On 16 August 2018, Ministry of National Development Planning/National Development Planning Agency (BAPPENAS) hosted the FKP Seminar in Jakarta on the topic of labor market and poverty dynamics by Nuri Taufiq (Statistics Indonesia, BPS).  The labor market in Indonesia are dominated by informal and unskilled workers (58.35% share in 2017) who are prone to falling into poverty. Previous studies found that education attainment is an important factor to elevate welfare.  In this study, Nury asked whether education has affected informal turnover and whether informal turnover has affected the overall poverty dynamics in Indonesia.

In conducting the study, the researcher used the National Socio-economic Survey (SUSENAS) longitudinal data for  2011-2013, consisting of 7,123 households from 33 provinces in Indonesia. The researcher then classified workers into informal and formal categories based on working status variable.

Descriptive r of the labor turnover pattern in Indonesia, 2011-2013 (Source: Taufiq, 2018)

In conclusion, the study confirms that education gave significant influence for individuals to have an informal turnover. As education attainment increases, people become more likely to move out of informality. Furthermore, those who did move out of informality lowered their probability to fall on the ‘transient poor’ category by as much as 69%, and on the ‘always poor’ category by as much as 14%.

The study indicates that a better and more widely available/distribute education is very important as it provides knowledge and skills, open up opportunities for decent and productive work, and in the end will lead to breaking the poverty chain. In addition, it is also important for government to continue creating job opportunities and providing decent work in the formal sectors.

For the complete presentation and Q&A session, please refer to the videos and materials provided.