By Emilianus Yakob Sese Tolo*)
The Covid-19 pandemic has in general slowed down Indonesia’s economic growth. On the one hand, lockdown policies have pushed companies and small and medium businesses to cut their employees’ salaries, rationalize the number of their employees, and close down their enterprises.
On the other hand, lockdown policies have limited people’s activities outside their houses, which have led to a decrease in demands for goods and services.
Besides, the Covid-19 pandemic has also reduced Indonesia’s exports. In the first quarter of 2020, Indonesia’s exports to China, for example, experienced a contraction of around 6.8%, which can usually be around 15%. Hence the Indonesia’s economy grows merely 3%, the lowest since the 1998 economic crisis.
Furthermore, the Covid-19 pandemic has also brought about severe economic problems in rural Indonesia. Although the pandemic hit all villagers, the poor –landless peasants, poor peasants and informal workers– suffer the most.
The government has thus initiated to tackle economic problems in rural areas during the pandemic. Although the administration of President Jokowi has provided Rp405.1 billion to overcome the Covid-19 pandemic, the government has also encouraged village governments in Indonesia to utilize some of their village funds to help villagers during the pandemic.
However, the use of village funds could lead to increasing rural inequalities in Indonesia.
Rural Inequalities
The poor performance of the national economy does have impacts on Indonesia economies. If a 1% decline in national economic growth could increase 3% of the poverty rate, the poverty rate in Indonesia during the pandemic may have risen from around 9% to 15% due to the fact that its economic growth falls around 2% from its figure in 2019.
This problem during the pandemic put more economic pressure on the poor both in cities and villages in Indonesia. As poverty in Indonesia is concentrated in villages, this increased number of poverty rate could increase rural inequalities in Indonesia such as Flores.
Rural inequalities are rife in Indonesia as wealth, especially land, is concentrated in a few elites. By 2019, this concentration of wealth had contributed to the high Indonesia’s Gini index of 0.380. By the early 2000s, the Gini index of land ownership had increased from 0.50 in 1983 to 0.72 in 2003.
In rural Flores, for instance, land is now concentrated in the hands of elites. In 2011, based on Kompas journalistic expedition in Flores, Flori Seda in Boawae, rural Flores, only possessed 0.12 ha and he had to cultivate 0.7 ha of his landlord’s land to survive through sharecropping scheme.
The land concentration into the hands of landlords is rife in Flores, especially in Nagekeo and Ende. In Flores, local Catholic churches also own huge agricultural land in many parts of Flores in Maumere, Mataloko, Kisol and Soa.
In Ruteng and Maumere, Flores, around 50-60 different religious catholic congregations have bought strategic land both in cities and rural areas, including agricultural land. In 2018, in Mbay, Flores, I found some civil servants and politicians own huge rice fields (3-6 ha), although in the 1960s and 1970s the rice fields were aimed to be distributed to farmers and peasants in Mbay.
Some business people in Flores such as Thionghoa business people have invested in land and rice fields in Lembor and Mbay. As the land is concentrated on the hand of the few, Stein Kristiansen and Linda Sulistiawati in 2016 found out that 47% of land in Flores was underutilized as the elites have limited labour power to cultivate their land for agrarian capitalism has not that developed in rural Flores.
Land inequalities have led rural economies in Flores dependent on economic activities in cities. For instance, normally, informal workers in Flores, which Jan Breman in 1996 called footloose labour, have to juggle to work between villages and cities due to land inequalities.
During the Covid-19 pandemic, this footloose labour from Flores has to return home after loosing their jobs in cities. By early May 2020, around 1.6 million informal workers had left Jakarta to influx the countryside in Indonesia. The same trend has also occurred in other big cities in Indonesia such as Medan, Surabaya, Batam, Bali and Makassar.
Universal Basic Income
Social scientists, especially Victoria Fanggidae and Jonatan A Lassa in their article Sailing Through a Perfect Storm of Covid-19 with Universal Basic Income for Indonesia published in The Conversation in 2020, have so far contributed to finding solutions to in rural Indonesia through introducing Universal Basic Income (UBI) during the pandemic period.
In line with the Jokowi’s policy on the use of village funds during the Covid-19 pandemic, Victoria Fanggidae and Jonatan A Lassa claim that UBI for villagers in Indonesia could be deducted 30% to 35% from village funds (dana desa).
UBI may of course be helpful for poor peasants. In Flores, for example, most village governments are entitled to get Rp. 800 million to Rp.1.2 billion of village funds from the national government. This means that a village could allocate Rp. 360 million (30%) for UBI.
As a village in Flores has normally 1,500 people, every individual in the village would get monthly basic income of Rp. 80,000 through UBI scheme. If a family has 5 people, the family is entitled to receive monthly basic income of Rp. 400,000 during the pandemic.
This amount of money in a remote village in Flores is quite significant as a family could buy 40 kg rice to survive for a month.
However, although this social net through UBI may seem helpful for the poor, it can lead to increasing inequalities in rural Indonesia. It is because the economic ramifications during the Covid-19 pandemic in rural Indonesia have posed more problems to the poor than to the better-off families as has occurred in rural Flores.
The better-off families such as landlords, business people, and formal workers could survive during the pandemic as they have savings and still receive their salaries. Thus, UBI policy –which aims to give economic assistance to every individual in society regardless of their economic backgrounds– can in fact increase rural equalities in rural Indonesia during the Covid-19 pandemic.
*) Writer is a staff member of the Catholic Institute of Philosophy Ledalero, Maumere, Flores, East Nusa Tenggara, Eastern Indonesia
