Supporting small enterprises to transition to responsible digital wage payments

Small enterprises employ more than 90% of the workforce in Indonesia, but face challenges in management, digital capacities, access to financial services and formalization that hinder their sustainable growth. The transition from cash to digital wage payments can be an effective entry point for smaller enterprises into the digital ecosystem and can support them in accessing a broader range of financial services and formalizing their businesses. Despite the country’s progress in advancing digital and financial inclusion, most workers are still paid in cash (66.4% em 2021), especially for smaller enterprises. The rapid growth of the digital financial industry is an opportunity to scale up the transition, but it must be carried out responsibly and in dialogue with workers, the government and service providers.

We support the transition to digital wages for smaller enterprises in partnership with the Asosiasi Pengusaha Indonesia (APINDO), the Employers’ Organization of Indonesia. APINDO currently works with 140.000 SMEs and 100 communities of SMEs from various sectors in the country under its Entrepreneurship Development Unit. In addition, we engage with other key stakeholders in government, business associations, trade unions and financial service providers. Current activities in the country focus on the garment and retail sectors in Greater Jakarta and West Java.

Our intervention

  • Build evidence through research and documenting of good practices to raise the profile of responsible digital wage payments
  • Build capacities of employers’ organizations to support the transition
  • Develop tools and training materials to support the responsible transition of smaller enterprises
  • Strengthen small entrepreneurs and workers’ financial literacy to facilitate adoption of digital wage payments
  • Engage and support financial and payroll service providers to offer inclusive digital wage solutions and associated services for SMEs and workers
  • Facilitate social dialogue for a supportive policy environment to accelerate the transition to responsible digital wage payments

Our partners

  • APINDO (Indonesia Employer’s Association)
  • Central Bank of Indonesia
  • Coordinating Ministry of Economic Affairs
  • Ministry of Manpower
  • KADIN (Indonesian Chamber of Commerce and Industry)
  • ASPI (Indonesia Payment System Association)
  • AFTECH (Fintech Association)
  • Business Development Service Association

Our team

  • Arief Umar, Project Officer