Jakarta Globe | Insight

Gender Pay Gap Narrows in Indonesia

Jakarta. Indonesian women still earn less than men, but the gap is narrowing.

That’s good news as many studies show persistent wage gap can hinder efforts to reduce poverty and put some of the population, such as single mothers, in more vulnerable positions.

In Indonesia, where women make up fewer than half of the country’s workforce, female workers make almost 19 percent less in monthly earnings than their male counterparts in 2016, according to the latest report from International Labor Organization (ILO) published in December.

A decade ago, the average wage gap between Indonesian men and women was 40 percent.

Since paying male workers more than their female peers is still the general trend in most parts of the world, Indonesia’s progress has encouraged some observers.

“I’m an optimist, so I would like to say Indonesia is now progressing, but the progress could be faster,” Michiko Miyamoto, director of ILO Jakarta and Timor Leste, told the Jakarta Globe in an interview.

ILO findings indicate that education plays a big role in raising women’s income relative to their male colleagues.

“In the past, women did not get access to education, so at the end they were at a disadvantage in the labor market,” Miyamoto said.

“But currently the gender pay gap is narrowing because women have better access to education. They can now catch up with men, to get more access to the labor market,” she said.

Since the Reformasi years of the late 1990s, Indonesia has set aside 20 percent of its annual budget for education to ensure all children can complete junior high school.

As a result, 11 percent of women had bachelor degrees in 2015, up from just 7.9 percent five years earlier.

Lusiani Julia, ILO Jakarta and Timor Leste’s programme officer, said women with higher education are more likely to speak up for their wage rights.

Sectoral Gap

Another root cause for gender pay gap – sectoral issues – is more difficult to address.

“We want equality and inclusiveness, so we have to look at socio-cultural aspects, including sectoral issues. The truth is, the more female-dominant a sector is, the lower it pays,” Miyamoto said.

According to the ILO report, in Indonesia’s agriculture sector, where low-skilled labor tend to concentrate, women earn less than 45 percent of what their male counterparts make.

In mining, transportation, finance and real estate, there were minor differences between the average earnings of men and women.

One sector where women earn much more (71.1 percent) than men is construction, but that is because most of the men in the sector work in low-level jobs, the ILO report showed.

“That’s why we’re encouraging more women to pursue jobs in science, technology and engineering sectors, which are not considered the traditional fields for women. But there are many well-paid professional jobs on offer in these sectors and they need more women to fill them,” Miyamoto said.

In the long run, more women in important sectors will benefit Indonesia economically.

“If we manage to get more female participation in that area then we don’t need to import foreign workers, we don’t need to pay for consultants. We can hire local female professionals who are highly trained,” she said.

Advancement, Recruitment

Jumisih, the chairwoman of Factory Workers Forum (FBLP), said in factories across the country, women and men now earn a similar minimum wage but their take-home pay can be worlds apart.

“Men usually get allowances and also opportunities for promotion. That’s because they are considered more able to lead even though women also have the capacity to become a leader or supervisor,” Juminsih said.

Company owners often still balk at hiring women workers since they are reluctant to fork out the money for the mandatory 3-month paid maternity leave.

The company owners use this as a justification to offer lower salary for women, or, as long as there is no non-discriminatory wage regulation, to hire men instead.

“Many companies have started to implement performance-based recruitment and promotion system, but admittedly gender bias persists and it still influences employers’ decisions,” Shinta Kamdani, the deputy chairman of Indonesian Employers Association, said.

Shinta, though, believes a free labor market that allows women to move jobs easily will improve their lot.

Companies will be forced to offer more benefits to attract and keep the best female employees.

In 2016, Shinta helped establish the Indonesian Business Coalition for Women Empowerment (IBCWE), an organization that helps companies to realize gender equality in the workplace.

This includes closing the gender pay gap and investing in female-friendly working spaces equipped with maternity and day-care centers.

In the new job market, things are getting better. Michael Angelo, a manager at jobseeker website Karir.com, has noticed that companies today tend to offer similar salary packages to men and women.

“These days, unequal salary between men and women is no longer a problem. Companies offer similar packages to jobseekers regardless of their gender. What determines the pay gap now is education,” Michael said.