A 2026 study by Dirmansyah Darwin and I Made Jyotisa Adi Dwipatna from the State University of Makassar reveals that human development and economic growth play a decisive role in shaping informal labor in South Sulawesi, Indonesia. Published in the International Journal of Finance and Business Management, the research analyzes labor trends from 2018 to 2024 and shows that improving human development and economic performance can significantly reduce dependence on informal employment—an issue critical for regional development and labor policy.
Informal Labor Remains a Structural Challenge
Informal employment continues to dominate labor markets across many developing economies, including Indonesia. Workers in this sector often lack formal contracts, social protection, and stable income. In South Sulawesi, the informal sector serves as a fallback for individuals who cannot access formal jobs due to limited education, skills, or employment opportunities.
This issue is particularly relevant as Indonesia continues to pursue inclusive economic growth. A high number of informal workers signals structural challenges in the labor market, including unequal access to education and uneven regional development.
Study Scope and Approach
The research conducted by Dirmansyah Darwin and I Made Jyotisa Adi Dwipatna focuses on 24 districts and cities in South Sulawesi over a seven-year period. The dataset includes 168 observations, combining regional and time-based data.
The study examines three key factors:
- Poverty rate
- Human Development Index (HDI)
- Economic growth
Using a statistical panel data approach, the researchers applied a Random Effects Model (REM) to identify which factors most strongly influence informal labor trends. Data were sourced from the South Sulawesi Central Statistics Agency, ensuring reliability and consistency.
Key Findings: Human Development and Growth Matter Most
The findings provide a clear and data-driven picture of informal labor dynamics:
- Human Development Index (HDI) has a strong and significant influence on informal labor levels.
- Economic growth significantly reduces informal employment, indicating that expanding economies create more formal job opportunities.
- Poverty does not show a statistically significant effect on informal labor in this model.
The study also highlights the scale of variation across regions. On average, each district recorded more than 108,000 informal workers, with some areas reaching nearly 300,000. This disparity reflects uneven development and access to opportunities across South Sulawesi.
Rethinking the Role of Poverty
One of the most notable findings is that poverty is not a dominant factor in determining informal employment. While poverty is often assumed to push individuals into informal work, this study suggests a more complex reality.
People may still work in the informal sector even if they are not classified as poor, particularly when they lack access to education, healthcare, or formal job networks. This shifts the focus from income levels alone to broader human development indicators.
What Drives Change in Informal Labor?
The study shows that improvements in education, health, and living standards—captured by the Human Development Index—directly influence labor market outcomes. Regions with higher HDI tend to have a more skilled workforce, increasing access to formal employment.
Economic growth also plays a crucial role. When growth is inclusive and labor-intensive, it generates formal job opportunities that reduce reliance on informal work.
As Dirmansyah Darwin from the State University of Makassar explains, improving human development is essential for long-term labor transformation. In essence, better education and health systems equip workers with the skills needed to transition into more stable and productive jobs.
Implications for Policy and Development
The findings offer practical insights for policymakers and regional governments:
Improving access to quality education, vocational training, and healthcare can significantly reduce informal employment.
2. Promote inclusive economic growth
Economic expansion must create jobs, not just increase output. Sectors such as manufacturing, agroindustry, and modern services can absorb more workers into formal employment.
3. Support workforce transition
Training programs, reskilling initiatives, and job placement services can help informal workers move into formal sectors.
4. Strengthen social protection systems
Even as workers transition, safety nets such as labor insurance and financial access remain essential.
The research also emphasizes the need for integrated policies that combine job creation, education, and financial inclusion to reduce labor informality effectively.
Broader Context: Informal Work in a Changing Economy
The study is particularly relevant in the context of digital transformation. Many emerging jobs—such as gig work and online commerce—blur the line between formal and informal employment. While these opportunities expand access to income, they often lack legal protections. This means policymakers must not only reduce the size of the informal sector but also improve the quality of jobs within it.
0 Komentar