Bappenas Ambitious to Curb Indonesia's Poverty and Unemployment Rates

Bappenas aims to reduce Indonesia's unemployment rate from 6.18 percent of the labor force in 2015 to the range of 5.2 - 5.5 percent in 2016. However, Prijambodo added that this target is very ambitious - especially considering stagnation in the country's manufacturing sector and tertiary industry - and requires optimal government spending as well as plenty of investment from the private sector. Meanwhile, Bappenas targets to reduce the country's poverty rate to the range of 9 - 10 percent of the population in 2016. The latest data from BPS indicate that there were 28.6 million people living below the poverty line (set by the government), or 11.2 percent of the total population in March 2015.

Based on the latest data released by Indonesia's statistics agency (BPS) there were 7.56 million unemployed people in Indonesia in August 2015 (6.18 percent of the total labor force). The figure had risen by 320,000 people during the preceding six months due to Indonesia's economic slowdown and weather conditions. Indonesia's GDP growth slowed to a six-year low of 4.67 percent (y/y) in the second quarter of 2015 before slightly accelerating to 4.73 percent (y/y) in the third quarter. Meanwhile, unconducive weather conditions caused a (temporary) drop in employment in Indonesia's agriculture sector. Data from BPS show that 37.75 million Indonesians worked in the agriculture sector in August 2015, down from 40.12 million people in February 2015.

Prijambodo said that the government's decision to increase the Village Fund Budget and the Special Allocation Fund in the 2016 State Budget should manage to combat poverty and unemployment in the rural regions of Indonesia. Government spending on Village Funds are projected to increase from IDR 20.8 trillion (USD $1.5 billion) in the 2015 State Budget to IDR 46 trillion (USD $3.4 billion) in the 2016 State Budget. The funds should be spent on infrastructure development in the rural areas in order to improve connectivity hence reducing logistics costs.

Soon, the government will unveil the seventh economic policy package. With the new package it aims to boost people's purchasing power by focusing on the village economy. The package aims to (1) make the use of village funds - disbursed by the central government - more effective, and (2) improving logistics at the village level.

Indonesia's Unemployment Statistics:

	2011	2012	2013	2014	2015
Labor Force	119,399,375	120,320,000	120,170,000	121,870,000	122,380,000
- Working	111,281,744	113,010,000	112,760,000	114,630,000	114,820,000
- Unemployed	8,117,631	7,310,000	7,410,000	7,240,000	7,560,000

 

	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015
Unemployment (% of labor force)	10.3	9.1	8.4	7.9	7.1	6.6	6.1	6.2	5.9	6.2

^{Source: Statistics Indonesia (BPS)}

The government will also continue with its social safety programs. It has allocated IDR 21 trillion (approx. USD $1.6 billion) for food subsidies for the poor, in particularly used for the raskin (acronym of beras miskin which means rice for the poor) program. Through this program, around 15.5 million Indonesian households should be able to purchase rice for a subsidized price of IDR 1.600 per kilogram. However, distribution of raskin remains problematic and the product does not always go to the poor people that are entitled to it.

Another social assistance program is the Family Hope Program (Program Keluarga Harapan, abbreviated PKH), a conditional cash transfer program for the 5.5 million poorest people in Indonesia. The government prepared IDR 8.7 trillion (USD $644 million) for this program.

Indonesian Poverty and Inequality Statistics:

	2007	2008	2009	2010	2011	2012	2013	2014	2015
Relative Poverty (% of population)	16.6	15.4	14.2	13.3	12.5	11.7	11.5	11.0	11.2
Absolute Poverty (in millions)	37	35	33	31	30	29	29	28	29

^{Source: Statistics Indonesia}

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