The World Bank’s Indonesia Covid-19 Observatory is a Indonesia Brief multi-GP partnership that aims to generate usable and Covid–19 Observatory №3 near-real-time insights on the impact of the pandemic to inform the Government of Indonesia’s policy response to the crisis. Please direct Inquiries to Ririn Purnamasari —rpurnamasari@worldbank.org 26.06.2020 Page 1/2 Rabia Ali —rali1@worldbank.org High–frequency monitorıng of households Summary of Results from Survey Round 1 0 1 – 17 MAY 2020 Main Messages This brief presents findings ➊ Adverse impacts on income, employment and food security, with a quarter of households sampled re- from the first of five rounds porting that breadwinners had stopped working, income losses among 641 percent of those who continued of a nationally representa- to work and increased food insecurity for about a third of households; tive panel survey of 4,338 households across 40 dis- ➋ Non-farm business and service sector workers most affected with agriculture acting as a partial buffer; tricts and 35 cities in 27 provinces of Indonesia. The ➌ 54 percent of households in the bottom 40 percent reported benefiting from at least one Government survey was implemented social assistance program and the share rose to 78 percent after accounting for loan deferment and elec- through 15-20 minute phone tricity subsidy programs. Still just over two in five households in the bottom 40 percent had not received interviews. any assistance under the Program Keluarga Harapan (PKH), Sembako, Bantuan Langsung Tunai (BLT), Kartu Key findings include: Pra-kerja, or cash-for-work programs. W ith businesses closed and large- scale mobility restrictions im- posed after the Covid-19 outbreak, 24 percent of breadwinners – most- ly wage workers and non-farm business owners – had stopped working by May 2020. The most frequently cited reasons for not working were closure of business or office due to Covid-19 mobility restrictions (54 percent of those not working) and being furloughed (16 percent). Another 5 per- cent reported being laid off from a business that continued op- erating. The vast majority of those working prior to the outbreak had been engaged in either wage work (57 percent) or non-farm businesses (30 percent), with the remaining in farm businesses working as owners, farmers, or cultivators. At the time of the sur- vey, the crisis had taken a high toll in the first two groups: Among those who stopped working, wage workers constituted the largest share (59 percent), followed by those in non-farm businesses (36 percent) and a mere 5 percent in farm businesses. Those who stopped working were concentrated in the service and industry sectors. Among those who stopped working, ser- vice sector workers constituted the largest share (55 percent), fol- Indonesia Covid–19 Observatory 26.06.2020 Page 2/2 lowed by those in industry (33 percent), with the remaining in agriculture. Overall, 23 percent of service sector workers and 32 Figure 1 Share of breadwinners who stopped percent of those in the industry sector stopped working. Among working, by sector of employment (percent) industrial workers, those in manufacturing and construction were hit hardest, with just over a third no longer working (figure 1). In AGRICULTURE Agriculture the services sector, transport, storage and communication work- ers were hit similarly hard, followed by those in trade, hotel and restaurants. MANUFACTURING Industry Among those who continued working, reductions in income CONSTRUCTION were widespread across all sectors of employment, including agriculture. Overall, 641 percent of those who continued working OTH. INDUSTRY received incomes lower than before the outbreak. Those engaged in non-farm businesses (mostly micro and small businesses) and wage work were most likely to report reduced incomes (88 and 59 TRADE, HOTEL & RESTAURANT Service percent of workers respectively), as did many in farm business- es (43 percent). Income shocks were widespread among services TRANSPORT, STORAGE & COMMUNICATION and industrial sector workers, as well as in agriculture (figure 2). 8 percent of workers switched sectors or type of work, mainly to OTH. SERVICES agriculture. Over a third of households reported eating less than usual in 0 50 100 the week prior to the survey, suggesting that food insecurity may be rising. 31 percent of households reported shortage of food at least once during the past week because of lack of money or Figure 2 Share of households with reduced other resources, while 38 percent reported eating less than usual. incomes, by sector of employment (percent) These numbers indicate a significantly higher level of food inse- curity than that reflected in the 2019 Susenas, in which the share of households reporting running out of food and eating less than AGRICULTURE Agriculture they should in the year preceding the survey stood at 3 and 5 per- cent respectively. MANUFACTURING Industry The government’s economic relief measures and expanded so- CONSTRUCTION cial assistance programs have yet to reach many of those ad- versely affected. Most households (54 percent) in the bottom 40 percent reported benefiting from at least one Government of OTH. INDUSTRY Indonesia (GOI) social assistance program since February 2020, and the share rose to 78 percent after accounting for loan defer- TRADE, HOTEL & RESTAURANT Service ment and electricity subsidy programs. Still, just over two in five households in the bottom 40 percent had not received any assis- TRANSPORT, STORAGE & COMMUNICATION tance under the PKH, Sembako, BLT, Kartu Pra-kerja, or cash- for-work programs. The share stood at 51 percent of households OTH. SERVICES whose breadwinners had stopped working, and 56 percent among those experiencing reduced incomes. 20 percent of households in the bottom 40 percent who reported shortage of food had not re- 0 50 100 ceived Sembako, and coverage was still especially low among the recently launched Kartu Prakerja and BLT programs, standing at 1 and 4 percent of households respectively. To mitigate the impact on the poor and vulnerable, relief mea- sures need to be rolled out faster in coming months and expand- ed to include the neediest. The latest World Bank (WB) estimates suggest that in the absence of mitigation measures the economic fallout of the pandemic could push 5.5 to 8 million Indonesians into poverty2. GOI’s response has been strong. Economic relief measures rolled out include vertical and horizontal expansion and repurposing of several existing social assistance programs for the poor and vulnerable, and addition of new programs. WB analysis 1 The June 12, 2020, version of this note reported that 'half' of those who shows that these packages have the potential to fully mitigate the continued working experienced a reduction in income. The correct share impact on the poor and the vulnerable. However, for this to be re- is 64 percent. 'Half' refers to share of still working breadwinners who alized in practice, interventions must reach those who are target- experienced income reduction. ed and be implemented in a timely manner. The findings above 2 The model for simulating the pandemic’s impact on poverty combines suggest that there is still much more work to be done on these macroeconomic projections for GDP and sectoral output growth with dimensions. To achieve the program targets GOI has committed pre-crisis microdata from household and labor force surveys to predict income and consumption at the individual and household levels under to, implementation efforts need to focus much more sharply on three scenarios for 2020: (i) business-as-usual (growth estimate of improving delivery of assistance to targeted poor and vulnerable 5.0 percent); (ii) a mild shock (growth estimate of 0 percent estimated households and ensure that those engaged in hard-hit non-farm under assumptions of a deep global recession and moderate domestic restrictions); and (iii) a severe shock (growth estimate of -2.0 percent businesses benefit either from expansion of existing social assis- estimated under assumptions of a deep global recession and severe tance or new economic relief programs. domestic restrictions).