Indonesia - An Overview of Women's Work, Minimum Wages and Employment

Decisions for Life MDG3 Project Country Report No. 14

University of Amsterdam /Amsterdam Institute for Advanced Labour Studies (AIAS)
Maarten van Klaveren, Kea Tijdens, Melanie Hughie-Williams, Nuria Ramos Martin
email: m.vanklaveren@uva.nl
Amsterdam, Netherlands, February 2010

SUMMARY:

This report provides information on Indonesia on behalf of the implementation of the DECISIONS FOR LIFE project in that country. The DECISIONS FOR LIFE project aims to raise awareness amongst young female workers about their employment opportunities and career possibilities, family building and the work-family balance. This report is part of the Inventories, to be made by the University of Amsterdam, for all 14 countries involved. It focuses on a gender analysis of work and employment.

History (2.1.1). After, in 1949, the Netherlands as colonial power had formally recognised Indonesian sovereignty, the Sukarno administration moved from democracy towards authoritarianism. In 1965-66 it was replaced by another authoritarian but more pro-western regime, the New Order of Suharto. The crisis of 1997-98 and the reformasi movement resulted in Suharto’s fall and a stepwise opening to democracy. In the 2000s the Indonesian economy from year to year showed respectable though not quite high growth figures.

Governance (2.1.2). In spite of the current multiparty democracy, problems remain with compliance, especially in maintaining human, worker and women’s rights. Corruption at regional and local levels remains virulent. The position of women in politics is weak, though the 2009 elections saw a rise of female representation in parliament to 11 to 18%. Women’s position within the family context is difficult. Recently many women have been confronted with domestic violence and sexual harassment.

Prospects (2.1.3). The global economic crisis has had a limited impact on Indonesia economy, and the prospects for the country’s rebound seem rather bright. Subcontracted, casual and temporary workers in export-oriented industries as well as migrant workers have borne the brunt of job cuts in 2008-09.

Communication (2.2). Though the number of fixed lines is still increasing, telephone use is rapidly switching to cellular phone networks. In 2008, already 599 of each 1,000 in the population used a cell phone. Internet coverage is still modest, with in 2008 about 12.5% of the population as users. With 95% of all households TV has high coverage, but radio is the most popular medium.

The sectoral labour market structure – Population and employment (2.3.1). With 53% in 2008, women’s Labour Participation Rate (LPR) in 2008 was moderate, whereas the male rate of 85% was high. In the 2000s the female LPR fell and the male rate increased. In 2008 about 39% of all employed worked in agriculture, 13% in manufacturing, and 48% in services, with the female shares being 40%, 14% and 46%.

The sectoral labour market structure – Formal and informal employment (2.3.2). Slightly over 30% of all employed and less than 28% of females is currently working in the formal sector. About 42% of the total labour force and 32% of the females are self-employed. In the early 2000s the informal sector absorbed the largest amount of new entrants to the labour market, but this reversed in 2003-04.

The sectoral labour market structure – Unemployment (2.3.3). In the course of the 2000s unemployment for women remained at a higher level than for men. Unemployment is highest among youngsters, with for girls and young women in 2008 an official unemployment rates of over 18%.

Legislation (2.4.1). Indonesia has ratified the core ILO Labour Conventions. Yet, for unions there are a number of serious constraints. on collective bargaining and declaring strikes. The ITUC remains highly critical of the country’s enforcement of labour legislation.

Labour relations and trade unionism (2.4.2). Under Suharto’s New Order trade unions were disciplined, with (K)SPSI (con)federation as main vehicle of these policies. After the collapse of the Suharto regime the right to organise was restored. Since then, the union movement developed in highly fragmented direction. Union density can be estimated at 8-10% for the labour force at large. Women have a weak position in the union movement, though incidental successes in collective bargaining on behalf of women can be traced.

The statutory minimum wage (2.5.1). The statutory minimum wage structure is complex and not transparent. Though the minimum wage rates are based on cost of living calculations, after the gap between minimum living needs and (average) minimum wage levels has widened. Moreover, the informal sector is not included. Compliance and enforcement are weak.

Poverty (2.5.2). For 2005, it has been estimated that 53.8% of its population lived below the poverty line of USD 2 a day. From 1999 on, income inequality is growing. Official inequality seems low, but correction for varying consumption patterns brings Indonesia in the middle-high inequality ranks. The incidence of working poor is highest among casual workers, followed by unpaid and own-account workers. There may be a shift to urban poverty: in the 2000s the number of slum dwellers in the cities has increased strongly.

Population and fertility (2.6.1). Current population growth is estimated at 1.3% per year, and is still slowing down. With 2.2 children per woman, the total fertility rate is rather low. With an estimated 51 to 54 births per 1,000 women 15-19 of age, the adolescent fertility rate is in the low-to-moderate range worldwide. Indonesia is urbanising at high speed, with in 2008 52% living in urban areas.

Health (2.6.2). In 2007, in Indonesia about 270,000 people lived with HIV/AIDS. Epidemics concentrate among injection drug users and sex workers. Health disparities are considerable, and government expenditure on health care is low.

Women’s labour market share (2.6.3). The 2008 women’s share in the labour force was nearly 38%. It was highest in households (76%), health and social work (57%), restaurants and hotels (56%), and education (55%). In 2008 still about 40% of women employed worked in agriculture, followed by wholesale and retail (22%). 48% of female employees and 45% of the total female labour force worked in services, broadly defined. With 22% respectively 24% in 2008, the Indonesian shares of female legislators, senior officials and managers among employees respectively the labour force at large were rather low. 

Agriculture (2.6.4). Problems of land fragmentation, poor bureaucracy and infrastructure still dog agriculture. Under the prevailing conditions it is unlikely that many young women living in urban areas and trying to make a career can rely on a “fall-back scenario” in which they can go back to their families living from agriculture. 

Mining and manufacturing (2.6.5). About two million women are dependent on employment in low wage-based, labour intensive industries, but Indonesia’s share in these industries is falling. The prospects in manufacturing for girls and young women are not bright, maybe except for some professional and technical occupations.

Commerce (2.6.6). In the 2000s, commerce has expanded rapidly, though most recently the retail industry has suffered from falling purchasing power. Super- and hypermarkets continue to expand, with foreign investors playing major roles. In the course of the 2000s, wage rates and working conditions of retail workers seem to have deteriorated.

Services (2.6.7). Formal labour is quite limited in commercial services except commerce. Tourism is an important source of employment, also for women, but its growth may be hampered by low wages, unfavourable working conditions and lack of professionalism. The finance sector remains comparatively small, with employment prospects for girls and young women in the sector remaining limited as well. 

Government (2.6.8). Since 2000, its size of public administration has been slimmed down, and in the process the already small female share has even declined to 20%. Average public sector wages are not extremely high, but still at the level of the finance sector. 

Literacy (2.7.1). The adult literacy rates –those age 15 and over that can read and write—were in 2008 95.4% for men and 89.1% for women. The youth (15-24-year-olds) literacy rates were in 2006 97.0% for young males and 96.3% for young females. 

Education of girls and young women (2.7.2). Combined gross enrollment in education was in 2006 overall 68.2%: females 66.8%, males 69.5%. Net enrollment in primary education was in 2007 98%, with boys’ enrollment at 100% and girls’ at 96%. However, recent reports stress the poor quality of much of primary education. The drop-out ratio during the secondary school ages is considerable. The urban – rural divide is large in educational facilities, and is reflected in lower enrollment and completion rates in rural areas. In 2007 tertiary gross enrollment was 18%, and equal for both genders. 

Female skill levels (2.7.3). A larger share of female workers than males had no education at all completed but the share of working females educated at the three highest levels was also higher than that of men. The females aged 15-29 make the difference: by 2008 they had a higher average educational level than their male peers. 

As for Indonesia, about 2.5 million girls and young women can be estimated to belong to the DECISION FOR LIFE target group, as they work in commercial services in urban areas. About half of them did so in regular wage employment, with the other half working as self-employed, family workers or casual wage-earners. 

Wages (2.8.1). Large income differences show up between workers of different type (employment status) and across industries. For both sexes the highest wages are paid in the finance sector, closely followed by public administration and utilities. With 23% the gender pay gap in Indonesia is still considerable. 

Working conditions (2.8.2). According to official figures for 2009 over 9 million women are working more than 48 hours per week. Long working hours are in particular made by women in households (average 51.4 hours in 2008), wholesale and retail (49.2 hours) and hotels and restaurants (47.8 hours), and these averages were even prolonged between 2000 and 2008.

• Download the complete report: 

     'An Overview of Women’s Work and Employment in Indonesia' (pdf, 597kb).

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• Decisions for Life project website
• Gajimu.com the WageIndicator website for Indonesia
• Decent Work Check for Indonesia
• Salary Survey for Indonesia
• Salary Check for Indonesia