Gender inequality in Indonesia's labour market

February 17, 2016
Gender inequality in Indonesia’s labour market

Women's labour market participation is low in Indonesia by international standards. In addition, women are paid considerably less than men, even when differences in education levels are taken into consideration, new Monash Business School research shows.

Over the last few decades, the Indonesian economy and labour market has changed significantly. There is less reliance on agriculture, with the economy moving to other sectors, such as manufacturing and services.

While this has led to a change in the labour market over the past 25 years, there has been virtually no change in Indonesia's female labour force participation (LFP), with a participation rate of 51 per cent.

Professor Lisa Cameron and Dr Diana Contreras Suarez researched the different drivers of female LFP in Indonesia, including the factors that have contributed to this participation remaining stagnant for the past 25 years.

"We found that, on average, Indonesian earn 42 per cent less than their male counterparts," Dr Contreras Suarez said.

"31 per cent of this difference can be explained by different characteristics between women and men, such as career interruptions, level of education, and industry of employment. The remaining unexplained gap, can be taken to reflect some degree of discrimination."

The research looked at both the informal (that part of the economy that is neither taxed nor monitored by the government) and the formal sector.

"Wage gaps are higher in the informal sector but there was evidence of sticky floors – a higher wage gap for lower income women compared to higher income ones – in the formal sector," Dr Contreras Suarez said.

According to Professor Cameron, there are several reasons why it's important to look at why labour force participation has remained stagnant in Indonesia.

"The first is that it provides an evidence base for future policy to improve LFP among women; for social and development reasons, but also economic growth," Professor Cameron said.

The Asian Development Bank has stated that narrowing gender gaps in employment could add 14 per cent to the per-capita income of emerging markets, like Indonesia, by 2020.

The Indonesian government has identified improvement of female LFP as a key development priority.

However, despite efforts to improve gender equality in the workforce through government policy, there has been no significant improvement. For example, legislation around minimum wages has had little impact thus far on women's participation levels or the wage gap.

This means there are grounds for further study of this topic, focusing on the mechanisms that assist women in entering the labour market, remaining in the and earning a fair wage while managing their household responsibilities with the aim of improving policy and its implementation, added Dr Contreras Suarez.

"Evidence from other countries show that transportation and access to roads and childcare, for example, are important constraints to women's participation in the workforce."

Explore further: More female managers do not reduce wage gap

Related Stories

More female managers do not reduce wage gap

December 16, 2011

Are wage differences between men and women decreasing as more women attain managerial positions? A new Swedish report from the Uppsala Center for Labor Studies (UCLS) at Uppsala University and the Institute for Labour Market ...

Gender pay gap persists through the ages

April 12, 2013

A new study examining gender disparities in the Australian labour market has found female graduates earn less than their male counterparts - and the gender pay gap widens dramatically the older women are at the time of graduation.

Male graduates earn more than female graduates

June 18, 2014

Male university graduates earn more than their female counterparts and the pay gap will likely increase with the more time spent in the workforce, according to new research.

Who does most of the housework in multicultural Britain?

February 9, 2016

The first ever nationally representative study has looked at how housework is organised by couples across different ethnic groups in Britain. It finds that Black Caribbean men have the least traditional attitudes to gender ...

Recommended for you

An inflexible diet led to the disappearance of the cave bear

August 23, 2016

Senckenberg scientists have studied the feeding habits of the extinct cave bear. Based on the isotope composition in the collagen of the bears' bones, they were able to show that the large mammals subsisted on a purely vegan ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.