The current downturn in commodity pricesprovides an opportunity for Indonesia to shift away from itsdependence on commodity-driven growth towards highervalue-added activities in manufacturing and services.However, Indonesia faces both global and structuralchallenges in making this transition. Global challengesinclude competition from regional trade agreements,especially the TPP, but also from structurally lower globaltrade growth. In addition, Indonesia’s manufacturing sectorshave also been losing competitiveness to regionalcompetitors, while most job creation in the 2000s took placein low productivity sectors. This report aims to show thepatterns of economic transformation in Indonesia in the pastdecade and a half, especially in terms of jobs andemployment. The report highlights barriers to labor movementand macroeconomic sources of demand for labor. The reportseeks to contribute to the design of a jobs strategy thatemphasizes the transition of workers from low to highproductivity sectors. While Indonesia has, so far, relied onjob creation in low-productivity, and even vulnerable,employment, future challenges would require the country toshift to higher productivity and quality jobs.