The Welfare Implications of the Gig Economy: Empirical Evidence from Vulnerable and Double Burden Workers in Indonesia

Abstract

The growth of the gig economy in Indonesia has emerged as an alternative source of income amid the limited opportunities in formal employment. The flexibility offered by gig-based work is often seen as a solution, but it also creates vulnerability related to workers’ welfare. This study seeks to answer two main questions: (1) do gig workers have better welfare compared to non-gig workers, and (2) who gains the most significant benefits from the gig economy. This research uses data from the Indonesia National Labor Force Survey (Sakernas) 2024 with a total sample of 768,855 and applies interaction effect regression model and subsample regression approach, which can show the robust correlation of gig economy participation at the individual level with various characteristics, including double burden. Gig workers and the counterpart are defined based on differences in payment mechanisms, where gig workers are paid by output and/or service fees. This study finds that: (1) gig workers in Indonesia earn lower wages compared to non-gig workers, which occurs across different economic status groups; (2) however, the lower the individual’s economic status, the smaller the wage gap between the two groups, indicating greater benefits of gig work for vulnerable groups; (3) if the individual is poor and female, then gig work provides same welfare to non-gig workers, which indicates that the gig economy can meet employment needs especially for double burden groups. The recommendations are: (1) the gig economy and gig jobs can be an alternative employment option for local governments experiencing stagnation in job creation; (2) the minimum wage payment mechanism needs to be regulated by the central government so that the flexibility of gig jobs is not seen as an excuse to provide unfair wages; (3) gig job absorption needs to be regulated and prioritized for the most vulnerable groups.