Social safety net<\/p>\n
World Bank president James Wolfensohn was not exaggerating
\nwhen he told analysts and leaders of non-governmental
\norganizations here on Wednesday that the economic crisis now
\nfacing Indonesia has reached the point of life or death.<\/p>\n
But he also put his money where his mouth is by announcing a
\nWorld Bank funded crash program, worth US$100 million, to create
\n75 million work-days of low wage jobs this year, through labor
\nintensive projects. The bank is also reallocating $1.2 billion in
\ncommitments to Indonesia, as yet unspent, for the procurement of
\nbasic food staples, medicines and job-creation projects.<\/p>\n
Wolfensohn rightly saw the urgency of placing a social safety
\nnet below the most vulnerable elements of society. The blunt fact
\nis that current reforms aimed at setting the economy on a path to
\nrecovery, cannot run smoothly without adequate, short-term
\nprograms aimed at easing poverty induced by the crisis.<\/p>\n
Sharply rising prices have eroded purchasing power at
\nprecisely the same time as millions of newly redundant workers
\nare joining ranks of the unemployed. The 6.88 percent inflation
\nin January alone, when most basic food commodities, fuel oils and
\npublic utilities were still subsidized, portends more devastating
\ninflationary pressures over coming weeks.<\/p>\n
The government, as part of the reform measures, must slash
\nsubsidies on all food staples (excluding rice), fuel oils and
\nelectricity by April. This in turn will trigger a chain of price
\nrises across the economy, at great risk of social and political
\nunrest. Sporadic rioting in several towns in Java and Sulawesi,
\nin protest at rising prices, may be a foretaste of what is to
\ncome.<\/p>\n
The Indonesian government is aware of the potential for a
\nsocial backlash in protest at painful reform measures, and has
\nacted to head this off by creating temporary labor intensive
\nworks programs in Jakarta. This, however, falls far short of a
\nremedy for the unemployment problem.<\/p>\n
Wolfensohn's visit was timely, and brought with it
\nconsiderable World Bank experience of poverty alleviation in the
\ndeveloping world. His announcement that World Bank funding for
\nlabor intensive employment projects will be accelerated should
\nhelp to create more than 75 million work-days of low wage jobs. A
\nshrewd move, this step will help bolster public support for the
\nIMF-assisted reform package, which is expected to cause further
\nhardship over the next two years.<\/p>\n
Reallocation of over $1 billion in funds committed to, but not
\nyet disbursed, in Indonesia, for the procurement of food,
\nmedicines, farm inputs and job-creation works will further curb
\nthe social impact of the adjustments that have to be made.<\/p>\n
However, the temporary nature of the job-creation and social-
\nsecurity schemes must not be overlooked. These programs, though
\nnecessary, are not a sustainable way to alleviate poverty. That
\ncan only be achieved with the restoration of sound economic
\ngrowth. Thoughts of this cannot be entertained until the
\nconfidence of domestic and foreign investors is restored.<\/p>\n
Restoring confidence in the economy requires structural
\nreforms, a strengthening of the financial sector and good
\ngovernance in the private and public sectors. This can be
\nachieved through just enforcement of the law, and greater
\naccountability and transparency. Programs focused on these
\nproblems are designed to place the economy on a sound footing,
\nand will absorb the bulk of the $4.5 billion pledged by the World
\nBank and $10.5 billion pledged by the IMF, under the $43 billion
\nrescue package arranged to assist our economy over the next three
\nyears.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/social-safety-net-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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