The increase in poverty rates is actually caused by incorrect economic and social policies, rather than population growth.
tirto.id – The Ministry of Finance noted that the number of poor people as of March 2024 was recorded at 25,22 million people or 9,03 percent of the total population of Indonesia. This is down from the pre-pandemic period or 2019 which was recorded at 9,41 percent of the total population or 25,14 million people.
Despite a decline in poverty rates, the number of poor people from 2019 to March 2024 was recorded to have increased by around 80 thousand people. Minister of Finance, Sri Mulyani, believes that the increase in the number of poor people is a result of population growth.
"If you look at the number of people, it does appear to be 25,22 million people because from 2019 to 2024 there will be population growth in Indonesia," he said, in a Working Meeting with Commission XI of the Indonesian House of Representatives at the DPR/MPR Building, Jakarta, Wednesday (13/11/2024).
The reason is, based on data from the Central Statistics Agency (BPS), in 2019 the population of Indonesia was 266,91 million people. This number then increased to 282,48 million people in Indonesia in the first semester of 2024.
"From a percentage perspective, we have experienced a decline in the poverty rate," he added.
In line with the decline in poverty rates, the inequality ratio or Gini ratio was also recorded as having fallen from pre-pandemic levels of 0,382 to 0,379 in March 2024. According to the State Treasurer, the decline in the Gini ratio occurred along with the growth of the Indonesian economy, which in the third quarter of 2024 was at the level of 4,95 percent annually (year on year/yoy).
“Our Gini ratio describes the ratio between 40 percent bottom (bottom population) against the 20 percent top This is 0,379. The lower it is, the better. equal. This is a decrease compared to the situation during the pandemic or even before pandemic," said Ani, Sri Mulyani's nickname.
In terms of percentage, the poverty rate has indeed recorded a downward trend since March 2019. In fact, the poverty rate as of March 2024 can be said to be the lowest since before the pandemic. However, when viewed from the number, the poor population in March 2024 was recorded to have increased.
Although compared to the period of March 2020, the number of poor people of 26,42 million people continued to decline. Meanwhile, if citing BPS data, the number of poor people in the period of March 2020 of 26,42 million people was recorded as increasing from the same period in the previous year. However, a year later it rose to 27,54 million people in March 2021.
"What is important to note is whether population growth will have an impact on increasing the number of poor people? This is actually a little bit tricky (difficult). Because it does not directly affect the number of poor people, because the number of poor people is non-population," said The Prakarsa's Social Policy Officer, Darmawan Prasetya, to Tirto, Thursday (14/11/2024).
In this case, non-population is that poverty does not necessarily occur because of an increase in the poor population. This means that poverty is not only caused by an increase in population, but also because of policies released by the government.
"This policy can be various. Policies in the field of employment, handling food prices. Because if we look at one of the most important components or more than 70 percent of the consumption of poor groups in Indonesia is for food," he said.
So, when there is a policy of increasing the price of food or basic necessities, it will have a big impact on the number of poor people.
For example, last February the price of rice experienced an upward trend of up to 18,41 percent (yoy) and 6,35 percent monthly (month to month/mtm) from February-March. The spike in rice prices then became one of the largest contributors to February 2024 inflation of 0,37 percent (mtm). The contribution of rice to this monthly inflation was 0,21 percent.
"The increase in food prices or basic necessities will have a major impact on the growth of the poor population."
said Darmawan.
In addition to consumption, the number of poor people is also greatly influenced by the cost of education, health services that are still expensive in some areas, and expensive access to housing. These problems are what are still considered social problems in Indonesia. "So, I emphasize that there is not always a positive effect between population growth rates and poverty rates," said Darmawan.
Poverty Caused by Policy
Next Policy Director Yusuf Wibisono believes that the increase in the number of poor people due to population growth is an old understanding that is outdated. In fact, according to him, this idea is quite sad, especially for high-ranking state officials.
"In my opinion, it is an old understanding that is outdated, it is very sad that nowadays there are still people who have an outdated understanding like this, especially high-ranking state officials," he said to Tirto, Thursday (14/11/2024).
According to Yusuf, until now there has been a lot of empirical evidence showing that population is not a burden on development. On the contrary, with good management, population can be an important development capital for national economic growth.
However, the state must first have a clear direction for development policies for three aspects, namely the provision of broad social rights, education and workforce skills policies, and investment and employment policies.
"A large population has never been an obstacle to reducing poverty rates," he stressed.
On the other hand, if until today Indonesia has not been able to reduce the poverty rate or the number of poor people progressively, this could be a sign that Indonesia is not strong enough in providing broad social rights to the community. Even with a weak education system in improving the skills of the workforce and investment policies that fail to absorb the workforce.
Yusuf assessed that with the target poverty rate in 2024 of 7,5 percent, the decline in the poverty rate since March 2019 could be interpreted as slow progress. Moreover, the poverty rate of 9,03 percent in March 2024 could also be achieved with large and persistent social assistance (bansos) interventions.
How could it not be, in welcoming the 2024 Presidential Election (Pilpres), since early 2023 the government has flooded the community with social assistance. The Ministry of Finance reported that throughout 2023, President Joko Widodo (Jokowi) has spent a budget of IDR 433 trillion for social assistance, a jump compared to the pre-pandemic amount of IDR 308,4 trillion.
However, the realization of social assistance spending in 2024 fell when compared to the previous year which was worth IDR 460,6 trillion, and compared to 2021 and 2020 which were worth IDR 468,2 trillion and 498 trillion respectively.
"In my opinion, the biggest note from President Jokowi's poverty alleviation is the fatal policy error. In the last decade, our poverty alleviation policy has transformed into being very dependent on social assistance," Yusuf added.
In fact, poverty alleviation policies should focus on two main policies, namely the creation of quality jobs on a wide scale and the empowerment of the people's economy or in this case Micro, Small and Medium Enterprises (MSMEs). On the contrary, social assistance is used as emergency assistance to strengthen the purchasing power of the poor so that they are able to meet their minimum needs, so that social assistance alone will never be able to solve the problem of poverty.
In the short term, social assistance will indeed increase the purchasing power and consumption of the poor, but not their productive capacity. Meanwhile, to overcome social problems such as layoffs (PHK) which have occurred recently due to weak job creation and high living costs, social assistance is not the right solution.
"The severe dependence on social assistance, a legacy of President Jokowi, must end, and should not be continued in the era of President Prabowo. We hope that our efforts to overcome poverty in the future will no longer depend on social assistance, which is very easily infiltrated by political motives," he suggested.
Yusuf assessed that during President Jokowi's leadership period, social assistance was often used for electoral interests. In the end, this distorted the poverty alleviation policy, which should have been based on empowering the people's economy and creating jobs, but instead became very dependent on the disbursement of social assistance.
"The main focus of people's economic empowerment should be in the agricultural sector, which until now is still the mainstay of 28,4 million rural households throughout Indonesia. However, in the last 10 years, the number of small farmers has actually increased from 14,25 million households in 2013 to 16,89 million households in 2023," he said.
On the other hand, the creation of quality formal jobs is increasingly limited. In the last decade, the competitiveness of labor-intensive industries has weakened to the point of a wave of layoffs and the closure of many textile and textile product (TPT) factories to footwear.
The weak performance of this labor-intensive industry is reflected in the data Purchasing Manager's Index (PMI) which has contracted over the past few months. With the PMI in October 2024 recorded at 49,2, unchanged from September 2024.
Then, the incoming investment is now more flowing into the extractive industry sector such as mining downstreaming which is capital intensive and absorbs minimal labor. From Yusuf's data, if in 2013 every Rp1 trillion of investment was able to absorb 4.594 workers, in 2023 every Rp1 trillion of investment was only able to absorb 1.285 workers.
With this condition, he hopes that the establishment of the Poverty Alleviation Agency can show the government's commitment to the poor.
"It is time for President Prabowo to show his support for the poor by encouraging affirmative policies that empower the poor, open people's access to capital and carry out asset reform, especially agrarian reform, because land is the most important production asset for the poor on which they depend for their livelihoods," explained Yusuf.
Meanwhile, to overcome poverty, The Prakarsa's Social Policy Officer, Darmawan Prasetya, assessed that the government should be able to overcome the problem of food prices and non-consumption issues such as school fees, health services, access to housing, and sanitation. At the same time, the government also seems to have to review the poverty line used to calculate the level and number of poverty, which currently still uses the old standard from the World Bank, namely purchasing power parity or Purchasing Power Parity (PPP) I.90 United States (US) dollars per day.
It should be noted that PPP is a standard used to compare poverty levels between countries by taking into account differences in the prices of basic necessities. However, the World Bank has corrected this data to US$3,2 per day for lower-middle-income countries or US$5,5 for upper-middle-income countries.
"This is what has not shifted there. This is an important note, we dare not to raise the poverty line to the latest World Bank standard figure, in accordance with the inflation rate, and also the price level of other basic necessities to be met. This is actually challenges for the new government," said Darmawan.
Agreeing with Yusuf, poverty alleviation does not necessarily end with the issue of consumption. Instead of consumption, which Darmawan admitted is the largest expenditure of the poor, the government should eradicate poverty by first looking at the problems that cause poverty to occur.
"Poverty is not a matter of being full or hungry, but also a matter of how people can work. Or some people, some groups of workers who actually have the status of working but do not meet their basic needs every day. Well, working on poverty (efforts to overcome poverty among workers) this is the challenge," he explained.
Moreover, if viewed spatially, in March 2024, the poverty rate in Java and outside Java is very different. With the number of poor people in Java recorded at 13 million, while outside Java there are around 13,71 million people.
"In Java, the highest poverty is in rural areas. While outside Java, it is in urban areas," added Darmawan.
Therefore, the government should be able to see poverty from multidimensional, starting from education, health, ownership of social security and access to social assistance, as well as access to the availability of information. Then, the government should also be able to see poverty that occurs in society from the side of access to basic facilities, which include access to clean water to the size of the house.
"If you really want to see it from its multidimensionality, the government should be able to carry out quite a big reform to provide a policy that can target education issues. Because if education issues such as teacher adequacy, equal facilities are homework that has not been completed in several presidential periods," he said.
Meanwhile, the Head of the Agency for the Acceleration of Poverty Alleviation (BP Taskin), Budiman Sudjatmiko said, in alleviating extreme poverty and also vulnerable poor communities, his party and the Ministry of Social Affairs have agreed on two things, job creation and the creation of a new business ecosystem that allows people to survive. According to him, with these two things, it will also be able to overcome the problem of high layoffs that are currently occurring, not only due to the slowdown in industrial performance but also due to digitalization and robotization.
"If they want to be re-employed or simply given capital for business like before, there is a new challenge, how the new business ecosystem also fits with the existing challenges of digitalization and robotization, we will discuss that part with the Ministry of Industry, Komdigi, and the Ministry of Manpower," said Budiman, in his official statement, quoted Thursday (14/11/2024).
With the creation of this business ecosystem, he hopes that the employment sector will not collapse easily, causing more people to lose their jobs. Also, he does not want to eradicate poverty like aspirin, which heals for a while but hurts later.
"Because we don't want to give aspirin, which will cure you for a while from your poverty and then fall back down. No, we want that. sustainable "Because of Mr. Prabowo's orders, we want to add a new middle class," concluded Budiman.
Also read related articles POVERTY 2024 or other writings from Qonita Azzahra