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The Covid-19 pandemic has brought about economic problems in rural Flores. Although the pandemic hit all villagers, the poor –landless peasants, poor peasants and informal workers– suffer the most in Flores. Social scientists, especially Victoria Fanggidae and Jonatan A Lassa, have so far contributed to finding solutions to in rural Indonesia such as Flores through introducing Universal Basic Income (UBI) during the pandemic period. Based on my findings in Flores, however, UBI policy can in fact increase existing rural chronic economic inequalities in Flores.
As I live in rural Flores, I notice that the poor in Flores are now struggling for their livelihoods due to lockdown policies during the Covid-19 pandemic. Poor peasants in Flores cannot sell their products and buy basic necessities due to the absence of local markets during the pandemic. The subsequent impact of the absence of the local markets is that some basic needs such as rice have begun to rise in Flores in the past four weeks. In a rural sub-districts in Flores such as Keo Tengah, the price of rice has risen from Rp. 10,000/kg to Rp. 15,000/kg. Other basic necessities such as onions have risen from Rp. 30,000/kg to Rp. 60,000/kg and kerosene from Rp. 5,500/ltr to Rp. 7,000/ltr during the pandemic.
The government has initiated to tackle economic problems in rural areas such as Flores during the pandemic. Although the administration of President Jokowi will provide Rp. 405.1 billion to overcome the Covid-19 pandemic, the government has also encouraged village governments in Indonesia to utilize some of their village funds to help villagers during the pandemic. Therefore, Victoria Fanggidae and Jonatan A Lassa claim that UBI for villagers in Indonesia could be deducted 30% to 35% from village funds (dana desa).
UBI may be helpful for poor peasants. In Flores, most village governments are entitled to get Rp. 800 million to Rp.1.2 billion of village funds from the national government. This means that a village could allocate Rp. 360 million (30%) for UBI. As a village in Flores has normally 1,500 people, every individual in the village would get monthly basic income of Rp. 80,000 through UBI scheme. If a family has 5 people, the family is entitled to receive monthly basic income of Rp. 400,000 during the pandemic. This amount of money in a remote village in Flores is quite significant as a family could buy 40 kg rice to survive for a month.
However, although this social net through UBI may seem helpful for the poor, it can lead to increasing inequalities in rural Flores. It is because the economic ramifications during the Covid-19 pandemic in rural Flores have posed more problems to the poor than to the better-off families. The better-off families such as landlords, business people, and formal workers could survive during the pandemic as they have savings and still receive their salaries. Thus, UBI policy –which aims to give economic assistance to every individual in society regardless of their economic backgrounds– can in fact increase political economic equalities in rural Flores during the pandemic.
Economic Inequalities
The Covid-19 pandemic has in general slowed down Indonesia’s economic growth. On the one hand, lockdown policies have pushed companies and small and medium businesses to cut their employees’ salaries, rationalize the number of their employees, and close down their enterprises. On the other hand, lockdown policies have limited people’s activities outside their houses, which have led to a decrease in demands for goods and services. Besides, the Covid-19 pandemic has also reduced Indonesia’s exports. In the first quarter of 2020, Indonesia’s exports to China, for example, experienced a contraction of around 6.8%, which can usually be around 15%. Hence the Indonesia’s economy grows merely 3%, the lowest since the 1998 economic crisis. The poor performance of the national economy does have impacts on rural economies during the Covid-19 pandemic. If a 1% decline in national economic growth could increase 3% of the poverty rate, poverty rate in Indonesia during the pandemic may have risen from around 9% to 15% due to the fact that its economic growth falls around 2% from its figure in 2019. This problem during the pandemic put more economic pressure on the poor both in cities and villages in Indonesia. As poverty in Indonesia is concentrated in villages, this increased number of poverty could increase poverty and intensify existing political economy inequalities in rural areas such as Flores.
Rural economic inequalities are rife in Indonesia as wealth, especially land, is concentrated in a few elites. By 2019, this concentration of wealth had contributed to the high Indonesia’s Gini index of 0.380. By the early 2000s, the Gini index of land ownership had increased from 0.50 in 1983 to 0.72 in 2003.
In Flores, land is now concentrated in the hands of elites. In 2011, based on Kompas journalistic expedition in Flores, Flori Seda in Boawae, rural Flores, only possessed 0.12 ha and he had to cultivate 0.7 ha of his landlord’s land to survive through sharecropping scheme. The land concentration into the hands of landlords is rife in Flores, especially in Nagekeo and Ende. In Flores, local Catholic churches also own huge agricultural land in many parts of Flores in Maumere, Mataloko, Kisol and Soa. In Ruteng and Maumere, Flores, around 50-60 different religious catholic congregations have bought strategic land both in cities and rural areas, including agricultural land. In 2018, in Mbay, Flores, I found some civil servants and politicians own huge rice fields (3-6 ha), although in the 1960s and 1970s the rice fields were aimed to be distributed to farmers and peasants in Mbay. Some business people in Flores such as Tionghoa business people have invested in land and rice fields in Lembor and Mbay. As the land is concentrated on the hand of the few, Stein Kristiansen and Linda Sulistiawati in 2016 found out that 47% of land in Flores was underutilized as the elites have limited labour power to cultivate their land for agrarian capitalism has not that developed in rural Flores.
Land inequalities have led rural economies in Flores dependent on economic activities in cities. For instance, normally, informal workers in Flores, which Jan Breman calls footloose labour, have to juggle to work between villages and cities due to land inequalities. During the Covid-19 pandemic, this footloose labour has to return home after loosing their jobs in cities. By early May 2020, around 1.6 million informal workers had left Jakarta to influx the countryside in Indonesia. The same trend has also occurred in other big cities in Indonesia such as Medan, Surabaya, Batam, Bali and Makassar. Many Florenese people from these cities went home before the national lockdown. Some of them were stranded in several ports such as Sape and Maumere as the local governments in Flores at the time refused to welcome students and migrant informal workers from red zones of Covid-19 such as Jakarta, Semarang, Yogyakarta, Surabaya, Batam, Bali and Makassar.
In such rural inequalities, the Covid-19 pandemic brings about different economic impacts on villagers during the Covid-19 pandemic. Although the pandemic hit people in Flores from all walks of life, informal working classes, poor farmers and landless peasants in rural Flores are experiencing more severe economic problems during the pandemic. In this case, UBI interventions during the pandemic will of course intensify these political economic inequalities in rural Flores.
What should be done?
The main problem of UBI is that it does not care with rural inequalities. Hence UBI advocates claim that improving inequalities in rural communities could be done through distributing income without changing their unequal access to means of production. It is because UBI only contributes to giving small gain to the wealthy, but large gain to the poor. In the context of poor islands such as Flores, although farmers usually cultivate in average one hectare agricultural land with annual land productivity of Rp. 13.6 million, UBI could still contribute to increasing rural inequalities, especially between famers with land more than one hectare and landless peasants. Moreover, during the Covid-19 pandemic, the wealthy, including money lenders in Flores such as Mbay, in Flores often make more money from their wealth and businesses due to limited access to markets and basic needs.
Victoria Fanggidae and Jonatan A Lassa might think that UBI schemes can succeed in improving the well-being and satisfaction of people’s lives in Indonesia as occurred in Finland. However, both authors seem to ignore the political economy in Finland, which is based on social democratic ideology. The social democratic ideology has made Finland well-known for its income equality, which is one of the best in the world. Finland has long solved its problem of inequalities by changing its political economic structure through great land reforms which began since 1759 onwards. Workers in Finland also receive high salaries with relatively small pay differences. In 2015, the average monthly salary in Finland was 3,386 euro, far higher than other EU countries which only reached 2,116 euro. Finnish Gini index was thus merely 0.256 in 2018, much lower than Indonesia’s figure of 0.390 in the same year. In this case, Finnish economic equalities are able to make UBI schemes function quite well, including during the Covid-19 pandemic. However, in Indonesia, especially in rural Flores, UBI policy could increase further existing rural chronic economic inequalities, especially in the countryside, as the poor and the rich will receive the same amount of incentives through UBI schemes.
Based on the political economy in Flores, during the Covid-19 pandemic, village governments in Flores should utilize 30% to 35% of their village funds to provide Direct Cash Assistances (DCAs) and open cheap local markets for their villagers.
First, village funds in Flores can be used to provide DCAs to the most economically vulnerable, namely the disabled people, elder families, poor peasants and informal workers. Based on the previous experiences in Flores, however, DCAs were inclined to be manipulated corrupted and thus DCAs did not go to the poor but village leaders, village staff members, better off families and civil servants. For example, in Takaplager village in Sikka, Flores, 12 village staff members, including the village leader, have recently received DCAs. Likewise, on May 12 2020, villagers from three villages –Mautapaga, Roworena, and Roworena Barat– in Ende, Flores, also protested the district government as civil servants and better-off families in their villages have received DCAs during the pandemic. This manipulation of DCAs usually occurs due to the fact that the DCAs in Flores are managed through top-down approach, involving only village elites and higher corrupted bureaucracies in sub-districts governments in Flores. The previous DACs such as Program Keluarga Harapan only rely on data from Indonesian Central Bureau of Statistics, which often does not reflect the true socio-economic conditions in villages. Thus, several better-off families get DACs and, conversely, some vulnerable villagers are excluded from DACs. Hence DCAs during the pandemic should be conducted through bottom-up approach. Through this approach, leaders and their villagers in lower level of village governments such as Rukun Tetangga and Rukun Warga appoint their prospective recipients of DCAs as they know better their fellow villagers economic conditions. This could reduce manipulations as previous DCAs programs and the DCAs really go the most vulnerable recipients in villages.
Second, village governments in Flores can allocate some of their village funds to provide cheap local markets in basic needs. These cheap markets could provide basic necessities for villagers. In this case, village-owned enterprises (VOEs), which exist in most villages in Flores, could play important roles in providing cheap markets for villagers. To provide cheap basic necessities, VOEs should cooperate with district Indonesia Logistic Bureaus (ILBs). VOEs can buy basic necessities from ILBs. In Keo Tengah sub-district, Nagekeo, Flores, for example, all VOEs that usually sell agricultural inputs and items have been turned to selling cheap basic needs for villagers as two of their public weekly markets have been closed during the pandemic. In this case, the government thorough ILBs can subsidize cheap local market offered by VOEs during the pandemic.
Although provide DCAs and open cheap local markets may not eradicate existing rural economic inequalities as they do not contribute to changing structural changes such as land reforms as has happened in Finland, they can in fact help the poor in villages in rural Flores, especially during the Covid-19 pandemic. Therefore, instead of developing UBI that can intensify rural political economy inequalities, the government should encourage village governments in Flores to take these solutions.
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