JAKARTA, KOMPAS — The decline in inequality, which has been ongoing since March 2016, continued in September 2016. However, it is still relatively small as the Gini ratio, which measures wealth disparity, is still higher than that recorded in 2011.
According to the latest data issued by the Central Statistics Agency (BPS), the Gini ratio had dropped to 0.394 as of September 2016 from 0.402 in September 2015. The Gini ratio in cities is 0.409, far higher than the 0.316 in the villages.
Looking back to 2007-2011, the Gini ratio was far lower, ranging between 0.35 and 0.38. The ratio started to increase in 2012 and held at 0.4 to 2015. In March 2016, the Gini ratio had fallen to 0.397.
Since then, the decline continued until September 2016. However, the level has never reached that recorded between 2007 and 2011.
BPS head Suhariyanto said at a press conference in Jakarta on Wednesday that the fall in the Gini ratio in September 2016 was partly due to an increase in per capita expenditure in the bottom 40 percent and middle 40 percent of the population, which was higher than that of the top 20 percent of the population.
Between September 2015 and September 2016, spending in the bottom 40 percent of the population rose by 4.56 percent, while spending in the middle 40 percent grew 11.69 percent and that of the top 20 percent only rose by 3.83 percent.
Based on BPS data, the rising middle class spending was in line with the economy of this group strengthening. The number and percentage of self-employed people or those assisted by unpaid workers increased. This was due to the business climate for micro, small and medium enterprises becoming more conducive. This group is the largest in the middle class.
Referring to the National Workforce Survey data, the number of self-employed people or those assisted by unpaid workers increased from 37.7 million in August 2015 to 39.5 million in August 2016. This means that the population in this group increased by 4.77 percent.
Labor intensive
The rise in expenditure in the bottom group of the population was in line with an improvement in their earnings, among other things, due to the impact of labor-intensive infrastructure development, as well as a number of protection schemes and social assistance in education and health, as well other welfare provided by the government.
"The key to reducing the Gini ratio is reducing opportunity inequality. Opportunities include access to education, health, assets and capital. If this access could be improved for the poor, the Gini ratio would decline further," Suhariyanto said.
Separately, Institute for Ecosoc Rights researcher Sri Palupi said that it was difficult to link the decline in the Gini ratio and factual conditions experienced by the poor. The factual condition in question was that the burden of the poor had further increased over the past year.
"The fact is that the economy is more difficult. Food prices rose. This certainly hurt the poor. So it\'s hard to explain why the two things seemed not to link with each other, where the Gini ratio is lower and the people felt economically pressured, "said Palupi.
The role of private companies
The government has provided greater opportunities for private companies to take part in solving economic inequality in Indonesia. Their role is needed alongside the government\'s efforts to overcome inequality, which is still considered high. The government is preparing a scheme to involve the private sector.
Vice Presidential special staff for economic affairs Sofjan Wanandi has persistently explained the plan to private companies. "The participation of the private sector will be stipulated in a government regulation that will be issued next month," Sofjan said after accompanying Vice President Jusuf Kalla while receiving crossbench member of the British Parliament’s House of Lords, Lord Charles Powell, in Jakarta.
Powell, through his company, Jardine Matheson, is the majority shareholder of PT Astra International. “The role of companies such as Astra is quite strategic in assisting government programs. It is quite possible to implement them by forming synergy with small enterprises in the country. They can empower small scale entrepreneurs," said Sofjan.
Companies can also play a role in the plantation sector. Through its subsidiary PT Astra Agro Lestari Tbk., Astra can help develop the concept of plasma plantations. In this program, low-income people received economic benefits, Sofjan said. "It is not just Astra, all major conglomerates in Indonesia will also be involved," he said.
On the occasion, Powell also talked about conditions in the world economy and in the country. Powell and Kalla also discussed measures that could be prepared to face global uncertainties.
Kalla said he wanted Astra to play a more significant role in the national economy. Astra is currently the second largest company listed on the Indonesian stock exchange. During the meeting, Powell expressed his appreciation for improvements in the investment climate in the country.
Inequality issues were discussed earlier in a Cabinet meeting that was held at the Bogor Palace, Bogor, West Java. The meeting, which was chaired by President Joko Widodo, discussed programs to cope with wealth disparity in the country.
The government focuses on three main policies to address economic and social inequality nationwide. These are a land policy, opportunities and human resource capacity building. (LAS/INA/NDY)
