Jurnal Ketenagakerjaan Volume 20 No 3,2025 Online ISSN: 2722-8770 Print ISSN: 1907-6096 Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future Septiana Dwiputrianti1 *.
Alexander Kotchegura2 .
Hye Kyoung Lee3 Department of Administrative Sciences.
Politeknik STIA LAN Bandung.
Indonesia Department of Public Administration.
Russian Presidential Academy of National Economy and Public Administration: Moscow.
RU Department of Law & Public Administration.
Myongji University.
Rep.
of Korea *Email Correspondence: septiana.
dwiputrianti@poltek.
Abstract The gig economy has been widely celebrated for its potential to boost national productivity and generate flexible employment opportunities.
Yet, beneath its promise lies the paradox of digital inequality.
In Indonesia, the rapid growth of platform-based work in transportation, delivery, and online freelancing demonstrates the gig economyAos increasing visibility.
However, compared to countries such as India.
Brazil, and the United States, the measurable contribution of gig work to long-term economic resilience is less certain.
Drawing on secondary data from the ILO.
World Bank, and OECD, this paper argues that the gig economy, while expanding labour absorption, disproportionately depends on precarious, low-wage arrangements that limit upward mobility and sustainable growth.
From a cultural perspective, gig work normalises hyper-flexibility and individualisation, reshaping the meaning of employment in ways that weaken collective bargaining and career stability.
Comparative analysis reveals that countries with robust labour regulations have managed to harness gig productivity without exacerbating inequality, whereas emerging economies with weaker systems, such as Indonesia, risk deepening informalization.
This study contends that IndonesiaAos policy challenge is not whether the gig economy should grow, but whether it can grow inclusively.
Without deliberate labour governance.
Indonesia may face a dual economy: one sector benefiting from digital innovation, and another trapped in precarious, digitally mediated inequality.
Keywords: gig economy, digital inequality, labour future.
Indonesia, work culture, inclusive DOI: 10.
47198/jnaker.
Received: 03-12-2025 Revised: 10-12-2025 Accepted: 26-12-2025 Jurnal Ketenagakerjaan.
All rights reserved.
This is an open-access article distributed under the terms of the Creative Commons Attribution-ShareAlike 0 International License Licensed under a Creative Commons Attribution-ShareAlike 4.
0 International License Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future Introduction The rise of the gig economy has reshaped the global conversation on the future of work (Allon.
Cohen, and Sinchaisri 2023.
Jiang and Sinchaisri 2025.
Kerikmye and Kajander 2022.
Kim et al.
Across both advanced and emerging economies, digital labor platforms, like ridehailing, delivery, and online freelancing, are often praised as drivers of innovation, productivity, and flexible employment (Demir 2.
For developing countries, including Indonesia, these platforms have been seen as inclusive tools that can absorb additional workers and help more people participate in the economy.
However, behind this optimistic view is a contradiction: while digital platforms offer more chances to earn money, they also make existing inequalities worse by creating informal, unstable, and low-paying jobs (Chong & Kyounghee, 2.
In Indonesia, this struggle between opportunity and inequality is powerful.
As of 2024, more than 60% of the workforce remains in informal employment, and a substantial portion of recent growth in digital labor has occurred within this informal group (BPS, 2.
Platform-based work, such as driving for Gojek or Grab, or delivering for ShopeeFood and Lazada, demonstrates how technology is rapidly transforming the way people work.
Yet, as Arif Novianto .
Points out that even jobs officially labeled AuformalAy are becoming more informal through fake partnership models that shift risks from employers to workers.
This process weakens the concept of decent work by making flexible arrangements commonplace, without the usual benefits such as social security, stable pay, or the right to negotiate collectively.
Compared with experiences in other emerging economies, such as India and Brazil, digital labor markets, which lack strict rules and oversight, often exacerbate inequality rather than mitigate it (Berry 2.
In these contexts, gig work offers short-term livelihood security but fails to deliver upward mobility or skill progression.
Indonesia faces a similar dilemma.
According to the World Bank (Fu et al.
The countryAos Auself-reinforcing informality trapAy constrains productivity growth and limits the potential for equitable development.
IndonesiaAos formal job growth has stagnated, and despite its rapid digitalization, only one in five workers is projected to access formal employment by 2045.
Among women, the situation is even more concerning, only one in ten is likely to secure formal work under current trajectories.
At the macroeconomic level.
Bank IndonesiaAos inclusive finance division (Anatan and Nur 2.
underscores the strategic role of MSMEs .
icro, small, and medium enterprise.
in formalization and digital transformation.
Through value-chain-based corporatization and digital financial inclusion, the institution aims to integrate informal producers into the formal economy.
Yet, these initiatives face structural constraints, including fragmented digital ecosystems, uneven financial literacy, and persistent gender and regional disparities.
Without addressing these foundational issues, digital tools risk amplifying rather than bridging economic inequality.
Meanwhile, from a social protection perspective.
Jafar .
Emphasizes that the transition from informal to formal labour must not come at the expense of worker vulnerability.
In practice, many gig workers are negatively selected on the basis of education, age, or physical Dwiputrianti.
Kotchegura.
Lee characteristics, thereby leaving them exposed to income volatility and occupational risk.
Thus, inclusive and sustainable social protection systems are crucial for ensuring that gig workers can transition into more stable forms of employment without being excluded from national insurance schemes or retirement security mechanisms.
This emerging evidence suggests that IndonesiaAos gig economy represents not a clear path toward digital empowerment, but rather a contested terrain between innovation and inequality (Alfarizi.
Noer, and Noer 2025.
Annazah.
Tobing, and Habibi 2024.
Tobing 2.
The normalization of Auhyper-flexibilityAy and individual responsibility, hallmarks of the gig model, redefines the meaning of employment.
As scholars have observed globally, such transformations challenge the collective foundations of labour solidarity and weaken institutional mechanisms that historically protected workersAo rights (Panimbang 2.
The erosion of these mechanisms in Indonesia could deepen dualism in the labour market, with one segment benefiting from digital innovation and capital accumulation, and another trapped in precarious, digitally mediated At the policy level.
IndonesiaAos experience resonates with a broader global debate.
The ILO .
identifies three critical conditions for inclusive digital work: .
regulatory frameworks that balance flexibility and protection, .
social dialogue involving both platform companies and workers, and .
adaptive social security systems that accommodate non-standard forms of Countries such as Germany and South Korea have successfully integrated these principles, demonstrating that the gig economy can enhance productivity without exacerbating inequality (Deruelle.
Montero, and Wagner 2.
In contrast, emerging economies with weak institutional capacity, such as Indonesia, risk accelerating informalization and underemployment if digitalization proceeds without complementary labor reforms.
Therefore, this study situates IndonesiaAos gig economy within a comparative and policyoriented framework.
By synthesizing data from the ILO, the World Bank, and the OECD, as well as insights from national institutions such as Bank Indonesia and SMERU, it argues that IndonesiaAos labor future hinges not merely on the expansion of digital work but also on its The central question is not whether the gig economy will continue to grow.
it already has, but whether it can grow equitably.
Achieving this requires deliberate state intervention to ensure fair wages, access to social protection, and pathways for skill upgrading.
Without such governance.
Indonesia risks perpetuating a dual labour structure: one digitally empowered, the other digitally marginalized.
Table 1 provides a summary of IndonesiaAos digital-access landscape, highlighting disparities in internet penetration, device quality, and connectivity that shape workersAo ability to participate effectively in the gig economy.
These structural indicators demonstrate that digital inclusion remains uneven across regions and socioeconomic groups, reinforcing the argument that digital inequality is a foundational determinant of who can meaningfully access and benefit from platform-based work.
Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future Table 1.
Key Indicators of IndonesiaAos Digital Divide Indicator Internet users (Jan 2.
Internet penetration Value 3 million APJII survey users .
3Ae2.
221 million APJII penetration Estimated gig workers Median monthly gig income 78Ae79% 43Ae2.
3 million IDR 3Ae4.
5 million Device quality gap RuralAeurban connectivity gap High Persistent Notes Data Reportal / Kepios National average Higher due to a different Urban areas are significantly higher Broader definitions: up to 4 million Varies by region and platform type Significant differences between lowend and high-end smartphone users Affects visibility in algorithmic Sources:
Implementation of Intellectual Property Law Awareness and Cybersecurity Technology Against Digital Copyright Violations in Indonesia During The 2024 Elections.
Ay 7.
:349Ae58.
(Long et al.
Analysis of Social Media User Growth and Its Implications for Digital Marketing Strategies in Indonesia 2024.
Ay 236Ae (Tewu et al.
The Importance of Communication Literacy in the Digital World: Preparing the Public to Face Technological Challenges in Indonesia.
Ay 3.
:163Ae76.
(Furbani 2.
Digital Landscape and Behavior in Indonesia 2024: A National Survey Analysis of Internet Penetration.
Cybersecurity Risks, and User Segmentation Using K-Means Clustering and Logistic Regression.
Ay 6.
:3336Ae51.
(Aminudin et al.
Gig Workers in The Digital Era in Indonesia: Development.
Vulnerability.
And Welfare.
Atlantis Press International BV.
(Pratomo et al.
In sum, the gig economy presents both promise and peril.
It offers new forms of participation in a digitalizing world, but simultaneously threatens to entrench inequality if left unregulated.
IndonesiaAos challenge is to steer this transformation toward inclusive growth, in which flexibility does not entail insecurity and digital progress translates into social advancement.
The lessons from the countryAos ongoing debates and reforms highlight that the true future of work will be defined not by technology itself, but by how societies choose to govern it.
Research method This study employs a qualitativeAequantitative mixed-method approach based primarily on secondary data analysis from international and national sources, including the International Labour Organization (ILO), the World Bank, the Organisation for Economic Co-operation and Development (OECD).
Statistics Indonesia (BPS), and relevant national research institutions such as Bank Indonesia and the SMERU Research Institute.
The data encompass labour participation rates, growth in digital platforms, informal-sector employment shares, and social protection coverage from 2015Ae2024.
The analytical objective is to identify how IndonesiaAos gig economy contributes to labour formalization and inclusive economic growth.
Dwiputrianti.
Kotchegura.
Lee Data Collection Data were collected through a systematic review of official datasets, policy reports, and academic publications.
Data extraction followed three steps: .
selecting indicators of digital labour and informality.
standardizing data across sources for comparability.
contextualizing the findings with supporting qualitative insights from policy documents and expert presentations.
These sources were complemented by a review of the literature from the past decade to capture the evolving theoretical debates surrounding the gig economy and digital Data Analysis Data analysis employed a comparative and descriptive framework, combined with thematic content analysis.
Quantitative indicators were compared descriptively across countries (Indonesia.
India.
Brazil, and the United State.
to assess the differential impacts of platformbased work on economic resilience.
Meanwhile, qualitative analysis identified recurring policy themes, such as labour precarity, digital inclusion, and institutional response, that shape IndonesiaAos policy landscape.
The choice of a comparative-descriptive method enables the mapping of structural contrasts and policy gaps between advanced and emerging economies, aligning with the studyAos objective of drawing lessons for IndonesiaAos future labour market.
The research process followed four analytical stages.
First is data identification, which compiles data on digital labour and informality from validated international and domestic Second is data integration, which harmonizes metrics and transforms them into comparable indicators.
Third, a comparative analysis assesses IndonesiaAos position relative to other economies.
The last is interpretative synthesis, which derives policy implications for inclusive growth.
The studyAos analytical framework (Figure .
integrates the relationship between digital transformation, labour regulation, and inequality.
The model illustrates how technological expansion mediates labour absorption through both formal and informal pathways, influencing the inclusivity of economic outcomes.
Digital Transformation Labour Market Restructuring Informality and Inequality Figure 1.
Conceptual Framework of the Study Source: Proceed from Eichhorst et a .
In summary, this methodological design enables triangulation between quantitative indicators and qualitative interpretations.
By combining secondary data with contextual analysis, the study ensures empirical robustness while maintaining policy relevance.
This approach also reflects the interdisciplinary nature of digital labour research, bridging economic, sociological.
Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future and governance perspectives to assess whether IndonesiaAos gig economy can evolve toward inclusive and sustainable growth.
Results and Discussion Structural Dualism and Informality Trap Findings from the World Bank (Ryandika et al.
Emphasize that IndonesiaAos labour market remains structurally dualistic, with informality rates exceeding 60%, disproportionately concentrated in low-productivity sectors.
Despite a growing digital economy, formal job creation has stagnated.
Only one in five new workers is projected to secure a formal position by 2045.
This stagnation aligns with the Auinformality trapAy hypothesis, wherein firms, workers, and state institutions become locked in a self-reinforcing equilibrium that limits structural transformation.
Similar observations have been made by Barra and Papaccio .
Who notes that informality persists in emerging economies when regulatory costs and enforcement asymmetries outweigh productivity incentives.
Comparative data from India and Brazil reveal that digital platform expansion alone does not guarantee formalization.
Instead, it often deepens labour segmentation by creating Aupseudo-formalAy employment, a phenomenon also observed in IndonesiaAos platformbased sectors such as ride-hailing and online freelancing.
This evidence suggests that technological transformation, without institutional reform, risks amplifying inequality rather than reducing it.
Table 2 compares the characteristics, risks, and drivers of inequality across major categories of digital labour platforms.
The table illustrates that platform work is not homogeneous: ride-hailing, delivery, and online freelancing each exhibit distinct operational logics that influence worker precarity, algorithmic exposure, and income volatility.
Understanding these platform-specific dynamics is essential for interpreting how digitalization contributes to differentiated labour outcomes and the informalization of work.
Table 2.
Platform-Specific Dynamics in the Gig Economy Platform Type Ride-hailing Main Risks Spatial/temporal bias.
high operational costs Food/parcel Key Characteristics High-frequency Micro-tasks.
tight time Online Skill-differentiated, global competition Race-to-bottom pricing.
rating dependency Work low margin per order Drivers of Inequality Algorithmic prioritization by GPS accuracy, location Penalties variability in Reputational gatekeeping.
Sources: Proceed from Flexible Work Contracts in the Gig Economy : An Institutional Analysis.
Ay 8.
:80Ae88.
(Utami and Amini 2.
The South East Asian Journal of Management Balancing the Scales : The Role of Work-Life Balance and Technological Support in Enhancing Gig Worker Productivity in Indonesia Balancing the Scales : The Role of Work-Life Balance and Technological.
Ay 19.
doi: 10.
7454/seam.
(Parman 2.
Retention In Indonesia Ao S Gig Economy : The Role Of Work-Life.
Ay 23.
:597Ae619.
(Productivity and Satisfaction 2.
Dwiputrianti.
Kotchegura.
Lee The earlier study shows that digitalization alone does not automatically dismantle structural dualism when institutional capacity remains weak.
Cross-national experience reveals at least three distinct policy models that shape the relationship between digital transformation and labor The first model entails expanding legal recognition and social protection for platform workers .
, in India and Kore.
The second policy model is market-flexibility frameworks with partial worker protection .
California.
United State.
The last model is legislative initiatives on fair work and algorithmic transparency .
Brazil and selected EU These international cases illustrate why some economies can contain informalization, while others intensify it.
India offers a notable example.
Through the Code on Social Security .
and the e-Shram registration system, the government has formally acknowledged gig and platform workers, thereby enabling them to access welfare boards and contributory benefit If effectively implemented, these mechanisms could support workersAo gradual transition from informal to semi-formal status.
In contrast, the Proposition 22 framework in California permits platforms to classify drivers as independent contractors, thereby providing them with limited benefits.
While this preserves business flexibility and platform participation, it also institutionalizes a form of Auregulated informalityAy in which economic activity expands without corresponding social protection.
South Korea has taken a further step by extending employment-injury and unemployment insurance to various categories of platform workers, and by testing portable benefit systems that follow the worker across different employers or platforms.
Meanwhile, several European Union members, including Germany, have proposed or enacted legislation requiring algorithmic transparency, collective bargaining rights, and data access provisions for gig workers.
These efforts reflect a shift from regulating jobs to regulating platform accountability.
While Brazil represents an intermediate case, its recent AuDecent Work for App WorkersAy agenda .
nder discussion since 2.
seeks to establish minimum wage and social security contributions for gig workers while preserving flexible contracts.
Implementation, however, remains uneven due to fragmented governance across federal and municipal levels.
Table 1 summarizes the principal policy approaches and their implications for labour formalization.
Table 3.
Comparative Summary of Digital-Labour Policy Approaches Country / Jurisdiction Main Policy / Instrument Key Features Likely Effect on Formalization / Informality Expands coverage and access to Legal recognition of platform potential pathway out workers, unified national of informality if enforcement database, state welfare boards India Code on Social Security .
eShram registry Brazil Draft AuDecent Work Moves toward minimum pay May strengthen protections but for App WorkersAy and social-security remains fragmented pending local pilot debates over federal coordination.
algorithmic fairness Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future Country / Jurisdiction Main Policy / Instrument Key Features Classifies gig drivers as United States Proposition 22 .
0, limited benefits (Californi.
via company stipends Extensions of Republic of employment and Korea injury insurance to gig workers Germany / Expands social insurance pilots portable Platform-work Emphasizes algorithmic directive proposals.
transparency, collective national social bargaining, and shared dialogue frameworks responsibility Likely Effect on Formalization / Informality Maintains labour-market flexibility but institutionalizes partial protection.
Reduces vulnerability and fosters the semi-formal inclusion of non-standard Converts platform productivity gains into formalized protections when effectively Source: AuthorsAo compilation based on (Chong and Kyounghee 2024.
Vandaele 2.
Cross-country evidence thus reinforces two central lessons for Indonesia.
First, formal recognition, combined with portable social protection schemes, is essential to transform gig work into a pathway to inclusive formalization.
Second, regulatory regimes that prioritize corporate flexibility without adjusting labour institutions, such as the U.
model, tend to entrench the informality trap.
Countries that successfully balance innovation with protection .
Korea.
German.
demonstrate that digital transformation can support formalization only when accompanied by active governance and enforcement.
For Indonesia, these lessons imply that expanding digital labour must go hand in hand with modernizing its institutional architecture.
Through legal recognition, portable social protection, and integrated labour-market governance, otherwise, digital transformation will accelerate, rather than resolve, structural dualism and Informalization of Formal Work Arif Novianto .
Highlights the growing informalization of formal employment, where contractual flexibility and AupartnershipAy schemes erode the security historically associated with waged labour.
This finding aligns with global research by Gregori .
and Deruelle et al.
, which documents how digital platforms recast employment as entrepreneurship, shifting risks from the firm to workers.
In Indonesia, this reclassification reduces employersAo obligations for minimum wages, social security, and occupational safety.
The thematic content analysis from this study reveals that such transformations have blurred the distinction between formal and informal work.
Platform workers operate under algorithmic management yet lack collective bargaining mechanisms.
This mirrors the Aufissured workplaceAy model (Goldman and Weil 2.
, where accountability and responsibility are fragmented across networks of intermediaries.
Consequently, labour precarity becomes normalized, weakening social cohesion and undermining pathways toward upward mobility.
Digital platforms and new contractual forms are not merely creating new jobs.
they are reshaping the borders of existing formal employment by shifting costs, responsibilities, and risks Dwiputrianti.
Kotchegura.
Lee away from firms and onto workers.
This process Ai which we term the Auinformalization of formal workAy, takes several identifiable forms: worker misclassification, algorithmic management that erodes bargaining power, subcontracting and multi-layered supply chains, and the proliferation of AupartnershipAy or contractor models that mimic self-employment while preserving employer These dynamics have been documented across jurisdictions and provide significant contrasts for IndonesiaAos policy choices.
A prominent example is CaliforniaAos policy trajectory: the passage and subsequent legal defense of Proposition 22 institutionalized a contractor-based model for app drivers, preserving platform flexibility while providing narrowly defined, company-sponsored benefits rather than full employee protections.
The outcome has been the formal legalization of a partial-protection model that many observers argue entrenches an intermediate status.
Neither fully formal nor fully protected, thereby sustaining labor-market dualism.
This case shows how regulatory accommodation of platform business models can codify a version of Auregulated informality.
India demonstrates a different dynamic.
The Social Security Code and the national e-Shram registration recognize gig/platform workers, creating administrative channels for benefit delivery without reclassifying them as employees.
This has the potential to improve welfare coverage and Still, the Indian approach also illustrates a caution: legal recognition, combined with administrative registries, can increase access to targeted benefits without necessarily converting platform work into standard salaried employment, especially when enforcement and financing remain limited.
Thus.
IndiaAos path shows partial mitigation of informalization, contingent on implementation capacity.
South Korea offers an instructive policy experiment aimed at limiting informalization by adapting social insurance to the new reality of platform work.
National and ILO analyses document efforts to expand employment-injury and unemployment insurance coverage, as well as to trial portable benefit mechanisms that follow the worker across platforms and employers.
These measures reduce the vulnerability that arises when traditional employer-based protections fail to cover non-standard workers, and they illustrate how social insurance design can blunt the informalizing effects of algorithmic gig work.
(Chong and Kyounghee 2.
Brazil occupies an intermediate position.
While the Lula administration and civil society initiatives have advanced a Audecent workAy agenda for platform workers, legislative proposals are still evolving, and implementation remains uneven across federal and municipal levels.
Independent platform assessments .
Fairwork Brazi.
highlight persistent weaknesses in platform management practices and representation, suggesting that legal reforms alone may struggle to reverse informalization without robust enforcement and mechanisms for worker voice.
(Barcellos 2.
Across these cases, three patterns recur.
First, legal recognition alone .
hrough registration or a special categor.
can increase access to certain benefits, but it does not automatically restore full formal employment protections.
Second, regimes that enshrine contractor status .
CaliforniaAos Prop .
sustain flexibility but risk institutionalizing precariousness.
Third, adaptive social protection .
KoreaAos insurance extensions.
portable benefits pilot.
provides a concrete Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future policy route to reduce vulnerability even when employment classification remains non-standard.
These patterns offer operational lessons for Indonesia: to prevent the informalization of formally counted work, policies must combine legal frameworks, enforceable platform accountability, and redesigned social-protection instruments that are portable and decoupled from single-employer Table 4.
Mechanisms of Informalization of Formal Work-Comparative examples and policy responses Mechanism of Country/Example Observed effect on Noted policy response/implication Worker California (Prop .
ontractor statu.
Creates a legally sanctioned Preserves platform partial-protection model, raising limits employee concerns about enforcement and Administrative India (Social Security Code.
eShra.
Improves access to targeted benefits but not employment rights Algorithmic erosion of Brazil .
latform Weakens negotiation Fairwork power.
Requires strong implementation and financing to reduce (Shekhawat 2.
Calls for algorithmic transparency and collective (Fairwork 2.
Subcontracting/fis Various .
lobal sured workplace Diffuses employer enforcement complexity Necessitates multi-stakeholder enforcement and more explicit liability rules.
Portable benefits & Republic of Korea .
Reduces income/health vulnerability for nonstandard workers Demonstrates the feasibility of decoupling protection from single-employer status.
(Chong and Kyounghee 2.
Source: AuthorsAo compilation .
2Ae2.
based on policy documents.
ILO briefs, and independent platform assessments.
(Chong and Kyounghee 2.
In short, the international evidence suggests that the informalization of formal work under digitalization is not an inevitable by-product of technology.
somewhat, it is heavily shaped by policy choices regarding classification, the design of social protection, platform accountability, and enforcement.
For Indonesia, this implies that preventing the erosion of formal employment standards will require simultaneous reform in labour classification rules, legally enforceable platform obligations, portable social protections, and stronger mechanisms for worker representation and collective voice.
Financial Inclusion and MSME Formalization Insights from Bank Indonesia (Rosita Dewi, 2.
demonstrate ongoing efforts to formalize informal enterprises through corporatization and value-chain integration.
The central bankAos approach leverages financial inclusion and digital payment systems to embed micro and small Dwiputrianti.
Kotchegura.
Lee enterprises within formal financial structures.
Table 3 presents an illustration of MSME participation in formal credit and digital finance access.
Table 5.
MSME Participation in Formal Financial Systems .
0Ae2.
MSMEs with Digital Payment Access
(%)
Year MSMEs with Bank Accounts (%) MSMEs with Formal Credit (%) Source: Bank Indonesia .
, processed.
The data indicate a positive trend toward financial inclusion.
however, the conversion of informal MSMEs into formal enterprises remains slow, constrained by limited digital literacy and unequal access to credit across regions.
As OECD .
notes, digitalization enhances productivity only when accompanied by institutional capacity-building and skill development.
Therefore, while BIAos strategy promotes formalization through inclusion, its impact on labour quality and wage stability remains partial.
Digital financial inclusion has become a central policy instrument to encourage MSME formalization: electronic payments, digital account ownership, and fintech-based credit scoring can reduce transaction costs, enhance the traceability of sales, and expand access to formal credit.
However, cross-country experience shows these tools produce institutionalized formalization only when digital services are combined with regulatory support, capacity building, and linkages to credit and social programmes.
Indonesia has accelerated the digitalization of MSMEs through the adoption of QRIS.
SIAPIK (Sistem Aplikasi Pencatatan Informasi Keuanga.
, digital literacy initiatives, and AugodigitalAy initiatives led by Bank Indonesia and related ministries, as well as through collaboration with state banks to expand digital credit and market access.
These measures have increased formal financial touchpoints for many MSMEs.
however, they face constraints related to infrastructure, regional inequality, and heterogeneous digital skills that limit their complete IndiaAos experience illustrates a mixed but instructive pathway: the Udyam registration (MSME registr.
and targeted schemes, such as PM-SVANidhi for street vendors, combine digital registration with micro-credit and the promotion of digital payments.
The national approach emphasizes establishing an administrative footprint .
egistries, mobile application.
to enable subsidized credit and welfare delivery.
When effectively implemented, these tools can convert informal micro-actors into registered micro-enterprises, thereby increasing their access to finance.
KenyaAos mobile-money revolution (M-Pes.
demonstrates how low-cost, ubiquitous mobile payments can rapidly expand financial inclusion and formally link small businesses to the financial system.
M-PesaAos agent network and mobile wallets significantly increased transaction formalization, creating transaction histories that later supported credit scoring and small-business finance.
However, success required coordinated regulatory oversight Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future and strong agent networks (Njuguna S.
NdungAou 2.
On the other hand.
BrazilAos Pix instantpayment system, publicly operated by the central bankAihas also dramatically scaled up digital payments, lowering costs for MSMEs and increasing electronic receipts that can be used as transaction evidence for formalization or financing.
On the other hand, the Philippines has pursued a national Digital Payments Transformation Roadmap (PESONet.
InstaPay, and expanded e-money service.
to expand retail e-payments and thereby broaden MSME access to formal financial rails.
the Bangko Sentral ng Pilipinas pairs infrastructure with outreach to firms to increase adoption.
This approach illustrates the combined importance of rails outreach.
(Bangko Sentral ng Pilipinas 2.
While South Korea and OECD guidance highlight that digital financial services must be paired with SME support .
raining, subsidized tech adoption, access to market platform.
to produce durable formalization and productivity gains.
KoreaAos government programmes actively finance SME digital upgrading and provide coordinated support to connect firms to credit and export markets.
(Bianchini and Kwon 2.
Social Protection and Labour Vulnerability Palmira(Jafar et al.
Provides critical evidence on the vulnerability of informal and gig workers, emphasizing that most digital labourers are excluded from formal social security This aligns with the ILO's .
finding that nearly 80% of gig workers globally lack access to health insurance or pension schemes.
In Indonesia, selective barriers, such as those based on education, age, or digital competence, further exacerbate exclusion.
This studyAos comparative synthesis shows that the absence of adaptive social protection frameworks limits the inclusivity of digital work.
Countries such as South Korea and Germany have developed portable benefit systems, allowing gig workers to maintain social protection regardless of their employment type (Bianchini and Kwon 2.
Indonesia, however, continues to rely on static, employer-based models that fail to capture non-standard forms of labour.
Consequently, the gig economy expands horizontal inclusion .
y increasing the number of people employe.
but constrains vertical inclusion .
ith respect to social mobility and protectio.
The rapid expansion of platform and non-standard employment has exposed millions of workers to significant economic risks, including volatile income, inadequate occupational safety coverage, and the absence of retirement and health insurance.
Countries that have managed to mitigate this new vulnerability generally combine several policy instruments: .
extending conventional social-insurance schemes to cover new employment forms.
designing portable benefit systems that AufollowAy the worker across multiple jobs or platforms.
requiring platformspecific contributions or sectoral funds.
using administrative registries and digitalpayment infrastructures to target transfers or micro-insurance.
Comparative experiences demonstrate that, without structural adaptation, social protection systems amplify rather than correct the inequalities produced by digitalization (Bianchini and Kwon 2021.
Chong and Kyounghee 2.
Within the European Union, the Platform Work Directive establishes minimum standards for algorithmic transparency, employment classification, and workersAo fundamental rights, such as minimum pay and leave.
The directive Dwiputrianti.
Kotchegura.
Lee shifts the burden of proof to platforms when they claim contractor status, thereby promoting accountability while preserving business flexibility.
This model illustrates that reducing labour vulnerability requires clear legal duties for platforms, not merely expanded insurance architecture (European Commission 2.
South Korea has extended employment-injury and unemployment-insurance coverage to selected categories of platform workers while piloting portable benefit accounts.
These measures demonstrate that adapting employer-based schemes to worker-based participation can close protection gaps.
However, enrolment remains modest, indicating that regulatory change must be accompanied by outreach and administrative simplification (MOEL 2.
IndiaAos Code on Social Security .
and the e-Shram portal provide an alternative pathway.
By registering informal and platform workers in a national database.
India has created an Auadministrative anchorAy for targeted cash transfers, training, and subsidies.
Yet, the scheme also exposes implementation limits: coverage and financing remain incomplete, and the linkage to contributory social insurance remains weak (Ministry of Labour, 2.
Brazil and several Latin American countries have proposed or enacted minimum-standard legislation for app-based workers, defining minimum pay per active hour and mandatory pension contributions.
Implementation, however, is fragmented across federal and municipal levels, underlining the need for enforcement capacity in addition to legal obligations (World Bank 2.
In China, major delivery and logistics platforms, such as Meituan and JD.
com, have begun offering corporate insurance packages or contributions for their couriers, driven by public and regulatory pressure.
Although these voluntary schemes reduce short-term exposure, their effectiveness varies with transparency and the scope of benefits (ILO Asia-Pacific, 2.
For highly informal contexts, non-conventional instruments also play a significant role.
KenyaAos M-Pesa mobile-money ecosystem enables access to micro-insurance and rapid digital transfers, improving financial resilience among micro-entrepreneursAiillustrating how digital payment infrastructure can underpin social protection outreach.
Similarly, during the pandemic.
Chile and other Latin-American countries deployed emergency cash transfers (Ingreso Familiar de Emergencia.
IFE) to informal households, proving that robust administrative data can facilitate swift crisis responses (Bianchini and Kwon 2.
Overall.
OECD and ILO reviews converge on three design priorities for modern social protection: .
broadening coverage beyond standard .
integrating digital identification and data interoperability.
linking benefits to contributions in flexible yet enforceable ways (Bianchini and Kwon 2021.
Chong and Kyounghee 2.
Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future Table 6.
Comparative Summary Ai Social-Protection Instruments for Platform and Informal Workers Instrument / Approach Extension of standard social Country / Example South Korea Main Features Legal inclusion of platform categories in national employment-injury and unemployment insurance.
pilots for portability Practical Effect on Worker Vulnerability Narrowing protection gaps reduces exposure to income shocks and work United States .
ilot Provides partial but Portable benefits / scheme.
Korea Pro-rata contributions, continuous coverage.
individual worker pilots, private personal accounts practical where complete transferable across employers employee reclassification is (DoorDash Fun.
Enables rapid targeting.
success depends on financing and service National registry India .
-Shram.
targeted benefits Code on Social and training Securit.
National worker database.
channel for cash, training, and subsidies Mandatory sectoral funds Obligatory employer Creates dedicated funding minimum pay for benefits but requires & benefit floors effective enforcement.
Brazil .
roposed Decent Work Bil.
EU debates Reduces short-term Platform-led China (Meituan.
JD) Company-sponsored accident vulnerability.
however, it is and some U.
or health insurance inconsistent and firminsurance schemes platforms Micro-insurance via digital Kenya (M-Pesa Emergency and universal cash Crucial for crisis resilience.
Chile (IFE) and Temporary direct transfers to not a long-term substitute Latin America informal workers for structural social pandemic programs Mobile wallets delivering micro-insurance & transfers Increases the resilience of micro-workers.
through agent networks.
Source: AuthorsAo synthesis from ILO.
OECD.
World Bank, and national policy documents .
0Ae2.
Implications for Indonesia Comparative evidence suggests that Indonesia needs a hybrid approach to address labour vulnerability in its expanding digital economy.
The immediate priorities are: .
Pilot the extension of existing social-insurance schemes .
uch as employment-injury and health coverag.
to selected platform workers.
Design a national portable benefit account that aggregates contributions across multiple employers and platforms a pragmatic bridge toward universal .
Integrate platform registries or QRIS/SI-APIK data with social-security databases to enable targeted benefits and training programs.
Mandate baseline contributions from large digital platforms and ensure transparent reporting of worker coverage and benefit provisions.
Dwiputrianti.
Kotchegura.
Lee These instruments align with OECD and ILO recommendations for modern, adaptive social protection, thereby enabling Indonesia to reduce labour vulnerability while laying the foundation for inclusive digital-era growth.
Policy Implications: Towards Inclusive Digital Labour Governance Synthesizing the above findings, this study identifies three interdependent policy gaps.
First, regulatory alignment between digital platforms and existing labour laws remains weak, resulting in enforcement gaps.
The second gap is that institutional coordination between employment, financial, and social agencies is fragmented, reducing policy coherence.
The last is worker representation and voice mechanisms, which are underdeveloped in the digital sector, limiting social dialogue.
These gaps underscore the need for a multidimensional governance framework that integrates labour protection, financial inclusion, and digital literacy.
As shown in Figure 1, digital transformation reshapes the labour market through both productive and precarious Without deliberate intervention, informalization will outpace formalization, reinforcing inequality and undermining IndonesiaAos long-term development goals.
The comparative evidence presented earlier suggests a central policy insight: the outcomes of digital labour transformations depend far more on governance design than on the technology Countries that have reduced vulnerability among platform workers combine .
more explicit legal rules about employment status and platform accountability, .
adaptive socialprotection instruments .
ncluding portable benefit.
, and .
active institutional coordination and social dialogue.
Conversely, regimes that prioritize business flexibility without reconfiguring protection systems tend to institutionalize precariousness and sustain labour-market dualism.
The remainder of this section sets out concrete policy instruments, international practice, and their implications for IndonesiaAos governance agenda (European Parliament 2.
Second, policy experiments in East Asia .
otably Kore.
emphasize adaptive social insurance and the implementation of portable-benefit pilot schemes.
These approaches decouple social protection from single-employer relationships, enabling workers to accumulate entitlements across multiple platforms and jobs.
Portable schemes and insurance extensions mitigate the vulnerability to shocks among non-standard workers, even when formal reclassification is politically challenging.
In Indonesia, introducing interoperable contribution accounts or a national portability mechanism could be a pragmatic approach to protect gig workers while enabling business model innovation.
Third.
IndiaAos combination of legal recognition .
he Code on Social Securit.
and a large national registration platform .
-Shra.
illustrates a dataanchored pathway: administrative registries can enable targeted benefits, training opportunities, and microcredit linkages at scale.
However, registries alone do not guarantee full employment implementation, financing, and active linkage to services are decisive.
Indonesia could replicate the idea of an administrative AuanchorAy .
national platform worker registr.
, but it must pair it with funded benefits and effective enforcement mechanisms (Dhanya 2.
Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future Fourth, the California/US experience (Proposition 22 and subsequent legal decision.
illustrates the trade-offs of regulatory accommodation of platform models: statutory exemptions or bespoke benefit packages can preserve platform flexibility and worker participation but often leave workers outside mainstream social insurance and collective bargaining.
Indonesia should guard against policy choices that preserve market access at the cost of permanent gaps in social Where exemptions are politically considered, they should be accompanied by robust, portable protections and clear minimum standards.
Finally, effective digital labour governance requires institutional coherence: labour ministries, social-security authorities, financial regulators, and competition/digital-economy agencies must share data, align incentives .
, tax/treatment of platform.
, and implement joint The EU and several OECD countries are piloting interoperable data frameworks and social dialogue platforms that include platforms, worker organizations, and regulators, practices that Indonesia could adapt to strengthen compliance and voice mechanisms (European Parliament 2.
Table 5 is a concise comparative summary of policy instruments and their practical implications, which can guide IndonesiaAos policy mix for inclusive digital labour Table 7.
Comparative policy instruments for inclusive digital labour governance Policy Countries/examples Practical design Likely effect .
olicy Burden of proof on criteria for employee status.
platform accountability for working conditions Reduces misclassification.
increases employer formalization when (European Parliament 2.
Employmentclassification rules & platform EU Platform Work Directive (EU).
Spain rider laws Algorithmicmanagement Right to explanation.
EU directive.
human oversight of algorithmic transparency automated decisions.
data access for worker Restores worker contestability, reduces opaque control, and strengthens bargaining Portable benefits & insurance Worker accounts.
prorata contributions.
Korea pilots.
OECD pilots.
multi-employer portable-benefit proposals insurance pools.
(US/EU debat.
portability across Lowers the protection gap for non-standard workers.
feasible interim solution where reclassification is contested (Gross et al.
Administrative India .
-Shram.
Social Security Cod.
targeted transfers Enables scale delivery of National registry.
UID benefits and upskilling, but linkage, targeted benefit requires financing and delivery, training, and active linkage to services.
credit offers.
(Dhanya 2.
Dwiputrianti.
Kotchegura.
Lee Policy Practical design Likely effect .
olicy Companymandated partial California Prop 22 benefit models Minimum earnings guarantees, expense reimbursements, and company-administered Preserves market flexibility but risks long-term exclusion from mainstream social insurance.
Use with Institutional social dialogue Improves enforcement.
Joint data sharing, monitoring, and worker tripartite councils, essential for platform obligations for integrated policy responses.
data & bargaining access (European Parliament Countries/examples EU.
Germany, some OECD pilots Source: authorsAo synthesis based on EU Platform Work Directive materials, country policy briefs, and international reviews .
0Ae2.
Practical roadmap for Indonesia .
perational prioritie.
Adopt clear, testable legal criteria to determine employment status for platform work and require platform disclosure of algorithmic rules for job allocation and deactivation (European Parliament 2.
Pilot a portable-benefits account .
ationally managed or via regulated private provider.
that aggregates pro-rata contributions and provides core coverage .
njury, health top-ups, retirement credit.
Utilize pilots to refine contribution modalities and governance structures.
Build a national platform-worker registry .
inked to existing ID.
that enables targeted training, micro-credit offers, and claims on social transfers, paired with credible financing and enforcement plans, not just paper registration.
(IndiaAos e-Shram offers operational )(Dhanya 2.
Strengthen multi-agency coordination (Ministry of Manpower, social security agency, central bank/financial regulator, competition/digital economy authoritie.
and institutionalize social dialogue that includes platform firms and worker representatives to monitor implementation and adapt rules (European Parliament 2.
In short, international practice suggests a blended strategy for Indonesia: combine legally enforceable protections and platform accountability .
o prevent regulatory arbitrag.
, portable social protections .
o reduce immediate vulnerabilit.
, administrative anchors .
o scale service deliver.
, and strong institutional coordination .
o monitor and adap.
When implemented together, these instruments can convert IndonesiaAos digital labour expansion into a pathway for inclusive formalization rather than an accelerator of digital inequality.
Comparative Reflection and Theoretical Contribution Compared with prior studies, the present findings reaffirm the dual-edged nature of the gig economy identified by Cayli Messina.
However, this study extends the discussion by situating Indonesia within a comparative institutional context, showing that outcomes depend Gig Economy or Digital Inequality? Lessons for IndonesiaAos Labour Future less on technology per se than on governance capacity.
By linking macroeconomic trends .
rom World Bank and BI dat.
with micro-level labour realities .
s observed by SMERU and UGM), the paper contributes to a more integrated understanding of digital inequality as an institutional, not merely economic, problem.
In summary, the results indicate that IndonesiaAos gig economy simultaneously expands labour absorption and deepens inequality.
Technological progress has yet to translate into social Without inclusive governance, which combines regulatory reform, portable protection, and coordinated financial inclusion, the promise of digital work risks perpetuating the very inequalities it aims to solve.
Conclusion and Recommendations This study concludes that IndonesiaAos gig economy represents both an opportunity for labour absorption and a warning of deepening digital inequality.
The expansion of platformbased work has not automatically translated into structural transformation or social mobility.
Instead, it exposes the persistent fragility of IndonesiaAos labour institutionsAiwhere digital innovation outpaces governance capacity, and flexibility increasingly substitutes for security.
The most significant contribution of this research lies in reframing the gig economy not merely as a technological or economic phenomenon but as a systemic institutional challenge that determines how inclusively a country grows.
The analysis reveals that the key to leveraging digital labour for equitable growth lies in institutional design.
A digitally mediated labour market requires governance models capable of bridging formal and informal sectors, ensuring that flexibility coexists with protection.
Thus, policy should shift from regulating employment types toward safeguarding employment conditions.
This involves recognizing gig workers as legitimate economic actors entitled to social protection, fair remuneration, and collective representation, regardless of contractual form.
From a policy perspective, three recommendations emerge.
First.
Indonesia must establish a national framework for digital labour governance that integrates labour law, taxation, and social This can include the introduction of portable benefit accounts and multi-employer social insurance schemes that allow workers to retain protection across platforms.
Second, the government should strengthen institutional coordination between the Ministry of Manpower.
Bank Indonesia, and digital economy agencies to harmonize data systems and policy objectives.
Such integration would enhance the monitoring of gig work and facilitate inclusive access to credit, training, and insurance.
Third, capacity-building initiatives are essential, focusing on digital literacy, financial inclusion, and worker organization, to enable individuals to navigate digital markets with greater resilience and bargaining power.
The findings also underscore the importance of rethinking IndonesiaAos development model within the broader discourse of global digital capitalism.
Achieving inclusive growth in the era of algorithmic labour requires not only innovation-friendly regulation but also redistributive Dwiputrianti.
Kotchegura.
Lee mechanisms that counterbalance market concentration and technological rent-seeking.
The gig economyAos promise of empowerment will remain hollow if labour precarity continues to underpin Policies that blend innovation incentives with social safeguards, such as progressive taxation on digital platforms, public investment in social protection, and institutionalized dialogue between workers and platforms, can ensure that digitalization serves social advancement rather than exclusion.
For future research, this study opens avenues to explore micro-level dynamics within platform ecosystems, including gender disparities, algorithmic bias, and the socio-cultural reshaping of work identity.
Longitudinal studies that integrate labour economics with digital sociology could deepen our understanding of how gig work evolves and how policy interventions alter its trajectory.
Ultimately.
IndonesiaAos labour future will depend not on the scale of its digital economy but on the inclusivity of its digital transition.
The challenge is to transform flexibility into opportunity and innovation into equity.
The gig economy can contribute to national progress
only when it is governed by principles that value human security as much as technological References