Strong Political Will Needed to Resolve Structural Inequality
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JAKARTA, KOMPAS —Post-reform democratization that has been ongoing for more than 20 years has yet to resolve inequality in access to power. This leads to persistent socio-economic inequality. The inability to resolve structural inequality may lead to social dissatisfaction in the future.
Based on National Social and Economic Surveys (Susenas) in the past decade, Indonesia’s gini ratio since 2010 has been fluctuating on an upward curve, reaching the highest level of 0.414 in September 2014. This then decreased and reached the level of 0.384 in September 2018.
The University of Melbourne’s Asia Institute director Vedi R Hadiz said that 2016 World Bank data showed that 1 percent of Indonesians controlled 50 percent of the country’s wealth. This reflects the inequality in Indonesia’s wealth distribution.
“Democracy’s failure to resolve this inequality problem has led to the perception that social injustice is reproduced systematically in power relations,” Vedi said at a discussion at Kompas office in Jakarta on Monday (8/7/2019).
The discussion titled “Indonesian Inequalities” was held in collaboration between Kompas and the University of Melbourne’s Asia Institute. Other speakers in the discussion were John Murphy, Rachel Diprose and Ariane J Utomo. The University of Indonesia’s Communications Department lecturer Inaya Rakhmani and SMERU Research Institute researcher Athia Yumna attended as panelists.
Vedi said that policies and strong political will from the government would be necessary to resolve structural inequalities. One thing the government can do is to use fiscal instruments to reduce social inequalities. This is doable as the government has access to the market and regulations.
Anger
Efforts to resolve structural inequalities are important as this can affect social relations.
Inaya said that structural inequalities had led to citizens, especially the educated middle class, to develop expectations not lining up with reality. Even when they work hard, their vertical mobility is constrained by certain “ceilings”. The presence of impenetrable boundaries leads to frustration and anger. This is fertile soil for the growth of identity politics.
Athia explained that there are multiple dimensions of inequalities in Indonesia involving economic and non-economic sectors. These includes vertical inequality involving individuals, horizontal inequality between social groups and spatial inequality linked to regions. “Increasing inequality will decrease economic growth and its strength to reduce poverty. This will also increase the possibility of social conflicts,” Athia said.
As more social and economic activities are conducted digitally, opportunities are abound that social inequalities can be reduced. However, at the same time, this can also widen inequalities. Vedi said that technology could facilitate positive things, such as the growth of small businesses. However, at the same time, there is also persistent inequality of access to information technology. It is not impossible that digital inequalities will emerge as reflections of persistent inequalities in the real world.
Social security
Socio-economic inequalities can be reduced by social security, as social security aims to redistribute wealth.
John Murphy said that the Indonesian government since the era of President Soekarno has issued three waves of social assistance policies to reduce inequalities. First, there was the health insurance and pension for civil servants, army personnel and formal sector workers. Then, there is the Social Safety Net program in the democracy era. Lastly, there is the National Social Security System carried out by the Social Security Agency (BPJS).
John said that the first wave of social assistance scheme aimed to bind certain functional groups to the government while also appreciating their loyalty to the state. Subsequent social assistance programs, he said, significantly reduce poverty in Indonesia.
According to him, pension funds for the poor and informal sector workers can reduce poverty. This will require relatively equal funding to the pension fund for civil servants. (SAN)