"How Gender-Biased Minimum Wage Harms Women Workers in Indonesia", 20 March 2023

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Eva worked as a short-term contract garment worker with the hopes of having her contract extended from three months to a year. Her targets at the garment factory were quite high – 180 pieces per hour or 100, if the sewing model was complicated...She usually achieved this target by extending her working hours, which in turn let her get a bonus or calculated overtime. It also meant that she could earn more than the provincial minimum wage (UMP) in Jakarta...

But during her pregnancy, Eva often experienced nausea and vomiting.... As a result, she was rarely able to meet her targets, which in turn affected her income and her ability to manage her household expenses.

Eva is just one of the millions of women who work in Indonesia’s thriving garment industry. And sadly, her story is far from unique...

Women are not compensated for social reproduction

Women are an integral part of the machine for social reproduction... Unfortunately, social reproduction is rarely seen as valuable or productive even though it prepares workers to enter the workforce, replenishes the existing workforce, and cares for those who can no longer be absorbed into the workforce.

The contribution of women to social reproduction as child-bearers and caregivers is often unrecognized, unpaid, underestimated, and taken for granted. In addition, women in low- and middle-income countries spend more time on unpaid work compared to high-income countries. This is true in the case of Indonesian women who are also wage-earners employed in direct economic activities. In fact, many women workers are the heads and breadwinners of their families, facts that are often ignored by the state.

Indonesia’s Marriage Law from 1974 labels men as “breadwinners” and women as “homemakers”, and these archaic notions still are pervasive in the country today. So much so that it impacts the wages of the two genders. In many private sector organizations, men continue to benefit from the breadwinner status, which allows for a salary component that takes into account the needs of their dependents. On the other hand, this component often is not paid to women in the Indonesian private workforce.

Instead, in determining wages, the Indonesian government sees women workers as individuals and refuses to recognize their dependents even though many women are responsible for the living needs of other family members...

Abuse of contract-based employment

...Many supplier factories in Indonesia use such informal and insecure employment arrangements to bring down labor costs and make it easier to hire and fire workers. Contract workers cost less to employ per unit, often receive lower wages, rarely receive non-wage benefits (like paid leave and social security), and can be fired according to the shifting needs of brands.

The contractual working system thus allows factories to circumvent the minimum wage laws, which state that after a year of employment, workers can be paid more than the UMP and are eligible for additional wages based on company structure and scale. Contracts are usually for a year or less and when they expire, workers need to renew them as new employees once again. As a result, the UMP, meant to function as a social safety net, is actually the maximum wage.

And women are more likely to be hired through contractual or casual forms of employment...

Women on such contracts are even denied some of the basic benefits that Indonesian labor laws mandate, such as menstruation leave and maternity leave...

Some companies also force women to report their pregnancy by the fifth month and then stop paying them the menstruation leave compensation. In fact, in some places such as the Cakung Industrial Area, women contract workers who are about to give birth are forced to resign...

Gender bias in women’s wages

The issues mentioned above build a strong case for shifting to a system of living wages from the UMP.

Wages are meant to manage the living needs – not just the bare minimum – of families, nuclear and non-nuclear....

Wages in Indonesia are regulated in such a way that they are low in general and lower for workers who are especially vulnerable, which includes women...

New regulations continue to ignore women

Indonesia’s new Omnibus Law on Job Creation came into force in early 2021 and contrary to what was expected, it has been the root of the decline in labor wages. But past labor laws were no better and made no special allowances related to the specific needs of women when determining wages...

Furthermore, the Omnibus Law did not protect contract workers. Wages in the law are calculated in bulk or according to targets based on per unit of time. But pregnant workers like Eva find it difficult to reach the target as they go into the later stages of pregnancy...

And the minimum wage under the Omnibus Law did not increase much in 2022 – only by 1%. The backlash to the Omnibus Law saw it being replaced by the Job Creation Government Regulation In Lieu of Law, but this also had the same contents as before and didn’t protect or benefit workers. Instead, it causes greater uncertainty.

All of this underscores how gender inequality in Indonesian society has marginalized women in the country’s economic map even though they have contributed greatly to the country’s economy. Therefore, it is vital for workers to demand the determination of a wage that refers to the component of a decent living that accommodates the special needs of women to ensure it is no longer gender biased. Of course, determining the components of decent living needs should be based on the consumption survey of workers’ families involving grassroots workers, especially women.

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