The Dynamics of Social Protection Gaps in Indonesia’s Transforming Labor Market: Gig Workers and Formal Employees
Keywords:
employment injury security gig workers health insurance labor transformation social protection gapsAbstract
The rapid expansion of Indonesia’s gig economy has substantially reshaped the labor market, offering greater flexibility while simultaneously deepening disparities in social protection. This study aims to examines the evolving gap in social protection coverage between formal employees and gig workers—both online and local—within Indonesia’s transforming employment landscape. Using repeated cross-sectional microdata from the August 2018, 2021, and 2023 National Labor Force Surveys (Sakernas), the analysis focuses on the service sector, where gig work is most concentrated. A binary logisticregression model with marginal effects was employed to estimate the probability of workers’ participation in Indonesia’s social security programs. The findings reveal persistent and statistically significant disparities. Online gig workers were 33 percent less likely and local gig workers 23 percent less likely to be covered compared to formal employees. These inequalities widened during and after the COVID-19 pandemic, particularly in health and occupational accident insurance. Further heterogeneity analysis shows that the disparities were more pronounced among male and urban workers. The results underscore the structural vulnerabilities embedded in Indonesia’s dual labor system and highlight the urgent need for inclusive, adaptive, and risk-based social protection reforms. Policy implications include integrating gig workers into national social security schemes through shared contribution mechanisms, strengthening digital and social protection literacy, and establishing a comprehensive legal framework that formally recognizes platform-based employment as an integral part of Indonesia’s evolving labor market.
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