The impacts of COVID-19 pandemic to informal economic sector in Indonesia: Theoretical and empirical comparison

Abstract

The COVID-19 pandemic has caused a global multidimensional crisis, one of its impacts being the crisis on the informal economy. This paper presents a review of the effects of this pandemic on the informal economy, coupled with empirical evidence based on surveys conducted in Indonesia. Data used in this study was collected by an online survey during the pandemic. Theoretically, there are two points of view about the informal economy roles during a crisis: optimistic views that see informal economy survive in a crisis and pessimistic views that see the ongoing informal economy continue to suffer losses and also informal workers as vulnerable groups during a crisis. The research also discussed the impacts of the crisis triggered by the COVID-19 pandemic on informal employments and incomes, readiness in dealing with the pandemic, and the livelihood conditions of informal workers. The crisis as a result of this pandemic provides a new experience for the informal sector in dealing with the crisis. The informal sector is not always a hero during the crisis but rather an alternative sector that offers business flexibility.