Solving imminent social conflict

By Makmur Keliat

SURABAYA (JP): A variety of comments have been made on the origins of the ongoing monetary crisis. Analysis has suggested anything ranging from economic mismanagement to political misrule, from cultural weakness to structural impediments, from irrational reactions, such as panic, to hidden political agendas.

Though differing in approach, all analysts seem to have come to the conclusion that, from a macro-economic point of view, Indonesia is embattled and has a difficult road to recovery.

Prospects are gloomy and the IMF has forecast no growth in the Indonesian economy this year. It is likely that the whole population will suffer in some way from the current situation, but exactly how, and to what extent, depends on the social grouping to which an individual belongs.

For those belonging to the 200 or so elite, wealthy families, who give their popular names to giant conglomerates, the impact will be restricted to a curb on their salubrious lifestyles.

To the middle classes, the monetary crisis will have a more noticeable impact on their daily life. The drastic loss in value of the rupiah against the U.S. dollar, leading to widely reported price increases, may compel the middle classes to adopt a more spartan daily diet. Meat, other sources of protein such as eggs, even rice have risen sharply in price. Rough calculations show the average rise in price for those items to be 60 percent.

For the nations 4.1 million civil servants, staunch members of the lower middle classes, the situation is even worse. The government has decided not to raise civil service pay.

Since the crisis broke, the value of salaries has dropped, if measured in U.S. dollars. A teacher with eight years experience in a state university earns a monthly salary of Rp 400,000. In June 1997, this was approximately US$180. Now, at an exchange rate of Rp 10,000 to the dollar, the salary is equivalent to $40.

For casual factory workers the situation is even more desperate. The official minimum wage, at Rp 3,500 per day, has become insignificant in dollar terms, falling from $1.5 in July to three cents at todays exchange rates.

Furthermore, reports suggest that over one million workers have been made redundant since the economy stagnated.

In this context there are several questions that the government may be reluctant to answer regarding the issue of national discipline, national productivity and human resources.

First, how does the government expect civil servants to work ethically and with discipline as their standard of living drops?

Second, how can the target of clean and honest government be achieved if civil service pay is not increased?

Among the public it is an open secret that before the monetary crisis, civil servants pay could feed them and their families for two weeks of the month, now it is only one.

Third, how does the government expect to increase the productivity of our workers if the level of their wage, in dollar terms, is declining?

Even before the start of the monetary crisis in July 1997, the productivity of Indonesian workers was considered low, partly a result of low wages. It was estimated that 38 percent of the workforce worked less than 35 hours a week.

Fourth, how can we develop human resources in this era of global competition if the majority of our population struggle to buy milk, beef and chicken -- vital nourishment for their children.

Accordingly, it is fair to say that the current economic situation places great strain on our society, creates potential for political instability and the even more daunting prospect of social conflict.

Inequality in the distribution of income has been a notorious feature of economic development over the past thirty years.

Given that the rich and powerful families are the least affected in the current crisis, it is highly likely that the gulf between rich and poor will grow.

This in turn could sow the seeds of social discontent, even hatred, among other strata in society, including the urban middle class.

The urban middle class, which has risen and prospered over the last 30 years, now finds that the gains it made are receding rapidly.

Recent massive job cuts also effect younger members of the urban middle class, since it will now be difficult for new graduates to find jobs matching their expectations and qualifications. Unemployment among an educated young generation will encourage further disaffection.

A similar situation will face the rural poor, who migrated to urban areas during the high growth years. They will begin to find that shanty towns are no longer promising places from where jobs can be sought. After the realization of this harsh fact has dawned, the working class may then become increasingly militant in efforts to improve living standards.

The situation will be worsened if unscrupulous members of the ruling elite, protecting vested interests, seek to manipulate the situation and search for scapegoats of different race or religion. If this happen then sporadic riots and looting already seen will grow to a scale not seen for decades.

The final question for the government is what should be done?

Policy makers are limited in the options they have at their disposal for dowsing social conflict. However, one such option is the provision of a social safety net aimed at alleviating poverty.

Acknowledging the need for a social safety net represents a departure from the notion that market forces are beneficial for the poor. Lacking capital and with poor quality human resources, the impoverished people of our country will see little improvement in their standard of living if the task is left to market forces alone. A positive state role is needed to assist the rural and urban poor and to work towards a more equitable distribution of national income.

For Indonesia, this means poverty alleviation programs must be continued, intensified and expanded. The government must also involve NGOs more actively in the implementation and evaluation of the programs. NGOs have abundant practical experience in alleviating poverty and their involvement as an active partner is necessary to prevent the misuse of financial resources, allocated to the programs, by the state apparatus.

The writer is a teacher at the International Relations Department, School of Social and Political Sciences, Airlangga University, Surabaya.

Window: The situation will be worsened if unscrupulous members of the ruling elite, protecting vested interests, seek to manipulate the situation and search for scapegoats of different race or religion.