The 'Gig Economy' and the Challenge of Decent Work for Informal Workers

Shaping the gig economy means ensuring that the digital transformation truly improves the quality of work, not merely changes the way work is performed.

Jakarta – The employment issue in Indonesia is never far from one central fact: the majority of workers remain in the informal sector. Small traders, service workers, and daily wage labourers have long been the backbone of the national economy.

Data from the Central Statistics Agency (BPS) show that in February 2025 around 59.4 percent of Indonesia’s labour force, or about 86.5 million people, work in the informal sector, while formal workers account for around 40.6 percent. The figure is slightly higher than the same period last year, at 84.13 million people or 59.17 percent, while formal workers fell from around 40.83 percent.

Now, with rapid digitalisation, the face of informal work has changed significantly. Many informal workers are turning to digital platforms, now known as the gig economy.

The gig economy is often promoted as a symbol of modernisation of the labour market. However, behind the narratives of efficiency and innovation, a fundamental question arises: does this digitalisation truly improve the quality of work for informal workers, or does it merely move old vulnerabilities into a more technologically advanced form?

For informal workers, working without a permanent contract and without social security is not new. The difference now lies in the intermediaries. If previously informal workers dealt directly with the market, now the employment relationship is mediated by digital platforms that govern access, distribution of work, and income schemes.

Digitalisation indeed brings opportunities. Market access becomes broader, transactions faster, and demand for services relatively more stable, especially in urban areas. Many informal workers experience higher earnings in the early stages of joining a platform.

However, this dynamic also presents new challenges. Dependence on platforms increases, while workers’ status remains in a space of legal and institutional ambiguity. They are positioned as independent partners, but in practice they still follow rules unilaterally set by the platform system.

One of the attractions of the gig economy is flexibility. Workers can manage their working hours and choose when to actively accept orders. For some, this flexibility provides a solution to balancing work with family needs. Yet flexibility often comes with unpredictability.

The latest labour challenge shows that the main hurdle is not merely job creation, but the creation of decent work. In the context of the gig economy, informal workers often work long hours to chase targets and incentives. The risks of fatigue and occupational accidents are high, especially in the transport and logistics sectors.

Ironically, social protection remains voluntary and uneven. When accidents occur, demand falls, or platform policies change, workers must bear the impact themselves. There is no guaranteed minimum income, no old-age protection, and complaint channels are often limited.