The increase in prices, especially for basic commodities, has triggered a decline in people's purchasing power. Regarding this condition, the World Bank also raised the standard for the latest monetary poverty line.
Through latest economic development release in the countries of the Asia and Pacific Region, the World Bank provides Update poverty calculation based on income, which has an impact on the number of additional poor people. Daily income limit falling into extreme poverty – based on purchasing power parity (PPP) latest – is US$2,15 (Rp 33.756) per day. The previous standard was US$1,9 per day.
From this World Bank report, it was noted that 33 million people from the lower middle class in Asia fell into the category of extreme poor. As countries with large populations, China and Indonesia accounted for the largest decline in the number of middle class people, namely 18 and 13 million people, respectively.
Meanwhile, according to the latest release from the Central Statistics Agency (BPS) as of March 2022, Indonesia's poor recorded at 9,54% of the population, or the equivalent of 26,16 million people. This is a decrease of 0,17% compared to September 2021. The basis of the BPS calculation is to use the national poverty line based on expenditure, which is around IDR 550 thousand rupiah per capita per month.
It should be observed that poverty based on consumption or income by the World Bank, BPS, and perhaps other financial institutions has only led us to see the face of existing poverty. The aspect of non-monetary poverty which often concerns the quality of life of the community has not received serious attention.
The United Nations has listed poverty alleviation that needs to be solved in all its forms everywhere as the first point of the 17 points of the Sustainable Development Goals (SDGs). Although there is no priority of all goals, the first point should imply that this point is the main commitment.
Therefore, it is important for the government to eradicate poverty through improving people's quality of life, not only based on income or expenditure data, but also a decent standard of living.
In response to this, multidimensional poverty emerged as a more relevant, broad, and ideal concept for calculating and providing evidence of poverty.
Alternative calculations and conditions for Indonesia
Since 2010, the Oxford Poverty and Human Initiatives (OPHI) of the University of Oxford has been developing and providing alternative calculations Multidimensional Poverty Index (IKM). This index can be an alternative as well as provide an overview of the dimensions of poverty that can be targeted specifically by the government, as well as to compare poverty between regions or countries.
By emphasizing eligibility standards, IKM Global calculates poverty rates across three basic dimensions – health, education, and living standards – which compare situations and conditions across countries. Meanwhile, the national IKM is a development of the global IKM which is more relevant and flexible to determine the conditions and achievements of poverty alleviation in the country or regional scope so that it can be the basis of policy priorities.
Menggunakan Alkire-Foster method and data National Socio-Economic Survey (Susenas) BPS, The Prakarsa is currently calculating the national IKM based on an elaboration of five dimensions namely health, education, housing, basic services, and social participation.
Initial findings state that the number of poor individuals in households in Indonesia is 38,9 million or around 14,3% of the total population in 2021. This percentage of poverty has decreased drastically compared to 2020 and 2019 which were 17,5 respectively. % and 23%.
The indicators of housing material and access to safe drinking water are the two biggest indicators that affect the number of multidimensional poverty in this household. This result is also in line with data from the Ministry of Public Development and Public Housing that there are still almost 30 million unfit homes in Indonesia by 2021 and 57,15% of villages throughout Indonesia also do not have access to drinking water in 2022.
Our findings also show that by province, Papua, West Papua, and East Nusa Tenggara are the three provinces with the largest multidimensional poverty rates, namely 27,1%, 21,8%, and 20,7% of the total population, respectively.
Although the number of poor people in a multidimensional manner is relatively larger than monetary, of course the trend of decreasing the quantity and quality of poverty in a multidimensional manner in society is a good signal of an improvement in the quality of life of the poor.
Policy targeting for alleviating extreme poverty
Through presidential instruction, the government has issued a policy to eradicate extreme poverty in full by 2024.
Considering the findings of multidimensional poverty, the government's steps are considered to be in line. Government policies, both central and local, to improve the quality of housing and community slums are quite diverse and cross-sectoral, for example through programs provision of one million houses and repair of uninhabitable houses.
In terms of access to clean water and drinking water, the government across sectors has initiated many achievement targets. In fact, the Ministry of Health targets 100% access to drinking water feasible in 2024.
Unfortunately, the achievements during the implementation process to the evaluation of these programs are not presented openly and comprehensively to the public.
On the other hand, we see that in poverty alleviation efforts so far, the government still tends to prioritize old and instant ways with providing subsidies and various forms of cash assistance which is only effective in the short term. Fuel subsidies, for example, are slowly being reduced due to rising global prices. As a result, wage subsidies and cash transfers are considered unable to compensate for the impact of increasing prices for other basic needs.
The government needs to have awareness and strong political will to be able to prioritize the use of evidence that is strong, effective, and trustworthy.
The multidimensional poverty calculation that describes the condition of Indonesia has been available since at least 2015. This indicator should be maximized wisely to focus and prioritize development based on aspects that can reduce the poverty level of the community without being too wasteful of budget for short-term programs.
With limited fiscal capacity, when non-monetary poverty can be mapped with reliable data, the government to the sub-district level also knows what kind of development policy priorities can significantly reduce poverty in the region in the long term.
Multidimensional poverty need not replace monetary calculations. However, it is necessary to complement each other in the priority of poverty measurement by the government at all levels so that the formulation of poverty alleviation policies is more effective and efficient.
By: Rizky Deco Praha (Researchers, The PRAKARSA)
Source: Theconversation.com
