Minding the Gap : Conditional Cash Transfer and Labour Market Trajectories in Indonesia

Conditional cash transfer programs have widespread notably in Latin America and other parts of the world, utilized it as a social policy tool to alleviate poverty. It works with cash disbursed to poor household contingent upon beneficiaries’ conditionality in education and health. This paper locates itself of the potential for the poverty alleviation in Indonesia, known as Program Keluarga Harapan (PKH), in achieving the long term goal. One of the objectives of CCTs is to enhance educational aspects of the human capital accumulation that evolves to justify the goal to break the intergenerational poverty. The education attainment in Indonesia shows a positive outcome. Therefore this research sought to answer the questions of ‘To what extent does the role of improvement in human capital accumulation in conditional cash transfers’ beneficiaries into the existing labour market dynamics?’ The result shows so far that even though the human capital formation attempted to be improved, the pre-existing structure in labor market dynamics is matter. The mismatch conjuncture of the education with employment might hinder the long term goal of this conditional cash transfer program. The findings suggest that labour market trajectories are crucial to meet the skill-demand side. In addition, the government needs to integrate PKH with other social programs to overcome the labor segmentation particularly after the household reach the ‘exit’ stage of this program.