Empowering Indonesia's Workforce: The Role of the Care Economy in Boosting Female Participation

The World Bank's report highlights the need for Indonesia to invest in its care economy to boost female labor force participation and achieve broader social and economic benefits. The Care Economy Roadmap outlines a strategy to expand access to quality childcare and promote gender equality in caregiving roles, crucial for Indonesia's future growth.

The World Bank's recent report provides a detailed analysis of how investment in the care economy could significantly boost women’s participation in the Indonesian workforce and contribute to broader social and economic well-being.

Over the past two decades, Indonesia has seen impressive economic growth and substantial poverty reduction, yet the female labor force participation (FLFP) rate has remained stagnant at around 53 percent. This figure is notably lower than the male participation rate of 81 percent, despite advancements in women’s educational attainment and fertility rates. The report identifies that the entrenched social norms and family responsibilities are among the primary barriers to increased female economic participation. Women in Indonesia are traditionally expected to serve as the primary caregivers, a role that limits their opportunities for sustained engagement in the workforce, particularly after marriage and childbirth.

Challenges in Indonesia’s Childcare System

The existing childcare system in Indonesia is one of the critical areas where these barriers are most evident. Although the country has made considerable efforts in expanding early childhood education and development (ECED), these services primarily target children aged 4-6 and do not adequately address the care needs of younger children, where demand is highest. The current landscape of childcare services is fragmented and insufficient, with a heavy reliance on private entities and informal care arrangements. This has led to significant inequalities based on socioeconomic status and geographic location. Many families, especially those in lower-income brackets or in rural areas, have limited access to affordable, high-quality childcare. Consequently, women often have to depend on informal care arrangements, which are typically unpaid and lack professional standards, further limiting their ability to participate in the formal economy.

The Importance of a Robust Care Economy

The report underscores the importance of a robust care economy as a means to empower women economically and socially. Improved access to affordable and high-quality childcare is seen as a key factor that could alleviate the burden of unpaid care work, thereby increasing women’s availability for paid work. This would not only raise the labor force participation rate among women but also enhance their productivity and earning potential. The World Bank’s analysis suggests that if Indonesia could increase the FLFP rate from 53 percent to 58 percent through targeted childcare subsidies, the economy could grow by an additional USD62 billion annually. Such growth would not only improve the economic standing of women but also contribute significantly to the overall national economy.

Social Benefits of a Functioning Care Economy

A well-functioning care economy could also yield substantial social benefits beyond economic growth. By providing professional care services, the care economy can support the well-being and development of those who receive care, particularly children. In Indonesia, where the prevalence of childhood stunting remains high, better access to quality childcare could play a crucial role in reversing these negative health outcomes and improving the future prospects of the younger generation. The report highlights that children who benefit from structured childcare arrangements tend to have better developmental outcomes compared to those who are primarily cared for in informal settings.

Indonesia’s Path Forward: The Care Economy Roadmap

Recognizing these challenges, the Indonesian government has taken significant steps to address the gaps in its care economy. The Care Economy Roadmap and National Action Plan 2025–2045 outlines a comprehensive strategy aimed at expanding access to childcare, improving the quality of care services, and promoting gender equality in caregiving roles. The roadmap sets ambitious targets, including a new FLFP goal of 70 percent by 2029. This plan is supported by a series of reforms designed to enhance the regulatory framework, improve the training and recognition of care workers, and foster better coordination between the public and private sectors in care provision. However, the report also emphasizes that achieving these goals will require coordinated efforts across the entire care ecosystem. This includes not only government policies and public investments but also the active involvement of the private sector and a shift in societal attitudes towards care work and gender roles. The success of the Care Economy Roadmap will depend on how well these different elements can be aligned and integrated to create a supportive environment for women’s economic participation. The report concludes that while Indonesia has made important strides in addressing the needs of its care economy, much work remains to be done. Building a functioning care economy will be essential for achieving the country’s broader development goals and ensuring that women can contribute fully to Indonesia’s economic and social progress.