Housing, Homeownership and Labour Market Change in Greater ,

In fulfilment of the requirements for the degree of Doctor of Philosophy

Surya Gunanta Tarigan

Faculty of Humanities and Social Sciences School of Architecture, Planning and Landscape Newcastle University 2016

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Housing, Homeownership and Labour Market Change in Greater Jakarta, Indonesia

A b s t r a c t

Globalisation, economic restructuring and structural adjustment are significant phenomena in contemporary society. Since the economic crisis in 1997, Indonesia’s market through economic reform has become more neoliberally-oriented, leading to the reduction of subsidies, the privatisation of state companies and the transformation of the labour market to become more flexible. This has influenced the shift from permanent employment to short-term contracting and outsourcing systems in Indonesia’s labour market, resulting in unsecure employment for many. Meanwhile, since Indonesia’s property prices started to pick up in 2004, growing house price inflation through the widespread commodification of housing has shown no signs of stopping – but on the contrary, experiencing annual growth. Declining affordability in housing costs, the increased housing shortage in urban areas, lack of finance availability and affordability, and increasing housing market speculation are important phenomena that have created insecurity within Indonesia’s housing markets. This study focuses on how labour insecurity has influenced the nature of housing consumption of households from varying socioeconomic backgrounds. In exploring both the labour and housing market, the study employs the ‘household strategies’ paradigm to understand the dynamics underlying the ‘housing careers’ of blue-collar and white-collar households. The study differentiates between these households by dividing them into three groups: ‘Defensive’, ‘Managing’ and ‘Improving’ households. This paradigm provides a useful way of understanding residential mobility via the operation of the housing market, exploring how the progression of the household through the housing stock is influenced by the diverse circumstances that prompt different economic strategies, each which seeks to protect that household from the harsh realities of the contemporary neoliberal condition.

Keywords: Job insecurity, Housing market, Household strategies, Indonesia

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Acknowledgements

The author would like to gratefully acknowledge the financial and other support it has received from the General Directorate of Higher Education, Ministry of Education and Culture, Republic of Indonesia, without which this study would not have been possible. In addition, the completion of this research is impossible without the support and encouragement of my supervisors, Dr Suzanne Speak and Prof Rose Gilroy, who always there to listen and to give advice, I thank both of them for all the patience, dedication, guidance, insightful comments, and invaluable suggestions throughout this research. Also thanks to Prof Ali Madanipour and Dr Stuart Cameron who provided useful critical comments in my eportfolio. My sincere gratitude also goes to Marian Kyte for her kind assistance for every administration problems during my studies.

In completing my study, I need to thank you my close friends Erikson Tambunan, Ricky Dwitama who have shared my joy and frustrations, and have supported me while writing this thesis. Thanks to former doctoral students: Wido Tyas Dona, Antonius Karel, Agustina Dewi, Agam Marsoyo, Deva Fosterharoldas Swasto, Yohannes Firzal, Javier Urquizo Calderon, Khalid Setaih. Also, special thanks to the current members of the research group: Sarah Cahyadini Dewantoro, Asmarani Februandari, Maimuna Saleh-Balla and Djuang Solikin. Thanks to my good friends in Jesmond Parish Church and Indonesian Student Society: Ben, Immanuel, Samuel, Joan, Paul Togan Sihombing, Robby Jauhari, Rio Butar-butar, Hifzani Hidayat, Riar Rizaldi and Jose Suryanegara. I also thank Alexander Macleod who help me proofreading and polishing my thesis. I have met many good people during my time in this wonderful city.

I cannot end without thanking my parents and Surbakti and Tarigan families, on whose constant encouragement and support I have relied throughout my studying life. Finally, I would like to appreciate the support of my wife, Helva Riyani Ginting, to whom I dedicate this thesis.

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Table of Contents

Abstract ……………………………………………………………………………… iii Acknowledgement ……………………………………………………………………… iv Table of Contents ……………………………………………………………………… v List of Tables and Figures ……………………………………………………………… xi

Chapter 1: Introduction

1.1 The Argument of the Study ……………………………………………………… 3 1.1.1 Labour Market Flexibility and Homeownership Aspirations …………………….... 3 1.1.2 Background of the Study…………………………………………………………… 7

1.2 Research Questions and Objectives ……………………………………………... 10 1.2.1 Research Questions ………………………………………………………………... 10 1.2.2 Research Objectives ……………………………………………………………….. 12

1.3 Contribution to Theory and Practice ……………………………………………. 12

1.4 The Construction of Study ……………………………………………………….. 12 1.4.1 Research Location ………………………………………………………………….. 12 1.4.2 General Methodology Approach …………………………………………………… 14 1.4.3 The Organisation of the Thesis …………………………………………………….. 15

Chapter 2: Housing, Globalisation and Economic Restructuring

2.1 Prior to the Discussion ……………………………………………………………. 20

2.2 Global Capitalism and Economic Restructuring: How it Works? ……………. 22 2.2.1 Perspective of Global Restructuring ………………………………………………. 22 2.2.2 The Indonesian Context of Restructuring ………………………………………… 23

2.3 Structural Adjustment Theory and the World Bank ………………………….. 27

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2.3.1 Economic Adjustment …………………………………………………………….. 27 2.3.2 The World Bank and Housing Theory Development ……………………………... 30

2.4 Enabling Housing Market: Triggering Economic Crisis? ……………………... 37

2.5 Privatisation and Commodification of Housing: Embedded Liberalism, Neoliberalism and Homeownership …………………………………………….. 39

2.6 Links between Housing and Labour Markets …………………………………. 42 2.6.1 Social Analysis of Housing and Labour Markets …………………………………. 42 2.6.2 Theoretical Assumptions and Concepts …………………………………………… 42

2.7 Conclusion ……………………………………………………………………….. 46

Chapter 3: Methodology and Research Design

3.1 Preparing the Research Plan ……………………………………………………. 50 3.1.1 Organising Qualitative Research ………………………………………………….. 50 3.1.2 Determining the Research Strategy: Why Use Case Studies? …………………….. 52 3.1.3 Pilot Study: Developing the Ideas …………………………………………………. 53

3.2 Data Collection Methods ………………………………………