Empowering The Informal Economy Through Islamic Social Finance: Insights from Islamic Economic Principles for Inclusive Development

Authors

  • Husna Karimah Universitas Lambung Mangkurat, Indonesia
  • Azizah Akbariani Ahmad Universitas Lambung Mangkurat, Indonesia
  • Muhammad Ariq Athallah Akbar Universitas Lambung Mangkurat, Indonesia

DOI:

https://doi.org/10.18592/taradhi.v16i1.16301

Keywords:

Empowerment, Informal Economy, Islamic Economics, Maqāṣid Al-Sharī‘ah

Abstract

The informal sector continues to dominate employment in many developing countries, including Indonesia, providing livelihoods for millions of workers who often lack access to social protection and economic security. This paper examines the origin and development of the informal economy and explores its structural determinants. Additionally, it highlights the role of Islamic economics, particularly the potential of Islamic social finance instruments—zakat, infāq, ṣadaqah, and waqf (ZISWAF)—in supporting inclusive and sustainable development within the informal sector. Employing a descriptive-qualitative approach, this study integrates content analysis, literature review, and critical analysis of both mainstream and Islamic economic perspectives. The conceptual model developed in this paper positions Islamic economic principles such as falah, maslahah, and social justice as key drivers for empowering informal sector workers. By aligning these principles with the objectives of maqāṣid al-sharī‘ah, the framework provides strategic directions for capacity building, ethical financing, and inclusive growth. The findings suggest that productive utilization of ZISWAF can facilitate the transition of informal workers toward economic resilience and formal sector integration. This study calls for collaborative engagement among government, private sector, and Islamic philanthropic institutions to ensure the realization of sustainable development goals, underpinned by ethical and spiritual commitments. Sektor informal terus mendominasi lapangan kerja di banyak negara berkembang, termasuk Indonesia, dengan menyediakan mata pencaharian bagi jutaan pekerja yang sering kali tidak memiliki akses terhadap perlindungan sosial dan jaminan ekonomi. Penelitian ini mengkaji asal-usul dan perkembangan ekonomi informal serta mengeksplorasi faktor-faktor struktural yang menjadi penentunya. Selain itu, penelitian ini menyoroti peran ekonomi Islam, khususnya potensi instrumen keuangan sosial Islam—zakat, infāq, ṣadaqah, dan wakaf (ZISWAF)—dalam mendukung pembangunan yang inklusif dan berkelanjutan di sektor informal. Melalui pendekatan deskriptif-kualitatif, studi ini mengintegrasikan analisis isi, kajian literatur, dan studi kritis terhadap perspektif ekonomi arus utama dan ekonomi Islam. Model konseptual yang dikembangkan dalam penelitian ini menempatkan prinsip-prinsip ekonomi Islam seperti falah (kesejahteraan holistik), maslahah (kemaslahatan umum), dan keadilan sosial sebagai pendorong utama dalam memberdayakan pekerja di sektor informal. Dengan menyelaraskan prinsip-prinsip tersebut dengan tujuan maqāṣid al-sharī‘ah, kerangka ini memberikan arahan strategis dalam penguatan kapasitas, pembiayaan berbasis etika, dan pertumbuhan yang inklusif. Temuan penelitian ini menunjukkan bahwa pemanfaatan ZISWAF secara produktif berpotensi memfasilitasi transisi pekerja informal menuju ketahanan ekonomi dan integrasi ke dalam sektor formal. Studi ini juga mengajak adanya kolaborasi yang sinergis antara pemerintah, sektor swasta, dan lembaga filantropi Islam guna mewujudkan tujuan pembangunan berkelanjutan yang berlandaskan komitmen etis dan spiritual.

References

Abdullah, & Rusdiana, A. (2024, February 19). PEROLEH LEGALITAS HALAL, BU LISNA KIAN SEMANGAT TINGKATKAN PEMASARAN USAHA. Rumah Zakat. https://www.rumahzakat.org/peroleh-legalitas-halal-bu-lisna-kian-semangat-tingkatkan-pemasaran-usaha/

Adiwijaya, Z. A., Suprianto, E., & Rusdi, D. (2023). Mustahik Micro Business Incubation in Poverty Alleviation. Barolli, L. (Eds) Advances in Internet, Data & Web Technologies. EIDWT 2023. Lecture Notes on Data Engineering and Communications Technologies, Vol 161. , 64–75. https://doi.org/10.1007/978-3-031-26281-4_7

Aldi, Andika, & Ishmah. (2020, August 14). Keuangan Syariah Seharusnya Jadi Motor Penggerak Utama SDGs. KNEKS. https://kneks.go.id/berita/297/

Amrial. (2021, September 28). Menguatkan Model Pengelolaan Zakat Berbasis Wilayah. KNEKS. https://kneks.go.id/isuutama/28/menguatkan-model-pengelolaan-zakat-berbasis-wilayah

Aransyah, M. F., Noor, M., & Abdullah, A. H. (2022). Policy analysis of micro Waqf banks in Indonesia. Jurnal Perspektif Pembiayaan Dan Pembangunan Daerah, 10(2), 63–74. https://doi.org/10.22437/ppd.v10i2.12876

Arif, M. (2017). Zakat as a Mode of Poverty Alleviation. Asian Journal of Multidisciplinary Studies, 5(11), 57–65.

Ascarya, & Sakti, A. (2021). Proposing New Islamic Microfinance Model for Sustainable Islamic Microfinance Institution. In M. K. Hassan, M. Saraç, & A. Khan (Eds.), Islamic Finance and Sustainable Development (pp. 349–378). Springer International Publishing. https://doi.org/10.1007/978-3-030-76016-8

Aziz, Y., Mansor, F., Waqar, S., & Haji Abdullah, L. (2020). The nexus between zakat and poverty reduction, is the effective utilization of zakat necessary for achieving SDGs: A multidimensional poverty index approach. Asian Social Work and Policy Review, 14(3), 235–247. https://doi.org/10.1111/aswp.12212

Barom, M. N. (2018). Conceptualizing A Unified Normative Framework for Social Responsibility in Islamic Economics. International Journal of Economics, Management and Accounting, 26(2), 329–363.

Baznas. (2025, April 23). Manfaatkan Teknologi Digital, ZAuto BAZNAS Mahmudin Semakin Ramai Pelanggan. https://baznas.go.id/pendistribusian-show/manfaatkan-teknologi-digital,-zauto-baznas-mahmudin-semakin-ramai-pelanggan/1993

Ceni, R. (2017). Pension schemes and labor supply in the formal and informal sector. IZA Journal of Labor Policy, 6(1), 8. https://doi.org/10.1186/s40173-017-0085-1

Chen, M. A. (2005). Rethinking The Informal Economy: Linkages With The Formal Economy and The Formal Regulatory Environment (Issue 2005/10). The United Nations University World Institute for Development Economics Research (UNU-WIDER). http://hdl.handle.net/10419/63329

Coletto, D. (2019). Informal Economy. In A. Orum (Ed.), The Wiley Blackwell Encyclopedia of Urban and Regional Studies (pp. 1–8). John Wiley & Sons Ltd. https://doi.org/10.1002/9781118568446.eurs0157

Creswell, J. W., & Poth, C. N. (2018). Qualitative Inquiry and Research Design: Choosing Among Five Approaches (Fourth Edition). SAGE Publications.

Delechat, C., & Medina, leandro. (2021). What Do We Know about The Informal Economy. In C. Delechat & leandro Medina (Eds.), The Global Informal Workforce: Priorities for Inclusive Growth (2021st ed., pp. 1–10). International Monetary Fund.

DPR RI. (2024, May 28). Miliki Metode Berbeda, Baznas dan Kemensos Mampu Kerja Kolaboratif Entaskan Kemiskinan. Media DPR RI. https://emedia.dpr.go.id/2024/05/28/miliki-metode-berbeda-baznas-dan-kemensos-mampu-kerja-kolaboratif-entaskan-kemiskinan/

El Ayyubi, S., & Eka Saputri, H. (2018). Analysis of the Impact of Zakat, Infak, and Sadaqah Distribution on Poverty Alleviation Based on the CIBEST Model (Case Study: Jogokariyan Baitul Maal Mosque, Yogyakarta). International Journal of Zakat, 3(2), 85–97. https://doi.org/10.37706/ijaz.v3i2.80

Farook, S. (2008). Social Responsibility for Islamic Financial Institutions: Laying Down A Framework. Journal of Islamic Economics, Banking and Finance, 4(1), 61–82.

Farrel, D. (2004). The Hidden Danger the Informal Economy. The McKinsey Quarterly, 26–37.

Febrianto, E. N. (2020). HUBUNGAN SEKTOR INFORMAL DAN PERTUMBUHAN EKONOMI DI INDONESIA. JURNAL PENDIDIKAN EKONOMI: Jurnal Ilmiah Ilmu Pendidikan, Ilmu Ekonomi Dan Ilmu Sosial, 14(1), 151. https://doi.org/10.19184/jpe.v14i1.16620

Firmansyah, A. (2024, October 15). Menag ingatkan Baznas perkuat kolaborasi dengan pemerintah. https://www.antaranews.com/berita/4398825/menag-ingatkan-baznas-perkuat-kolaborasi-dengan-pemerintah

Firmansyah, A., & Adji, R. (2023, January 17). 15,273 businesses applied for halal certification in 2022: LPPOM MUI. https://en.antaranews.com/news/269757/

Fourie, F. (2018). Enabling the forgotten sector: Informal- sector realities, policy approaches and formalisation in South Africa. In C. Skinner & F. Fourie (Eds.), The South African informal sector: creating jobs, reducing poverty (pp. 439–476). HSRC Press.

Gerxhani, K. (2004). Informal Sector in Developed and less Developed Countries: A Literature Survey. Public Choice, 120(3–4), 267–300.

Halim, S., Dyarini M, A., Suhada, J. I., Jalil, N., & Anasrul. (2025). Implementation of Zakat as a Tax Incentive in Indonesia: A Comparative Analysis. International Journal of Research and Innovation in Social Science (IJRISS), 9(15), 45–65.

Herianingrum, S., Supriani, I., Sukmana, R., Effendie, E., Widiastuti, T., Fauzi, Q., & Shofawati, A. (2024). Zakat as an instrument of poverty reduction in Indonesia. Journal of Islamic Accounting and Business Research, 15(4), 643–660. https://doi.org/10.1108/JIABR-11-2021-0307

Iddy, Z., Amin, S. N., & Yaacob, A. S. (2022a). Emerging the Equity and Fairness of Zakaat over Taxation. Open Journal of Accounting, 11(02), 110–125. https://doi.org/10.4236/ojacct.2022.112007

Iddy, Z., Amin, S. N., & Yaacob, A. S. (2022b). Emerging the Equity and Fairness of Zakaat over Taxation. Open Journal of Accounting, 11(02), 110–125. https://doi.org/10.4236/ojacct.2022.112007

Ismail, N. H., & Mohd Rasid, M. E. S. (2022). Promoting An Inclusive Economy: The Relevance Of Sustainable Development And Islamicity Prosperity Index. Journal of Islamic Monetary Economics and Finance, 8(4), 637–660. https://doi.org/10.21098/jimf.v8i4.1530

Johari, & Pratama, H. (2022). Determination of the Poor Mustahiq From Maqasid Shariah Jasser AudaPerspective(Study After the Decision of Baznas’s Chairman Number 33 of 2019). JSEAIS: Journal of Southeast Asian Islam and Society, 1(1), 1–18.

Khatimah, H., Beik, I. S., & Nuradi, N. (2024). Performance of BAZNAS Empowerment Program in Indonesia: A Systematic Literature Review. Prosperity: Journal of Society and Empowerment, 4(2), 207–222. https://doi.org/10.21580/prosperity.v4i2.22448

Kundt, T. C. (2017). Opportunities and Challenges for Taxing the Informal Economy and Subnational Taxation.

Larasati, R. A. (2023, September 22). The High Percentage of Informal Employment in Indonesia: Causes and Implications. Modern Diplomacy.

Loayza, N. V. (2018). Informality: Why Is It So Widespread and How Can It Be Reduced?

Majeed, M. T. (2019). Real Wellbeing of the Ummah and Economic Performance: Islamic Perspective and Empirical Evidence. Pakistan Journal of Applied Economics, 29(1), 1–31.

Malek, N. A., & Arshad, M. N. M. (2017). The Informal Economy: A Neglected Area In Islamic Economics. International Journal of Economics, Management and Accounting, 25(2), 285–314. http://econsmalaysia.blogspot.my/2012/05/shadow-

Malihah, L., Ma’mun, M. Y., Mahfuzah, A., Karimah, H., Meilania, G. T., & Murliana, M. (2022). FORECASTING ANALYSIS OF ZIS COLLECTION IN BANJAR REGENCY USING DOUBLE EXPONENTIAL SMOOTHING METHOD. J-EBIS (Jurnal Ekonomi Dan Bisnis Islam), 357–370. https://doi.org/10.32505/j-ebis.v7i2.4278

Mitra, S. (2017). To tax or not to tax? When does it matter for informality? Economic Modelling, 64, 117–127. https://doi.org/10.1016/j.econmod.2017.02.024

Mohamad, S., & Borhan, N. A. (2017). Islamic Finance And Social Sustainability: Parameters For Developing A Model For Social Impact Measurement. Malaysian Journal of Sustainable Environment, 3(2), 81–103. https://doi.org/10.24191/myse.v3i2.5596

Mohapatra, K. K. (2012). Women workers in informal sector in India: understanding the occupational vulnerability. International Journal of Humanities and Social Science, 2(21), 197–207.

Mukherjee, D. (2016). Informal Economy in Emerging Economies: Not Substitute but A Complement. International Journal of Business and Economic Development, 4(3), 16–27.

Natalia, D. L. (2022, October 6). Wapres Ma’ruf Amin minta ekonomi syariah masuk ke kurikulum pesantren. Antara. https://www.antaranews.com/berita/3162441/wapres-maruf-amin-minta-ekonomi-syariah-masuk-ke-kurikulum-pesantren

Özgür, G., Elgin, C., & Elveren, A. Y. (2021). Is informality a barrier to sustainable development? Sustainable Development, 29(1), 45–65. https://doi.org/10.1002/sd.2130

Palmer, R. (2020). Lifelong Learning in the Informal Economy: A Literature Review (1st ed.). International Labour Organization. https://cradall.org/sites/default/files/lll_in_informal_economy_ilo_2020_wcms_741169_0.pdf

Perdana, D. A., Apriani, I., & Macpal, S. (2023). Effect Of Utilization Of Productive Zakat Funds On Mustahik Empowerment at BAZNAS Gorontalo Regency. International Journal of Islamic Finance, 1(1), 20–34. https://doi.org/10.14421/ijif.v1i1.2030

Pitoyo, A. J., Aditya, B., & Amri, I. (2020). The impacts of COVID-19 pandemic to informal economic sector in Indonesia: Theoretical and empirical comparison. E3S Web of Conferences, 200, 1–8. https://doi.org/10.1051/e3sconf/202020003014

Portes, A., & Haller, W. (2010). 18. The Informal Economy. In N. J. Smelser & R. Swedberg (Eds.), The Handbook of Economic Sociology, Second Edition (pp. 403–426). Princeton University Press. https://doi.org/10.1515/9781400835584.403

Rahayuwati, L., Arsyad, S., Ekawati, R., Dawam, M., Rahmadewi, R., Nurhayati, S., Fahmi, I., & Fauziah, S. R. (2024). Factors That Influence the High Number of Elderly People Working in the Informal Sector. Journal of Multidisciplinary Healthcare, Volume 17, 1827–1837. https://doi.org/10.2147/JMDH.S450047

Rizki, M., Sari, N., & Widjayanti, A. (2022). Optimization of Micro Waqf Bank’s Ability to Support Micro and Small Businesses. The 3rd International Conference on Governance, Public Administration, and Social Science (ICoGPASS), 1269–1285. https://doi.org/10.18502/kss.v7i9.11015

Rothenberg, A. D., Gaduh, A., Burger, N. E., Chazali, C., Tjandraningsih, I., Radikun, R., Sutera, C., & Weilant, S. (2016). Rethinking Indonesia’s Informal Sector. World Development, 80, 96–113. https://doi.org/10.1016/j.worlddev.2015.11.005

Samad, T. F. D., & Sugeng, A. (2022). The Role of the Islamic Economic System in Achieving Falah. Adzkiya: Jurnal Hukum Dan EKonomi Syariah, 10(2), 175–186.

Schneider, F., & Enste, D. H. (2000). Shadow Economics: Size, Causes, and Consequences. Journal of Economic Literature, 38(1), 77–114.

Sillah, B. M. S. (2019). Formalizing Informal Economy: Improving Decent Work And Tax Collection In OIC Member Countries. Journal of Islamic, Social, Economics, and Development, 4(23), 47–63. www.jised.com

Solekha, Y. A., Murdianah, A. Q., Lestari, N. S., & Asytuti, R. (2021). Baitul Maal Wa Tamwil Sebagai Lembaga Keuangan Mikro Syariah Pemberdaya Ekonomi Umat (Konsep dan Teori). Velocity: Journal of Sharia Finance and Banking, 1(1), 44–58. https://doi.org/10.28918/velocity.v1i1.3647

Sultana, N., Rahman, M. M., & Khanam, R. (2022). The effect of the informal sector on sustainable development: Evidence from developing countries. Business Strategy & Development, 5(4), 437–451. https://doi.org/10.1002/bsd2.217

Susanti, S. D. (2022, October 6). KNEKS: Indeks literasi ekonomi syariah Indonesia 23,3 persen di 2022. Antara. https://www.antaranews.com/berita/3162845/kneks-indeks-literasi-ekonomi-syariah-indonesia-233-persen-di-2022

Syahriani, F., Mulyani, F. F., Fismanelly, Afifah, S., & Medani, A. (2023). Application of Maqasid Al-Shariah in Islamic Economics and Finance as the Development of Products of Islamic Value. Hakamain: Journal of Sharia and Law Studies, 2(1), 150–162.

Wakaf Warrior. (2025, January 21). Gerobak Berkah Wakaf Warrior Dukungan Nyata untuk UMKM di Pesta Wirausaha Nasional. Wakaf Warrior. https://wakafwarrior.id/info-terbaru/berita/gerobak-berkah-wakaf-warrior-dukungan-nyata-untuk-umkm-di-pesta-wirausaha-nasional

Wibowo, S. A., & Restuningsih, W. (2019). The Effectiveness Of Productive Zakat Funds On The Development Of Micro-Businesses And The Welfare Of Zakat Recipient (Mustahiq) (A Case Study At Rumah Zakat, Dompet Dhuafa, And Lazismu In Yogyakarta City). Proceedings of the 5th International Conference on Accounting and Finance (ICAF 2019). https://doi.org/10.2991/icaf-19.2019.23

Williams, C. C. (2014). Out of the shadows: a classification of economies by the size and character of their informal sector. Work, Employment and Society, 28(5), 735–753. https://doi.org/10.1177/0950017013501951

Winkler, H., Ruppert Bulmer, E., & Mote, H. (2017). Expanding Social Insurance Coverage to Informal Workers. https://ideas.repec.org/p/wbk/jbsgrp/27905978.html

Wu, D. F., & Schneider, F. (2021). Nonlinearity between the Shadow Economy and Economic Development. In C. Deléchat & M. Lenadro (Eds.), The Global Informal Workforce: Priorities for Inclusive Growth (2021st ed., pp. 87–114). International Monetary Fund.

Yasmeen, K., Yasmeen, K., & Al Abri, S. (2024). Islamic Framework for Sustainable Development. International Journal of Islamic Finance and Sustainable Development, 16(4). https://doi.org/10.55188/ijifsd.v16i4.978

Downloads

Published

2025-06-10