Minimum Wage Earners in Decile 10? Here is the Explanation

Jakarta, CNBC Indonesia - The government’s decision to open access for the public to check their welfare decile means that individuals can now identify their position within various prosperity groups.

On social media, citizens have even been publishing their deciles obtained from the Ministry of Social Affairs’ data portal. Some have claimed that despite earning only the minimum wage (UMR), they are categorised in Decile 10, a group typically reserved for conglomerates or high-ranking officials.

However, deciles are not measured based on individual income alone. Numerous elements form this metric, encompassing socio-economic variables, including routine expenditure.

Turro Wongkaren, Vice Chairman of the Statistical Society Forum, stated that in the field of statistics, expenditure data is utilised when data collectors lack the ability to obtain individual income data from the public.

“Because we do not have income data, we usually use expenditure data. It is as simple as that,” Turpend said when contacted by CNBC Indonesia on Friday.

According to Turro, accessing income data in Indonesia is difficult because not everyone possesses a financial account or works in the formal sector, where income is fixed and clearly recorded over a specific period.

“Many people do not have continuous formal income. You might see many ordinary people in Jakarta who have accounts, but not everyone does,” Turro noted.

Consequently, decile measurement employs the Proxy Means Test (PMT) method to estimate family welfare levels based on observable characteristics. This includes individual details such as occupation and education, housing conditions, electricity capacity, and asset ownership.

These variables are then ranked into groups known as Deciles 1-10, considering various socio-economic characteristics collectively, including housing conditions, drinking water sources, cooking fuel and energy, asset ownership, electricity consumption, family composition, education, occupation, health, and disability.

“So, the proxy means test is essentially a statistical method because we do not have actual income data; to predict your expenditure, decile rankings are created based on that expenditure,” he explained.

Nevertheless, Turro believes that the government should strive to use actual income measurements to assess social conditions. While clear data for this is not yet available, he suggested that tax data could be utilised.

“I agree with that; it should be used as shared information, incorporating various sources, such as electricity usage and tax data,” said Turro.

“The purpose of tax data is not just to tax a specific value, but rather the opposite. We want to know approximately what their income is. Therefore, there are various venues to collect this information,” he emphasised.

As is known, the decile is one of the metrics contained within the National Single Socio-Economic Data (DTSEN).

DTSEN, according to Turro, is the result of integrating datasets consisting of the Integrated Social Welfare Data (DTKS), the Targeting of Extreme Poverty Eradication Acceleration (P3KE), and the Socio-Economic Registration (Regsosek).

This data is then enriched with various administrative data and periodically synchronised with population data managed by the Directorate General of Population and Civil Registration (Dirjen Dukcapil) under the Ministry of Home Affairs.