Wealth Inequality: How Discrimination Contributes to Unequal Wealth Distribution
by Michelle C. Willianto
This essay is part of “Critical Essay Anthology vol 5: Wealth Inequality in Indonesia”. This anthology is part of a series of essay anthologies, written by the students of our Essay Mentorship program. Learn more about how you can also write & publish your own essays on our Instagram, and contact our WhatsApp for more information on when you can register for the next batch.
Beneath the surface of national progress and poverty reduction lies a deep, persistent problem: discrimination. Though often associated with social prejudice alone, discrimination also plays a powerful, less visible role in shaping economic life. It influences who gets hired, who earns more, and who has access to resources and opportunities. Understanding how discrimination fuels unequal wealth distribution is crucial to addressing the root causes of economic inequality in Indonesia.
According to Oxford Languages’ definition, discrimination is the unequal, prejudicial treatment of different categories of people, especially on the grounds of gender, ethnicity, disability, or birthplace. Far from being isolated acts of bias, discrimination shapes society through many aspects, including the economy. It is a significant factor of economic inequality in which the resources, opportunities, and power within a society are distributed unfairly, disadvantageous to marginalized groups and minorities.
This systemic inequality does not remain abstract; discrimination manifests in various forms, gender pay gaps, limited job access for certain ethnic or religious groups, and unequal treatment in hiring, promotions, and credit access. In Indonesia, while overall positive changes to poverty rates have happened over time, economic discrimination, especially in income and wealth disparities, has only risen, even reaching its peak in the last five years as of 2024. According to The Jakarta Post in 2019, the top 1% of Indonesians hold 45% of the country’s wealth, one of the most disproportionate concentrations globally. Indonesia’s Gini coefficient during 2022 was 0.388, signifying that income inequality had risen from 0.380 in 2019 (The Jakarta Post, 2024). These figures illustrate that despite poverty alleviation efforts, discrimination continues to restrict fair access to economic mobility.
In essence, discrimination is a significant part in the cycle of unequal wealth distribution because it obstructs individuals or groups from accumulating wealth, maintains classism and systemic inequality, and heightens the wealth discrepancy between social classes. Rather than being a standalone issue, it is deeply interwoven into the structures of opportunity and access that define economic life.
This essay will explore how discrimination plays a central role in perpetuating unequal wealth distribution. It will examine how discrimination prevents or hinders wealth accumulation in marginalized communities, is a significant facet of institutionalized discrimination and inequalities in the system, and increases the socio-economic wealth gap. By doing so, it aims to highlight the urgent need for inclusive policies that dismantle economic barriers rooted in prejudice.
Discrimination Obstructs Wealth Accumulation
Discrimination becomes an obstacle for stigmatized individuals in accumulating wealth through limiting access to employment, income, and education. Among the most affected are women, who in Indonesia face persistent challenges driven by underlying misogyny in society. This manifests as a gender wage gap on the basis of discrimination, a higher concentration of women working in the informal sector, unsolved care economy restraints, and unequal access to education and skills. Although women's employment has increased in recent years, the female labor force participation rate in Indonesia remains significantly lower than the male rate—around 52% of women in the workforce compared to more than 80% of men. Additionally, this disparity has remained constant for two decades (The World Bank Study Report, 2020), indicating a persistent structural issue.
The average wage per month for men is 2.9 million, while women earn only around 2.3 million, despite efforts to combat gender wage discrimination, according to Statistics Indonesia (BPS) in 2021. This income gap further widens when informal employment is taken into account. Women in informal work lack the normal benefits other laborers have such as minimum wage, social security, or labor dispute resolution mechanisms. More than 60% of informal workers are constituted by women (Kompas, 2025), and 3 in 4 informal household service workers in Indonesia are women, most of whom come from rural areas and have limited prospects.
The concentration of women in low-paying informal jobs starkly contrasts with their underrepresentation in secure, middle-class employment. Only 15% of Indonesians hold a middle-class job that pays at least Rp 3.8 million and provides income benefits and job security. The percentage of women in this category is even lower—only 29% of all middle-class careers are held by women. The barriers women face are not limited to wages and job types but extend into their roles within the household. According to a 2023 survey by The International Labour Organization (ILO) in collaboration with KataData Insight Centre, out of 2,217 respondents from various work sectors (a slight majority being women at 67.5%), 61.6% of male respondents had female family members with a double burden. Meanwhile, 79.3% of the women surveyed reported having a double burden themselves. Almost 70% of these women stated that they did not have longer hours to focus on care work than men. While maternity/paternity leave and flexible hours are the most common forms of care programs, ~30% of the respondents’ workplaces did not have care programs, and 16.8% of respondents in the informal sector even faced pay cuts due to caregiving responsibilities.
This accumulation of disadvantage, wage gaps, informal employment, and unpaid care work, illustrates how discrimination continues to shape economic opportunities for stigmatized groups, particularly women. Compared to their male counterparts, women’s labor is considered lesser, as shown by the earnings gap even when both genders occupy the same role. Due to this discrepancy, women are more likely to take part-time jobs, many of which fall into the informal sector, explaining the higher percentage of women doing informal work. The problem with informal jobs is the lack of standard labor protections, which increases vulnerability to exploitation and further influences income instability.
Social norms also expect women to engage in care work for the elderly or children as a double burden, but they are often not given longer hours or care programs in consideration of these responsibilities, largely because such care activities are not viewed as having economic value. Care economy restraints that remain unacknowledged significantly hinder wealth accumulation by limiting participation in paid work or the formal labor market, impacting earnings, and reducing access to pensions and social security. In some cases, women may even be forced to leave the workforce entirely to manage caregiving responsibilities.
In conclusion, discrimination, as shown in the case of gender-based inequality through income gaps, the high percentage of women in the informal sector, and unresolved care economy burdens, results in unequal wealth distribution. These interconnected factors accumulate to substantially affect income for women, limit their access to the labor market, and ultimately increase their risk of falling into poverty.
Discrimination Maintains Classism and Systemic Inequality
Discrimination maintains systemic inequality by embedding structural disadvantages that prevent marginalized communities, such as ethnic minorities like Papuans, from fully participating in the economy. In a migrant dominated market, Papuans face economic marginalization and poverty because of larger issues such as unfair regulations, racism, lack of capital, insufficient equipment, and difficult market access. The racialisation of Papuans has a long history, degrading their capabilities and creating stereotypes that Papuans lack an aptitude for technical, professional, and entrepreneurial work, which provides a discriminatory justification for investors to exclude Papuans from accepting them as workers in industrial services.
Papuans who face extreme violence and human rights violations due to deeply-rooted racism are another example of how discrimination impedes ethnic minorities from building wealth. Papua and West Papua have the highest level of poverty in Indonesia despite natural wealth, with more than 28% of residents living beneath the poverty line, higher than the national average (Adrita Quabili, 2024). Since 1963, an influx of internal migration due to government incentive transmigration programmes now result in an estimated half of Papua’s population split between non-indigenous people and ethnic Papuans.
From a study held by Agus Sumule who lectures at the University of Papua in Manokwari, data showed that schools in West Papuan highlands have significantly lower attendance rates and a lack of teacher training colleges in the central highlands, where the inhabitants are overwhelmingly indigenous Papuans. This area also happens to have a high rate of illiteracy ranging from 48% to 92% (UNICEF, 2016-17). A large percentage of Papuan students (30%) also do not complete their primary and secondary education, especially in rural areas, where 50% of students have unfinished primary school and 73% drop out in junior high.
Immigrants are more likely to find jobs in medical fields than indigenous Papuans as said by Dr. Maria Louise Rumateray, who has worked at Wamena General Hospital for 15 years. Local medical personnel in Wamena trained as nurses require standard certification in Jayapura or Makassar, but most lack the money to travel to these cities, hindering their ability to apply for jobs. She states that before the certification, the staff consisted of more locals than migrants, yet the opposite has become true. According to Heinzpeter Znoi, anthropologist, Papuan commercial agriculture had a brief improvement when PT Freeport Indonesia bought vegetables from locals to feed their workforce at the Grasberg Mine. However after the company was sold to a Jakarta contractor, vegetables were imported from Sulawesi instead. These actions taken to restrict Papuans from entering the market are partially the reason for the crisis in highland Papuan agriculture, Znoi argues.
The situation that Papuans face illustrate how the government and economy sidelines ethnic minorities from competing in the market. The entry of non-Papuans (through a decades-long transmigration method that has often led to the displacement of Papuans and the confiscation of their land for resource mining, additionally) causes a rise in social inequality and discrimination towards natives. Local and central governments favor immigrant areas compared to majority Papuan-populated places, which are neglected in development. The amount of public health centers and educational institutions in migrant areas exceeds those in Papuan areas, with better accessibility and infrastructure.
Meanwhile, areas that happen to be highly populated with indigenous Papuans, such as the highlands, struggle with access to education in complex problems ranging from geographical conditions, teacher absenteeism, and inadequate facilities or infrastructure. These places also have decreased school participation rates, with Papua having the lowest in Indonesia. The lack of quality education, low school completion rate, and heightened illiteracy percentages contribute to the limited prospects of Papuans, continuing the cycle of poverty.
The government is also biased towards Papuans to fill government jobs in fields such as teachers, nurses, police, and military, while Papuans in other parts of Indonesia struggle to access jobs, education and housing. Less Papuans work formal jobs in urban parts of Papua.
The amount of migrant-owned shops are rapidly increasing as policies and regulations managing the granting of permits for said businesses allow a surge of economic dominance by migrants. On the other hand, Papuan traders lack designated market spaces, contributing to the deficiency of Papuan businesses and entrepreneurship. While activists have lobbied for progress and efforts to build markets for ‘mama-mama Papua’ have been built, these infrastructures have had limited success because other issues with policies and inequality have yet to be solved.
Therefore, discrimination plays a crucial role in maintaining systemic inequality by barring ethnic minorities such as indigenous Papuans from fully competing in the market, perpetuating the cycle of poverty, and maintaining the structural disadvantages that prevent marginalized communities from upward mobility in the social ladder. Discrimination reinforces a rigid social hierarchy that relies on unequal wealth distribution, where dominant groups have almost absolute power over the economy.
Discrimination Heightens Wealth Discrepancy Between Social Classes
As a result of persistent discrimination, the wealth gap between privileged and marginalized groups continues to grow, exacerbating social and economic inequality. Indonesia is now ranked sixth in the whole world for wealth disparity, according to the Paris-Based Global Inequality Report of 2022. Tax policies that favor the rich, unfair land distribution, and differences in wealth between varying social, racial and gender groups contribute to the jarring wealth gap among the wealthy and impoverished. In recent years, the middle class has been shrinking at an alarming rate, increasing this economic disparity. If it is left to fester, the consequences will cause a plethora of systemic issues detrimental to the country's growth and economy.
To illustrate the wealth inequality in this country, with a population of more than 285 million by the first half of 2025, the wealth of Indonesia’s four richest men surpasses 100 million of its poorest people’s combined total. Out of all the 554 million bank accounts in the country, 98.8% of these accounts each hold a downward of 100 million, which makes up 12.3% of combined deposits in financial institutions. On the other hand, less than one percent of accounts (135,000) that hold amounts exceeding 5 billion rupiah control >50% in all bank deposits.
Unchanged until 2021, the highest possible percentage of tax for PIT was 30%, applied to anyone with an annual income of over 500 million rupiah, although the majority of corporate executives especially in nationalized enterprises earned around 2-5 billion rupiah. The rate was adjusted to 35% and imposed on those who had a yearly income upwards of 5 billion only after 2022. However this slight improvement has had limited impact, as just 10% of total tax receipts come from PIT— and 90% of PIT receipts are sourced from labor wages while HNWIs (high net-worth individuals), for example business peoples and high-skilled professionals, comprise a miniscule estimated 10% of this tax.
Three main aspects of inequality in Indonesia, as analyzed in a study by Eny Sulistyaningrum and Alexander Michael Tjahjadi, are gender, education level, and urban-rural area differences. Measured on the Theil index and quantile regression analysis, while workers in an urban area typically had higher income. In the working class, wages earned by men were greater, while women had less income. Laborers with primary school education experienced more inequality than others with higher education levels, such as income difference and struggle with job availability, as the minimum requirement for formal employment is a high school certification.
The Gini index for land ownership inequality, ranging from 0-1, with 0 being perfect equality and 1 the opposite, was 0.58 (National Land Agency, 2022). Typically, an amount greater than 0.4 is considered high inequality. In 2019, the middle class in Indonesia —referring to the group whose monthly spendings calculated 3.5 to 17 times above the poverty line— numbered 57.33 million, but has dropped to 47.85 million (BPS, 2024.) The aspiring middle class increased from 128.85 million to 137.5 million in the same period, and now make up 49.22% of the population.
Growing inequality creates social tension that threatens economic growth and peace, sabotaging efforts against poverty. The working class experience the worst of work insecurity, low wages, and poor infrastructure, especially women. Land ownership, another indicator of wealth, is also unfairly distributed in Indonesia. With the immense majority of land owned by enterprises and the wealthy, who receive all the financial benefits, land ownership also considered as wealth is skewed. In rural areas, the difference in infrastructure compared to urban areas can be seen as rural areas have less access to electricity and decent road development, for example.
After the Covid-19 Pandemic, the middle class shrunk as more households and individuals were affected by difficult circumstances. However, other factors such as weak national economic foundation, corrupt government policies, and lack of a strong social safety net have also contributed significantly to the situation. Meanwhile the percentage of aspiring middle class, a term that refers to individuals or households who are not yet financially secure but are no longer classified as poor, rose in line with the progression. Despite the warning this rapid decline of Indonesia’s middle class brings to light, measures taken to support this group from social protection programmes, the Pre-Employment programme, as well as the People's Business Credit scheme, to tax incentives among others, the downward trend continues. Tax policies, such as personal income tax (PIT), favor upper middle and rich taxpayers due to how they are structured. Even if tax policies were restructured, the impact of this adjustment would be dependent on how the core tax system is implemented, and how the digital platform will improve efficiency, transparency, and tax administration.
Ultimately, this growing disparity is not just the result of economic factors alone,it is deeply tied to longstanding discrimination that operates across gender, class, and geography. Discrimination, in its many forms, shapes who gets access to jobs, land, education, and capital, thereby reproducing unequal starting points for different social groups.
Conclusion
In conclusion, discrimination is a structural force that drives unequal wealth distribution in Indonesia. It limits access to income, jobs, and education for marginalized groups, especially women and ethnic minorities like the Papuans. By reinforcing systemic barriers and social hierarchies, discrimination fuels a growing wealth gap and the decline of the middle class. If left unaddressed, it will continue to hinder poverty reduction and economic growth. Promoting inclusive policies, fair taxation, and equal access to opportunities is essential to creating a more just and prosperous society.
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