When Informality Meets Poverty: Vulnerability of Informal Workers in North Sumatra’s Rural and Urban Divide
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Issue
Vol. 20 No. 1 (2025)
Keywords:
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informal workers, poverty vulnerability, microcredit access, regional disparities pekerja informal, kerentanan kemiskinan, akses kredit mikro, kesenjangan wilayah
Abstract
The province of North Sumatra, with its 33 districts/cities, faces significant challenges in managing the informal sector, where a high proportion of the workforce is employed compared to the formal sector. This study aims to analyze the vulnerability of informal workers to poverty in the region, focusing on demographic characteristics, economic factors, and regional disparities. The research employs ordinal logistic regression analysis to identify key determinants of vulnerability to extreme poverty among informal workers. The results show that informal workers, particularly in rural areas, are more likely to experience poverty, with factors such as low education levels, limited access to financing (especially microcredit), lack of luxury goods, short working hours, and marital status being significant contributors. Workers in urban areas have better access to formal sector jobs and are less vulnerable, while those in rural areas are highly dependent on the informal sector with limited opportunities for economic advancement. The study concludes that improving access to financing, education, and employment opportunities in rural areas can reduce the vulnerability of informal workers to poverty. Additionally, policies supporting the growth of the formal sector in rural areas and enhancing social safety nets are essential for reducing economic disparities.
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References
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Lubis, N. P. S., Nugrahadi, E. W., & Yusuf, M. (2020). Analysis of Superior Commodities in Agricultural Sector in Some Districts of North Sumatera Province. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 3(2), 1054–1066. https://doi.org/10.33258/birci.v3i2.936
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Sen, A. (2000). Social Exclusion: Concept, Application, and Scrutiny. Asian Development Bank.
Setyanti, A. M. (2020). Informality and the Education Factor in Indonesian Labor. Journal of Indonesian Applied Economics, 8(2), 71–80. https://doi.org/10.21776/ub.jiae.2020.008.02.7
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Suripto, S., & Wicaksono, A. (2023). Analysis of Factors Influencing the Income of Women Informal Sector Workers in Indonesia (IFLS Data Analysis 5). Journal of Economic, Bussines and Accounting (COSTING), 6(2), 1498–1508. https://doi.org/10.31539/costing.v6i2.5042
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Thu Diem, L. T. (2023). Informal Employment and Income: A Case Study in Tra Vinh Province. Journal Of Economics, Finance and Management Studies, 06(10). https://doi.org/10.47191/jefms/v6-i10-08
World Bank. (2020). The World Development Report: Trading for Development in the Age of Global Value Chains.
Becker, G. S. (1994). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Third Edition. University of Chicago Press.
Boertien, D., Bernardi, F., & Härkönen, J. (2018). Family Structure and Socioeconomic Inequality of Opportunity in Europe and the United States. In Unequal Family Lives (pp. 165–178). Cambridge University Press. https://doi.org/10.1017/9781108235525.008
BPS. (2024). Keadaan Ketenagakerjaan Indonesia Februari 2024.
Chambers, R. (2014). Rural Development. Routledge. https://doi.org/10.4324/9781315835815
Chen, M. A., Vanek, J., & Carr, M. (2004). Mainstreaming Informal Employment and Gender in Poverty Reduction: A Handbook for Policy-makers and Other Stakeholders.
Cuevas, S., Rosario, A., Barcenas, M. L., & Christian, M. (2009). Informal Employment in Indonesia. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1611406
Damayanti, D. (2024). UMKM, Coretax, dan Rasio Pajak. Https://Pajak.Go.Id/En/Node/112386.
Dartanto, T., Pramono, W., Lumbanraja, A. U., Siregar, C. H., Bintara, H., Sholihah, N. K., & Usman. (2020). Enrolment of informal sector workers in the National Health Insurance System in Indonesia: A qualitative study. Heliyon, 6(11), e05316. https://doi.org/10.1016/j.heliyon.2020.e05316
de los Santos, D., & Fynn, I. (2024). From Safety Net to Safety Trap: Informality and Telework During the Coronavirus Pandemic in Latin America. American Behavioral Scientist, 68(8), 1032–1051. https://doi.org/10.1177/00027642231155365
Dellas, H., Malliaropulos, D., Papageorgiou, D., & Vourvachaki, E. (2019). Fiscal Multipliers with an Informal Sector.
Demirguc-Kunt, A. K. L. S. D. A. S. H. J. R. (2017). The Global Findex Database 2017?: Measuring Financial Inclusion and the Fintech Revolution (English).
Eka, P. I. (2023). Financial inclusion in Indonesia: Does education matter? Economics & Sociology, 16(2), 265–281. https://doi.org/10.14254/2071-789X.2023/16-2/16
Ferdiana, A., Baiquni, F., Rahman, D. U., Febriana, A., Solikhah, S., Nervilia, A. V., Kusumaningrum, F., Supriyati, S., & Sari Tetra Dewi, F. (2019). P.3.11 Implementation of community-based occupational health programs for informal workers in indonesia. Occupational and Environmental Medicine, 76(Suppl 1), A99.2-A99. https://doi.org/10.1136/OEM-2019-EPI.272
Fields, G. S. (2011). Working Hard, Working Poor. Oxford University Press. https://doi.org/10.1093/acprof:oso/9780199794645.001.0001
Gasparini, L. T. L. (2007). Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata. CEDLAS Working Paper.
Gemma, A. I. K. (2015). Creating Youth Employment through Entrepreneurship Financing: The Uganda Youth Venture Capital Fund. Research Series 206130, Economic Policy Research Centre (EPRC).
Hervías Parejo, V., & Radulovi?, B. (2023). Public Policies on Gender Equality (pp. 405–428). https://doi.org/10.1007/978-3-031-14360-1_12
Hilbe, J. M. (2016). Practical Guide to Logistic Regression. Chapman and Hall/CRC. https://doi.org/10.1201/b18678
ILO. (2002). Decent Work and the Informal Economy.
ILO. (2018). Women and Men in the Informal Economy: A Statistical Picture (3rd ed.).
Karmini, K., Saroyo, S., Karyati, K., Widiati, K. Y., Widuri, N., & Sulichantini, E. D. (2022). Sektor Unggulan di Kabupaten Kutai Barat dan Kontribusinya Dalam Penyerapan Tenaga Kerja di Provinsi Kalimantan Timur. JURNAL RISET PEMBANGUNAN, 5(1), 22–32. https://doi.org/10.36087/jrp.v5i1.114
Kumar, S. S., & Jie, Q. (2023). Exploring the role of financial inclusion in poverty reduction: An empirical study. World Development Sustainability, 3, 100103. https://doi.org/10.1016/j.wds.2023.100103
Liu, D., & Zhang, H. (2018). Residuals and Diagnostics for Ordinal Regression Models: A Surrogate Approach. Journal of the American Statistical Association, 113(522), 845–854. https://doi.org/10.1080/01621459.2017.1292915
Liu, Y., Fu, Y., & Liao, W.-C. (2017). Trade, Formalization Cost, and the Spatial Distribution of Formal and Informal Employment: Evidence from Indonesia.
Lubis, N. P. S., Nugrahadi, E. W., & Yusuf, M. (2020). Analysis of Superior Commodities in Agricultural Sector in Some Districts of North Sumatera Province. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 3(2), 1054–1066. https://doi.org/10.33258/birci.v3i2.936
Muara Setyanti, A. (2020). Informality and the Education Factor in Indonesian Labor. Journal of Indonesian Applied Economics, 8(2), 71–80. https://doi.org/10.21776/ub.jiae.2020.008.02.7
Natalia, C., & Putranto, F. G. F. (2023). Kerentanan Kesejahteraan Gig Worker di Indonesia Pascapandemi. Jurnal Ekonomi Indonesia •, 12, 173–186.
Nureev, R. M., & Akhmadeev, D. R. (2021). The Contemporary Crisis and Its Influence on Informal Employment in Russia. Journal of Economic Regulation, 12(1), 006–022. https://doi.org/10.17835/2078-5429.2021.12.1.006-022
Peng, C.-Y. J., Lee, K. L., & Ingersoll, G. M. (2002). An Introduction to Logistic Regression Analysis and Reporting. The Journal of Educational Research, 96(1), 3–14. https://doi.org/10.1080/00220670209598786
Pratomo, D. S., & Manning, C. (2022). Structural Change and Formal Sector Employment Growth in Indonesia. Southeast Asian Economies, 39(1), 1–20. https://doi.org/10.1355/ae39-1a
Rachmawati, R. R., Juliani Purba, H., Sudaryanto, T., Erwidodo, Kristyantoadi Dermoredjo, S., & Riski Irawan, A. (2023). The dynamics of rural transformation, household income, and poverty reduction: Case study in North Sumatra, Indonesia. E3S Web of Conferences, 444, 03012. https://doi.org/10.1051/e3sconf/202344403012
Sen, A. (2000). Social Exclusion: Concept, Application, and Scrutiny. Asian Development Bank.
Setyanti, A. M. (2020). Informality and the Education Factor in Indonesian Labor. Journal of Indonesian Applied Economics, 8(2), 71–80. https://doi.org/10.21776/ub.jiae.2020.008.02.7
Sibagariang, F. A., Mauboy, L. M., Erviana, R., & Kartiasih, F. (2023). Gambaran Pekerja Informal dan Faktor-Faktor yang Memengaruhinya di Indonesia Tahun 2022. Seminar Nasional Official Statistics 2023.
Sugiharti, L., Aditina, N., & Esquivias, M. A. (2022). Worker Transition Across Formal and Informal Sectors: A Panel Data Analysis in Indonesia. Asian Economic and Financial Review, 12(11), 923–937. https://doi.org/10.55493/5002.v12i11.4635
Suripto, S., & Wicaksono, A. (2023). Analysis of Factors Influencing the Income of Women Informal Sector Workers in Indonesia (IFLS Data Analysis 5). Journal of Economic, Bussines and Accounting (COSTING), 6(2), 1498–1508. https://doi.org/10.31539/costing.v6i2.5042
Tambunan, T. T. H. (2016). The Importance of Informal Sector during an Economic Crisis: A Story from Indonesia 1*. In J. Asian Dev. Stud (Vol. 5, Issue 2).
Thu Diem, L. T. (2023). Informal Employment and Income: A Case Study in Tra Vinh Province. Journal Of Economics, Finance and Management Studies, 06(10). https://doi.org/10.47191/jefms/v6-i10-08
World Bank. (2020). The World Development Report: Trading for Development in the Age of Global Value Chains.
Authors
Damanik, R. and Zebua, H. I. (2025) “When Informality Meets Poverty: Vulnerability of Informal Workers in North Sumatra’s Rural and Urban Divide”, Jurnal Ketenagakerjaan, 20(1). Available at: https://journals.kemnaker.go.id/index.php/naker/article/view/463 (Accessed: 22 September 2025).
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