LABOUR MARKET DYNAMICS AND TOTAL REWARDS STRATEGIES IN COPING WITH ECONOMIC UNCERTAINTY IN 2026
DOI:
https://doi.org/10.5281/zenodo.20252746Keywords:
the labour market in 2026, total rewards, economic uncertainty, the demographic dividend, pay equity, AI disruption, job upgrading, talent retention, adaptive HR strategies, employee wellbeingAbstract
This article analyses the dynamics of the Indonesian labour market in 2026, characterised by economic uncertainty, AI disruption and a demographic dividend, with an unemployment rate of 4.68% yet a 60% dominance of informal employment, and formulates an adaptive total rewards strategy as an organisational response through personalised compensation (a 5.8% pay rise), pay equity, and wellbeing programmes that boost retention by 20% in the VUCA era. Through a systematic literature review, the study reveals a shift from job creation to job upgrading, as well as a transformation of rewards from financial to holistic, data-AI-driven approaches, with practical implications for Indonesian HR practitioners in navigating talent shortages, rising benefit costs, and JKP-ALMP policies. Key contributions include a local-global integrative framework for talent retention and strategic recommendations: allocating 10–15% of the HR budget to reskilling, conducting annual pay equity audits, and fostering public-private collaboration to ensure inclusive growth and regional competitiveness amidst 5% economic stagnation.
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