BPS: Poverty Rate Declines
JAKARTA, KOMPAS — The poverty rate, depth and severity indices fell in September 2018, along with the Gini ratio. However, food poverty and urban-rural inequality must be resolved.
Statistics Indonesia (BPS) said the poverty rate fell from 10.12 percent in September 2017 to 9.66 percent in September 2018. During the same period, the number of poor people in the country also decreased by 910,000 from 26.58 million to 25.67 million.
The September 2018 decline in the poverty rate was confirmed through a number of indicators, including farm laborers real wages, Farmers Terms of Trade (FTT) and inflation. Real agricultural wages in September grew 1.6 percent compared to real wages in March 2018, while the FTT grew 1.21 percent. Inflation was maintained at a 0.94 percent low during the same period.
BPS chief statistician Suhariyanto told a press conference on Tuesday (01/15/2019) in Jakarta that although the poverty rate had declined, food still contributed greatly to the poverty line and remained a serious challenge.
Records show that the poverty line rose from Rp 387,160 per capita per month in September 2017 to Rp 410,670 per capita per month in September 2018. Food commodities dominated the September 2018 poverty line at 73.54 percent, while non-food commodities contributed 26.46 percent.
Rice is the commodity with the greatest influence on the poverty line. BPS data shows that rice contributed 19.54 percent and 25.51 percent respectively to urban and rural poverty in September 2018. This is an increase from September 2017, when rice respectively contributed 18.8 percent and 24.52 percent to urban and rural poverty.
Center for Economic and Public Policy Studies head A. Tony Prasetiantono at Gadjah Mada University told Kompas on Tuesday that food commodities dominated the poverty line, which showed that social welfare had not improved. "Food is a basic need. Poor people spend more on food than on other needs," he said.
Tony said that most food prices did not experience deflation in 2018. However, deflation was no guarantee of the affordability of food. The poverty line was also expected to rise because the BPS made adjustments based on current food prices, which remained high.
BPS records show that the retail prices of several basic commodities experienced deflation in March-September 2018. The price of rice fell 3.28 percent, beef 0.74 percent, cooking oil 0.92 percent and sugar 1.48 percent.
Following a meeting with President Joko Widodo at the Presidential Palace on Monday, Social Affairs Minister Agus Gumiwang Kartasasmita said he was optimistic that the poverty rate would reach 9 percent by the end of the year.
Agus said that the declining poverty rate and inequality showed that the government’s poverty alleviation program was correct. "The social welfare concept or program that the government has developed has been proven correct and is running well," he said.
High inequality
The BPS said that indices for the depth and severity of poverty had also fallen. The depth of poverty index fell from 1.79 in September 2017 to 1.63 in September 2018, while the severity of poverty severity index fell from 0.46 to 0.41 in the same period.
Even though these indices recorded a decrease, the poverty gap between urban and rural areas remained high. "The poverty rate for urban and rural areas was [respectively] 6.89 percent and 13.1 percent in September 2018," said Suhariyanto.
He said that inequality in the distribution of wealth, or the Gini ratio, fell from 0.391 in September 2017 to 0.384 in September 2018. The September 2018 Gini ratio for rural areas was higher than in urban regions, respectively 0.391 and 0.319. "Based on the World Bank’s criteria, inequality in Indonesia is low. Strong efforts are needed to reduce the Gini ratio, including improving the distribution of income in the upper and lower [classes]," he said.
Tony said that the decline in the Gini ratio could be viewed from two sides. Apart from improvements in the income of the lower bracket, the decline was also due to shrinking incomes from the economic turmoil in 2018.
Smeru Research Institute director Asep Suryahadi said that poverty alleviation efforts needed to focus on the very poor, such as through a regularly administered social assistance system.
Population and Employment deputy chairman Pungky Sumadi of the National Development Planning Agency (Bappenas) claimed that the high population of poor people, especially in Java, was caused by the fact that people were changing jobs quickly without attendant skills development. He cited the BPS\'s findings on the decreasing number of agricultural workers. "People who previously worked on rural farms want to switch to the urban services industry, but their skills have not improved," he said.
Poverty reduction, Pungky said, needed to be pursued through various approaches, including through expanding potential in rural areas. This year’s village funds for community investment was no longer intended to be used for infrastructure development. The aim was to create jobs so that people do not simply migrate to the cities.
Moreover, the distribution of social security funds had continued to increase since 2015. The 2019 State Budget has allocated Rp 385.2 trillion for social security in expanding the Family Hope Program (PKH), the Health Insurance Recipient (PBI) program and the non-cash food assistance program, as well as subsidies for SMEs and housing loans.
Finance Minister Sri Mulyani Indrawati said that the government’s social security programs covered basic provisions. The poor must not miss their chance to send their children to school or to access healthcare facilities, simply because they were not financially capable.
Hairiah, 44, a member of the PKH’s Gotong Royong electronics business collective in Johar Baru, Central Jakarta, said that several disadvantaged families had not become beneficiary members.
BPS Jakarta said that the poor population in September 2018 fell 0.02 percent compared to the figure in March 2018. Although the poverty rate had decreased, the poverty line (per capita expenditure per month) had increased by 5.11 percent.
"The decline in Jakarta’s poverty rate was influenced effective distribution of social welfare programs, such as rice assistance," said the BPS Jakarta social statistics chief Suryana. (LSA/KRN/DEA/E18/NTA)