Flexibility for women in Indonesia’s labour market

To help Indonesian women stay in the formal labour market after their first child, policymakers should invest in affordable childcare, transport, and Internet infrastructure to provide greater flexibility, Sarah Xue Dong and Nurina Merdikawati write.

Many economic indicators of gender equality in Indonesia improved over the last 20 years.

From those born in early 1950s to those born in the late 1980s, each new cohort of Indonesian women became more likely to be more educated, have fewer children, and participate more in the labour force in the years immediately following the completion of their education than the last. According to data from the Indonesian National Socioeconomic Survey (SUSENAS), women’s tertiary educational attainment has also overtaken that of men since the 1976 cohort.

These improvements are largely driven by increased living standards and better economic opportunities for women. The country’s previous model of economic growth, which was driven by export-oriented manufacturing, stopped working after the 1997 Asian Financial Crisis. However, between the early 2000s and mid 2010s, a resource boom helped Indonesia grow at the relatively fast rate of around six per cent every year.

This sustained period of economic growth in the post-Suharto era has led to a substantial expansion of Indonesia’s middle class. In turn, this new middle class has demanded more and higher quality consumer goods and services, such as manufactured food and beverages, tourism, health, and education. Crucially for gender equality, many of these industries employ more women than men.

At the same time, Indonesia has improved education for girls due to the demand from middle class families. As a result, economic opportunities for women have improved.

This change is illustrated by the growing share of working age women who are employed in high-end services, such as legislators, senior officials, managers and professionals. The percentage for women has increased from four per cent in 2001 to seven per cent in 2021, while the share for men has not changed, according to data from the Indonesian National Labour Force Survey (SAKERNAS).

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Considering the size of the population of working age women in Indonesia, which numbers in the tens of millions, this is a huge increase in the number of high-end jobs for women.

Notwithstanding a general increase in economic opportunities, women still face significant barriers to entering the labour market. Although each new generation of women in urban areas is more likely to be employed in the formal sector at the start of their career, our research shows that they are also likely to drop out of the formal workforce and begin informal work around the time they get married, especially in cities.

While the number of jobs in high-end services for women have dramatically increased, the gender wage gap in these jobs has also widened in the last 20 years.

These two phenomena could be interrelated, as wage growth for women is hampered by the fact that they enter high-end service jobs at the bottom of the pay scale, before dropping out when they get married and have children.

Another recent trend is that, contrary to the overall improvement in gender equality, SUSENAS data shows that women born after 1980 are getting married and having their first child earlier than previous cohorts.

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This is happening for women across all education levels and in both urban and rural areas, and is likely driven by an increasingly conservative attitude towards dating and marriage across the country. When seen together with the trend of women dropping out of the workforce at this point in their lives, this can exacerbate the negative career and economic impacts for women, making them more economically dependent on their husbands.

So how can the Indonesian government help women overcome these constraints?

The phenomenon of women dropping out of the formal sector at around child-bearing age in urban areas deserves government attention.

The nature of formal sector work in urban areas, with long and inflexible working hours, and even more time spent commuting, can mean that many women with a young family are not able to do this paid work while also in many cases acting as their child’s primary caregiver.

Addressing the lack of affordable and reliable childcare would be a start. Investing in better transport infrastructure would also help to alleviate the commuting burden, making life as a working mother more achievable.

The pandemic has also shown that working from home can be a genuine option for many professionals, and better Internet infrastructure can facilitate this – allowing both women and men greater flexibility.

Although the government can play limited role in affecting cultural change in dating and marriage, enforcing the recently legislated higher minimum age of marriage can help to ensure that young women have at least a chance to obtain education and explore economic opportunities before they get married.

For Indonesian women with young families, caring responsibilities can often mean they drop out of the formal labour market, and in many cases never return. By investing in measures that enhance flexibility, such as affordable childcare, transport, and Internet infrastructure, Indonesian policymakers can ensure women don’t have to choose between family and their career.

This piece is published as part of our new In Focus: Indonesia section, ahead of this year’s ANU Indonesia Update. The authors’ full study will be published as part of a collection following the conference. The opinions expressed in this article are the authors’ own.