Humans have evolved from prehistoric times to the present day, now living alongside robots. This evolution reflects significant changes in the structure of work resulting from technological and economic developments. So, has this structural transformation occurred in Indonesia?
Labor Market Specialist of the Ministry of Manpower, Putri Riswani Halim, while delivering a public lecture at the MBA ITB on Sunday (18/5), said that the transformation of labor in Indonesia is not sub-optimal. Indonesia’s labor transition shifted directly from the agricultural sector to services without first passing through the manufacturing sector. This shift has a significant impact because the service sector exhibits high inequality, characterized by a variety of jobs with substantial differences in income.
“This disparity in types of services creates significant inequality. For example, an IT specialist and a domestic worker. Both provide services, yet the outcomes they receive are vastly different,” said Putri.
Inequality is a major challenge that must be overcome in Indonesia. Indonesia, according to Putri, will not be able to jump higher when the inequality between regions is very high.
“When a country shifts toward manufacturing, inequality often decreases. In contrast, the pattern in the services sector is less clear with the levels of equality and inequality varying widely,” she explained.
She also explained that the employment structure in large cities like Jakarta is dominated by the service sector, with an employment share exceeding 80%. However, the wages received by workers vary significantly, ranging from IT technicians to informal workers, such as cleaners. Meanwhile, provinces like Papua still depend on the agricultural sector (agriculture) even though they have abundant natural resources, such as gold mines.
In Papua, the industry has not been able to optimally absorb local workers, so the majority work in the agricultural sector. This highlights the significant challenge of aligning economic development with the capacity of local human resources, indicating a substantial gap in regional harmony or similarity, which is the primary focus of the research presented.
Putri also highlighted that most provinces in Indonesia are not focused on manufacturing. Even provinces with industrial areas, such as the Riau Islands, actually show a dominance of the service sector. She explained that the Riau Islands were once considered a developed region, but due to changes in the workforce structure, their status reverted to developing. According to Putri, national policies must take into account the unique economic characteristics of each region.
“Each region has different economic conditions and workforce capacities. We cannot impose industrial development on areas that are still structurally rooted in agriculture. Instead, we need to build on their existing potential, for example, by promoting green and sustainable agriculture,” she said.
According to Putri, workers are not only workers but also consumers. This understanding is also important for business actors in a region.
“Understanding who our workers are means understanding who our market is. Business strategies must be built on this understanding,” she said.
Putri emphasized that Indonesia needs reindustrialization to escape the trap of premature transformation. However, this cannot happen without a preceding institutional revolution.
“Structural transformation can only be successful if it is built with a solid system and targeted policies,” she said.
