Informal sector plays role in providing jobs

Rendi A. Witular, The Jakarta Post, Jakarta

For Jon Subayung, 29, patching punctured tires was not his idea of a decent job, but the country's prolonged economic crisis has forced him to do just about anything to make ends meet.

Four years ago, Jon was still working as a waiter for a prominent international restaurant located in Senayan, South Jakarta. But the economic crisis had forced the restaurant to reduce the number of its employees, and Jon was one of the unlucky ones.

After a depressing year of wandering around looking for a job, Jon, who is a senior high school graduate, gave up job seeking and with two of his colleagues from the restaurant opened a sidewalk tire repair service beside a bus stop on Jl. Gelora I, South Jakarta.

Although there is no job security or career prospects, Jon does not regret his decision. In fact, he feels lucky because he now receives a higher income than what he used to get as a waiter.

With only Rp 5 million (US$555) in capital to develop the business, the booth has shown promise. Each day Jon can earn at least Rp 50,000 net.

With such promising prospects, Jon set up another tire repair outlet on Jl. Palmerah Utara, Central Jakarta, and plans to open more in the coming months.

"I don't expect to find a formal job. It's difficult with my educational background and my age. And moreover, I can make more money here than the standard salary a senior high school graduate receives in an office," said Jon.

Jon is among the millions of people in the country that work in the informal sector, the numbers of which outnumber those working in the formal sector.

In its latest quarterly survey on the country's employment indicators, the Central Statistics Agency (BPS) revealed that out of the 89.7 million people employed in Indonesia, some 62 percent work in the informal sector, or about 55.6 million people.

The figure represents a significant shift. Before 1999, the number of those working in the formal sector was much higher, at around 60 percent.

Employment in the informal sector is defined by the BPS as those who work for themselves, assisted by temporary staff, or working for a family business.

The BPS survey said that 65 percent of those working in the informal sector were employed in the agriculture sector.

It added that of all the people working in the cities, nearly 40 percent work in the informal sector, mostly in trading (40.6 percent).

Economist Djisman Simandjuntak said that the huge number of people working in the informal sector indicated that the country had yet to recover from the economic crisis that had forced many companies to close or slash the number of their employees.

"The government should accommodate and support them by providing the necessary infrastructure or else they won't be able to survive and will become unemployed again. It is the conditions in the country that have driven them to work in the (informal) sector," said Djisman.

Djisman criticized the Jakarta administration for not giving support to the informal sector and for often conducting raids against people working in this sector such as street vendors and pedicab drivers.

According to the BPS survey, the rate of open unemployment in the country is around 8.2 percent of the total labor force of 97.6 million, or 8.2 million people. But independent experts put the unemployment figure at more than 40 million, taking into account disguised unemployment or the huge number of people underemployed.