Policy makers often are concerned with responding to seasonal fluctuations in the labor market, as the perception is that large segments of the labor market may be affected at a regular time every year. Policy responses to such phenomena not only often have a broad popular appeal, but also are relatively easy to manage, with obvious start-up and completion dates. Interestingly, regular fluctuations in the labor market may be the phenomena that least require policy interventions, as households can prepare private responses for the downturns in advance (for example, shifting from agricultural labor to other types of employment during the off-season, or simply saving eamings for the anticipated periods of underemployment). Although seasonality of underemployment is an interesting phenomenon, unanticipated economic shocks probably generate far higher levels of welfare loss.

# _A General Description of Underemployment in Indonesia_

The _SAKERNAS_ data provide a useful description of underemployed workers in the informal sector. More than 12 percent of the population work less than 35 hours and would like additional employment. Although many are women, a larger number are men. The vast majority of the underemployed workers are found in rural areas, and even many of the urban unemployed are active in agricultural economic activities. Both farm and non-farm workers experience seasonality in their employment opportunities, but these patterns tend to balance each other out, providing a misleadingly stable appearance to the aggregate labor market in the informal sector. While education appears to make underemployment more likely, most of the underemployed have little or no education (at most, they have passed primary school). And while rates of underemployment are higher in Eastern Indonesia, most of the underemployed can be found on Java.

# _The Seasonality of Earnings_

The use of underemployment as a proxy for income insecurity is necessitated by the paucity of reliable information concerning the fluctuations in household incomes in Indonesia. The SUSENAS expenditure survey provides important insights into expenditure levels in Indonesia, how those levels vary across regions within Indonesia, and how they change over time. Unfortunately, none of this information helps answer the question of how variable household income levels are over time. Consequently, while SUSENAS data can be used to identify the households with low income levels who are more vulnerable to income fluctuations, the data cannot identify those households (or their location) which have actually suffered from income fluctuations.

While the SAKERNAS Labor Survey is not designed to generate the same wealth of information about expenditures and incomes as that provided by SUSENAS, the labor survey does collect information on both weekly and monthly earnings. While these data do not track specific households throughout the year, they can be used to look at how average levels of individual earnings fluctuate across quarters. Significant variation in the mean values of all workers' earnings would suggest that at least some workers are experiencing fluctuations in their personal income levels. Unfortunately, many workers in 13