Informal sector helping Indonesia cope in global downturn

Abdul Khalik, The Jakarta Post, Jakarta | Tue, 12/02/2008 10:36 AM  

Syafrudin, 35, stacked cages of chickens onto a waiting mini van outside his employer's house at Kemandoran in South Jakarta on Monday with help from two other workers. 

For those in the poultry businesses -- with warnings about avian flu scarce and demand for chicken rocketing ahead of the Christmas and New Year holidays -- the threat of the global financial crisis seems as far off as the countries that provoked it. 

"The business is good. It means we will receive more payment," said Syafrudin, who earns up to Rp 1 million per month. 

The poultry business is forecast to survive the economic crisis, as the price of chicken is expected to remain affordable compared to that of fish and red meat. 

Syafrudin and his co-workers are among 60 million people employed in the informal sector, compared to the country's total work force of 97 million. 

"Given the fact that over 60 percent of the country's employment is provided by the informal sector, we can imagine how much it has contributed to the economy," Hetifah Sjaifudian Sumarto, director of the Bandung Trust Advisory Group for Local Governance Reform, told an academic forum. 

Hetifah was one of a number of researchers who Monday presented researches on public exposure as part of a program funded by the Australian government under the Australia-Indonesia Governance Research Partnership. 

"With massive layoffs predicted to increase the country's jobless by 2 million next year, the informal sector could provide earnings for most of them; allowing them to survive while decreasing the risks of political and social instability," she said. 

Despite its pivotal role in the economy, as evidenced during the Asia financial crisis in 1998, the informal sector has remained largely neglected by the government, Hetifah said. 

The government has no policy to address the problems within the sector or protect the people it employs, she added. 

Hetifah found in her research on street vendors in Surakarta and Manado that local government support for the vendors helped boost their profits, created more jobs and contributed more to regional revenue. 

"Surakarta has formed a special office dealing with street vendors and has allocated a budget to provide loans and infrastructure, including markets," she said. 

Surakarta Mayor Joko Widodo has relocated more than 1,000 street vendors without resorting to the violence that other city administrations have resorted to. 

"Our research suggests that the government must introduce a special policy at the national level to deal with the informal sector in anticipation of the looming massive lay-offs next year. Surakarta has shown the way," she said.