Building pathways to middle-class jobs for Indonesian women

Santi manages the Information and Technology team at a large e-commerce company in Jakarta, Indonesia. After graduating from a technical college with a degree in computer science, her skills were snapped up by Indonesia’s growing technology sector, and she quickly rose through the ranks in the following ten years. She had two children along the way, but her employer allows flexible work hours and provides ample maternity benefits, so her responsibilities as a mother and a housewife haven’t stopped her building her career. During the COVID-19 pandemic, she has been able to work seamlessly from home.

Santi, however, is an exception rather than the norm for Indonesian women. She holds a “middle-class job” – defined as a job that pays at least Rp 3.8 million or USD 265 per month (in 2018 prices) and provides a level of income security and benefits that are consistent with middle-class expectations. Yet, only about 15 percent of Indonesian income earners held a middle-class job in 2018, and women were even less likely to hold these jobs than men . While 35 percent of all jobs were occupied by women, among all middle-class jobs, only 29 percent were held by women  (Figure 1).

Figure 1. Women are underrepresented in middle-class jobs

Distribution of income-earning jobs and of middle-class (MC) jobs, by gender

^{Sources: Sakernas 2018; World Bank staff calculations.
Note: Sakernas is the National Labor Force (Survei Angkatan Kerja Nasional).}

Indonesian women struggle to find middle-class jobs partly because they lack access to the country’s labor market in the first place. Approximately only half of Indonesian working-age women participate in the labor force, compared with about 80 percent of men.  This has remained the case for at least two decades, despite rising educational attainment by girls and declining fertility rates.

At least three key factors explain why labor market participation – and access to middle-class jobs – is so limited for Indonesian women. First, differences between men and women in labor market participation emerge during the transition from school to work, with marriage and childbirth being the biggest predictors of women not making the transition to the labor market.  The unmet need for child- and elder-care services adversely affect women’s decisions to participate in the labor force.  

Second, when women join the labor market, they cluster in the lower-paying service jobs. Women perform vital work in health and education, but salaries for nursing and teaching jobs are low. Moreover, the subjects that women study in the post-secondary school are not well aligned with middle-class jobs : for example, women are underrepresented in subjects like science, technology, engineering, and mathematics (STEM) (Figure 2).

Third, even if women occupy the same occupations as men,  earnings gaps are large, with Indonesian men earning on average 25 percent more than Indonesian women for similar work.  This stems in part from persistent social norms: for example, the perception that women’s work is supplementary to their male partner or male kin may contribute to employers offering lower pay, or women being willing to accept lower pay for equal work.

Figure 2. Tertiary-educated women graduate in subjects with limited access to middle-class jobs

Distribution of field of postsecondary education study, by gender and middle-class (MC)/ non-middle-class (Non-MC) jobs

^{Sources: Sakernas 2018; World Bank staff calculations.
Note: Sakernas is the National Labor Force (Survei Angkatan Kerja Nasional).}

Despite these challenges, several policies can help women have better access to middle-class jobs. 

First, invest in the care economy. While changing gender norms may eventually lead to men adopting more domestic responsibilities, in the short run, making the workplace friendlier for women to balance work and home[1] could play a crucial role in helping women enter and succeed in the labor market.  Investing in care services in Indonesia could also contribute to greater job growth in care services and have a positive impact on women’s labor force participation.[2]     

Second, facilitate learning. The vast majority of middle-class jobs require at least upper secondary education. Only 39 percent of working-age Indonesian women have upper secondary education or above, compared to 43 percent for working-age men. Moreover, women’s post-secondary qualifications could be better aligned to middle-class jobs. In addition to the need for high-order cognitive skills and interpersonal skills, the rapid acquisition of entrepreneurial and digital skills could make a special contribution to women’s labor market participation. Entrepreneurship[3] and e-commerce help women return to work after giving birth.

Third, lower labor mobility costs for women. Moving jobs is a common path for job upgrading. However, labor mobility costs are high in Indonesia, and even more so for women. High-value services – which have been one of the key avenues to middle-class jobs for women – are among the costliest types of jobs to enter, in terms of skills development, networks to get those jobs, and long waiting periods.  Supportive labor regulation practices, such as the Job Loss Guarantee Program, could facilitate job mobility. Comprehensive job search services such as SiapKerja and KarirHub can provide information and coaching to shape women’s employment preferences and expectations by helping women identify career goals, secure training, and other social supports to make work possible, and with a broader job search. 

The COVID-19 crisis gives fresh impetus to supporting women into middle-class jobs. By August 2020, the crisis had led to positive net employment impacts for women, but as was the case during the Asian Financial Crisis, they may have only intended to work temporarily in low-quality jobs, in order to help households cope during the pandemic. Whether these new female entrants can stay in the workforce and find pathways to middle-class jobs – becoming more like Santi – remains a vital question for longer-term gender equality in Indonesia’s labor market.

To find out more about the jobs reform agenda in Indonesia, access the recently published report here.