Profiles and dynamics of the urban informal sector in Indonesia : a study of pedagang kakilima in Bandung : a thesis presented in fulfilment of the requirements for the degree of Doctor of Philosophy in Development Studies at Massey University
This study analyses the ways in which the trajectory of development in Indonesia affects the poor who work in the urban informal sector. Situated in the context of Bandung, the third largest city in Indonesia, this study targets street traders, pedagang kakilima, to pursue three areas of inquiry: the economics of the street enterprises; human development of the traders; and coping strategies of the households. The data cover the period of economic crisis, notably between 1997 and 1999. This allows the study to emphasise how the crisis - along with the processes of capitalist industrialisation and urbanisation - affected the activities and lives of street traders and how they coped with the problems they faced. This study has seen that the current economic crisis in Indonesia, following the advent of structural changes of the 1970s and 1980s, has been followed by the prevalence of employment shifts from the formal to informal sector. At the macro level, the informal sector continues to cater for a majority of total employment in the Indonesian economy and thereby sustains livelihoods, especially of the low-income households. The data on the economics of pedagang kakilima show that profiles of the small and informal enterprises are distinctively different from those of larger and formal businesses. Although a few of the street traders demonstrate characteristics of successful merchants, most of their features still exhibit vulnerability These include volatile incomes, insecure premises, limited economic resources, inadequate technology for advancement, and lack of access to formal financial services. These limitations are generally typical of small-scale production and were already in existence prior to the crisis. On the basis of human development indicators, the findings suggest that there is no automatic link between street trading and poverty, but equally there is no such link belween street trading and prosperity. The widespread economic crisis detrimentally affected pedagang kakilima, especially their economic capital. Reduced consumer demand and price rises, for example, were widely found to diminish income earnings in street trading during the period of recession. With specific reference to human capital, however, it is clear that the crisis had not yet had a detrimental effect on their access to education, health, and housing facilities. Information about coping strategies adopted by street trader households reveals that the urban informal sector is dynamic. Instead of being passive and static, pedagang kakilima make every effort to succeed in the city during economic hardship and try as best as they can to curtail the effect of the crisis. Those participating in this street trading, including men, women and children, prove to be active and creative in the ways they manage and manipulate a threatening situation in both enterprise and household settings. This study ultimately suggests that together with the existing conventional approach, the holistic framework drawn from the human development and coping strategy perspectives can be combined and developed to shape thinking and actions concerning the urban informal sector. This combination will enable research and policy to become more sensitive to the needs and reality of urban development in Indonesia that more often than not neglects the reality of its human, social, and cultural fabrics.