National Formal Employment Decreased by 10.4% in 2020

Data from the Indonesian Central Statistics Agency (BPS) shows that the percentage of formal national workforce decreased by 10.4% in 2020 compared to the previous year, falling from 44.12% to 39.53%. Meanwhile, the percentage of informal workers increased from 55.88% in 2019 to 60.47% in 2020, a rise of 8.21%.

According to BPS, formal workers are those whose employment status is as laborers/employees/staff and those employing permanent/paid laborers. Informal workers, on the other hand, are those who are self-employed, employ non-permanent/unpaid laborers, are independent workers in agriculture, independent workers in non-agriculture, and unpaid family workers.

(Read More: SAKERNAS 2020: 1 Million Workers Impacted by Covid-19)

The decrease in the percentage of formal workers is due to companies' workforce reduction policies during the pandemic. According to data from the Ministry of Manpower, up to July 2020, the number of formal and informal workers affected by Covid-19 reached 2,146,667 people. This comprises 1,132,117 formal workers who were furloughed, 383,645 formal workers who were laid off, and 630,905 informal workers who were impacted (loss of income).

The sector that reduced its workforce the most during the pandemic, according to the BPS survey, was the manufacturing industry. Approximately 1.8 million manufacturing industry workers were affected by workforce reductions. To recover from the impact of the pandemic on employment, the government enacted the Job Creation Law, which aims to open new job opportunities through increased investment, while still providing improved welfare and protection for existing workers.

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