indo01

Incomes shrink for 75% of Indonesian homes

JAKARTA: Three out of four Indonesian households experienced an income reduction last year as breadwinners either lost jobs, switched to informal jobs or closed businesses during the pandemic while government assistance for small businesses remained limited, a recent survey has found.

The majority of the affected households were located in urban areas and had school-aged children whose education and mental health were strained, according to the joint survey by the SMERU Research Institute, the United Nations Development Programme, the United Nations Children’s Fund (Unicef) and the Australia-Indonesia Partnership for Economic Development.

The survey involved 12,216 households and was conducted from October to November 2020 in all 34 provinces in the country.

“This survey confirms that the impact of the Covid-19 pandemic has been very severe on household finances and is likely to continue in 2021, ” Athia Yumna, SMERU’s deputy director of research and outreach, said at a virtual launch of the survey.

Citing an estimate from Unicef, she added that the pandemic’s impact on households with children could push more than two million children into poverty.

The survey sheds more light on what happened behind the scenes in Indonesian homes as household consumption contracted 2.63% in 2020, driving the country to its first annual gross domestic product (GDP) contraction since the 1998 Asian financial crisis.

Statistics Indonesia data shows that the economic fallout from Covid-19 also increased the poverty rate by 0.97 percentage points year-on-year (y-o-y) to 10.19% in September 2020, undoing roughly three years of progress.

The urban poverty rate saw an annual increase of 1.32 percentage points, more than double the increase in rural poverty.

The joint study also found that around half of all surveyed households did not have any savings, which led around one-third to sell or pawn their personal property and around one-quarter to borrow money from relatives or friends to survive.

The pandemic also caused 14% of breadwinners to switch jobs, wherein half of them switched from the formal sector to the informal sector. — The Jakarta Post/ANN