Poverty and Inequality Analysis
Welcome to the first edition of the SMERU Newsletter in our second year as an independent organization. This edition focuses on various issues concerning the determination of minimum wages. From April to Oktober 2001, SMERU conducted a major study in this area, using both qualitative and quantitative approaches. A summary of the main findings of our work is presented in this edition.
The first half of this year has flown by. We have experienced a host of social, economic, legal and political problems that have left us all feeling exhausted. Yet, as a nation we still have to solve another equally crucial problem, the question of poverty. This edition deliberately sets out to highlight poverty as an important issue which must not be allowed to become a secondary priority on our national agenda.
This study provides an overview of inequality trends in Indonesia for the period from 1984 to 2002. Different from previous studies on inequality in Indonesia, we use data on household consumption expenditure that takes into account price differentials across regions.
Many people reminisce about or associate a certain period of their life with the price of rice at that particular time, especially when the rice price skyrocketed. The wife of a factory worker recollects: "Then, my husband's salary was hardly enough to buy 25kg of rice. How could we possibly survive?"
Before the onset of the Asian financial crisis in 1997, the Indonesian economy was growing quickly; as a result, poverty fell significantly. Other welfare indicators, such as the infant mortality rate, the school enrolment rate and life expectancy at birth, were also showing improvements. The economic crisis that engulfed Indonesia in 1997–98 reversed these trends, resulting in a large increase in poverty in 1999.
