Indonesia's Social Mobility Challenge: A Barrier to Poverty Reduction

Low Mobility Index Highlights Structural Issues

Indonesia faces significant challenges in improving social mobility, ranking 67th globally in the social mobility index. This ranking is notably lower than neighboring countries such as Vietnam, Thailand, and the Philippines. The social mobility index measures the ability of individuals or groups to change their social status compared to their parents, encompassing factors such as income, occupation, and education.

Key Factors Contributing to Low Social Mobility

Several structural issues are identified as major contributors to Indonesia's low social mobility:

1. Corruption and Monopoly of Natural Resources: Concentration of natural resource control among a few individuals or entities
2. Unequal Quality of Education: Particularly in poverty pockets, limiting opportunities for social advancement
3. Limited Formal Sector Job Opportunities: Constrained employment opportunities in the formal sector
4. Regressive Tax Policy: Current tax policies disproportionately burden lower-income groups while providing benefits to the wealthy through tax amnesty programs

Policy Implications and Recommendations

The current tax system in Indonesia is considered regressive as it imposes a higher relative tax burden on lower-income individuals. Meanwhile, the wealthy benefit from tax amnesty programs and other incentives that reduce their tax obligations. Addressing these structural issues through comprehensive policy reforms is crucial for improving social mobility and reducing poverty in Indonesia.