Middle Class Starts Turning To Survival Mode, Economist: New Poverty Threat

Illustration (Photo: Doc Antara)

JAKARTA - Jakarta Veterans UPN Public Policy Economist Achmad Nur Hidayat said the middle class had begun to switch to survival mode.

According to him, the mode of survival that is now felt by the middle class is an alarm for all parties.

Because, continued Achmad, now the middle class is no longer focused on consumption of secondary or tertiary goods, such as recreation or entertainment. However, starting to shift the budget to essential goods.

"This is a clear indication that they are in survival mode," he said in an official statement, Friday, September 27.

According to Achmad, this indication can be seen from the latest data by the Deposit Insurance Corporation (LPS) and Bank Mandiri Research, showing that people's savings has decreased, accompanied by reduced people's purchasing power.

The phenomenon, which is often dubbed as eating savings, continued Achmad, is not only experienced by the lower class, but also begins to spread to the middle class.

"Inflationary pressure on basic and energy necessities, coupled with layoffs (PHK) in various sectors, makes the middle class increasingly dependent on their savings to survive," he explained.

In fact, he continued, research shows that middle class savings have decreased, while spending is relatively stable, especially for basic needs. However, the decline in savings in the middle class is not as large as among the lower class.

"But in the long term, this pattern can be an early signal that the middle class are struggling to maintain their lifestyle," he said.

New Poverty Threat

If their purchasing power continues to decline, continued Achmad, consumption-dependent sectors such as retail, property, and services will experience serious impacts.

"One of the most worrying impacts of mid-range survival mode is the threat that they can go down to vulnerable poor groups," he said.

Moreover, continued Achmad, the Central Statistics Agency (BPS) also noted that millions of people have dropped caste from middle to lower class in recent years.

"If this trend continues without significant policy intervention, we will witness a massive economic setback, which will not only have an impact on people's purchasing power, but also on national economic growth as a whole," he said.