Indonesia is the largest economy in Southeast Asia with a real GDP of US$755 trillion in 2019 and a stable pre-Covid-19 annual growth of above five percent. Agriculture still plays a big role in Indonesia's economy where it contributed to 12.4% of the GDP and is the third major contributor after the manufacturing and retail sectors.
The agricultural sector accounts for 27.3% of Indonesia's 126.5 million labour force. Of which, approximately 15% or 5.2 million people work as casual agricultural workers –those working temporarily for multiple employers in the agricultural sector. As part of the informal employment sector, casual agricultural workers are not entitled to the minimum wage and suffer from gender pay gap.
By understanding some of its determinants, policy makers could benefit from designing an evidence-based policy to address this problem.
Trends and Patterns of Gender Pay Gap among Casual Agricultural Workers
The gender pay gap among casual agricultural workers stood at an average of 23.6% from 2011-2019 with a mean income of approximately S$0.89 per hour for males and S$0.66 per hour for females in 2019. This gap has widened compared to in 2011 where female casual agricultural workers were paid 18.9% less than males.
Indonesia's National Labour Force Survey (SAKERNAS) conducted in August 2018 could shed some light for policy makers on some descriptive determinants of this gender pay gap among casual agricultural workers. This dataset contains a total of 12,204 samples which represent currently employed casual agricultural workers aged 18 years or older in Indonesia.
Based on this data, it appears that gender pay gap does exist where, on average, men earned S$0.29 or 32.7% more per hour than women in 2018. Those at the bottom 40% of the income scale are, on average, paid 66.9% lower in hourly wage than those at the top 20% for males and 67.5% lower for females. Furthermore, women, on average, worked six less hours than men per week. Interestingly, only 88.3% of male casual agricultural workers finished nine years of compulsory education compared to 94.7% that of female, indicating that men started working earlier than women as a casual agricultural worker.
Why Does This Gender Pay Gap Persist?
Studies have explored various issues related to gender gap in agriculture, although specific studies on gender pay gap among casual agricultural workers remain very limited. Based on the existing literature about gender construction and gap in the agricultural sector, there are at least three possible determinants of gender pay gap among casual agricultural workers.
First, the regional minimum wage policy in Indonesia that has been implemented since 2001 does not bind informal sectors like casual agricultural workers, which makes minimum wage compliance in the agricultural sector non-obligatory. Empirically, the minimum wage policy in Indonesia did not have any significant effect on the informal sectors' wage and is therefore unable to reduce gender pay gap in these sectors.
Second, agriculture is considered a physically demanding job where women are often excluded in some of the more physically demanding tasks, such as land preparation and pruning. Women are also often held responsible for most household and childbearing activities, limiting their time spent working outside and explaining the lower average working hours of women in the agricultural sector. As a result, women are considered as cheap labour in the agricultural sector due to the perceived physical and time constraints although the evidence has suggested that women work longer than men, such as for food preparation during breaks. This kind of perception has not only limited women's participation in casual agricultural work, but also weakened their bargaining power when negotiating wages.
Lastly, although women often work in post-harvesting roles, most of the harvests are sold as raw materials to the middlemen which makes jobs on value-adding post-harvest processing very limited. Thus, women who want to work as casual agricultural workers are left with only low wage and less-physically demanding agricultural work, particularly during the planting and harvest periods.
What Can Policy Makers Do?
While it is evident that the minimum wage does not include informal employment like agriculture, policy makers could consider some affirmative policy options to bridge the gender pay gap.
Access to productivity enhancing capital can be given through various policy tools that have been implemented in Indonesia, such as village funds. The village fund allows for direct fiscal transfers to each village as a means of improving village development, where village officials can utilise the money for infrastructural and non-infrastructural works. In 2019, the use of this fund was focused on agriculture to procure modern agricultural tools.
Granting this access to women could allow them to undertake more physically demanding jobs in agriculture which are mostly associated with men, such as land preparation and pruning. The ownership can be made collective instead of individual where these tools can be treated as village assets for communal use by the communities.
Given that studies have shown that women's participation in agricultural technology adoption has been low partly due to the perception that women are not technologically inclined, it becomes important to give women an exclusive avenue to participate in agricultural works through women's groups.
In the context of Indonesia, such groups can be in the form of women farmers' group or Kelompok Wanita Tani (KWT ) in Indonesian and women cooperatives. A study has found that women in the Lampung Province of Indonesia played a big role in post-harvest processing of forest-grown coffee through a KWT which hired local women to work in coffee processing facilities. The local agricultural bureau could then implement a policy to provide technical assistance to these groups whereby government's extension workers could lead the implementation.
Additionally, increasing women's participation in agriculture through agribusiness vocational education could potentially increase women's bargaining power and ability to perform more value added post-harvest processing through KWT.
Addressing the gender pay gap in the informal sector requires not only a single policy instrument such as minimum wage. Evidence suggests that this gap results from a heteronormative gender construction which systematically disadvantages women. More affirmative policies are therefore required to narrow, if not close, the gender pay gap in the informal sector.
(Photo credit: tiket2.com)