Discrimination Driving Gender Wage Gap in Indonesia

By Kiyoshi Taniguchi

The conventional view of wage gaps between men and women is that they have been steadily narrowing over recent decades and this trend will inevitably continue as women achieve higher education levels and enter areas of the workforce which have been dominated by males in the past. Unfortunately recent evidence from Indonesia suggests that pay parity between the sexes remains some way off.  

The conventional view of wage gaps between men and women is that they have been steadily narrowing over recent decades and this trend will inevitably continue as women achieve higher education levels and enter areas of the workforce which have been dominated by males in the past.

Unfortunately recent evidence from Indonesia suggests that pay parity between the sexes remains some way off. Using the country’s 2010 labor force survey, we found that gender wage differences remained significant and pervasive —as they are for most of the world.  

The data shows that female workers monthly real wages were 30.8% lower than those of male workers, with the wage gap slightly wider (31.5%) in urban centers than in rural areas (29.9%). This gap exists even after variables like the number of hours worked, marital status, number of children, the type of work, and industry category are controlled.

When we break down the numbers we find that the vast bulk of the wage difference is derived from gender discrimination. The portion of the overall gap of 30.8% due to discrimination is 28.7%, meaning female workers receive 28.7% less than male workers due to gender discrimination. The rest of the gap (2.1%) is explained by non-discriminatory factors like hours worked or educational attainment by female workers. In urban centers, 27.6% of the wage gap is due to gender discrimination, and in rural areas discrimination accounts for 28.9%.

Educational attainments, the number of children below 10 years old, and marital status are all factors affecting a woman’s entry into the workforce. Equally, the number of hours worked and years of experience in the target position are significant determinants of monthly wage levels.  However our research makes it clear, persistent wage gaps are still predominantly determined by gender discrimination.

This problem of course goes far wider than just Indonesia. It is common all around the world and the message is clear. Governments need to put in place equal pay legislation for male and female workers with comparable credentials and experience, and make sure it is enforced, with the public sector leading by example.

Ultimately, an efficient labor market in which equally qualified female and male workers receive the same pay, will be a key factor in achieving sustainable and equitable economic growth in the long run.