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COVID-19 pulls more workers into low-paying service sector jobs
The jobs include those in wholesale and retail trade, accommodation and food service activities and transportation and storage.
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Two Indonesian vendors wearing face masks wait for customers at a traditional market in Jakarta on March 19, 2020. Wholesale and retail trade accounts for nearly 40 percent of the whole service workforce. (AFP/Adek Berry)
M
ore Indonesian workers have turned to service sector jobs over the past few years as factories furloughed employees amid the pandemic-induced economic downturn.
However, the latest data show these workers remain concentrated in traditional sectors with relatively low wages as the country lacks highly educated human capital, thus fettering the benefits of Indonesia’s economic tertiarization, a phenomenon that had spurred growth in developed countries.
Traditional sectors, including wholesale and retail trade, accommodation and food service activities and transportation and storage, employed the majority of the Indonesian workforce in services in August 2021, according to the latest data from Statistics Indonesia (BPS).
In comparison, industries such as health, education, finance, business services and IT employ larger chunks of the workforce in developed economies.
“Some service sectors got hit [by the pandemic] quite significantly, especially those related to public mobility,” said Faisal Rachman, economist at state-owned publicly listed Bank Mandiri, on Feb. 25.
“However, once the [mobility restrictions] were eased, those sectors could rebound faster. In contrast, the manufacturing sector needed some time to accelerate.”
Over 25.7 million Indonesians work in the wholesale and retail trade, accounting for nearly 40 percent of the whole service workforce. Workers in accommodation and food services accounted for 14.2 percent of the total, making this sector the second-largest employment base.
