73032 ENGLISH Indonesia has experienced an improvement in narrowing the gender gap in some key areas of endowment (e.g. health and education), opportunities, voice and agency, and necessary legislation for gender mainstreaming, but challenges remain. Gender parity index in education has been achieved. Maternal health has significantly improved. There are no pronounce gender disparities in infant and under five mortality rates and other health outcomes. Women labor’s participation rate continues to grow with better return for educated women than men. Women’s political representation has increased. Challenges persist in MMR, HIV/AIDS, stunting and wasting, gender streaming in education, economic opportunities, access to legal justice, and voice and agency in influential decision makings. These challenges juxtapose the emerging trends of human trafficking and non-women friendly policies at sub national levels. The key achievements and outstanding-issues are presented in the eight Policy Briefs, developed by the Government (the Ministry of National Planning and The Ministry of Women’s Empowerment and Child Protection) and development partners (the World Bank, AusAID, CIDA, The Netherlands Embassy, DFID, and ADB). Policy Brief 1: Gender Mainstreaming has been adopted since the issuance of Presidential Instruction No 9/2000. Presidential Instruction No 3/2010 and other ministerial regulations on gender mainstreaming further stipulate efforts on equitable and inclusive development. The emerging non- women friendly legislation at the local level signifies the importance of enforcing the aforementioned legislative and policy frameworks, coordination among national ministries and all levels of public institutions, and replication of good practices. Policy Brief 2: Gender Equality and Health in Indonesia shows positive results and remaining challenges in the four key health areas related to the MDGs. Important efforts have been made to increase women’s access to health services but Indonesia needs to work hard on reducing the high maternal mortality rate, increasing access to water and sanitation as well as HIV prevention and treatment for the increasing number of adult women living with HIV. Policy Brief 3: Gender Equality and Education has been one of the key achievements for Indonesia. The MDG targets on gender parity in net enrollment are on track to be met by 2015, especially if disparities at the provincial level are addressed. Focus is now on systematic measures to increase access to improved outcomes from a more gender responsive education. The challenge remains to mainstream a gender perspective in education which involves assessing the implication of any planned educational actions (legislation, policies or programs) to boys and girls, in all areas and at all levels. Policy Brief 4: Employment, Migration, and Access to Finance remain a challenge in that without proper measures may impede development. The average annual growth of women entering labor market is higher than men, but women continue to face lower labor’s participation and higher unemployment rates, poorer quality work and lower wages, limited access to resources, discrimination in hiring and promotion, and a higher level of economic informality. Women constitute most of self- employed, unpaid family workers, and migrant workers, making them susceptible to personal and financial insecurity, trafficking and other human rights violations. Closing these gender gaps requires focusing on the equal employment opportunities, link and match of women’s trainings and skills with the labor market, underlying factors of labor market segmentation, and wage gaps and career opportunities. ENGLISH Policy Brief 5: Poverty, Vulnerability and Social Protection has been one of the current highest government’s development priorities. Whilst the national poverty rate fell from 16.7% (2004) to 13.3% (2010) and poverty rates amongst female-headed households (FHH) remain lower than male-headed households (MHH), the overall rate of poverty reduction for FHH is lower than MHH. This is notwithstanding the well-targeted FHH in all Social Protection programs. Improved targeting techniques will reduce exclusion and inclusion errors and ensure that more poor households receive social protection. The challenge will be to ensure the new targeting mechanisms to include poverty indicators which reflect characteristics of poor and vulnerable FHHs and the male-female intra-household equal access to program benefits. Policy Brief 6: Gender Equality in Disaster Management and Climate Adaptation highlights the gendered differentiated impact of disasters. There has been significant learning from Aceh Tsunami on good practices for gender responsive disaster management. These need to inform and further strengthen all related national and local-level policies, institutions and programs to tackle the root causes of gender-based vulnerabilities, ensure use of gender analysis and sex-disaggregated data, as well as give equal weight to men’s and women’s rights and capacities. Policy Brief 7: Women’s Voice in Politics and Decision Makings in Indonesia has increased due to, among others, affirmative action for women candidacy and political participation in 2008. Women’s representation in the Parliament (DPR) increased from 11% (2004-2009) to 18% (2009-2014). Representation remained below the desired 30% and inadequate in other critical areas of public service and decision-making roles. Significant disparities within political parties and across levels of national and sub national government constrain the MDGs’ achievement for women’s empowerment. Indonesia’s Constitution and legal framework assure the equal rights of women. Strengthening current laws/regulations as well as implementation and monitoring could more effectively address women’s institutional and socio-cultural barriers. Policy Brief 8: Violence Against Women (VAW): Domestic Violence and Human Trafficking in Indonesia show both important progress and outstanding issues. More efforts are needed for law enforcement, capacity building of service provider and wider community, and extend services to urban and rural areas. The increased trend of human trafficking demands more integrated efforts for prevention, protection, prosecution and reintegration. POLICY BRIEF 4 EMPLOYMENT, MIGRATION AND ACCESS TO FINANCE T his Policy Brief provides an overview of achievements and gaps for gender equality in the labour market and suggests ways to address shortcomings that are negatively affecting the nation’s economic development. Over the past seven years, average annual growth of women entering labor market has been substantially higher than men, in part due to expansion of service sector employment and progress in women’s education. Yet women continue to face lower participation and higher unemployment rates, poorer quality work and lower wages, limited access to resources such as land and credit and discrimination in hiring and promotion practices in the formal sector, as well as a higher level of informal economic activity. They constitute most self-employed and unpaid family workers as well as Indonesian migrant workers, making them susceptible to personal and financial insecurity, trafficking and other human rights violations. Closing these gender gaps requires giving more attention to equal employment opportunities, particularly in the formal sector, strengthening the fit between women’s training and skills and current labour market requirements through expanding labour markets and income earning opportunities by addressing the causes of labour market segmentation leading to wage gaps and limited career advancement opportunities for women. Current Status: sector employment, culturally defined expectations of •• Labour Market appropriate work for women and discriminatory work practices. Women with vocational training do better than their male counterparts when they enter the la- Despite their growing participation rate, bour market, because their training is a closer fit with women continue to be more disadvantaged the needs of the growing service sector. in the labour market than men. W hile women are under-represented in the labour Notwithstanding the sustained economic growth, force, they are over-represented among unem- limited employment opportunities for poor workers, ployed and under-employed, part time and informal particularly rural women with low levels of education, sector workers, unpaid workers, people actively seek- has contributed to the slow rate of poverty reduction. ing work and those not actively engaged in the labour Although over the past seven years the average an- market. Reasons include women being out of the nual growth of women entering labor market is well workforce to take care of family, poor access to formal above men (7.2% and 2.2% respectively) their labor 1 NEW brief 4.indd 1 6/13/2011 2:31:26 AM Table1:Laborforceparticipation,unemploymentandunderemployment  2004 2009 2010 Item(percent) Male Female Male Female Male Female 4 WorkingAgePopulation15+ 50 50 50 50 50 50 POLICY BRIEF Labourforceparticipationrate 86 49 84 52 84 52 Unemploymentrate 8 13 8 9 7 9 Notinthelabourforce 21 79 25 75 25 75 AttendingSchool 52 48 51 49 51 49 Housekeeping 2 98 5 95 5 95  Sourceofdata:WBCalculationfromSakernas2004and2009Feb;2010dataisfromthe MinistryofLaborandTransmigration.  Womenrepresent75%ofthosenotinthelabourforce,approximately50%ofnonlabour be linked force participants who areto the fact attending  schoolthat women’s  and  95% of thoserate of underem-  engaged  in housekeeping. This participation at 52% remains lower than men’s at 84%.  suggests  that  the  main  reason  behind  women’s  relatively  low  labour force participation isployment (38%)  still domestic is higherthan  responsibilities whichmen’s are not  shared although (25%), equally within the It has actually stagnated over the past 5 years and is household.  This  may also be linked interestingly fact that women’s rate of  to the underemployment women’s  underemployment decreased (38%) is higher than men’s (25%),  although interestingly women’s underemployment significantly lower than most other countries in the from decreasedfrom 42%42%to38% to 38% while while men’s men’s increased increased slightly from23% slightly to25%from in2009. region. The unemployment rate for women (9%) is Table2:Laborforce 23% to 25% in participation, 2009. unemployment andunderemploymentoftheyouth(15Ͳ29 close to that of men (8%) and decreasing at a faster  years) Table 2: Labor force participation, unemployment and underemployment of  rate while their share of total unemployment the youth (15-29 years) 2004 2009 is lower and has decreased from 48% to 42%.  Male Female Male Female Youth unemployment accounts for 70% of Age15Ͳ29,SHS+education 51 49 51 49 Youthunemploymentrate(15Ͳ29years) 19 26 17 20 total unemployment with women account- Youthunemploymentrate(15Ͳ29)SHS+education 27 36 22 26 Youthunemploymentaspercentoftotalunemployment 76 73 69 72 ing for almost half of the unemployed youth. Underemployment(workinglessthan35hrs/week) 23 42 25 38 The rate of young women’s unemployment  Source of data: WB Calculation from Sakernas 2004 and 2009 Feb unemployment with women accounting for almost half of the unemployed Sourceofdata:  youth.  The fromSakernas2004and2009Feb WBCalculation is higher than for young men but is decreasing at a rate of young women’s unemployment is higher than for young men but is decreasing at The structure of the labor market, the gender division of labor and wage gaps a muchfaster much rate faster rate and  and is higher  is higher for women  for young young women  with with  more education.  (Note: Unless contributes to continuing gaps. Women are more likely to be informal workers (67.4%) otherwisespecifiedalltemporaltrendsarecomparing2004and2009). more education. (Note: Unless otherwise specified all compared  to men  (62%)structure The of the  with a slight increase labor and  for women market, the  for men  a slight decrease  Table1:Labor temporal forceparticipation, trends are comparingunemployment2004andand underemployment 2009).  over  the  past  4 gender division of labor and wage gaps years.  Being  a  woman  increases  the  probability  of  working  informally by  contributes to continuing gaps. 2 Table 1: Labor force participation, 2004 unemployment  2009underemploymen and 2010 W Item(percent) Male Female Male Female Male Female omen are more likely to be informal workers WorkingAgePopulation15+ 50 50 50 50 50 50 Labourforceparticipationrate 86 49 84 52 84 52 (67.4%) compared to men (62%) with a slight Unemploymentrate 8 13 8 9 7 9 Notinthelabourforce 21 79 25 75 25 75 increase for women and a slight decrease for men 51 49 AttendingSchool 52 48 51 49 5 95 over the past 4 years. Being a woman increases the Housekeeping 2 98 5 95  probability of working informally by 24%. In the non- Sourceofdata:WBCalculationfromSakernas2004and2009Feb;2010dataisfromthe Source of data : WB Calculation from MinistryofLaborandTransmigration. Ministry of Labor and Transmigration. Sakernas 2004 and 2009 Feb; 2010 data is from the agricultural informal sector, men tend to be employed  Womenrepresent75%ofthosenotinthelabourforce,approximately50%ofnon transportation inlabour  whilst women (60%) are mostly in force participants who are attending school and 95% of those engaged in housekeeping. This suggests that the main reason behind women’s relatively low labour force household retail and groceries traders. Informal work- Women represent 75% of those not in the labour force, participation is still domestic responsibilities which are not shared equally within  the a wage penalty of over 30% compared with ers face approximately household. This may 50% non to of linked  also be labour  the fact force participants  that women’s  rate of underemployment (38%) is higher than men’s (25%),  although interestingly women’s underemployment workers  in the formal sector. This means that if two who attending arefrom school and 95% of those engaged decreased 42%to38% whilemen’s increased slightlyfrom 23%to25%in2009. people share identical qualifications and characteris-  in Tablehousekeeping. This suggests 2:Laborforceparticipation, unemploymentthatand the main reason underemployment oftheyouth(15Ͳ29 years) tics (same level of education, age, sex and location) behind women’s relatively low labour force partici-  and differ only in their sector of work, the one work- pation is still domestic responsibilities which are not  2004 2009 ing in the formal sector would earn 30% more than shared equally within the household. This Male  may Female  also Male Female Age15Ͳ29,SHS+education 51 49 51 49the  one with an informal job. The wage penalty is even Youthunemploymentrate(15Ͳ29years) 19 26 17 20larger for informal workers with at least a high school  Youthunemploymentrate(15Ͳ29)SHS+education 27 36 22 26 Youthunemploymentaspercentoftotalunemployment 76 73 69 72degree;  they earn 62% less than workers with identical Underemployment(workinglessthan35hrs/week) 23 42 25 38  characteristics in the formal sector. Informal workers Sourceofdata:WBCalculationfromSakernas2004and2009Feb are not only worse off in terms of wages but are also The structure of the labor market, the gender division of labor and wage  gaps less  insured, pensioned and trained. contributes to continuing gaps. Women are more likely to be informal workers (67.4%) compared to men (62%) with a slight increase for women and a slight decrease for men over the past 4 years. Being a woman increases the probability of working informally by 2  2 NEW brief 4.indd 2 6/13/2011 2:31:29 AM POLICY BRIEF 4 24%. In the nonͲagricultural informal sector, men tend to be employed in transportation whilst women (60%) are mostly in household retail and groceries traders. Informal workers face a wage penalty of over 30% compared with workers in the formal sector. Despite the lure of greater income security, less than sectors also increased from 29.55% in 2004 to 33.45% Thismeansthatiftwopeopleshareidenticalqualificationsandcharacteristics(samelevel 3% of informal workers transition into the formal sec- in 2009. While the wage levels of female workers have of education, age, sex and location) and differ only in their sector of work, the one tor annually - 2.5% for men and 1.8% for women. Be- increased, wage discrimination is still prevalent. From workingintheformalsectorwouldearn30%morethantheonewithaninformaljob.The tween 1993 and 2000, only 2.6% of informal workers 2004 to 2009, the average monthly wage of female wage penalty is even larger for informal workers with  at least a high school degree; they transitioned into the formal sector per year, shrinking workers categorized as employees increased from Rp earn 62% less than workers with identical characteristics in the formal sector. Informal to 2.2% per year in 2000-07 (Table 3). Slow growth of 676,611 to Rp 1,098,364. In non-agricultural sectors, workersarenotonlyworseoffintermsofwagesbut arealsolessinsured,pensionedand the formal sector limits job availability. The new en- the average wage of female casual employees also trained. trants  to the job market tend to be better educated increased from Rp 277,183 to Rp 396,115. Although and more Despite urbanized  the  lure ofthan before;  greater informal  income workers less than  security, women’s  3%average of informal wage has increased,  workers  transition there remains  into the formal sector annuallyͲ 2.5% for men and 1.8% for women. Between 1993and who are young, urban and male are the most success- a wide wage disparity between women  and men. The ful 2000,at breaking  only 2.6% into the offormal informal job market. workers Actually  transitioned biggest  into gap  the was in casual  formal employees  sector  perin non-agricul- year,  shrinking to 2.2% per year in 2000Ͳ07 (Table 3). Slow growth of the formal sector limits men’s it is more common for formal workers to move into ture sectors where women receive only 54% of informal jobs than jobavailability. the other The newwayentrants around. toFrom thejob 2000 market wages. tendto At be the national better level, the educated and average more monthly  urbanized than before; informal workers who are young, urban and male are the most 61% to 2007, an average of 4.4% percent of formal work- wage for female workers in 2009 increased by ers moved into successful  atinformal  breaking jobs annually,  into higher than  the formal  jobthemarket.from Actually 2004,  is morewomen’s  ithowever,  common average  for formal wage was  still level workersseen in to1993-2000.  move into Formal workers  informal  jobsin rural than areas  the other only  way 78%  around. of the average From 2000 male worker’s  2007,wage.  to  an Wide who are less average  ofeducated are more  4.4% percent likely  of to move  formal into in- moved  workers disparities  into informal also exist between  jobs  annually,provinces.  higher thanthelevelseenin1993Ͳ2000.Formalworkersinruralareaswhoarelesseducated formality than those who live in urban areas and are Looking at the employment sectors in order areof their moreeducated. more  likely toAlthough  move into are more likely  informality women thanto those who share  live of the urbanmarket,  in labour areas and the  are more majority of  women educated. be found in  Although the informal  women sector, men  are  more are  likely slightly more  to beworkers found in (41%) theare  informal concentrated  sector, in agriculture, men are where slightly likely to move morefrom  likely  to move formal  from to informal  formal jobs. Most of informal  to they  represent prevalent. jobs.  From 2004  Most  to38% 2009, ofofaverage the those all workers  who  monthly and  wage are suffer of  self  female fromͲ a workers 17%   categorized asemployeesincreasedfromRp676,611toRp1,098,364.InnonͲagriculturalsectors,the employedandfamilyworkersarefemaleat67%in2009. those who are self-employed and family workers are wage average  wagegap.  of  Women female  casual  are half employees  of also all workers increased  from  Rp in  wholesale, 277,183  to Rp 396,115. Although women’s average wage has increased, there remains a wide wage disparity  female at 67% in 2009. restaurants between  women and and  men. accommodation,  The biggest gap was in casualwhere  employeesthe wage gap  in nonͲagriculture sectorswherewomenreceiveonly54%ofmen’swages.Atthenationallevel,theaverage Table3Mobilityfrominformalitytoformality(%) is 25%; monthly  wage 41% of those  for female in social  workers services in 2009 increased  bywith a wage  2004, gap 61% from however, Table 3: Mobility from informality to formality (%) women’s average wage was still only 78% of the average male worker’s wage. Wide of 32%; disparities also42 percent exist of those betweenprovinces.  in industry with the high-  1993Ͳ2000 2000Ͳ2007   est wage gap of 44%; and a third of those in finance  >7years peryear >7years peryear  Looking at the employment sectors in order of their share of the labour market, the majority of women workers (41%) are concentrated in agriculture, where they represent 38% of all workers and business services where the wage gap of 20% is All 19.8 2.6 16.4 2.2  and suffer from a 17% wage gap. Women are half of all workers in wholesale, restaurants and accommodation, where the wage gap is 25%; 41% of those in social services with a wage gap of in their favor (see Table 4). 32%; 42 percent of those in industry with the highest wage gap of 44%; and a third of those in Urban 29.3 3.7 26.3 3.4  financeandbusinessserviceswherethewagegapof20%isintheirfavor(seeTable4).  Rural 17.8 2.4 12.3 1.7  Table Table4 4. Gender .Gender Division Divisionof of Labor LaborbySector, by WageGap  Sector, Wage Gap  Male 20.0 2.6 19.0 2.5  2004 2009 2004 2009      Sector  Male Female female Male Female female meanmale mean female 2004 wage meanmale mean female 2009 wage   share share  ( %) (%) (%) (%) Female 13.8 1.9 13.5 1.8 hourly hourly gap    (%)   (%) hourly hourly gap   wage2005 wage2004 (%)  Agriculture,plantation,forestry,fishery  43  45 36 41 41 38  3,258.58  2,148.73    wage2009  wage2009  (%)   52 4,604.35 3,939.31 17         5,481.84  2,925.76        8,557.24 5,752.81  Mining 1.43 0.50 16 1.53 0.37 13 87 49 Young 23.3 3.0 24.8 3.2 Industry     11    13   40   11   13   42   4,311.58 6,732.48   2,879.17 5,672.78    50     6,210.30   4,309.82   44    Electricity,fuel,drinkwater 0.34 0.06 9 0.31 0.03 5 19 11,503.95 10,476.93 10         3,615.07  4,066.41        Construction 7.31 0.34 2 6.96 0.30 3 Ͳ 11 5,541.80 7,801.56  Ͳ29 Adult 16.7 2.2 16.1 2.2                 4,183.78 2,943.14  Wholesale,restaurant,accommodation 17 6,158.71 4,931.65      27  46  16  28  51  3,712.76  3,949.60  42     25   Transportation,warehousing,communication 9 6,085.72 8,863.76     0.59  4  8  1.99  13    Ͳ6    Ͳ31   Finance,realestate,rental,businessservices 1.39 0.85 25 1.64 1.06 29 8,226.86 7,953.98  3   11,297.56 14,056.20 Ͳ20                 6,606.07 5,075.12  9,143.72 6,904.95 Source : World Bank 2010  Socialservices,social,andindividual Others  10 0.00  13 0.01  41 48  12 0.06  14  0.05 41 35  3,694.00  1,302.41  30    32              184  3,357.98  2,371.45  42  :WorldBank2010  Total  Sourceof data:Sakernas2004and2009Feb    100  100    35   100   100   38    Source  of data: Sakernas 2004 and 2009 Feb   share of women in wage employment in the          The wage premium for moreͲeducated workers is high and started growing after 2003. The The premium is higher for moreͲeducated women and urban workers. Female workers The share of women in wage employment in the nonͲagricultural sector increased from non-agricultural sector increased from 29% in 2004 who have at least completed senior secondary school enjoy the highest wage premiums. The wage  duringpremium for  a premium equal toworkers more-educated  the wage ofis 29% in 2004 to 33.45% in 2009. The total share of women in wage employment in both to 33.45% in 2009. The total share of women in wage On  average,  1990Ͳ2007, they  earned educated women, while the premium for moreͲeducated men was only 57% on average.  lessͲ agriculturaland nonͲagricultural sectors also increased from 29.55% in 2004 to 33.45% in high and Premiums started  for more Ͳeducated growing  men, however,after  grew2003. The premium  at 1.9 percentage  points peris  year employment in both agricultural and non-agricultural during 2003Ͳ2007 – more than four times the rate of women’s premiums, which grew at higher for more-educated women and urban workers. 2009.Whilethewagelevelsoffemaleworkershaveincreased,wagediscriminationisstill 0.4  percentage points peryear. Gender gaps in employment and wages cannot necessarily be explained by disparities in educational attainment and training. The ratio of girls to boys at all levels of schooling is close to parity and for junior secondary and higher education is in favor of female 3  students.Thereare,however,significantregionaldifferencestobetakenintoaccountfor 3 4  NEW brief 4.indd 3 6/13/2011 2:31:31 AM Since the financial crisis of 1998, the economy has increasingly relied on the service sector to generate growth. Annual growth in the industrial sector has fallen dramatically, while annual service sector growth remained strong. From 2003 to 2007, employment in the service sector has grown more rapidly than employment in the industrial sector. Furthermore, the service sector commands a wage premium approximately twice that of POLICY BRIEF 4 industry and 4 times that of agriculture. This change in the structure may be negatively affecting male graduates who tend to choose technical and industrial majors over more serviceͲoriented majors in vocational school. Women tend to choose vocation majors compatiblewiththegrowingservicesector,whereeducatedworkersbenefitfromhigher wage premiums: 56% of female SMK students are enrolled in business management and 28.9%studytourism(Figure1).  Figure1.ChoiceofVocationalMajors Female workers who have at least completed  senior Figure 1. Choice of Vocational Majors secondary school enjoy the highest wage premiums.  On average, during 1990-2007, they earned a premi-  um equal to the wage of less-educated women,  while the premium for more-educated men was only  57% on average. Premiums for more-educated men,  how- ever, grew at 1.9 percentage points per year  during     Source: World Bank staff calculations, based on Susenas, 2006 2003-2007 – more than four times the rate of women’s premiums, which grew at 0.4 percentage points per Source:WorldBankstaffcalculations,basedonSusenas,2006  year. Gender gaps in employment and wages cannot neces- Policy  Issues  Policy Issues Job creation is essential for reducing poverty and vulnerability. Despite modest growth sarily be explained by disparities in educationalin attain- formal job creation, there has been no progress in removing barriers to this growth. ment and training. The ratio of girls to boys atLabor regulatoryreform all levels Job and jobcreation creation areincluded is essential foramong reducing poverty priorities theGovernment’s in the National MediumͲTerm Development Plan (RPJMN 2010Ͳ2014.) A draft revision of of schooling is close to parity and for junior secondary and vulnerability. the Labor Law, developed  under the supervision of the Ministry of Manpower and and higher education is in favor of female students. Transmigration (MoMT), is currently under review by the Ministry of Justice. While the draft introduces There are, however, significant regional differences contracts, which may help be taken into account for local government planning to D espite modest  some welcome there reforms (e.g.  stimulate has been  formal growth  greater no job progress in  flexibilities  creation), associated with Indonesia’s current severance system, characterized by high rates (that to this growth. Labor regulatory reform and job cre- formal  in in removing job  thecreation,  use of temporary it fails to address barriers  problems purposes. Furthermore female students’ choice of vo-  job creation) and low compliance (that fails to provide real protection, discourages particularlyforlow ation are included wageworkers). among Slowprogress the on laborGovernment’s andsocialsecurity priori- reformsisa cational training subjects also works in their favor. ties in the National Medium‐Term Development Plan Since the financial crisis of 1998, the economy has (RPJMN 2010‐2014.) A draft revision of the Labor Law, 5 increasingly relied on the service sector to generate  developed under the supervision of the Ministry of growth. Annual growth in the industrial sector has Manpower and Transmigration (MoMT), is currently fallen dramatically, while annual service sector growth under review by the Ministry of Justice. While the draft remained strong. From 2003 to 2007, employment in introduces some welcome reforms (e.g. greater flex- the service sector has grown more rapidly than em- ibilities in the use of temporary contracts, which may ployment in the industrial sector. Furthermore, the help stimulate formal job creation), it fails to address service sector commands a wage premium approxi- problems associated with Indonesia’s current sever- mately twice that of industry and 4 times that of agri- ance system, characterized by high rates (that dis- culture. This change in the structure may be negatively courages job creation) and low compliance (that fails affecting male graduates who tend to choose techni- to provide real protection, particularly for low wage cal and industrial majors over more service-oriented workers). Slow progress on labor and social security majors in vocational school. Women tend to choose reforms is a cause of concern. The political window of vocation majors compatible with the growing service opportunity for movement on either issue is brief, and sector, where educated workers benefit from higher will begin to close as national elections loom in 2014. wage premiums: 56% of female SMK students are en- rolled in business management and 28.9% study tour- ism (Figure 1). 4 NEW brief 4.indd 4 6/13/2011 2:31:33 AM POLICY BRIEF 4 While there is a legal and policy framework ers’ compliance with the protection of women and in place to support gender equality in the children’s labor rights in the RPJM 2010-2014 to be im- world of work, implementation remains the plemented by the MoMT. The RPJM outlines priorities key issue. to improve protection and facilities to support labor mobility as follows: (a) increasing the role of regional S everal legal measurements have been put in place to ensure equal employment opportunities (EEO) such as Law No 80/1957 on Equal Remuneration, Law authorities [province/district] in labor protection and facilities; (b) completing the regulation and strength- ening institutions for migrant workers’ placement; (c) No 21/1999 on Discrimination (Employment and Oc- enhancing services for migrant workers’ placement; cupation), Manpower and Transmigration Ministerial (d) increasing protection for migrant workers; and (e) Regulation No 49/2004 on the Structure and Scale developing information on the foreign labor market. of wages, Law No 3/1992 on Social Security covering accidents at the workplace, old age security, life and health insurance, and the Labor Law No 13/2003 on Recommendations Labor. Other provisions provide for breastfeeding in •• Conduct research on factors underlying the low the workplace, protection of employed women work- female participation rate in the labor force, gender ers at night and gender mainstreaming for the MoMT. gaps in wages by sector and type of employment, Enforcement of these laws and regulations to protect and barriers to women’s promotion and career de- women workers’ rights is necessary for gender equal- velopment in the formal sector. ity but some feel that compliance with these laws in- creases costs to employers and may result in the slow •• Related ministries and the Centre of Bureau of Sta- growth of industries and employment opportunities. tistics (BPS) to improve availability of sex-disaggre- In 2002, MoMT drafted a paper on “Strategic Thinking gated database in order to track trends in the links on Advancing Gender Equality in Indonesia: Ministry of between education and training and labor par- Manpower and Transmigration Perspective”, as a blue- ticipation and remuneration in different sectors, as print for its strategy to advance ILO Conventions 100 well as the formal and informal sector. (Equal Remuneration) and 111 (Discrimination), which •• MoMT to advocate the uptake of the EEO policy in was then incorporated in Law no 13/2003 on Labor. order to eliminate discrimination in recruitment, Since 2009, the MoMT has been developing a Code of promotion, wages, and other employment prac- Practice on Sexual Harassment at the Workplace and tices. MoMT to further ensure that private compa- in 2010 established an inter-governmental agency nies adopt an EEO policy to increase productivity taskforce to review and strengthen the implementa- through building commitment at all levels and tion of EEO guidelines. The ILO is assisting the Ministry to develop a system for monitoring and evaluating application of these guidelines. Improving workers’ protection is one of the targets set by the Govern- ment for achieving the MDGs, specifically under Goal 1: Eradicate Extreme Poverty and Hunger and Goal 3: Promote Gender Equality and Empower Women. In Goal 3, the Government has set targets on employ- 5 NEW brief 4.indd 5 6/13/2011 2:31:35 AM POLICY BRIEF 4 technical units, training and consultation, devel- enterprises at the business margin with a lack of ac- oping networking, monitoring and evaluation. cess to the capital and business advisory services nec- essary for entrepreneurial success, largely due to lack •• MoMT to promote legal literacy, using EEO guide- of collateral, complex procedures and legal (licensed) lines and other legal instruments for gender equal- status. They become entrepreneurs mostly as a func- ity and non-discrimination in employment. for tion of “self-employment by necessity”, due to limited women workers and their employers. work opportunities and the need to supplement fam- •• MoMT and Ministry of Education to encourage girls ily income whilst also carrying out domestic roles. to pursue education and training streams which A 2006 IFC study on business women’s access to credit feed into growth areas such as the service sector found that they are applying for and receiving less and promote continuing education and training to credit than men. In the study sample, 11.5% of total encourage women workers to pursue higher level loans were disbursed to women, while male borrowers professions. accounted for 88.5%. While legally there is no gender discrimination in access to finance, in practice, wom- en business owners avail themselves less than men to Current Status: credit, despite the fact that they are considered a bet- •• Enterprise Development and ter (lower) credit ‘risk’ than male borrowers. Reasons Access to Finance for this could include a higher rate of financial literacy among men than women, a greater Box 1: Gender differences in SMEs M icro-Small-Medium Enterprises (MSME) form the backbone of the informal sector in Indo- nesia where the majority of women workers are con- likelihood that men have necessary col- A recent survey of 602 SMEs in 10 cities in Indonesia found that women ran 28% of the surveyed SMEs. Women lateral (legal titles headed firms were generally smaller centrated. They account for the bulk of employment than men’s with 82% having a monthly for assets such as in Indonesia, employing between 80% (Government turnover of IDR 50 million or less, com- land, housing, ve- pared to 56% for men. They are more of Indonesia/GoI MDG report) to 96% (World Bank, concentrated in wholesale and retail hicle) and more 2010) of the working labour force and for over 99% of trade (63% female/46% male) and more freedom in decision likely to be sole proprietorship (77% all business units. They contribute close to 58% of GDP female/62% male). Insufficient finance making, although (GoI MDG report) and yet receive about half of bank and financial management were less of both spouses in the a concern for women (23% female/(41% credits. The distribution of all firms according to size male). Women-run firms were less likely household must shows that micro firms form the bulk (83%), while 16% to have a savings or deposit account sign loan agree- (79% female/92% male), to have prop- are small, 7% are medium and 0.2% are large. Women erty insurance (5% female/13% male) ments. run 39% of all micro and small firms and 18% of all me- or to have taken a business loan (6% Male and female female/16% male). Of those who did dium and large firms (2006 Economic Census as cited take out loans both men and women patterns of access- in IFC/NORC 2010). The number of women-run SMEs used commercial banks three quarters ing financial ser- of the time; but the second source of increased by 42% between 2002 and 2007 and in line loans for men was cooperatives and vices do not differ with global trends, their annual growth exceeds that for women was informal sources. Only much: women (17%) 2% of men and 1% of women headed of men at 8% and -0.27% respectively. There are clear firms used Sharia-compliant financial are only slightly less differences between female and male entrepreneurs products. likely to be “finan- (see Box 1); most women engaged in micro and petty (source: IFC/NORC, 2010) 6 NEW brief 4.indd 6 6/13/2011 2:31:36 AM POLICY BRIEF 4 cially excluded” (not have access loans and savings) erty). But divorce law provides a greater share of as- than men (17.2%), they are just as likely to have a sets to husbands while taxation law identifies men as savings account (68%), 41% of women have bank ac- the subject of taxation meaning that married women counts compared to 40% of men while 49% save in- must use their husband’s tax number at all times un- formally compared to 47% for men. These results are less they have a specific pre-nuptial contract that al- quite high compared to other countries where the lows a couple to separate their assets and income. proportion of women with savings accounts is signifi- cantly less than men. However, available data does not Current laws governing access to land and assets, and show the amounts that are being saved, which may property ownership do not discriminate against wom- reveal gender differences in wealth and financial secu- en. These include the Agrarian Law No. 5/1960, the rity. Women have slightly less average amount of debt Law on Religious Jurisdiction No. 7/1989 (which cov- at USD 771 than men at USD 796 representing 27.3% ers inheritance) and property ownership for women in and 28.1% of household expenditure respectively. Ap- the Marriage Law No. 1/1974. Female heads of house- proximately 17.3% of both male and female borrowers holds (FHH), except those without legal identification take bank loans. Women borrow less than men from as head of households, are eligible for securing land Micro Finance Institutions (0.4% and 1% respective- tenure and inheritance for their children, and thus ac- ly) and community welfare schemes (5.4% and 6.8% cessing formal credit institutions. Traditional norms respectively) but more from pawn shops (3.4% and and values give men greater de facto claim over asset 2.5%) and informal sources (44.2% and 41.9%). and land ownership which constrain women’s eco- nomic opportunities, particularly in accessing credit and in practice, married women may face limitations Policy Issues depending on their husbands’ awareness of and re- spect for their legal rights. Contradictory legislative and policy ar­ rangements contribute to women’s limited Planned mechanisms to expand and streng­ access to formal finance institutions. then MSMEs should be informed by gender analysis. T he 1974 Marriage Law No. 1/1974 provides equal T rights and responsibilities between husband and he Government aims to promote MSME develop- wife while article 31(3) of Law No 1/1971 on Mar- ment through the following measures: facilities to riage recognizes men as the head of the house and increase the capacity of MSMEs; expansion of coopera- ‘breadwinners’ and women as wives and mothers. The tives through entrepreneurship and capacity building explanatory clauses to Article 61 of Law No 23/2006 on business management; provision of information on on Administration of Population, however, recognize services and business consultancy; and expansion of women as the head of household. Article 31 para- the People-Based Small Business Loan Program (KUR). graph (2) of the Marriage Law No. 1/1974 stipulated The Ministry of Home Affairs’ (MoHA) 2010 Regulation that married women are entitled to perform legal No 39, established the Village-owned Cooperative acts (including appearing before the court of justice, “BUMDES” (Badan Usaha Milik Desa), a new form of vil- entering into contracts and using and owning prop- lage owned cooperative providing goods and servic- 7 NEW brief 4.indd 7 6/13/2011 2:31:38 AM POLICY BRIEF 4 es, including credit, for SMEs. The Ministry of Finance • BPS to integrate Access to Finance module into Regulation No 135/PMK.05/2008 clearly outlines gov- Susenas to track disaggregated data and links to ernment support to accelerate the real sector (i.e the poverty reduction. market of goods and services) and to facilitate access to finance for SMEs and cooperatives by establishing a government sponsored credit guarantee fund. Each Current Status: of these programs needs to be analyzed further to de- •• Migrant Workers termine the extent to which women, particularly poor women, are able to gain access to services and build in As the migrant workforce becomes more measures to target women entrepreneurs. minized, it is possibly becoming more fe­ vulnerable. Recommendations •• Improve access for poor women start-up entre- I n 2008, women comprised 74% of the total 748,825 Indonesian migrant workers (see Figure 2) reflecting a growing trend for women in this sector. The actual preneurs to productive resources such as finan- cial services (loans and savings), financial literacy, number of overseas workers is estimated to be much business advisory services, improved technology higher x Related Ministries at  to about  improve 4.3 million  availability  of sexsince many Ͳdisaggregated more emigrate  database  for womenͲ run SMEs including on profitability, market segmentation, job creation, development and markets and training and support so they can andaccessillegally. tofinance(formal,Women comprise informal, around MFIs,commercial three-quarters banks, etc). of x BPS to integrate Access to Finance module into Susenas to track disaggregated data move from informal to formal sources of finance andlinksto Indonesia’s povertyreduction. migrant workers, mostly in unregulated  domestic work and continue to be one of the least •• Enhance legal literacy for women entrepreneurs to Status:MigrantWorkers Current As the migrant  workforce in protected the region. becomes Coming  more feminized,  it mostly is possibly from  becoming rural ar-   more better understand their property rights and enti- vulnerable. Ineas  2008,  women with low levels of education, they are vulnerable   comprised  74%  of  the  total  748,825  Indonesian  migrant tlements under the various laws referred to above.workers (see Figure 2) reflecting a growing trend for women in this sector. The actual number of overseasto unregulated  workers is estimated  to be muchpractices, recruitment  higher at about indebtedness,  4.3 million since many more emigrate illegally. Women comprise around threeͲquarters of Indonesia’s •• Strengthen existing women MSMEs to scale-up migrant workers, exploitation and abuse.  mostly in unregulated  domestic Women  work and migrant  continue to  be one ofare workers  the their activities, thereby generating more employ- least protected at  in  the risk  region. of  Coming 55% trafficking: mostlyof  from  rural areas trafficking  with low victims  levels of assisted education, they are vulnerable to unregulated recruitment practices, indebtedness, ment opportunities for other women workers. exploitation and by  International abuse. Women migrant Organization  workers are for  atMigration in Indone- risk of trafficking:  55% of trafficking victims assisted by International Organization for Migration in Indonesia were •• Collaborate more systematically with CSO net- exploiteddomestic sia were workers, exploited 89%ofwhom domestic werewomen. workers,  89% of whom  works, who play significant role in developing and were women. Figure 2. Migrant Workers Placement by Sex and Year, 1994Ͳ2008 (official data, does not include undocumented migrants) strengthening women-run MSMEs through finan-  Figure 2. Migrant Workers Placement by Sex and Year, 1994-2008 (official cial support, capacity building support data, does not include undocumented migrants) and advocacy on gender sensitive policy development. •• Related Ministries to improve availability of sex-disaggregated database for wom- en-run SMEs including on profitability, market segmentation, job creation, de-   Source: http://bnp2tki.go.id/, accessed 4 January 2011 velopment and access to finance (formal, Source:http://bnp2tki.go.id/,accessed4January2011  informal, MFIs, commercial banks, etc). Economic contribution of migrant workers is hampered by exploitative practices. High migration fees (official and unofficial) are often financed by migrant workers and their families through debt. These range from USD 350 to USD 950 for legally registered migrants; the fees for illegal arrangements are lower, which explains the high rate of undocumented migrants. Actual salaries are often lower than contract values due to salary deductions from brokers and recruitment agencies and underpayment by 8 10  NEW brief 4.indd 8 6/13/2011 2:31:40 AM POLICY BRIEF 4 Economic contribution of migrant workers receiving countries. The Migrant Workers and Over- is hampered by exploitative practices. seas Filipinos Act (RA 8042/1995), establishes labor centers in all countries with more than 20,000 Filipino High migration fees (official and unofficial) are of- workers. Each center – staffed with a Labor Attaché, ten financed by migrant workers and their families Foreign Service Personnel, Welfare Officer, Center Co- through debt. These range from USD 350 to USD 950 ordinator and, if necessary, an interpreter – provides for legally registered migrants; the fees for illegal ar- a comprehensive range of services, including loans to rangements are lower, which explains the high rate cover the costs of legal disputes, and operates a fund of undocumented migrants. Actual salaries are often to cover possible repatriation costs if necessary. lower than contract values due to salary deductions from brokers and recruitment agencies and under- payment by employers. Registered migrant workers Policy Context face barriers in claiming non-wages benefits such as insurance, for which they have paid. Because formal transfers come with high charges and require legal T he government has put important measures such as Letter No B.80/MEN/SJ-UM/IV/2011 on the es- tablishment on an integrated team for the protection ID, migrants’ savings are often sent back via informal and insecure channels to households that are highly of migrant workers on 15 April 2011. The current le- dependent on remittances. Indonesia is one of the gal frameworks and support services available for mi- top remittance-recipient countries in the world. In grant workers, however, needs to be further strength- 2007 alone, migrant workers sent approximately USD ened to mitigate their vulnerabilities. The existing 6 billion in remittances (equal to one-third of foreign laws and regulations do not clearly define roles and direct investment in the same year). Their economic negotiating power across government institutions in contribution is hampered by the high costs of recruit- providing support and services for migrant workers. ment, placement and post placement stages, weak In addition, as mandated in ICPD 1994 Chapter X on legal protection, and income insecurity. This affects International Migration, urge Governments to address both the livelihoods of the migrant workers and the the root causes of migration, to make remaining in households that depend on their income. Households one’s country a viable option for all people. Inflows of reported that remittances equaled 80-90% of total remittances should be fostered by sound economic household expenditures, regardless of the income policies and adequate banking facilities. Countries of level of the household. destination should consider the use of temporary mi- gration, while countries of origin should collaborate There is considerable scope for reducing risk and in promoting voluntary return. The exchange of infor- increasing revenues and household incomes by ad- mation on migration policies and the monitoring of dressing the barriers to legality that migrant workers stocks and flows of migrants through adequate data face. Indonesia’s policy framework is incomplete com- gathering should be supported. ICPD+15, suggested pared to countries such as the Philippines, placing its a more comprehensive approach that addressees the female migrant workers at greater risk. The Philippines root causes of migrant workers, reintegration process offer better protection, labor standards and minimum of returning migrants, and more intensive coopera- wage provisions, through bilateral agreements, mem- tion and dialogue with recipient countries may need orandums of understanding, and support services in to also be envisaged. 9 NEW brief 4.indd 9 6/13/2011 2:31:41 AM POLICY BRIEF 4 Law No. 39/2004 on the Placement and Protection of document available to domestic workers. The Phil- Indonesian Migrant Workers emphasizes placement ippines also requires employers to register, sign procedures rather than workers’ protection, and over- and authenticate employment contracts with their looks women migrant workers’ specific vulnerabilities foreign missions. such as sexual harassment and abuse, and limited mo- •• Expand support services for migrant workers in bility for live in domestic workers. This law has been Indonesian embassies of all major receiving coun- revised and is currently with the House of Parliament. tries that cover a range of functions that may in- clude: one-stop information services, legal advice, Recommendations and conciliation services. Facilitate legalization of illegal undocumented migrant workers: to •• MoMT to develop a comprehensive policy frame- strengthen their protection status, ability to use work to improve protection of migrant workers, legal and safe remittance channels, etc. with a particular focus on women, especially do- •• Make formal sector instruments and services more mestic workers. The Philippines model on the accessible and responsive to migrant workers. This protection policy framework may be used as an can be done by: helping ensure that migrant work- example. An agenda of action is recommended to ers have valid and acceptable forms of identifica- improve the access of migrant workers to formal tion; customizing financial products and instru- financial instruments and services, to ensure that ments for Indonesian migrant workers, including poor households benefit from remittance flows, remittance services, loans and savings; ensuring and to enhance data collection on migrant work- better assessment techniques of data and regula- ers by sex, destination, occupation, remittances, tory changes; enabling strategic partnerships be- wages, abuses and legality. tween remittance service providers (both formal •• MoMT to establish and monitor service standards and informal), and expanding the state’s role in for the pre-departure training and preparation encouraging formal transfers. programs implemented by recruitment agencies •• Facilitate migrant workers’ and their families’ access and ensure that participants receive comprehen- to the formal sector financial services providers in sive and detailed information about their contrac- two ways: 1) provide financial literacy trainings tual and legal rights and have the correct docu- for migrant workers in partnership with financial ments and forms to claim entitled benefits (e.g., institutions, Indonesian embassies and non-gov- insurance). ernmental organizations and 2) improve physical •• Pursue bilateral negotiations with all major receiv- accessibility to locations where remittances can ing countries to protect workers, including foreign be deposited, transferred and withdrawn, and domestic workers, through agreements or memo- improve the user-friendliness of financial institu- randums of understanding. tions. •• Promote the use of standard employment con- •• Formalize and regulate informal service providers tracts that detail comprehensive rights and ben- while maintaining their accessibility for migrant efits for migrant workers. In the absence of legal workers. Improving competition in order to reduce frameworks, the contract is often the only legal costs will help ensure that only efficient providers 10 NEW brief 4.indd 10 6/13/2011 2:31:42 AM POLICY BRIEF 4 remain in business. In addition, licensing and reg- Opportunity, ILO. Jakarta, Indonesia. Newhouse, D. & Suryadarma, D. (2009), “The Value of Vocational Educationi: ulating informal providers will allow remittances High School Type and Labor Market Outcomes in Indonesia”, Policy through these channels to be better monitored Research Working Paper 5053. The World Bank, Washington D.C, USA. and tracked. Rodgers, Yana van der Meulen (1999), “Protecting Women and Promoting Equality in the Labor Market: Theory and Evidence”, Policy Research Report •• Comprehensive data on migrant workers and on Gender and Development, Working Paper Series No 6. The World households is needed and would best be collected Bank. Washington D.C., USA. through national, regular surveys such as Susenas UNDP (2010), “The Real Wealth of Nations, Pathway to Human Development”, Human Development Report 2010, 20th Anniversary Edition. UNDP, New or Sakernas. This could include data from an an- York, USA. nual survey in addition to the panel data from the World Bank (2010), Migrant Workers for the Indonesia Jobs Report, “Towards Indonesia Family Life Survey which would spur fur- Better Jobs and Security for All”, Unpublished Chapter, Jakarta Indonesia. ther empirical research designed to support poli- World Bank and the Netherlands Embassy (2010), Indonesia Jobs Report, “Towards Better Jobs and Security for All. The World Bank. Washington cies concerning migrant workers. (Note: Possible D.C., USA. research questions include: why and how people World Bank and The Netherlands Embassy, (2010), “Improving Access to migrate; who they are (sex, education level, age, Financial Services in Indonesia”, The World Bank. Washington D.C., USA. etc) and what kind of jobs they are looking for; to World Bank (May 2008), “The Malaysia-Indonesia Remittance Corridor, Making Formal Transfer the Best Option for Women and Undocumented Migrants”. what extent do migration and remittances con- The International Bank for Reconstruction and Development/The World tribute to economic growth; how do households Bank, Washington D.C., USA. use additional income from remittances – for con- World Bank (December 2010), “Maximizing Opportunities, Managing Risks”, sumption, economic development (i.e., purchasing Indonesia Economic Quarterly, Edition December 2010. Jakarta, Indonesia. productive assets), or human development (i.e., in- creased spending on education and health)). References Alisjahbana, A. S. & Manning, C. (October 2007). “Trends and Constraints Associated with Labor Faced by Non-Farm Enterprises, Working Paper in Economics and Development Studies”. Centre for Economic and Development Studies, Department of Economics, Padjadjaran University. Bandung, Indonesia. Akademika for IFC-PENSA (2006), “Access to Credit for Businesswomen in Indonesia”, IFC, Jakarta, Indonesia. Bappenas (2010), “Peta Jalan Percepatan Pencapaian Tujuan Pembangunan Milenium”, Bapenas. Jakarta, Indonesia. IFC/NORC (2010), “Serving the Financial Needs of Indonesian SMEs”, IFC, Indonesia Larsen, JJ, Jade, L., Judy, P. (2009), “Trafficking in persons monitoring report July 2007-December 2008’, AIC Reports: Monitoring Reports 06. Australian Institute of Criminology. Canberra, Australia. Mastercard Worldwide, (2010), “Women-owned SMEs in Asia/Pacific, Middle East and Africa: An Assessment of the Business Environment”, The Mastercard Worldwide Insights, Q3 2010. Ministry of Manpower and Transmigration (2005), “Guidelines: Equal Employment Opportunity in Indonesia”, Task Force Equal Employment 11 NEW brief 4.indd 11 6/13/2011 2:31:43 AM NEW brief 4.indd 12 6/13/2011 2:31:44 AM