STUDY ON INFORMAL SECTOR

CONDITION IN BALI PROVINCE

AND POLICY DIRECTIONS
Ida Ayu Meisthya Pratiwi
Ida Bagus Putu Purbadharmaja
Ni Putu Wiwin Setyari

Departement of Economics and Business, Udayana University

Indonesian Regional Science Association 14th

23-24 July 2018, Surakarta-Indonesia
 OUTLINE

INTRODUCTION

INFORMAL SECTOR ANNOUNCES THE MOST OF EMPLOYEES IN BALI PROVINCE

IMPACT OF INFORMAL SECTOR ON POVERTY AND THE STRENGHT OF INFORMAL

SECTOR IN BALI PROVINCE

WEAKNESSES AND PROBLEMS OF INFORMAL SECTOR IN BALI PROVINCE

EMPOWERMENT OF INFORMAL SECTOR THROUGH CREATIVE ECONOMY AS EXPANSION AND

DIVERSIFICATION RECOVERY TO SUPPORT TOURISM SECTOR OF BALI PROVINCE
 INTRODUCTION
The contributions of informal sectors in Indonesia
• its ability to sustain the country's economy during the multidimensional crisis of 1998
• its ability to absorb labor
The numbers of workers in the informal sector in Indonesia continues to increase

Distribution of Workers in Indonesia by Employment

Status On Pebruary 2017 o By sectors :
• Trade services : 0,83%
• Sosial services : 0,36%
• Industry : 0,19 %
• Electricity, gas and water : 0,04 %
41.65
Formal o By main occupational status :
Informal • family worker group increased by 0,84 %,
58.35 • self-employed group increased by 0.65 %
• the non-permanent workers increased by
0.66 %

Source : BPS, 2017

 INTRODUCTION
Along with the rapid growth of the informal sector, the informal sector is no longer just
an alternative to provision of temporary employment for unacceptable workers in the
formal sector, but also a complementary alternative to the formal sector (Setya Ari,
2018).

The movement of the informal sector is vital to create growth and employment : Cathy
and Oluwatoyin in Nigeria (2017) which reveal that the informal sector is one of the
providers of employment and creates a source of livelihood for the unemployed
• The informal sector is quite flexible and can easily adapt to the ups and downs of
the market demand
• Informal enterprises also create jobs faster than other sectors and are diversified
in making important contributions to exports and trade

Therefore, the informal sector is an important aspect for the economic development of a
competitive region
 INTRODUCTION
Informal sector problems = Government homework
• Local governments need to take strategic steps to empower the informal sector
• Most informal sector enterprises formed from the populist economy
• The presence in the era of regional autonomy are potentials that must be explored and developed :
can absorb labor and can improve the welfare

Informal sector role in economy of Bali Province

• The relationship between the informal sector as a complementary alternative to the formal sector occurs very
closely
• The informal sector becomes a mainstay to attract tourists as well as increase tourist spending, as a support
provider of the needs of the workers in the tourism sector
• The development of Bali's tourism industry not only benefits the blood command, but also the Balinese people,
and it is undeniable that the informal sector has a very important role in the growth and economic
development of Bali

Given the relatively positive role of the informal sector in national and regional development processes, the
existence of the informal sector needs to be empowered. There is a need to prioritize the development of the
informal sector and favor the interests of the lower middle class.
INFORMAL SECTOR ANNOUNCES THE MOST OF EMPLOYEES IN BALI PROVINCE

Condition Of Labor Quantity in Bali

Figure 1 Condition of Labor Quantity in Bali

Source : BPS Bali, 2017 (diolah)
 INFORMAL SECTOR ANNOUNCES THE MOST OF EMPLOYEES IN BALI PROVINCE

Percentage of Workers in Formal and Informal Sectors in Bali Province 2011-2016

Figure 2 Percentage of Workers in Formal and Informal Sectors in Bali Province 2011-2016
Source : BPS Provinsi Bali, 2017
 INFORMAL SECTOR ANNOUNCES THE MOST OF EMPLOYEES IN BALI PROVINCE

Distribution of Workers in The Formal and Informal Sector I Bali Province 2011-2016

Figure 3 Distribution of Workers in the Formal and Informal Sectors in Bali Province 2011-2016
Source : BPS Provinsi Bali, 2017
 INFORMAL SECTOR ANNOUNCES THE MOST OF EMPLOYEES IN BALI PROVINCE

Population 15 Years and Over Working by Major Employment Status 2016-2017

2016 2017
Stastus Pekerjaan Utama
Februari Agustus Februari
Berusaha Sendiri 325.000 382.946 379.281
Berusaha Dibantu Buruh Tidak Tetap 452.674 435.670 408.027
Berusaha Dibantu Buruh Tetap 84.896 88.872 93.007
Buruh/Karyawan 1.009.064 1.014.982 1.067.448
Pekerja Bebas 154.760 196.060 158.761
Pekerja Tidak Dibayar 305.193 298.025 330.970
Jumlah 2.331.587 2.416.555 2.437.494
Table 1 Population 15 Years and Over Working by Major Employment Status 2016-2017
Source : Statistik Ketenagakerjaan Provinsi Bali, 2017.
 IMPACT OF INFORMAL SECTOR ON POVERTY AND THE STRENGHT OF INFORMAL SECTOR IN BALI PROVINCE

 The informal sector in Bali : sell farm produce, gardens, livestock, forest, canang, religious ceremonies,
Balinese food, handicrafts, small retail business and so on.

 Paramitha and Suresmiathi (2016) showed that the informal sector negatively and significantly influenced
partially to poverty in Bali Province in 2004 - 2010.

Figure 4 The Percentation of Poor by Regency in Bali Province

Source : BPS Bali, 2017
IMPACT OF INFORMAL SECTOR ON POVERTY AND THE STRENGHT OF INFORMAL SECTOR IN BALI PROVINCE

The policy of empowering the poor, one of the efforts that can be done is to design the
policy of Small / SME development no longer partially but synergies between regencies
/ cities in Bali with attention to local wisdom in the form of social capital in Bali

The informal sector is very influential on the life of Balinese people, especially the
middle to lower society

The development and growth of the informal sector in Bali is generally supported by
rather on generations transmitted from generation to generation, such as silver
craftsmen in Sukawati, wood carvers, traders of upakara tools and others –other

The viscosity of Balinese culture inherited downhill is characteristic of the growing

informal sector in Bali and its existence complements the needs in the formal sector
 WEAKNESSES AND PROBLEMS OF INFORMAL SECTOR BALI PROVINCE

1. Lack of Capital and Limited Access to Financing

2. Human Resource Education (HR) is limited

3. The weakness of the Net working and Marketing

4. The low of entrepreneurship spirit is still

 WEAKNESSES AND PROBLEMS OF INFORMAL SECTOR BALI PROVINCE

 The rural atmosphere that becomes the background of Balinese society, often also
has a share in shaping performance

 Lack of transparency between the early generations of the builders towards the
next generation, so this poses difficulties for future generations in developing
their business

 In addition, the weakness of the informal sector often experienced by workers is

the absence of job benefits, no health benefits, and economic uncertainty due to
uncertainty of income (Losby et al., 2003)
 EMPOWERMENT OF INFORMAL SECTOR THROUGH CREATIVE ECONOMY AS EXPANSION
AND DIVERSIFICATION RECOVERY TO SUPPORT PROVINCIAL SECTOR OF BALI
Activities in the emerging informal sector provide benefits to providers and consumers in
the tourism sector

The focus of development should be aimed at improving the quality of human resources
through human development.

Small business empowerment / Small and Medium Enterprises (SME) is a synergic

movement between various parties, need more integrative steps between stakeholders in
effort to develop SMEs.

SMEs’ development should not be partial, must be integrated as the economic support
capacity of the region.

Efforts made in the development of SMEs in the utilization of technology in the production
process and marketing
 EMPOWERMENT OF INFORMAL SECTOR THROUGH CREATIVE ECONOMY AS EXPANSION
AND DIVERSIFICATION RECOVERY TO SUPPORT PROVINCIAL SECTOR OF BALI
 The strengthening of SMEs is also seen by more emphasized on the aspect of business orientation and market
share. The aspect of business sustainability is a major concern in the direction of SME development policy

 The business process based on the creative industry can be one of the efforts to maintain the sustainability of
SMEs, so that the synergistic, integrative, and creative process is supported by the ease of access to capital by
involving various stakeholders and the utilization of social capital owned to maintain the sustainability of SMEs
in Bali

 Digital era is not closed the possibility of introducing information technology, especially in the system of
transactions or payments to informal sector players

 The direction of sustainable SME development policy in Bali is carried out by involving various stakeholders
including social institutions, as well as in integrative and synergic work among the district / city governments and between
actors in the business line

 The empowerment of the informal sector can be done through the exploration of potential and creative
economic opportunities in the informal sector in Bali Province, which is of course based on tourism, so as to
increase the creativity of the people in working to support the tourism sector which in turn can create new jobs
in the informal sector, and the informal sector can be transformed into a formal sector