Precariat: The vulnerable middle class
Last month, I attended a lecture by Guy Standing, a prominent British academic cum social activist. His fame was largely built around his book The Precariat: The New Dangerous Class written in 2011 out of a growing concern for the specter of burgeoning temporary workers with neither careers nor job security.
The book takes London as its main setting and looks at industrialized cities in the UK and European countries post the hard-hitting global financial crisis hit hard in 2008.
He warned of the fragility of the precariat group whilst urging politicians and policymakers to take serious concern regarding this worrying trend amid widening inequality.
Within the context of Indonesia, vulnerability is at the heart of the social welfare problem. As early as the mid-20th century, JH Boeke first mentioned the dualistic economy with regard to widespread informality in various sectors.
Today, it is estimated that almost 70 percent of workers rely on traditionally insecure jobs such as seasonal labor and or casual work. It has been acknowledged that a large portion of unregulated informality lends itself to intersecting problems surrounding gender, child labor, working conditions, low income and many other issues.
Although labor law in Indonesia is considered among the most rigid and inflexible in the region, trends in industrial relations show that employers are increasingly inclined to recruit temporary, contractual, or outsourced labor.
Subsequently, an alarming number of career-less workers without sustainable income, with less shock protection, has been created. The shift to temporary labor is part of a global business practice to optimize profit. Yet, the advantage gained from the commodity boom and the rising “middle class” has masked these issues.
The middle class segment, particularly in emerging economies, is usually defined and measured based on income or spending range. However, alternative measurement using proxies such as ownership of certain durable assets or savings might infer that this group is susceptible to falling into the poverty category. Generally, those consumption patterns that separate them from the poor are not enough to secure their new found prosperity.
Arguably, the increasing middle class does not necessarily translate into the significant welfare progression of an entire society. In many emerging economies, including Indonesia, rising incomes has also meant rising inequality. If we refer to the Gini index, which measures inequality using household expenditure, an increasing trend has been highlighted — even more worrying in terms of assets or land ownership disparity — for the last five years, the gap between the rich and poor is becoming increasingly wide, both in urban and rural areas.
While poverty rates have been declining steadily in the last decade, given the method and definition used by Central Statistics Agency ( BPS ), we should remain aware that the vulnerable group might be larger than official records. The disparity often becomes clear when the government sets up direct assistance programs such as cash transfers or healthcare cards.
Recently, the data base has suggested that around 96 million individuals or the lowest 40 percent of the total population fall into the vulnerable group.
Another important issue is the increasing rate of the working-age population or the “demographic dividend”. The term sounds positive. However, this demographic shift should be an early warning to social planners and policymakers.
Most of the labor force are only equipped with elementary-level education and possess minimal skill, making them suitable only to lower-level occupations or informal jobs with meager income.
We should acknowledge the endeavor of the government and stakeholders in establishing social protection systems although these may still be in the inception phase. Indeed, social security laws and its carriers need to be improved and extra effort is required to tackle the problems surrounding social welfare, including provision for old-age maintenance and more importantly employment creation.
Reducing informality and creating decent employment is not an easy task. Most employers will be hesitant to increase operating costs. Therefore, incentives to opt for formalization should be designed appropriately without reducing competitiveness towards the era of open market and free labor mobility.
Given the potential for profound impact, a number of key issues need to be addressed so as to ensure a
viable and favorable investment climate. Taken together, there is a need for a thorough review of the industrial relations, balancing interests between employers, labors, and government as regulator and enhancing human resource capability through intensive capacity building.
_______________________________________
Posted in The Jakarta Post: Wed, May 4 2016 | 08:13 am
The original article can be found here or fetched from here
Last month, I attended a lecture by Guy Standing, a prominent British academic cum social activist. His fame was largely built around his book The Precariat: The New Dangerous Class written in 2011 out of a growing concern for the specter of burgeoning temporary workers with neither careers nor job security.
The book takes London as its main setting and looks at industrialized cities in the UK and European countries post the hard-hitting global financial crisis hit hard in 2008.
He warned of the fragility of the precariat group whilst urging politicians and policymakers to take serious concern regarding this worrying trend amid widening inequality.
Within the context of Indonesia, vulnerability is at the heart of the social welfare problem. As early as the mid-20th century, JH Boeke first mentioned the dualistic economy with regard to widespread informality in various sectors.
Today, it is estimated that almost 70 percent of workers rely on traditionally insecure jobs such as seasonal labor and or casual work. It has been acknowledged that a large portion of unregulated informality lends itself to intersecting problems surrounding gender, child labor, working conditions, low income and many other issues.
Although labor law in Indonesia is considered among the most rigid and inflexible in the region, trends in industrial relations show that employers are increasingly inclined to recruit temporary, contractual, or outsourced labor.
Subsequently, an alarming number of career-less workers without sustainable income, with less shock protection, has been created. The shift to temporary labor is part of a global business practice to optimize profit. Yet, the advantage gained from the commodity boom and the rising “middle class” has masked these issues.
The middle class segment, particularly in emerging economies, is usually defined and measured based on income or spending range. However, alternative measurement using proxies such as ownership of certain durable assets or savings might infer that this group is susceptible to falling into the poverty category. Generally, those consumption patterns that separate them from the poor are not enough to secure their new found prosperity.
Arguably, the increasing middle class does not necessarily translate into the significant welfare progression of an entire society. In many emerging economies, including Indonesia, rising incomes has also meant rising inequality. If we refer to the Gini index, which measures inequality using household expenditure, an increasing trend has been highlighted — even more worrying in terms of assets or land ownership disparity — for the last five years, the gap between the rich and poor is becoming increasingly wide, both in urban and rural areas.
While poverty rates have been declining steadily in the last decade, given the method and definition used by Central Statistics Agency ( BPS ), we should remain aware that the vulnerable group might be larger than official records. The disparity often becomes clear when the government sets up direct assistance programs such as cash transfers or healthcare cards.
Recently, the data base has suggested that around 96 million individuals or the lowest 40 percent of the total population fall into the vulnerable group.
Another important issue is the increasing rate of the working-age population or the “demographic dividend”. The term sounds positive. However, this demographic shift should be an early warning to social planners and policymakers.
Most of the labor force are only equipped with elementary-level education and possess minimal skill, making them suitable only to lower-level occupations or informal jobs with meager income.
We should acknowledge the endeavor of the government and stakeholders in establishing social protection systems although these may still be in the inception phase. Indeed, social security laws and its carriers need to be improved and extra effort is required to tackle the problems surrounding social welfare, including provision for old-age maintenance and more importantly employment creation.
Reducing informality and creating decent employment is not an easy task. Most employers will be hesitant to increase operating costs. Therefore, incentives to opt for formalization should be designed appropriately without reducing competitiveness towards the era of open market and free labor mobility.
Given the potential for profound impact, a number of key issues need to be addressed so as to ensure a
viable and favorable investment climate. Taken together, there is a need for a thorough review of the industrial relations, balancing interests between employers, labors, and government as regulator and enhancing human resource capability through intensive capacity building.
_______________________________________
Posted in The Jakarta Post: Wed, May 4 2016 | 08:13 am
The original article can be found here or fetched from here
