The Reality of Indonesia Poverty: From Urban-Rural Gaps to Structural Poverty

While Indonesia continues to experience economic growth, many people still live in poverty. Although less familiar to Japanese readers, about 8–9% of Indonesia’s population—over 24 million people—live below the national poverty line.

Poverty is not just about low income; it also means limited access to basic services like education, healthcare, clean water, housing, and electricity. Escaping poverty is often difficult without support, and many children born into poor families end up facing similar conditions as adults.

This article explains the current situation of the poor in Indonesia, focusing on differences between urban and rural areas, living conditions, access to education and employment, government and NGO efforts, and the structural causes behind persistent poverty.

Figure: The Decline in Extreme Poverty in Indonesia (1981–2019)

As the economy has grown, extreme poverty—defined as living on less than $1.90 per day—has dropped significantly. However, relative poverty remains a major issue, with millions still lacking access to essential services.

Differences in Poverty Between Urban and Rural Areas

A key characteristic of Indonesian poverty is its concentration in rural regions. In cities like Jakarta or tourist destinations such as Bali, poverty rates are relatively low—often around 3–5%. In contrast, some rural areas report double-digit poverty rates.

As of September 2024:

• National average poverty rate: 8.57%
• Urban poverty rate: 6.66%
• Rural poverty rate: 11.34%

Some regions suffer far worse:

• Papua Province: 26.6% poverty rate
• Bali Province: Only 3.8% poverty rate

This shows how different life can be across Indonesia. In fact, the gap between city and countryside is so large that they seem like two separate countries within one nation.

In urban areas, rising incomes and development have improved living standards for middle-class residents near Jakarta to levels comparable to Japan. Meanwhile, many rural communities still rely on subsistence farming and fishing, with little cash income, making modern living nearly impossible.

The contrast between shopping malls and high-rises in cities versus traditional villages in rural areas highlights the growing wealth gap—a serious social issue in Indonesia today.

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Living Conditions Among the Poor: Housing, Sanitation, and Infrastructure

The living environment for Indonesia’s poor varies by region but remains challenging across both urban and rural areas.

Urban Slums

In Jakarta, it’s estimated that half the city consists of slum areas where makeshift wooden houses and tin-roof shacks cluster along rivers and train tracks. These homes lack proper infrastructure like clean water, sewage systems, and sanitation.

According to UN-Habitat, slum households are defined as those lacking at least one of the following:

• Access to safe drinking water
• Access to adequate toilets
• Secure housing rights (not subject to forced eviction)
• Durable housing
• Enough space per household

In these areas, children are often seen playing barefoot among trash, and diseases like diarrhea and cholera remain common due to poor hygiene.

Rural Challenges

Rural poor face even greater obstacles. Many villages lack reliable electricity and clean water supplies. In remote parts of South Sulawesi, for example, people draw water directly from mountain streams for daily use, and toilets are rudimentary with no sewage system.

Surveys show only about half of rural residents have access to proper sanitation, and over 30% still practice open defecation. Unpaved roads make travel difficult during rainy seasons, sometimes isolating entire villages. Schools and hospitals are often far away, further worsening the quality of life.

Education and Employment Opportunities

Poverty is closely tied to lack of education and job opportunities. Children from poor families often miss out on schooling, limiting their future earning potential.

Although the Indonesian government has extended compulsory education from 9 to 12 years, many children in rural areas still do not complete middle school. In Papua, where poverty is most severe, the school enrollment rate for children aged 13–15 in poor households is only about 72%, compared to over 90% in wealthier regions.

One reason is the distance to schools and lack of transportation. Another is that parents—who themselves may not have completed school—often prioritize labor over education. This mindset contributes to the cycle of poverty, as uneducated children grow up unable to read well or acquire skills needed for better-paying jobs.

Employment and Informal Work

For the poor, stable employment is rare. Most work in the informal sector—daily labor, small-scale trading, or seasonal agricultural work. Nationally, about 55–60% of workers are in informal jobs, but this rises to 46% among the poor , while only 15% have formal employment.

Informal workers receive no minimum wage protection, labor law coverage, or social insurance. A sudden illness or loss of income can push them into deeper hardship. People working as farmers, street vendors, motorcycle taxi drivers, or domestic helpers struggle to save money, making them highly vulnerable to inflation or disasters.

Government and NGO Efforts to Reduce Poverty

Indonesia’s government has launched several programs to help the poor:

Program Keluarga Harapan (PKH)

Known as the Family Hope Program , PKH is a conditional cash transfer initiative targeting poor families. Benefits are provided on condition that children attend school regularly, get vaccinations, and pregnant women receive prenatal care. Started in 2007, it’s now the world’s second-largest cash transfer program after Brazil’s Bolsa Família . It has contributed to reductions in child malnutrition, dropout rates, and child labor.

Other Government Programs

• BPNT (Bantuan Pangan Non-Tunai): Monthly e-vouchers for purchasing staple foods like rice, especially useful during price surges.
• BLT (Bantuan Langsung Tunai): Cash transfers to low-income families during crises like fuel price hikes or the pandemic.
• KIP (Kartu Indonesia Pintar): Smart cards offering financial aid for educational expenses including uniforms and books, supporting students through vocational training.
• Health Insurance Support (JKN): Free public health insurance for the poor, allowing access to medical services regardless of income.

NGO Contributions

International NGOs like World Vision and Plan International also operate in Indonesia. They build wells, provide sanitation training, and run education and vocational programs to empower children and youth in rural areas. These activities contribute to achieving the Sustainable Development Goals (SDGs), reflecting international support for tackling deep-rooted poverty.

Structural Poverty – Why Poverty Persists

Behind Indonesia’s poverty problem lies what experts call “structural poverty “—systemic issues that keep certain groups poor across generations, regardless of individual effort.

In regions like Papua or East Nusa Tenggara, historical underdevelopment and inadequate investment in infrastructure and education have left rural populations trapped in low-wage agriculture or mining. Without better job prospects, people remain stuck in poverty.

Children born into poor families often miss out on education, grow up with few skills, and repeat the same cycle. This is the nature of structural poverty—poverty passed down through generations, beyond the control of individuals.

Addressing Structural Poverty

To truly reduce poverty, systemic change is necessary. Key strategies include:

• Investing in infrastructure and education in underdeveloped regions
• Increasing budget allocations for rural schools, clinics, and road construction
• Providing technical training and microloans to develop local industries
• Promoting gender equality and ending discrimination against minorities and persons with disabilities

The Indonesian government has started allocating direct village funds (Dana Desa ) to empower local development. Family planning and women’s empowerment programs also aim to break the cycle of intergenerational poverty.

Conclusion

Despite decades of economic growth, Indonesia still struggles with significant poverty, especially in rural areas. While progress has been made in reducing extreme poverty, structural barriers continue to trap millions in hardship.

Efforts by the government and NGOs have helped, but long-term solutions require addressing regional inequality and reforming social systems. The goal is to create an inclusive society where all Indonesians—not just those in wealthy cities—can enjoy basic services and hope for a better future.

Only by tackling poverty at the structural level can Indonesia ensure sustainable, equitable development for all its citizens.

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Glossary

Frequently Asked Questions (FAQ)

Q1. What is Indonesia’s poverty rate?

A: About 8–9% nationally—around 6.6% in urban areas and 11.3% in rural areas . Some regions, like Papua, exceed 26% .

Q2. What is life like in urban slums?

A: Slums often lack clean water, sanitation, and durable housing. Health risks like disease outbreaks are common due to poor living conditions.

Q3. What is structural poverty?

A: Poverty rooted in systemic issues like unequal development, limited education access, and social exclusion. It often leads to generational cycles of poverty.

Q4. What kind of support does the Indonesian government offer?

A: Includes programs like PKH (cash transfers) , BPNT (food vouchers) , BLT (emergency cash payments) , KIP (education support) , and free health insurance (JKN) for the poor.

Q5. How can I help reduce poverty in Indonesia?

A: You can contribute through education support , ethical consumption , donations to NGOs , or participating in volunteer programs focused on community development.

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