The constraints as well as opportunities facing the urban poor are likely to be significantly different from those facing the poor in rural areas. To date, however, there has not been a study of the urban poor in Indonesia that analyzes trends and patterns in urban poverty, the characteristics of the urban poor and dynamics of poverty, and the effectiveness of programs to address their needs. This document attempts to fill that gap, using both quantitative analysis of secondary data sources and analysis of newly collected qualitative (focus group and interview) data to provide a comprehensive picture of urban poverty in Indonesia.
Using nationally-representative household data from SUSENAS and the Indonesian Family Life Survey, our quantitative analysis addresses rates and patterns of urban poverty across Indonesia and over time, characteristics of the urban poor, correlates of urban poverty and household-level poverty transitions. We focus on changes and patterns both in monetary measures of well-being (per capita household consumption) and in a range of non-monetary welfare measures such as schooling, housing characteristics and sanitation, and child immunizations. We examine the evolution of these factors since 2002, thus capturing the period of economic growth following the Asian Financial Crisis of 1998-2001. For reference and perspective, we compare findings with those for rural areas.
We also provide a broad overview of government programs that cover the urban poor, before turning to a quantitative benefit incidence assessment of several of the most significant programs currently or recently in place: Raskin (rice for the poor), Jamkesmas (health insurance), BLT (unconditional cash transfers), PKH (conditional cash transfers), and credit programs directed toward the poor (PPK and PNPM). For programs such as Raskin that explicitly target the poor
We also consider programs such as education and maternal and child health services, and basic infrastructure services such as provision of safe water and electricity as well as community level public infrastructure investments. While these do not target the poor specifically, they nonetheless have important impacts on welfare and poverty, including intergenerational poverty. For these services we consider program coverage or participation by per capita expenditure quintile, or the share of the target population (which could be all individuals or a sub group such as children or mothers) receiving the benefit in each quintile, using formal methods of benefit incidence analysis to consider their progressivity
Recognizing that quantitative analysis based on large-scale survey data is often incomplete, the results above are complemented by two other analytical exercises. Firstly, to address the fact that some important marginalized subgroups are not easily captured by household surveys, we provide further discussion of vulnerable urban sub-populations, including migrants, slum dwellers, informal workers, and street children, based on a survey of recent studies. Secondly, to provide a current picture of urban poor and their interactions with government programs, including PNPM-Urban, we conducted a qualitative study based on focus groups and interviews with poor residents in 16 urban kelurahan (wards) across Java, Sumatera, and Sulawesi. The focus groups covered respondents’ perceptions of their own poverty and its causes, and barriers to moving out of poverty; strategies for coping with inadequate resources (both permanent and temporary shortfalls); differences in the causes and impacts of poverty for men and women; perceived needs, including forms of government assistance and participation in and perceptions of assistance programs (including efficiency, fairness, value of benefits, convenience, corruption, etc.) These focus groups and interviews were integrated into the larger process evaluation of PNPM-Urban, and should be regarded as important background context for the findings of that companion study.