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Jakarta Post

70 million informal workers most vulnerable during pandemic

  • Farida Susanty and Markus Makur

    The Jakarta Post

Jakarta/West Manggarai, East Nusa Tenggara   /   Fri, April 3, 2020   /   03:35 pm
70 million informal workers most vulnerable during pandemic A storekeeper measures and cuts lurik cloth. (JP/Aditya Sagita)

Physical distancing, closed shops and empty roads have changed the daily activities of Tedy Abdullah, a 27-year-old motorcycle taxi driver who partners with ride-hailing apps Gojek and Grab. What used to be hectic days that start in the afternoon and go on until the morning after, are now filled with inactivity.  

“I can wait for hours with no orders,” said Teddy, who used to earn between Rp 200,000 (US$12) and Rp 250,000 a day. “Now I only earn around Rp 100,000 per day.”

Teddy is only one out of the estimated 2 million app-based ojek (motorcycle taxi) drivers in the country whose incomes have taken a hit with fewer orders, especially for ride-hailing and shopping services. The number of Gojek and Grab active users declined 17 percent throughout March, according to a Statqo Analytics report.

Motorcycle taxi drivers may only be the tip of the iceberg for Indonesia’s 70.49 million informal workers, more than half of those employed in the country who are considered the most vulnerable in the economic downturn driven by the COVID-19 pandemic. They are unregistered, unregulated and unprotected by a proper social safety net, according to the International Labor Organization (ILO).

“If they don’t work for a day, they don’t get an income,” said Hadi Subhan, a labor expert from Airlangga University, highlighting informal workers’ vulnerability that stem from the way they rely on daily earnings. 

App-based ojek (motorcycle taxi) drivers drop off customers in front of the Tanah Abang railway station's gate in Central Jakarta. App-based ojek (motorcycle taxi) drivers drop off customers in front of the Tanah Abang railway station's gate in Central Jakarta. (JP/Dzulfiqar Fathur Rahman)

The situation, he added, was exacerbated by a lack of social and health protection for informal workers. “The government has lagged in providing protection for formal workers, let alone  informal workers,” said Hadi.

India, with 80 percent of its workforce in the informal sector, has been warned by international NGO Human Rights Watch for its decision to enforce a three-week nationwide lockdown starting March 24 to contain the spread of the virus. The lockdown “has disproportionately hurt marginalized communities due to loss of livelihood and lack of food, shelter, health, and other basic needs”, the organization stated.

India then announced a relief package of 1.7 trillion rupees ($22.2 billion) to provide free food and cash transfers to vulnerable populations. Similarly, President Joko “Jokowi” Widodo has also announced plans to spend Rp 405 trillion on health care, social spending and business recovery programs.

Of the total spending, Rp 110 trillion has been allocated for social safety net programs, including Rp 20 trillion to cover 5.6 million laid-off workers and small business owners, and Rp 150 trillion for economic recovery programs for small and medium businesses (SMEs).

As part of the move to disburse the financial relief, the Social Affairs Ministry announced on Thursday that 3.7 million informal workers in Jakarta would be given staple food packages, in cooperation with the Jakarta administration. The ministry will disburse Rp 25 trillion for the aid.

“I’m very concerned about that, distributing relief through the bureaucratic process. Based on my experience, the bureaucratic process to disburse relief is very long and it doesn’t always reach all those in need,” said Tadjudin Noer Effendi, a labor expert from Gadjah Mada University.

Read also: Indonesia advances pre-employment card program to tackle pandemic impacts

Small business owner Marvin Mujito Tanoto, 35, is among those who have yet to hear directly from his bank about loan relaxations, although his monthly orders have plunged by 90 percent. The Surabaya-based batik producer said because of numerous event cancellations, his monthly orders had nearly diminished from what used to be around 50 pieces per month.

“I took credit through the KUR with Bank Rakyat Indonesia. To this date, I still receive  confirmation that I have to pay the fixed credit. There is no facility to delay the payment,” he said, referring to the government’s microcredit program (KUR).

For travel-related workers at Indonesia’s popular tourist destinations in East Nusa Tenggara, such as the Komodo National Park, which hosts the country’s iconic Komodo dragons, the closure of tourist sites until May 29 has forced them to take unpaid leave.

The West Manggarai branch of the Indonesian Hotel and Restaurant Association (PHRI) reported zero percent occupancy at 102 hotels in Labuan Bajo. Travel guides for the national park have also subsequently lost their incomes.

“At the moment, I’m just looking for work on the internet. It may be an alternative to provide for my family,” said M. Buharto, a 32-year-old travel guide in West Manggarai, who is among 200 members of the local branch of the Indonesian Travel Guide Association (HPI) with no customers to serve.

SMERU Research Institute senior researcher Palmira Permata Bachtiar noted that current conditions served as an opportunity for the government and businesses to think about social protection for informal workers.

“We are facing two pandemics, the medical pandemic and financial pandemic. The medical pandemic might be resolved when a vaccine and medicine for the coronavirus are discovered. But the more dangerous thing is the financial pandemic, when billions of people all over the world are impacted,” said Palmira. 

Since the announcement of the first COVID-19 case in Indonesia on March 2, the country has recorded 1,790 cases, with 170 deaths, as of Thursday. Jokowi has declared a public health emergency, imposing large-scale social restrictions as countries around the world struggle to flatten the curve and slow down the spread of the highly infectious disease.

The global economy is heading toward recession, experts say, with Indonesia’s GDP seen as contracting by 0.4 percent under the worst case scenario, according to Finance Ministry estimates. The baseline economic growth scenario is 2.3 percent this year, the lowest since 1999.