Middle Class Reduction Impacts On The National Economy

JAKARTA - Indonesian Center of Reform on Economics (Core) Economist Yusuf Rendy Manilet assessed that the national economy is related to the condition of the middle class which has decreased in recent years.

"We know that this class group has a relatively large portion and of course it will affect the aggregate growth rate of household consumption," he said in his statement, Thursday, February 6.

According to him, the decline in the middle class is also inseparable from the industrialization trend that has occurred, especially in recent years where when industrialization occurs, it means that there is less opportunity for people to be able to enter to work as a group of workers in the manufacturing industry.

It is known, the number of middle class decreased by around 10 million, from 57.33 million or around 21.45 percent in 2019 to 47.85 million or around 17.13 percent in March 2024.

"Unfortunately, manufacturing industry groups on paper should be able to become instruments to improve people's welfare in the long term and when people have difficulty accessing employment opportunities in the manufacturing industry, they will look for alternative powers to look for work," he said.

Yusuf said that one of the options is to be or be included in the classification of informal worker groups which is certainly difficult to expect to improve the welfare of the community, especially in the medium to long term.

According to him, national economic growth of only 5.03 percent in 2024 should be an alarm for the government to pursue the economic growth target by 2025.

"I think last year's economic growth data should have been an alarm for the government, especially in pursuing targets, especially if we pay attention to the quarterly growth trend in several quarters, which has decreased, especially for household consumption, which is the largest support," he explained.

Yusuf said that the decline in household consumption growth also needs to be a concern for the government, especially in designing policies this year.

According to him, this is included in the context of government policy interventions, it should have started to think about how to intervene in policies so that the GDP group for household consumption can be encouraged to grow higher.

"It's not easy, especially when we talked about trends last year and also problems such as relatively limited incentives for the community. We ourselves predict that this year's economic growth without any significant changes from the government will be in the range of 4.8 percent to 5.0 percent throughout the year," he said.

According to Yusuf, the manufacturing industry sector will still be a support and it needs to be considered not only in the context of the contribution of the manufacturing industry to economic growth as a whole but also in the context of how the manufacturing industry can play a role in becoming a solution to the socio-economic problems that the government is facing.

"For example, unemployment and also the low level of community welfare in certain income groups," he said.