Loan Apps to Loan Sharks: Sources of Debt for Industrial Workers

A number of industrial workers rely on several financial sources for loans to meet their needs. This is stated in the survey report, *Cheap Wages, High Cost of Living: The Trap of Modern Loan Sharks on Workers' Families in Six Industrial Sectors*, by the Decent Living Coalition (Koalisi Hidup Layak or KHL).

Of the 200 respondents involved in this section of the survey on debt sources, the majority (78 people) borrowed from commercial banks.

The research team explained that bank loans were primarily for home purchases (i.e., mortgages) and for business purposes.

"Only 12 respondents borrowed for business capital," the research team wrote, as quoted on Tuesday (November 19, 2024).

The second most common source was online loans (pinjol), with 63 respondents. Third was borrowing from family or relatives, with 57 respondents.

Others borrowed from leasing companies (34 people), traditional shops (26 people), cooperatives (22), arisan (rotating savings and credit association) groups (17), mobile banks (10), and individual loan sharks (10).

The debt economy survey, conducted over a month and a half in August-September 2024, collected data from a total of 257 respondents across eight regions and six industrial sectors.

The eight regions were Tangerang City and Regency, Serang City (Banten); Sukabumi City and Regency (West Java); Sambas Regency (West Kalimantan); Morowali Regency (Central Sulawesi); Denpasar City (Bali); Brebes Regency and Jepara Regency (Central Java); and Sidoarjo Regency (East Java).

The participating industrial sectors were manufacturing (88 respondents), the gig economy/ride-hailing sector (80 respondents), aviation (11 respondents), plantations (30 respondents), mining (37 respondents), and fisheries (11 respondents).

The research used a participatory action approach integrating quantitative and qualitative methods.

The unit of analysis in this study was defined as working-class households. Sample selection was conducted using non-probability sampling with a snowball sampling method.

The research team explained that the choice of snowball sampling was based on the unavailability of a reliable official sample frame. Therefore, this research also aims to identify the number of such hidden household populations.

(See also: [How Often Do Industrial Workers Borrow? Here's the Survey])