Indef Sees Poverty Rate Rising to 10.34 Percent in September

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  • People do their activities in a slum on the banks of Ciliwung River in Manggarai, Jakarta, Wednesday, April 15, 2020. ANTARA FOTO/M Risyal Hidayat

    People do their activities in a slum on the banks of Ciliwung River in Manggarai, Jakarta, Wednesday, April 15, 2020. ANTARA FOTO/M Risyal Hidayat

    TEMPO.CO, JakartaThe Institute for Development of Economics and Finance (Indef) has predicted that Indonesia's poverty rate may rise to 10.34 percent in September, 2020 in the wake of the COVID-19 pandemic.

    “The government has been trying to reduce the poverty rate to single digits, but due to COVID-19, the rate has re-increased to double digits,” Indef researcher Rusli Abdullah said at an online discussion on Tuesday.

    According to the Central Bureau of Statistics (BPS), between September, 2019 and March, 2020, the poverty rate stood at 9.78 percent of the population, or about 26.42 million people.

    Rusli predicted that the rate could increase by 0.56 percent, or about 1.63 million.

    "The (increase in the) poverty rate is equal to the decline in the rate in 1.5 years — from March, 2018 to September, 2019," he added.

    During President Joko Widodo’s first term in 2014-2019, the poverty rate had declined by 1.74 percent (2.93 million), or 0.34 percent annually on average, Rusli informed.

    As the impact of the COVID-19 pandemic is expected to be felt in 2021, the government's target of reducing the poverty rate to 9.2 percent would be too optimistic, Rusli opined.

    It would be more realistic to set the target at 9.70 percent, he said.

    The 2021 draft state budget has predicted an increase in unemployment to a range of 7.7 - 9.1 percent, while the 2020 state budget has set the unemployment target in a range of 4.88 - 5 percent.

    This would be the highest increase in a decade, he said.

    The government has issued some policies to mitigate the impact of the pandemic, including disbursal of aid to formal workers earning less than Rp5 million.

    According to Rusli, the government’s aid disbursement should also cover informal workers.

    Informal workers account for 56.5 percent of the total workforce in Indonesia, compared to formal workers who make up 43.5 percent, or about 52 million, of the labour force, according to BPS data.

    Read also: Indonesia's Poverty Rate to Touch 11.5 Percent amid COVID-19: VP

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