Family-Friendly Workplaces Key to Unlocking Indonesia’s Economic Potential

A groundbreaking new report by the International Finance Corporation (IFC), titled From Barriers to Breakthroughs: Family-Friendly Workplaces for Indonesia’s Future, has shed light on the untapped potential of family-friendly workplace policies in transforming Indonesia’s economy. The study argues that by better supporting the care responsibilities of employees, Indonesian businesses can improve productivity, retain talent, and drive inclusive economic growth, particularly through increased participation of women in the labor force.

The report, developed in collaboration with IGNITE Women Networking and Mentorship Program and supported by the Australian Government, is part of IFC’s global Tackling Childcare initiative, which has delivered successful outcomes in over 20 countries since 2017. It represents one of the most comprehensive examinations of how care responsibilities intersect with productivity and workforce participation in Indonesia.

The Business Case for Family-Friendly Policies

Surveying over 2,000 employees across 13 private sector companies in Indonesia—including sectors like finance, retail, manufacturing, e-commerce, consulting, and food and beverages—the report provides a detailed picture of the care-related burdens facing Indonesian workers. Together, these companies employ 33,000 workers, with 69 percent being women.

One of the report’s core findings is that unmet care responsibilities are a hidden but significant cost to businesses. Specifically:

• 50 percent of working parents reported that childcare duties negatively impact their job performance.

• On average, businesses lose four workdays per employee per year due to care-related absences—equivalent to 1.7% of total wage bills.

• 40 percent of employees are also responsible for caring for elderly relatives or family members with disabilities.

• Nearly 25 percent of employees provide care for both children and older or dependent adults, placing them in the “sandwich generation.”

“Care responsibilities are often an invisible drag on productivity,” said Euan Marshall, IFC Country Manager for Indonesia. “This research shows that when businesses take practical steps to support working parents—such as by offering flexible work arrangements or childcare support—they not only retain talent but also strengthen overall performance. Investing in people is good business.”

Why Women Bear the Brunt—and Why It Matters

According to the International Labour Organization (ILO), more than one-third of Indonesia’s 208 million working-age population is outside the labor force. Notably, women are overrepresented in this group. Only 53 percent of Indonesian women participate in the labor force, compared to 81 percent of men—a gap that has persisted for over two decades.

This gender disparity is deeply intertwined with care responsibilities. Without reliable and affordable childcare, many women are forced to leave or avoid entering the workforce, stalling their professional advancement and weakening the national economy.

The World Bank estimates that increasing women’s labor force participation by 25 percent could contribute an additional $62 billion to Indonesia’s GDP. Yet this potential remains largely untapped due to persistent structural and cultural barriers to women’s full economic inclusion.

Practical Solutions for Inclusive Growth

The IFC report provides a roadmap for Indonesian employers and policymakers to unlock this potential. Among the recommended family-friendly policies are:

• Flexible work arrangements (e.g., remote work, flexible hours)

• Childcare subsidies, partnerships with childcare centers, or on-site facilities

• Lactation rooms and parental leave benefits

• Backup care services for emergencies

• Elder care support, including information services or care leave

• Support for dual-care responsibilities, recognizing the strain of caring for both children and aging relatives

These interventions are not just beneficial to employees—they also reduce absenteeism, improve retention, and enhance employee engagement, contributing to a stronger, more resilient workforce.

Building Future Leadership and Resilience

The report also complements the goals of the IGNITE Women Networking and Mentorship Program, a national platform aimed at increasing women’s representation in executive leadership. By tackling the caregiving burdens that disproportionately fall on women, these workplace reforms lay the groundwork for a more equitable and merit-based career advancement system.

Furthermore, IFC’s initiative aligns with Indonesia’s broader development agenda, which includes strengthening human capital, fostering innovation, and promoting inclusive economic resilience in the wake of the COVID-19 pandemic.

“Without practical workplace policies that support caregivers, especially women, Indonesia risks leaving a significant portion of its talent pool untapped,” the report notes. “Family-friendly policies are not just a perk—they are a strategic investment in the country’s economic future.”

What’s Next: Co-Creating Change With the Private Sector

The IFC has pledged to continue working closely with private sector partners in Indonesia to co-develop innovative care solutions tailored to business needs and employee realities. This collaborative approach ensures that care reforms are scalable, sustainable, and aligned with both commercial goals and social progress.

As companies increasingly recognize the interplay between employee well-being and business success, the push for family-friendly workplace reform could emerge as a defining trend in Indonesia’s post-pandemic recovery and long-term growth.