The Informal Economy and Social Justice: Understanding the Role of Informal Workers in Indonesia’s Economic Landscape

Abstract

This paper examines the role of informal workers in Indonesia’s economy, focusing on their contributions to the national economy while highlighting the social and economic injustices they face. Informal workers, who make up a significant portion of Indonesia’s labor force, contribute substantially to sectors such as retail, agriculture, transportation, and construction. However, they often work in precarious conditions, lacking legal protections, social security, and access to basic labor rights. The study explores how the informal economy operates within Indonesia’s broader economic landscape, including its interactions with the formal economy and its impact on income inequality and social mobility. The paper investigates the challenges faced by informal workers, such as low wages, lack of healthcare and pension benefits, and limited opportunities for career advancement. It also considers the government’s role in regulating the informal economy and providing social protections for informal workers. The paper argues that while informal workers play a critical role in sustaining Indonesia’s economy, they remain vulnerable to exploitation and social exclusion. Finally, the study offers policy recommendations aimed at integrating informal workers into the formal economy, improving their working conditions, and ensuring their access to social protections, in order to promote economic justice for all workers in Indonesia.