World Bank report helpful but misguided

World Bank report helpful but misguided

By Paul Keys

JAKARTA (JP): The World Bank released a report last Monday
disputing some of the most commonsense assumptions about the
economic crisis. Much of the report may be valuable, even
pathbreaking.

The poverty data, for instance, uses locally scaled standards
rather than aggregate national indexes to appreciate the local
effects of the crisis. And the study convincingly proposes that
some rural areas, typically agricultural communities, are
prospering from the higher market prices.

But, despite admitting deep urban poverty, the report muddies
the point by suggesting it is the middle class -- not the poor --
which is most hurt by the crisis. More controversially, the
report suggests that previous studies on poverty from the
International Labor Organization, the United Nations and the
Indonesian government finessed their data for dramatic effect.

To be sure, in the scarifying days of mid-1998, sensational
speculation abounded. The normally tempered Emil Salim warned in
early June that the country was lurching toward mass starvation
amid withering domestic rice stocks and a fading rupiah.

Not to be left out, the World Bank stated in July 1998: "No
country in recent history, let alone one the size of Indonesia,
has ever suffered such a dramatic reversal of fortune."

The hyperboles of mid-1998 are forgivable and are readily
explained by the terrifying and uncertain times. The old
political certainties had collapsed, with Soeharto's resignation
and Habibie appearing unsuited to manage the crisis. Mass chaos
was glimpsed in the mid-May riots, raucous street protests became
daily business and, amid the discord, it was assumed the
flattened economy could only go flatter.

But the distortions of Monday's report are harder to
appreciate. Crucially, the World Bank fails to comprehend the
scale of hardship in our constituency, the beleaguered working
class and jobless.

According to the bank, the hardest-hit victims of the crisis
are the middle classes, whose jobs and incomes have been
shredded.

Stating the drop in income for the middle class is
proportionally greater than for the poor -- while statistically
true -- is misleading because it disregards the vast disparity
between the two groups from the outset. The middle class was
better positioned to absorb the blows, even if they were greater,
than was the working class.

The middle class, it should be remembered, enjoys some of the
highest rates of savings in the world. High interest rates helped
cushion the wallop from the crisis.

In contrast, few workers have any savings.

At the very bottom, child scavengers near the South Jakarta
bus station pick through rubbish for Rp 1,000 a day, it they are
lucky. Children hawking newspapers earn, maybe, Rp 2,500 daily
and child porters plying the transit terminals can bring home Rp
4,000 after a hard day's work.

For them and for the millions cast aside by the crisis, the
World Bank's brightened economic picture changes nothing. We urge
the World Bank to remember its pledge to "help mitigate the worst
impacts of the crisis".

The writer is communications officer at the Indonesian
Prosperity Labor Union, international department, Jakarta.