Over the past two decades, Indonesia’s poverty alleviation and social welfare programs have undergone major transformations, marked by a stronger government commitment to evidence-based policymaking.
This approach has had significant implications for program effectiveness, social impact, and the accuracy of budget allocation. However, there has been a growing tendency to move away from such evidence-based practices.
Meanwhile, Indonesia’s poverty alleviation and welfare policies are currently facing several major challenges, including a high level of labor market informality, fiscal pressures, institutional fragmentation, and demographic shifts. Additionally, data systems must be regularly updated to remain dynamic and relevant.
These issues were discussed at the Mubyarto Public Policy Forum 2025, held under the theme “Poverty and Welfare Reform in Indonesia” on Friday (Oct. 24) at the Learning Center Function Hall, Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM).
The annual seminar, organized since 2017 to honor the late Professor Mubyarto, a distinguished UGM economist and a leading figure in Indonesia’s rural development policy during the 1960s–1990s, featured several economists, including Dr. Elan Satriawan (UGM), Dr. Putu Geniki Lavinia Natih (Universitas Indonesia), Dr. Firman Witoelar Kartaadipoetra (Australian National University [ANU] Indonesia Project), and Dr. Sudarno Sumarto (SMERU Research Institute).
According to Dr. Satriawan, Indonesia’s current economic challenge is no longer focused solely on eradicating extreme poverty but on addressing declining welfare among vulnerable groups, particularly the middle class. He emphasized that social policies should not only aim to reduce poverty but also strengthen protection and economic empowerment across society.
Dr. Satriawan noted that many middle-class and elderly individuals still work in the informal sector and remain excluded from adequate social protection systems.
“Policies in Indonesia must go beyond poverty alleviation. We need an empowering, inclusive, and sustainable social protection system supported by collaboration, scientific evidence, and consistency,” he stated.
He further identified five key challenges that must be addressed to make the social protection system more inclusive: inaccurate targeting of beneficiaries, limited coverage for persons with disabilities and the elderly, minimal impact on human development, weak linkage with employment programs, and unsustainable funding.
“People’s welfare conditions can change rapidly. Therefore, a dynamic and up-to-date data mechanism is urgently needed,” he added.
Meanwhile, Dr. Putu Geniki Lavinia Natih introduced the Multidimensional Poverty Index (MPI) as an approach to understanding that poverty should not be viewed merely from an economic perspective, but also from human and experiential dimensions.
Although monetary poverty rates have declined, many people still face barriers in education, health, and access to basic services.
She stressed the importance of sustainable social protection to ensure that every citizen is supported from childhood through old age.
“Social protection should not stop at poverty reduction but must accompany individuals throughout all stages of life,” she remarked.
Dr. Natih also highlighted low female labor force participation and the lack of inclusive data and policies for persons with disabilities. Without comprehensive data and understanding, she argued, social policies risk losing direction and effectiveness.
She further called for the integration of social protection policies with the green energy transition and the development of green skills to ensure that vulnerable groups, including women, are not left behind in the sustainable economic transformation.
“The ultimate goal of development should not merely be economic growth or income increase, but the realization of equality and social justice for all,” she added.
Dr. Firman Witoelar Kartaadipoetra explained that over the past two decades, Indonesia’s poverty alleviation and social welfare programs have undergone significant evolution, marked by a growing commitment to evidence-based policies.
This has influenced the effectiveness, social impact, and accuracy of state budget use. He underlined the importance of research and evidence-based policymaking in addressing social welfare issues in Indonesia.
“Recent developments, however, show a declining reliance on strong evidence in implementing major social programs, which could undermine effectiveness and lead to resource misallocation,” he warned.
Meanwhile, Dr. Sudarno Sumarto discussed the transformation of poverty alleviation and social welfare policies in Indonesia over the past twenty years. These changes include a significant reduction in poverty rates and the expansion of major social programs such as the Keluarga Harapan Program (PKH) and Non-Cash Food Assistance (BPNT).
Dr. Sumarto acknowledged that these reforms were achieved through collaboration among the government, research institutions, and civil society in promoting data-driven policymaking.
Nonetheless, he pointed out that Indonesia’s welfare system now faces serious challenges, including high labor market informality, fiscal strain, institutional fragmentation, and demographic shifts.
“We are currently dealing with a fragmented welfare system characterized by numerous programs across multiple ministries, often with overlapping targets,” he explained.
Author: Cyntia Noviana
Editor: Gusti Grehenson
Post-editor: Rajendra Arya
Photographer: Salwa