# Introduction

With the recent enactment of _JAMSOSTEK,_ the Government of Indonesia created an important mechanism to provide income security to workers. Although the law is intended to cover everyone eventually, in its initial stages of implementation the law will cover only those workers in the formal sector. Workers in the informal sector, however, face not only much greater risk of income loss, but also are more vulnerable to these shocks due to their lower average incomes.' While other countries have found that public works programs, when well designed, can provide a measure of income security to workers in the informal sector, Indonesia does not have such a scheme at this time, and it may be years before _JAMSOSTEK_ is able to provide an adequate safety net for these workers. In this context, this paper considers whether a need for such a new income security program for workers in the informal sector exists in Indonesia today.

The remainder of this paper is divided into three sections. The first section examines the state of the Indonesian labor market in the informal sector. Because income insecurity may be strongly connected with high levels of underemploymen **t** , his section explores the nature of underemployment in the informal sector in Indonesia, disaggregating the data by season, age, gender and region. Data from the 1993 National Labor Survey _(SAKERNAS)_ reflect high underemployment in all categories, but the highest incidence of underemployment can be found among women, in rural areas, and in eastem Indonesia. In absolute numbers, however, there are more underemployed men than women (because men comprise a disproportionate share of the workforce), and more are found on Java than elsewhere. Somewhat surprisingly, the data show no real pattern of seasonality in the level of underemployment, even in rural areas.

The second section of the paper discusses existing mechanisms that generate security for workers in the informal sector. While _JAMSOSTEK_ may not cover these workers yet, the Government of Indonesia has an impressive array of other programs that, at least indirectly, may provide a safety net to some members of the informal sector. While _Inpres Desa Tertinggal_ has received considerable renown for generating new income-earning activities in backward areas, there are many other programs with less visibility that represent real safety nets, including efforts by the Department of Social Welfare _(DEPSOS)_ and the Department of Manpower _(DEPNAKER)._ Moreover, households are not ignorant of the vagaries of the informal sector; living in this environment, many workers develop their own private schemes for generating some level of security. One of the most common of these schemes is the diversification of income sources to reduce household vulnerability to drops in income from any single source.

The final section of the paper will return to the original question: is there a rationale for income security schemes for the informal sector in Indonesia? This research suggests that, through a range of existing public programs, the Government of Indonesia already plays an important role in providing security mechanisms to workers in the ' For the purpose of this study, the informal sector includes all workers except those paid regular wages in the non-agricultural sectors.

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