The Central Statistics Agency (BPS) compiled the proportion of informal and formal sector workers across all provinces in Indonesia. The proportion was calculated from the number of working people in February 2023.
Papua had the highest proportion of informal workers in Indonesia, reaching 85.18% of the total working population. Only 14.82% worked in the formal sector.
East Nusa Tenggara (NTT) had the second-highest proportion of informal workers at 75.15%, while formal workers comprised 24.85%.
Lampung followed with 74.89% informal workers and 25.11% formal workers. Bengkulu was fourth, with 70.26% informal workers and 29.74% formal workers.
Gorontalo was fifth, with 69.88% informal workers and 30.12% formal workers. The remaining data is included in the graph.
In terms of location, formal sector workers in urban areas accounted for 69.11% of the total working population in February 2023. Only 30.89% were informal urban workers during the same survey period.
Conversely, rural areas had a higher proportion of informal sector workers, reaching 55.88% in February 2023, while formal sector workers in rural areas comprised 44.12%.
Formal sector employment is identified by the employment relationship between worker and employer, based on a work agreement. This agreement includes specified or unspecified time periods, outlining work targets and wages.
The informal sector is characterized by its unorganized and unregulated nature; mostly legal but unregistered.
According to the Gadjah Mada University (UGM) website, this sector is characterized by a large number of small-scale business units; individual or family ownership; simple, labor-intensive technology; low levels of education and skills; limited access to local financial institutions; low labor productivity; and relatively lower wages compared to the formal sector.
Examples of informal sector work include street vendors, small shops, workshops, salons, tailoring services, unpaid family workers, and others.