Like other colonial governments, the Netherlands begins to follow more "ethical" policies. Spending on education and infrastructure increases in an effort to undermine the grievances that build support for nationalist movements.
By the 1920s the cash economy produces changes at the village level, causing a greater concentration of wealth, debt, and landlessness (as much as 65 percent in one survey of Java). Many peasants move back and forth between plantation labor and subsistence farming depending on seasons and sugar prices.
The drop in world demand for raw materials leads the colonial government to adopt a strict balanced-budget policy, aggravating economic and social conditions.
Confiscation of food by the Japanese army contributes to widespread shortages and starvation. Millions of romusha, or forced laborers, are conscripted, many of them sent to distant islands or elsewhere in Asia.
Recovery from the war is slowed by continued fighting. Even after independence, social conditions remain poor because of a ruined economy, rapid population growth, and food shortages.
Land-reform efforts are blocked by landowners and Sukarno's own bureaucrats, while failed economic policies help cause widespread poverty and a life expectancy under 50 years. Communist organizers use issues like land reform and rural poverty to build the world's third largest Communist Party.
The New Order ends talk of land reform and allows only one government-run labor union. At the same time, "Father of Development" Suharto points to falling poverty rates as a major achievement of his regime. Government health centers expand access to medical care, especially for women and children. The transmigration program grows, shifting poor and landless farmers to less crowded areas.
The Second Five-Year Development Plan aims to increase standards of living through better food, clothing, housing, infrastructure, social welfare benefits, and employment opportunities. The development budget boosts social expenditures such as education and health.
As one of the first steps of liberalization, food and fuel subsidies are cut. The official poverty rate falls from 60 percent to 15 percent in the 20 years up to 1996, though not all groups or regions benefit equally. In the '90s light manufacturing companies surge, as do many well-documented charges of forced overtime, unsafe conditions, and inadequate pay in export-oriented factories.
The economic crisis jeopardizes social gains, and the fragile recovery is undermined by uncertainty, investor jitters, and worsening conditions such as health and nutrition levels. Spending on social services widens the deficit. Regional conflicts abate thanks to settlements with separatists. But the Bali bombing highlights vulnerability to terrorism and potential Muslim fundamentalist pressures.
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