Debt-Paying Worker Strategies: Increased Working Hours and Further Borrowing

The Decent Living Coalition (KHL) report compiles a series of strategies employed by industrial workers to repay their debts.

Previously, KHL stated that 76%, or 200 out of 257 surveyed workers, admitted to being in debt.

(Read also: Industrial Workers Incur Debt to Meet Living Needs)

The most common method of debt repayment was working extra hours. This option was chosen by 143 people, or 41.9% of the total number of workers in debt.

The second most common method was reducing consumption, chosen by 85 people or 24.9%.

The third most common method was taking out more loans to repay existing debts, chosen by 73 people or 21.4%.

This was followed by selling assets, chosen by 35 people or 10.3%. Repaying with salary was also an option, with a proportion of 0.9%.

Finally, defaulting on payments accounted for 0.6%. It should be noted that this survey used a multiple-answer method, allowing respondents to select more than one option.

KHL stated that resorting to further loans is due to the government's failure to create a living wage, trapping workers in a cycle of debt.

"This forces individuals to work extra hours, sell valuables, and reduce consumption," wrote the research team in the report *Low Wages, High Living Costs: The Trap of Modern Loan Sharks for Workers' Families in Six Industrial Sectors*, quoted on Tuesday (November 19, 2024).

KHL added that the domino effect of this debt trap makes workers more vulnerable to entering the informal sector.

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 are 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 are manufacturing (88 respondents), gig economy/ride-hailing workers (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 lack of a reliable official sample frame. Therefore, this research also aims to identify the number of hidden households in this population.

(Read also: Online Loans to Loan Sharks, These are the Sources of Debt for Industrial Workers)