A tale of the “other” workers: An observation on home-based women workers in Indonesia

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The Jakarta Post first published this blog on 8th March, 2022.

Working from home: A choice for some but a circumstance for another

Work from home (WFH) has become associated with the pandemic for those who have the luxury to choose to work from home. Yet not everyone can have this option and still have sustainable income, decent working space, and secured social protection each month. “Other” work-from-home workers have been working from home much before the pandemic but under different working circumstances.

These others are home-based workers. According to the ILO/MAMPU project report, home-based workers (HBWs) are those “who are self-employed and/or subcontracted piece-rate workers (putting-out system), and most of them are women.” In Indonesia, the law on MSMEs also accommodates the concept of home-based workers, categorizing them as an informal sector.

The Implementation Guideline to Home Industry Development, published by the Indonesian Ministry of Women’s Empowerment and Child Protection (MoWECP), classifies home-based workers as a cottage industry. A cottage industry is a production system within which products are produced by creating additional value from raw materials, carried out in individual homes and not in a particular location (factory).

Yet these home-based workers, whether in the putting-out system, self-employed, or part of the cottage industry, remain vulnerable to shocks. The Indonesian Labor Law is yet to define HBWs. Indonesia has yet to ratify the ILO Convention No. 177 on homeworkers. In the absence of a law, HBWs remain predominantly informal workers. Informal workers lack formal contracts, stable income, high wages, health cover, workers’ insurance, and adequate working conditions. The absence of a law increases their vulnerability to unemployment, exploitation, and poverty.

A WIEGO 2021 Statistical Brief outlines that COVID-19 exacerbated the already-existing multiple vulnerabilities of HBWs. For those who do not use ICTs in their work, HBWs suffer the greatest loss of work and income. In Indonesia, despite the challenges, women in informal work have proven to be resilient, even though they are paid lower than men. A Jakarta Post article also mentioned that informal female workers, such as women HBWs, are expected to also take on the primary child-rearing responsibilities and housework, besides earning low wages.

Sense and workability: A facilitator’s remark on women home-based workers

In many social development programs, heroes in the field contribute to the success of a program. One such hero in this context is Zaenab Hafiezh. Zaenab is a local facilitator who supports the MoWECP’s program on women’s economic empowerment for female home-based workers in Rembang Regency (Central Java Province).

Zaenab, also an HBW, applied to be a facilitator in 2016 for MoWECP’s women home-based workers program in Rembang. The MoWECP was set to support the program for only two years, after which it would continue from the local regent office. While many of her fellow facilitators resumed their role, Zaenab was among the ones that continued her critical role as facilitator to several women HBWs in the neighborhood.

As a fellow HBW, Zaenab understands her peers’ situation, challenges, and needs in navigating livelihood strategies and securing basic everyday essentials. Zaenab facilitates women HBWs who are self-employed and in the putting-out system. Her task is to support the mobility level and empowerment of those she facilitates, according to the “implementing guideline on home-based workers” published by MoWECP.

This program was part of the ministry’s effort to achieve the 3ENDs, namely: (1) ending violence against women and children, (2) ending human trafficking, and (3) ending economic inequality between men and women.

To Zaenab, the 3ENDs goals reflect real concerns she learned from several experiences of her fellow HBWs. She also believes this women’s home-based economic empowerment program by MoWECP is a tactical approach to reducing violence, trafficking, and economic inequality in her hometown. Zaenab’s facilitation journey, though, was not smooth. She faced risks from husbands who rejected the program and blocked their wives from participating. Yet she saw other instances where this program could help survivors exit domestic violence situations. From her observation, women HBWs experience economic struggles alongside domestic violence. The burden does not stop there. Some of these women are the primary breadwinners for their families and struggle to make ends meet while caring for children and household chores.

Based on the lessons from Zaenab’s facilitation, the workability of women HBWs depends on the fulfillment of four critical needs. These are:

  1.  Assistance in strengthening leadership and confidence as women home-based workers, to enhance eligibility and mobility;
  2. Support in capacity building on product development and marketing to increase the value of their work;
  3. Facilitating a safe space to include men in the conversation, especially husbands of women HBWs, who are also vital to support their wives;
  4. Commitment in policy and budgeting to recognizing and protecting home-based workers as acknowledged workers.

Zaenab notes that if the above needs are supported, the pathway to increasing female home-based workers’ mobility level, quality of employment, and economic empowerment is achievable and will help achieve the 3ENDs objectives.

The MoWECP stated that:

1. Strengthening women’s leadership and economic empowerment is part of its mandate under the gender mainstreaming unit and as part of their home-based workers’ programs. It has initiated a series of awareness campaign activities as part of this endeavor. This includes socialization on themes related to gender equality, gender-equality-based entrepreneurship, eliminating violence against women and children, and reproductive health.

The MoWECP also notes the importance of including men in conversation and awareness programs on women’s economic empowerment. It has already included partners to develop and execute more tailored programs as needed.

2. The MoWECP has also connected with some sub-national governments to promote local homeworkers’ products in local markets, through local and national crafts councils, and to affiliated companies and private sectors. The mentorship program will also serve as a platform to enhance product development and marketing capacity.

3. MoWECP supports the endeavor of several local governments that made local commitments through development planning and budget. It has also mandated its agencies on-site to be the activity focal point to support local initiatives.

Yet MoWECP realizes that it too will need collaborative support from allies to achieve the needs of women home-based workers comprehensively.

Friends, allies, and comrades

So, who are these allies of women home-based workers in Indonesia who can fulfill the said needs? Moreover, how can more players support their empowerment pathway?

The MoWECP has been a friend, ally, and comrade to women home-based workers by initiating the women’s home-based economic empowerment program since 2016. MoWECP has organized a pilot program in 21 regencies and cities. It is now is in the progress of replicating these efforts to other regencies and cities. The program’s success stories, such as those led by Zaenab, have become references of best practices to other sub-national governments to have the same commitment in strengthening women home-based workers in their area.

In MSC CPD Indonesia’s discussion with the Economic Assistant Deputy of MoWECP, Eni Widiyanti, she mentioned that MoWECP is committed to improving the conditions of women home-based workers. This commitment is also strengthened by connecting with like-minded organizations like MSC CPD Indonesia.

MSC CPD Indonesia also works on economic and financial inclusion, supporting MoWECP to strengthen women’s economic empowerment through economic inclusion and digital financial inclusion. MSC applies a gender-centrality framework to ensure its work on women’s economic and financial empowerment is inclusive and gender-responsive.

Other friends, allies, and comrades are the coalitions of civil society organizations, such as the Indonesian Homeworkers Network, the Indonesian Social Observer Foundation, and Homenet Indonesia. They have voiced and influenced the national and sub-national legislation on protecting home-based workers in Indonesia. The Ministerial Regulation on the Protection of Home-based Workers is not yet legislated. Yet at the sub-national level, local leaders have developed local regulations and policies that champion the narrative for an equal and inclusive working system for home-based workers. To name a few, local CSOs like TURC, Yasanti, and BITRA have been making progress on this advocacy in Java and Sumatra provinces.

CSOs play a significant role in connecting and networking on the issue with other strategic actors and organizations, which are potential allies in this campaign. Some conversations have also included local employment agencies, women’s empowerment agencies, and local development agencies.

MSC CPD Indonesia is also a friend, an ally, and a comrade to women home-based workers. MSC CPD Indonesia is currently developing a partnership with MoWECP to strengthen women’s economic empowerment through economic and digital financial inclusion.

Homework on home-based workers

The Rembang Regency experience led by Zaenab revealed the ecosystem of work for women home-based workers, which remains challenging. Yet these challenges can gradually be overcome with coordination, collaboration, and most of all, commitment to the recognition and protection of home-based workers. Zaenab’s experience also indicates that capacity building on gender equality and social inclusion on HBW should not be limited to the HBW. Instead, it should expand to all relevant stakeholders and key figures in the ecosystem. These stakeholders include men in the family, local and national government officials, private companies, service providers, and public institutions. Almost all have a weak understanding of the issues that women HBWs face. Strengthened coordination and collaboration can support the recognition of HBWs as workers and speed up processes to advocate policies and regulations on their protection.

Recognizing the profiles and gaps of women HBW can be enhanced by improving national and sub-national gender equality and social inclusion disaggregated data on HBWs. Such recognition will ensure they are not invisible in data. It will also ensure informed and comprehensive decision-making based on the reality and needs of (women) HBWs can fill the void on policies and development toward a decent, recognizable, and sustainable working condition for them.

Supporting the ongoing work of local CSOs and advocacy for the empowerment and protection of home-based workers is also vital. These CSOs can be partners and tandems of decision-makers and providers to assist in mainstreaming a comprehensive design and implementation of empowerment programs and policy development for and on home-based workers.

And last but not least is the inclusion of those not included in prior conversations and decision-making processes. Making room for HBWs, facilitators, companies, and service providers in the campaign and awareness dialogue and program designs on HBWs would ensure balance, meet the needs, and reinforce equity to improve their lives.

Managing public expenditure needs a digital boost

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Finance Minister Nirmala Sitharaman, in her budget speech 2022, mentioned some significant reforms towards government procurement that have happened over the past few months. These are welcome developments in a landscape marked by State’s weak budget execution capacities. However, there needs to be a stronger push towards adopting public finance management reforms to enable the government to manage its finances better.

Take for instance the nearly Rs 2000 crore of idle funds recently unearthed by the special task force set up by the Tamil Nadu government.  State Finance Minister Dr. Palanivel Thiaga Rajan called it a “trailer” with the whole picture across thousands of bank accounts yet to be seen.

The issue of unspent funds or ‘idle float’ lying in government accounts is, of course, not a new revelation. Last September, the Comptroller and Auditor General (CAG) of India highlighted a whopping Rs.4.72 lakh crore remaining unspent in FY19, citing poor budget formulation as a leading cause. Former CAG Rajiv Mehrishi had also pointed to the problem of unsatisfactory monitoring of allocated budgets and suggested an “end-to-end enterprise-based IT system” to improve expenditure tracing.

Idle float is a symptom of inefficient use of public funds. The funds stuck in the bank accounts of various government agencies as float add to the public debt. This is ironical for a low middle income country like India, since government cannot meet it expenditure commitments from its own funds and has to borrow additional funds adding to the fiscal deficits and the challenges that come in its wake. Downstream macro-effects include lower credit availability for the private sector and eventually, slower economic growth.

It also has a huge opportunity cost in the form of scarcity for those Implementing agencies (IAs) that have spent their allocations and need funds urgently. These IAs then struggle with mounting arrears and unpaid dues to contractors. This even as funds are available aplenty with other IAs and programs. This paradox of simultaneous plenty and scarcity manifests on the ground as poor service delivery to citizens.

Issues galore, reorientation a must

How does public finance work in India? If visualized as a tree, the Centre or states are at the top and transfer funds to lower branches representing state, district, local governments and panchayats. For most Centrally Sponsored Schemes (CSS), there is a multi-layered fund release mechanism. Each step of fund flow requires documentation, usually utilization certificates (UCs), to prove previous payment tranches have been used up. When this is done, the relevant state-level department releases more funds.

A delay at one branch – say, at the district level – for any reason often hampers the smooth release of funds to the next one, i.e. the block or panchayat level. As a result, funds often get stuck for years. Furthermore, after tranches are transferred, they are often not spent within a stipulated time period either on account of work not being done on time or delays in reporting.

Importantly, the flow of information is no smoother, resulting in a lack of observability on expenditure status. In most cases, data at the primary unit of activity (e.g. teacher attendance or weight measurement of a child by an Anganwadi worker) is fed manually and gets digitized “manually” by an army of Data Entry Operators (DEOs) who enter program data in computers. This same data, often with compromised authenticity, moves from one IT system to another. This too is done through another round of manual entries, not automatically through data exchange protocols between interoperable systems.

Overall, the data that resides in the system is recorded away from the primary unit of activity, and through a series of manual processes between disconnected information systems. This leads to a gap in the reporting of physical and financial progress.

While the Public Financial Management System (PFMS), managed by the Controller General of Accounts (CGA), has certainly helped such flows become more traceable over time, the scale of the issue demands a mix of process and technology interventions.

So, what’s the solution?

There is an urgent need for these disparate systems to ‘talk to each other’. This will require an approach that integrates digital principles with public finance management (PFM) principles. These integrated ‘Digital PFM (DPFM) principles’ can transform the PFM ecosystem and improve governance and development outcomes. Two specific ones, Just-in-Time (JIT) and Single Source of Truth (SSOT), are starting points of the DPFM journey.

A JIT funding approach for centrally sponsored, central sector and state schemes will enable real-time funds transfers to the payee (contractor or individual) instead of it being parked in the bank account of implementing agencies (IAs). It would negate the need for pre-loading or funds transferred in advance.

It’s analogous to a bank issuing a credit card and defining a spending limit on that card. It authorizes an individual to spend up to a specific limit without transferring advance money into that individual’s bank account. Similarly, the Centre and state governments can define the spending limit of IAs for their respective schemes, without transferring money in advance. Money flows directly into the bank account of the contractor or beneficiary, only when the work is complete and the money is due. Modern technology allows this to work seamlessly with some tweaks in work practices. In fact, Rule 230(7) of the General Financial Rules, 2017, recommends JIT but unless it is implemented in principle and totality, the government and citizens cannot reap the technological benefits.

Similarly, pursuing an SSOT will enable aggregating scheme/program data at a single point that is accessible to a variety of public departments and agencies. This would foster higher systemic accountability and transparent reporting by individual departments and program heads. It will allow quick and, in some cases, algorithmic decisions. Such high-fidelity data is critical to the functioning of a JIT system.

Way forward

DPFM principles such as JIT and SSOT do not require an overhaul of current systems. They all have an associated technology play that just needs to be layered on current systems with tweaks in work practices.  The PFMS is one part of the solution. It already tracks funds and expenditures. It can be re-factored a little, or a new module for JIT can be created to meet the requirements of real-time fund release and improve visibility.

Such enhancements will improve scheme monitoring and reduce float. If JIT can be integrated with the program MIS, it can help auto-trigger both payments from the Consolidated Fund of India or State to a department or program as well as to end beneficiaries. This would help administrators focus more keenly on service delivery than simply approving payments at respective branches. And one must not look far for inspiration. The Government of Odisha is implementing the Just-in-Time rule for various schemes such as the ‘Grant-in-Aid to Special Schools’ under Social Security & Empowerment of Persons with Disabilities Department (SSEPD) and the ‘Urban Wage Employment Scheme (MUKTA)’ under Housing and Urban Development department.

The Centre and States would do well to consider these smart solutions in their existing PFM architecture. The wins would not just be mutually beneficial; but have long-lasting positive impacts on state capacity, government savings, welfare planning, and service delivery.

This blog first appeared as an Op-ed in the Times of India, on March 9, 2022.

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Grassroots women leaders transforming lives

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In collaboration with multiple partners across countries, MSC has collated inspiring stories of grassroots leaders. The booklet shares a snapshot of their journey, experiences, and insights and is a testimony to their grit and resilience. It also gives us a glimpse of the hardships women grapple with at the last mile.

RBIH whitepaper: Gender and finance in India

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MSC worked with the Reserve Bank Innovation Hub (RBIH) on a whitepaper on “Gender and Finance in India” for its स्व-नारी (Swanari) program. The paper discusses the landscape of gender and finance in India and highlights the main gaps in gender. Its premise is that applying a gender lens to financial inclusion is essential to understand barriers women face around equal access, usage, and quality of financial services offered. The paper analyzes public data on gender gaps in savings, credit, insurance, and pensions. Using inputs from experts and stakeholders, it attempts to understand key gender-based barriers. The whitepaper arrives at crucial problem statements around access, usage, and quality of financial services for the Swanari program. It also shares some promising innovations, good practices, and stories of female users and financial services providers. The paper ends with a call to move “toward gender-intelligent banking” and shares critical enablers that could catalyze women’s financial inclusion.

Would a Business Correspondent Network Manager’s (BCNM’s) strategy to customize incentive structure change the agent business?

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Eko India Financial Services is a new-age banking correspondent network manager (BCNM). It offered three progressive plans in its old incentive structure, shown in Figure 1, to more than 200,000 agents to take care of their business needs.  The agents could choose the monthly plans which had different subscription charges based on their commission rates.

Figure 1: Old subscription plans offered by Eko to its agents (exclusive of Goods and Services Tax (GST))

However, agents and their needs are different in India. Devnarayan Chaudhary, a Business Correspondent (BC) with Eko, operates from Vishwakarma Industrial Area near Jaipur, Rajasthan. He has been associated with Eko for more than six years now. He provides multiple services like domestic money transfers (DMT), cash withdrawals through the Aadhaar-enabled Payment System (AePS), bank balance inquiry, and utility payments through the Eko platform.

As Devnarayan’s outlet is close to an industrial area, his customer base primarily comprises migrant workers and truck drivers who send money to their families regularly using DMT services. Although his primary source of income comes from a cybercafe and cellphone selling shop, he is a well-performing BC agent on Eko’s platform. He conducts 80-100 transactions daily and earns between INR 30,000 to INR 40,000 (USD 400-500) per month by providing DMT services at his outlet. 

Devnarayan has used Eko’s Supersaver plan till now. He paid INR 500 (USD 7) monthly and received a commission of 0.50% of the transaction value each time he transacted through the portal. While he was satisfied and earning well with his existing plan, he wanted more.

In contrast, Dharm Raj, another agent with Eko for three years. He operates from Samastipur, Bihar, and faces a unique set of challenges with Eko’s plans. He mainly serves beneficiaries of various government schemes. They come to his outlet to withdraw cash through AePS.

He conducts three to four transactions daily and earns between INR 1,000-2,000 (USD 12-20) in a month, using Eko’s Basic plan. Like Devnarayan, Dharm Raj’s primary source of income is a cybercafe.

Agents like Devnarayan and Dharm Raj face multiple challenges around the incentives received as an agent. They have varied key demands, listed in Figure 2.

Agents have a choice. Faced with low revenues, agents often reduce or eliminate transactions on a platform and move to competitors’ platforms that offer higher commissions and easy options to switch. Such departures can reduce the usage of the platform and impact Eko’s business model, which is built around agent-assisted use. In India, the DMT and AePS market has become highly contested of late. Many nimble players have entered the market and lured agents with competitive services like higher commission, better customer support, and more robust field support. This competition has reduced the barriers to switching from one platform to another with lower setup costs and on-boarding requirements.

Thus, a growing BCNM like Eko must set the prices that provide value to their last-mile agents for higher usage and motivation.

Reinventing the existing incentive strategy: Addressing the challenges faced by agents

Eko cannot follow a cookie-cutter approach to address its agents’ varied needs and requirements. Thus, it decided to remodel its existing subscription plans to meet the needs of different agents. Eko designed a new set of plans based on the information and data in its extensive “agent transaction data bank” to address its agents’ needs. MSC (MicroSave Consulting) conducted an assessment to understand the agents’ perceptions around these new plans. The assessment focused on:

Figure 3: Focus of the assessment conducted by MSC

After completing the assessment, MSC recommended the “Good-Better-Best (GBB) framework” for improvements to the subscription plans, which would address the challenges faced by agents like Devnarayan and Dharm. The GBB framework helps Eko design a strategy that: 

  • Provides variable incentives for agents who have different turnovers, use specific services, or value features like longevity, subscription price, and commission value of the plans differently; 
  • Introduces plans with minimal entry barriers for all the existing and new price-sensitive agents who adopt Eko; and
  • Enhances the suite of value-added features for high-potential agents. 

GBB facilitated a subscription model that works as a tool to build solid relationships between Eko and its agents. Moreover, the model provides a seamless and sustained brand experience.

A sneak peek at the GBB framework for Eko

GBB takes a holistic approach to a solution to cater to differentiated needs and the value of differently-priced subscription plans for agents.

Figure 4: The GBB approach suggested by MSC, Source: Harvard Business Review

What implementing GBB means for the agents and Eko 

Based on this recommended approach, Eko tweaked its plans to improve the overall incentives it provides agents to suit agent-specific needs better. The new plans have changed how an agent chooses a subscription plan. 

  • Now, Devnarayan can choose plans with extended validity. He chooses a 365-day plan and does not bother with monthly payments. 
  • Dharm Raj earns a higher income on cash withdrawals through AePS in his village. His overall earnings have also increased. He can now switch plans on specific days when customers receive subsidies. His outlet sees a high volume of transactions.

Other Eko agents can offer additional services through Eko and thus met a broader range of customer needs and serve more customers. Furthermore, the new scheme provides multiple options to rebalance, and even add e-value through UPI, which reduces their dependence on distributors. The option without distributors now offers a higher commission to agents like Devnarayan.

These changes supported different agents by offering more flexibility, convenience, and higher revenue due to increased incentives across multiple products and services. Since the launch of the scheme in July 2021, more than 68% of agents have taken up the new plans. Eko has increased revenue and provided new sources of earnings to its extensive agent network through the platform. 

What the new pricing strategy means for Eko’s future 

The changes Eko introduced have supported the increase in agent incentives. But will the new scheme prevent agents like Devnarayan or Dharm Raj from moving to competitors offering them other unique benefits? We cannot say for sure.

With an increasing number of BCNMs in an ecosystem that provides agents with higher increasing incentives, competing providers will find it challenging to maintain agent stickiness. Similarly, these will not be the last set of plans Eko launches to support its agent network. Every time the agent incentives and plans are redesigned or changed, the Good-Better-Best framework and its principles can guide Eko.  

Increased competition will influence the BCNM ecosystem through new product features, convenience, and commissions. We expect things to heat up—for the better—as we move forward with new emerging business models, rapid technological innovations, state initiatives, and more players entering the market.

Women’s agent network—the missing link in India’s financial inclusion story: A supply-side perspective

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Over the past decade, business correspondents (BC) agent outlets have grown by nearly 45% CAGR compared to bank branches, which grew at 6.4%. However, female BC agents represent only 10% of the BC agent network. Mounting evidence points to increased financial activity by women if they transact with a female BC agent.

This note discusses a supply-side perspective on expanding women’s agent network in India, based on a survey with private BC network managers. We discuss the efforts made in several fronts to recruit and include more female BC agents and the challenges supply-side providers face in the process. Based on the study, we conclude with recommendations to increase understanding and appreciation among service providers about gender policies and practices and their effect on cash-in-cash-out (CICO) operations.