Impacts and Strategies Behind COVID-19-Induced Economic Crisis: Evidence from Informal Economy

Abstract

The COVID-19 pandemic has put pressure on the informal sector, especially in developing countries. Regarding the case study found in Yogyakarta Special Region (Indonesia), this research focuses on workers in the informal sector with the following objectives: (1) to assess the impacts of COVID-19 pandemic on informal workers’ conditions, (2) to identify their strategies for surviving the crisis, and (3) to analyze the existing social safety net to support their livelihood. This study surveyed 218 respondents who worked in the informal, non-agricultural sector. The data were analyzed using descriptive statistical techniques. The results confirmed that most respondents underwent a decrease in working hours and incomes. In general, they have particular coping mechanisms to survive. The results also found that most respondents had high hopes for social assistance to stabilize their livelihood. Several government programs had been issued, either by improving policies before the pandemic or by creating new ones. However, there were many barriers and challenges to implementing them so that some recommendations had been suggested in this study to help the informal workers to become more resilient.

Worker Transition Across Formal and Informal Sectors: A Panel Data Analysis in Indonesia

“…Thus, it is shown that workers mostly targeted informal entrepreneurship as a transition step to a permanent job or formal entrepreneurial activity. This finding aligns with that of Todaro and Stephen (2012) as well as with that of Pitoyo et al (2021), who noted that it is relatively easy to access the informal sector because it requires lower capital and fewer skills than the formal sector. In addition, Meng (2001) found that informal entrepreneurs possibly have a higher income than that gained from other activities within the formal or informal sectors in China.…”

“…Earlier studies have looked at mobility across sectors, regions, and locations (Calì et al, 2019;Kataoka, 2019) but have not provided estimates based on formality level. Second, we study the nexus between socio-demographic variables and labor mobility aimed at identifying sectors where policy efforts can bear fruit in supporting formality and identifying vulnerable groups (or slow movers) toward formality who may require additional policy support (Pitoyo, Aditya, Amri, & Rokhim, 2021). Third, we test whether improving skills development and training may help to increase mobility toward formal activities and increase permanence in formal employment.…”

“…Workers within the agricultural, service and construction industries have a lower tendency to transition to the formal sector than workers in secondary industries. Unemployed people have the lowest opportunities to access the formal sector, suggesting that workers may opt for informal jobs as entry to the labor market, as noted in the case of workers in Turkey (Tansel & Elif, 2017) and Indonesia (Pitoyo et al, 2021).…”

Livelihood of street vendors in Yogyakarta amidst the COVID-19 pandemic

“…The COVID-19 pandemic caused workers' conditions to fall into the worst condition, 2.52% of workers experienced layoffs and 22.74% did not work, and 70.53% of the population had low incomes of less than IDR 1,800,000 who had become the most affected ones by the COVID-19 pandemic [2]. A preliminary study conducted in Indonesia also proved that the pandemic crisis disrupted the incomes of most informal workers [3,4].…”

Migration Attributes in Adaptation and Its Correlates during Pandemic: The Socio-ecological Interpretation

“…Urban informal sector has been considered as the resting place where the urban in-migrants work until they find a formal sector job (Selod & Shilpi, 2021;Tran et al, 2022;Szaboova et al, 2022). But increasing number of studies in recent years has repeatedly shown an alternative role of urban informal sector (Acharya et al, 2009;Pitoyo et al, 2021). Rural-urban migration has inherent linkages to agricultural development (Mianabadi et al, 2022).…”