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P
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F
OUR
Social Safety Nets in Indonesia:Analysis and Prospects*
*
The study was based on a paper prepared for ESCAP by Mr Puguh B. Irawan, Social Economist,Central Board of Statistics; and Mr Erman A. Rahman, Mr Haning Romdiati and Ms UzairSuhaimi, National Development Planning Agency (BAPPENAS), Indonesia. The views expressedare those of the authors only. They do not necessarily reflect the views of the United Nations orits Secretariat.
 
Strengthening Policies and Programmes on Social Safety Nets
 
I. BACKGROUNDA. Impacts of the 1997 economic crisis
The most severe social impact of the crisis in Indonesia was the worsening of povertythat, in fact, had improved quite impressively in the two and a half decades preceding the1997 economic crisis. Between 1976 and 1996, poverty had declined from around 40 percent to just over 11 per cent (Table 1). The success of poverty alleviation was coupled withclear improvements in such areas as education and health. However, the crisis reversedthese developments, raising the number of poor people to 49.5 million by December 1998from 34.5 million in 1996.The intensification of poverty was related to several factors: (a) the skyrocketingprices of basic commodities; (b) the contraction in production resulting in increases inunemployment; (c) the decline in household income in both urban and rural areas; and (d)the impact of El Niño.Since then, however, the number of poor people has fallen from 48.4 million inFebruary 1999 to 37.5 million in August 1999. This favourable turn of events was greatlyinfluenced by the deflating prices of food commodities as well as the steady, although slow,recovery of the economy in general. To a certain extent, it may also have been a positiveeffect of social safety net programmes, such as Special Market Operations for Rice (OPK)and the labour intensive programme.Notwithstanding the currently improved situation, the Government did not act quicklyenough in responding to the crisis when it erupted. It was stymied by an inadequatebureaucracy, the absence of early monitoring systems for social concerns, even by theunavailability of reliable and timely poverty statistics, as well as information on theidentification of the poor. It took some time, at least a full year, before it could mountmeaningful social safety net programmes.
B. Objectives of the study
The present country study has the following objectives:(a)To assess the adequacy of policy formulation of social safety nets in Indonesia;(b)To assess the efficacy of social safety net programme implementation; and(c)To recommend measures to strengthen the responsiveness of social safety netprogrammes to short-term emergencies as well as to long-term strategies.
Social Safety Nets in Indonesia: Analysis and Prospects
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