Nonfiction in response to Decent Work and Economic Growth
August 2018

Economic Growth in Indonesia

By Grace Muresan

1/5

On June 29, I took a trip to Indonesia to visit my mother’s family. They live in Malang, the second most populated city in East Java. As we drove through the motorcycle-clogged streets I noticed hundreds of tiny restaurants, street peddlers, people delivering goods, people on the side of a road playing guitar or selling snacks, bicycle carts, children selling street food, traffic regulators (not government controlled) and more. It was very interesting that through all this economic bustle, I couldn’t count more than 3 people begging every car ride. In Indonesia and many other developing countries, working class people will do any job, legal, illegal, unsustainable, dangerous, or all of these.

Based on the published average salaries by WageIndicator.com, I consider these categories of classes in Indonesia correspond to these legal jobs:

  • Upper class: Factory/Hospital owners, Well qualified doctors

  • Middle class: Restaurant/shop owners, Bank accountants, Doctors, Engineers

  • Working class category: Fishermen, Delivery workers, Factory workers

  • Lower working-class category: Household servants, Drivers, Street jobs, Factory workers

 

The United Nations Development Program (UNDP) counts Indonesia as one of the top 10 biggest upward developers in UNDP’s Human Development Index, decreasing the national poverty line from 19% to 11% between year 2000 and year 2015.

Despite many challenges that the country already faces, including extremely diverse cultures, equality, remote areas, and corruption, Indonesia’s economy has placed as the 16th biggest economy in the world and is expected to be among the world’s top 10 largest by 2025. There are more challenges that come with a growing economy, like increased inequalities and even more that become a bigger threat as time goes on, such as deforestation and greenhouse gas emissions. To reach the goal of Decent Work and Sustainable Economic Growth, Indonesia needs to effectively implement of the policies which requires the changing of communities’ behavior towards sustainable consumption and production; which I may write in a different article.

In order to give examples of real people, for this article, I interviewed a person of each class, respectively.

The first person I spoke to was a factory owner in Malang. Her factory makes furniture and has been so successful that it has secured its position as one of the main suppliers of furniture/home décor companies for other countries, such as Pottery Barn and Williams-Sonoma. Not only is her factory doing very well, the workers there are also paid fairly. Weavers are paid by how many items they make, so if they want to make more money, they must work harder or longer hours. The economic growth leads to the decent work concept of “longer work means more money.”

The second person was a district manager of a pharmaceutical company. He doesn’t get paid that much per month (IDR 5 million, which is approximately USD 347), but his bonus from getting doctors to prescribe his company’s medicine is sizable. Corruption can occur in cases like these; if a doctor mostly buys a certain pharmacy’s medicine, the manager will get a pay raise. Usually doctors who are not very successful are bribed into these kinds of deals for money or recommendations. The manager’s economic growth stems from his ability to navigate his relationships with the medical doctors that he sells his products to.

The third person I interviewed was a journalist for Jawa Pos, the main newspaper of East Java. He said that he enjoys his work, but every year a new topic to write about is picked for him, and sometimes the work is overwhelming. There are two or more subcategories of the working class, and this journalist is in the first. I could not find out how much he gets paid for his job, but I would guess it could not be more than IDR 3 million per month. An article by Muchtar and Masduki (2016) pointed out that because of this relatively low salary, only around 70% of Indonesian journalists are writing full-time. The other 30% had other jobs as supplemental income.  

In Padang, a city in Sumatra, I visited a small coffee shop where coffee was being ground and packaged right in the back room. A man was roasting the coffee right there, breathing smoke, with little more than a piece of cloth to cover his face! Another person was grinding coffee in a manually churned machine, and he was breathing coffee dust. In my opinion, there should be more regulations on working condition for all jobs all over the world. If your morning cup of joe is worth a worker in Sumatra’s life, something needs to be changed. Moreover, his fee was only IDR 5 thousand per hour, which would only be enough to buy one meal, not even close to enough if he had a wife and two little children to feed.

Despite the former majority of the working class in Indonesia and many other developing countries, the middle class is growing very quickly in Indonesia. Expanding this population group can help boost economic growth and broaden prosperity. Following a massive reduction in Indonesia’s poverty rate in the last two decades, one in every five Indonesians now belong to the middle-class group.

 

This rapid growth of Indonesia’s middle class also leads to the growth of the consuming class. With a projected annual growth rate of 5-6 %, the number of consuming class is expected to reach around 85 million in 2020 and around 135 million in 2030. This growing consuming class can lead to a growing market, because more people can buy more freely, although two main challenges were still tough to solve: the massive geographical boundaries and the corruption culture.

 

The personal examples that I put in this article covers some of the main supporters of Indonesia’s middle-class industries: manufacture, agriculture, and trade. Despite the hardships for individuals, and the challenges of the country, the working class is very important for Indonesia’s economy. There are many aspects which need improvement, but the most significant issue is in helping people get decent work for their personal economic growth, which will ultimately and collectively lead to the country’s financial prosperity.

On a personal level, I am concerned about the lack of regulations for workers’ welfare. Next time you drink coffee that was made in or comes from Indonesia, imagine how hard somebody is working to make the bean roast that fills your cup. Savor every last drop of the creamy, fruity flavor, and know that by buying the coffee you have helped that business (and person) a little.

 

Sources:

https://jatim.tribunnews.com/2017/02/14/lima-tahun-penduduk-kota-malang-bertambah-50116-orang

https://wageindicator.org/salary/minimum-wage/indonesia/

https://www.id.undp.org/content/indonesia/en/home/countryinfo.html

https://sustainabledevelopment.un.org/memberstates/indonesia

https://www.salaryexpert.com/salary/job/magazine-journalist/indonesia/

https://epub.ub.uni-muenchen.de/30120/1/Country_report_Indonesia.pdf

https://www.worldbank.org/en/news/press-release/2017/12/04/indonesia-middle-class-vital-for-the-country-future

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