Poverty and the challenge of economic mobility

After 81 years of independence, development success is still often measured by how many people manage to escape poverty.

The latest data show that this achievement continues to improve. In March 2026, Statistics Indonesia (BPS) recorded a poverty rate of 8.07 percent (22.93 million people), down 0.18 percentage points, or around 430,000 people, compared with September 2025.

Not only that, the Poverty Depth Index (P1) also fell from 1.290 to 1.268, while the Poverty Severity Index (P2) declined from 0.303 to 0.291. Statistically, these changes indicate that the average expenditure of the poor is drawing closer to the poverty line and that expenditure inequality among the poor is also improving.

This achievement deserves appreciation. However, the issue is no longer simply how to lift households out of poverty, but how to ensure that such improvements can be sustained and become a foundation for a higher level of welfare.

The poverty line is one important reference point in understanding this issue. In March 2026, the national poverty line was recorded at Rp669,235 per capita per month, an increase of 4.33 percent compared with September 2025. The composition of this poverty line is still dominated by food needs, which account for 74.70 percent. This shows that the resources of low-expenditure households are still largely absorbed by basic needs. The room to save, acquire assets, finance education, or make investments therefore remains limited.

This condition matters because improvements in welfare are not determined solely by the size of income or expenditure at a single point in time. Equally important is the ability of households to convert additional resources into economic capital for the future.

When most income is spent on basic needs, an increase in income does not necessarily improve a household’s economic capacity immediately. Most of it is used merely to maintain consumption at a better level, while the ability to build savings and assets remains limited.

Households whose expenditure lies slightly above the poverty line are indeed no longer classified as poor statistically, but that position does not necessarily reflect strong economic capacity.

With limited reserves, job loss, rising staple food prices, health costs, or education needs can undermine a household’s ability to maintain consumption. Therefore, poverty reduction needs to be accompanied by strengthened economic resilience so that the improvement can endure.

This is where it becomes important to distinguish between a change in poverty status and a change in economic capacity. A change in status can occur when household expenditure crosses a certain threshold, whereas an increase in economic capacity requires a longer process.