:  

1. Reduce Regional Disparities in Education: Indonesia should shift a greater proportion of education spending toward districts with weak learning outcomes, particularly rural and eastern regions, rather than relying primarily on uniform national provision. Funding formulas should account for geographic isolation and poverty. 

2. Make Tertiary Education More Accessible: Indonesia should strengthen need-based financial assistance, particularly for students from the poorest households and rural areas. Tuition support should cover not only fees but also transportation, accommodation, food and learning technology, since these indirect costs can prevent disadvantaged students from entering or completing university.

3. Create More Productive and Formal Employment: Indonesia should use industrial policy to expand labour-absorbing manufacturing and related services while continuing to move toward higher-value production. Downstreaming should be assessed not only according to investment and export value, but also according to quality and quantity of domestic employment created.

4. Institutionalize Meritocracy: Indonesia needs to strengthen the credibility of merit-based recruitment across both the public and private sectors. Formal competitive examinations are insufficient if political connections or family relationships influence the final allocation of scarce positions. Recruitment processes for senior public positions should therefore include transparent selection criteria, publicly available scoring frameworks, conflict-of-interest declarations and independent oversight.

Still, these reforms are not a magic fix. Education can be made more accessible, internships can be improved, and hiring can be made more transparent, but none of these will matter much if the economy still does not create enough good jobs. There is also a practical limit to how quickly Indonesia can close the gap between Java and more remote regions, especially when infrastructure, teacher quality, and government capacity are so uneven. Even merit-based recruitment has its limits because political and family networks are difficult to completely remove from society. More importantly, there is a risk of treating the symptoms rather than the problem itself. Giving more scholarships or unemployment support can help people survive, but it does not automatically give them a real opportunity to move up. The reforms should therefore be seen as steps towards improving mobility, rather than as a guarantee that inequality will disappear.

       Moving forward, the focus should be on making these reforms work together. In the short term, Indonesia can concentrate on helping disadvantaged students stay in education, making the transition from university to work smoother, and protecting people who are at risk of falling out of the middle class. At the same time, the government needs to keep building an economy that actually has room for these people through more productive industries and better-quality formal jobs. Over the longer term, merit-based institutions need to become more credible, so that having the right family, connections, or background matters less when opportunities are being distributed. Ultimately, the goal is not to make everyone equally successful. It is to make the starting point matter less. A person should still have to work hard to move upward, but their chances of succeeding should not be decided before they even get the chance to compete.

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