Social Assistance not Enough, Creates more Jobs!

There are 9.77 million people unemployed and 27.55 million people living in poverty. Social assis-tance alone is inadequate to bring down poverty; hence, it must be followed by job creation.

KOMPAS/RUNIK SRI ASTUTI

Thousands of job seekers are hunting for job vacancies at the Sidoarjo job fair, Wednesday (25/11/2020).

Jakarta, Kompas – During the COVID-19 pandemic, while unemployment and poverty increases, the inequality gap has also widened.

Social assistance serves as a cushion for the lower-middle class to survive the pandemic. But social assistance alone is no longer enough.

The government should create jobs, high quality job opportunities in the productive sector. By creating more jobs, the rise in poverty can be brought to a halt.

Also read: Transformation of Social Welfare System

According to Statistics Indonesia (BPS) data issued on Monday, Indonesia’s poverty rate in September last year was 10.19 percent. The country has returned to a double digit poverty rate for the first time since March 2018.

The number of poor people in Indonesia was recorded at 27.55 million, an increase of 1.13 million from March 2020 or 2.76 percent year-on-year (yoy) from September 2019.

The rate increased because 29.12 million people had been adversely affected by the pandemic, including 2.56 people who lost their job during the health crisis. Consequently, as of August 2020 the number of unemployed people in Indonesia increased to 9.77 million people.

DINAS SOSIAL JEMBER

The Health Team and Jember Social Service Officers made a visit to check the health of a number of homeless people who were nurtured and cared for in the Social Lodge Environment (LIPONSOS) Jember.

Gini ratio, which reflects inequality in spending among the top and the bottom, increased to 3.85 in September 2020, worse than in September 2019 at 0.38 and March 2020 at 0.381. Gini ratio is recorded within the range of 0 to 1, with a higher figure indicating worsening inequality. Indonesia’s Gini ratio widened during the pandemic, moving closer to 1.

Institute for Development of Economics and Finance (Indef) executive director Tauhid Ahmad said more state spending was needed to stimulate the production sector and create more jobs. However, the current spending policy is not directed toward labor-intensive sectors.

Also read: Make Sure Social Assistance Is Well Disbursed

“There should be more allocation for agriculture, public works or transportation sectors. Government procurements must involve local micro, small, and medium enterprises (MSMEs), not focusing on big corporations or state-owned enterprises (SOEs) to create greater multiplier effect,” He said.

According to BPS data, out of 128.45 million workers in August 2020, around 29.76 percent or 38.23 million workers worked in agriculture, forestry, and fishery sectors. Employment share in agriculture sector was the largest compared to other sectors.

Government procurements must involve local micro, small, and medium enterprises (MSMEs), not focusing on big corporations or state-owned enterprises (SOEs) to create greater multiplier effect.

Tauhid added that the other way to create more job opportunities was by maintaining household spending. The government’s social assistance program plays a big role in maintaining people’s purchasing power. But the governance of social assistance should be improved to improve effectiveness.

Bank Danamon economist Wisnu Wardhana said people’s purchasing power and household spending will get a boost from gradual economic recovery.

KOMPAS/I GUSTI AGUNG BAGUS ANGGA PUTRA

Dozens of social aid recipients queued at Amalina Islamic Elementary School, Pondok Aren, South Tangerang City, Banten, Wednesday (13/1/2021).

A well-thought plan

Indonesian Chamber of Commerce and Industry (Kadin) vice chairman on manpower and industry relations Anton J. Supit said the government should initiate with a well-thought plan to create employment opportunities. Law No. 11/2020 on Job Creation would not be able to realize its potential without a comprehensive road map to reform and transform the economy.

Anton explained that the government should make a comprehensive economic policy that addresses issues in investment, industrial development, international trade, as well as bureaucratic bottlenecks created by inconsistent policy. Moreover, job creation could not be achieved without a master plan in automation and digitization.

Also read: Bridging the Financial and Real Sectors

“We need to create new job opportunities as much as possible. However, how are we going to achieve this objective without addressing the lingering issues? It is like repairing a house; taking care of a room alone will not suffice. Everything must be taken care of at once,” Anton said.

The strategy to boost investment through the new Job Creation Law must be concentrated on sec-tors that have the highest labor absorption rate. High investment value should not become the sole target. So, the government should be selective in stimulating the economy, concentrating in labor-intensive industry as well as export-oriented industry to create more new employment opportunities.

We need to create new job opportunities as much as possible.

According to Bank Indonesia data, there are six sectors that contribute highly to economic growth and export. The six sectors include food and beverages industry; chemical, pharmaceutical, and herbal industry; forestry and logging industry; horticulture; plantation; and metal industry.

BPS head Suhariyanto said in a teleconference that poverty had increased due to economic restrictions during the pandemic. However, the condition is not as worse as many thinktanks predicted.

“There was an increase but not as high as previously predicted. It shows that the government’s social assistance program during the pandemic helped the lower-middle income,” He said.

The National Development Planning Agency (Bappenas) previously projected an increase in the poverty rate to the range of 9.7 to 10.2 percent by the end of the year, equivalent to a poverty head-count of 26.2 million to 27.5 million people.

Also read: Muddled Data Causes Social Aid Confusion

By definition, poor people has average consumption per capita below the poverty line. In September 2020, the poverty line was estimated at Rp 458,947 per capita per month.

Papua has the highest poverty rate 26.8 percent, and Bali the lowest at 4.45 percent.

Bali BPS head Hanif Yahya said the number of poor people in the province as of September 2020 were 196,920 people. The headcount poverty number increased by 31,730 people from March 2020. The pandemic hit Bali’s tourism sector hard, particularly in the hotel and accommodation sector, causing mass lay-offs and significant drop in income.

Jakarta BPS head Buyung Airlangga explained that the pandemic had caused an increase in poverty head count at the capital. The capital’s poverty headcount increased to 497,000 people in September 2020, from 481,000 people in March 2020.

This article was translated by Lionel Priyadi.