Formal-Informal Employment and Poverty Dynamics: A Case Study of Mentawai Islands Regency, 2019-2021

Abstract

Mentawai Islands Regency is part of the frontier, remote, and underdeveloped regions in West Sumatera. Participation in the labor force is often considered a key to ensuring a good income and resources, which can help people escape or avoid poverty. The absorption of labor shown by the Labor Force Participation Rate (LFPR) in this regency shows the highest value within West Sumatera i.e 82,57% in 2021. However, its poverty rate was 14,84%, whereas West Sumatera’s rate was only 6,63%. This study aimed to analyze the dynamics of poverty and employment in Mentawai Islands Regency using secondary data from BPS Indonesia with descriptive and comparative approaches. The results show that 79,4% of the working population and 67.8% of the poor are involved in the informal sector. The high proportion of the poor workers in the informal sector can be influenced by numerous variables, including the lack of education. Even though the sector utilizes many workers, informal workers’ average monthly net income in Mentawai Islands Regency is among the lowest in West Sumatera. Therefore, despite the high number of LFPRs, not all forms of work are equally sufficient to avoid poverty, and employment does not guarantee a way out of poverty.