Social Protection in Indonesia

Current Situa+on and Challenges

Social Protection

Public Intervention

Social Security

Social Assistance

Income Support Programmes

Social Services Programmes

A set of public actions taken in response to levels of vulnerability, risk, and deprivation which are deemed socially unacceptable within a given polity or society Overseas Dev. Inst., 2001

Labour Market Programme

Economic, Social, and Political Framework

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2.00

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14.00

16.00

18.00

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1.00

2.00

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5.00

6.00

7.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Growth (Real GDP, %) Ina@on (%, RHL)

The overview of Indonesias economy from 2004: Other than in 2009, the real GDP over the past 10 years ranges between 5 6.5% InAlation shows sign of volatility the economy is vulnerable to inAlationary pressure A large section of Indonesias population lives just above the poverty line susceptible to a small shock

Source: BPS

Economic, Social, and Political Framework

Source: BPS, SMERU

Based on National Poverty Line ( Rp. 300k/capital/mo.) The GoI has managed to reduce poverty level: a decline of 22.4% from 36.15m in 2004 to 28.07m in 2013.

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35

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45

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

No. of Poor (Rural, Millions)

No. of Poor (Urban, Millions)

Who were categorized in 2009 as

Poor Near-Poor

Non-Poor

Share of Poor(%) in 2008

46.71 20.28 33.01

Share of Near-Poor(%) in 2008

22.32 21.53 56.15

Share of Non-Poor(%) in 2008

5.37 7.65 86.98

Economic, Social, and Political Framework

Source: WDI World Bank

43% 57%

2004

Agriciulture (%) Other Sector (%)

35%

65%

2012

Agriciulture (%) Other Sector (%)

Labor Participation Rate: In 2004, the labor participation rate of total population ages 15+, at national estimate, is 67.5%. In 2011, it increased to 68.3% Employment by Sector: In 2004, around 43% of employed population work in the agricultural sector. In 2012, the share of employment in agriculture decreased to 35% The value added by agricultural sector, however, accounts to around 13 15 % of the GDP for the past 10 years. Indonesias economy is dominated by SMEs (trade amounts to around 50% of GDP in 2013). These enterprises are particularly signiAicant in employment creation.

Labour Market Overview

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Employment Growth Rate

(%)

Unemployment Rate (%)

Youth Unemployment

Rate (%)

Female Par@cipa@on Rate (%)

Employment to Popula@on Ra@o (%)

Informal Employment Rate (%)

School Comple@on Rate (%)

Literacy Rate (%)

2008

2013

Source: G20

Economic, Social, and Political Framework

Source: WDI World Bank, ADB

0.000

0.020

0.040

0.060

0.080

0.100

0.120

0.140

INDONESIA INDIA CHINA

Social Protec@on Index

Labour Market Programme

Social Assistance

Social Insurance

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2.00

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12.00

14.00

16.00

18.00

Health Expenditure, Public (% GDP)

Public Spending on Educa@on

(% GDP)

Health Expenditure, Public (% Gov. Expenditure)

Public Spending on Educa@on

(% Gov. Expenditure

Indonesia

Brazil

Economic, Social, and Political Framework

Source: ILO

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5

10

15

20

Indonesia Brazil Chile China India Mexico Peru South Africa

Thailand The Philippines

Vietnam

Public Social Protec@on Expenditure (% GDP)

2000 Latest Available year

Social Protection in Indonesia Ministry of Social Welfare Programmes

Very Poor HHs

Poor HHs

Near-Poor HHs

Cluster I Family-based Social

ProtecKon Programs:

1. KKS 2. PKH 3. Raskin 4. BOS

Cluster II Community

Empowerment Program

PNPM

Cluster II SMEs Empowerment

Program

KUR

Macroeconomic Policies

Near-Poor HHs

Poor HHs

Very Poor HHs

Cluster IV 1. Aordable housing programme 2. Aording public transportaKon programme 3. Clean water programme 4. Aordable electricity programme 5. Fishermens life improvement programme 6. Urban poors life improvement programme

Social Protection in Indonesia Labour Market Programme Available Schemes:

Ministry of Manpower and Transmigration

Vocational and Skills Training Center,

Domestic Employment

Placement, Overseas Employment Placement

Ministry of Social Welfare

PNPM, Kelompok Usaha Bersama (KUBE) and other

micro credit programme,

Empowerment of indigenous communities

Social Protection in Indonesia National Social Security System

Phased national social security system universal coverage, starting from mandatory membership of workers in the formal sector and voluntary membership of the informal sector worker.

Scope: 1. Health insurance 2. Employment injury 3. Old age (provident fund) 4. Pensions scheme 5. Death bene\it

BPJS Kesehatan and BPJS Ketenagakerjaan

Social Protection in Indonesia Social Assistance Programmmes Ministry of Social Welfare:

Income Support Social Protection and Security Programmes e.g. Cash Transfer (Program Keluarga Harapan)

Income Support Social Rehabilitation Programmes e.g. social services for neglected children, elderly, and disabled.

Income Support

Social Services

TNP2K poverty alleviation coordination,

policy support and research, programs

monitoring and evaluation

Kartu Keluarga Sejahtera, Program Keluarga Harapan (PKH), Bantuan Operasional Siswa (BOS), Raskin, PNPM, Micro Credit Programme

Social Protection in Indonesia Social Rehabilitation Programmes

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12

Poor Households* Neglected children & elderly

Disabled

Target Group (mil)

Source: Kemensos

Referring to Aindings PPLS 2011, there are around 2.5 millions poor households in Indonesia. Assuming average household size of 4, this translates into 10 million of poor individuals. Based on estimates from SUSENAS 2009: Neglected children and elderly are 7.2 millions Disabled individuals are 2.1 millions

Social Protection in Indonesia Challenges Labour Market Programme: High youth unemployment Critical skills gaps Disproportionate number of women who are unable to enter the formal labor market Social Security Programme: Lack of clear strategic planning for the implementation of universal coverage The majority of working population i.e. informal workers is still largely excluded Health insurance subsidies for poor HHs is too low at the moment

Social Protection in Indonesia Challenges Social Assistance Programme: Social services delivery and organization are still under-developed low administration capacity, low quality of infrastructures Funding leakage, elite capture and political manipulation

Quality and reliability of data available Public underfunding

Coordination of different government agencies/stakeholders

Social Protection in Indonesia Possible Solutions Labour Market Programme: Employment-guarantee scheme to construct or rebuild basic infrastructure Skills development Technical and vocational education and training

Increase public support and funding for education and training.

Coordination with other agencies: BAPPENAS, Ministry of Public Work, Ministry of Education

& Culture

Social Protection in Indonesia Possible Solutions Social Insurance/Security: Develop strategic plan: mid- and long-term plan for phased implementation of National Social Security System, detailing processes for each implementation stage, and action plan with objectives to be achieved at each implementation stage Determine clear beneAit design: e.g. policy option, contribution rates based on actuarial projection, sustainable Ainancing mechanism, and organisation arrangement Improve administration capacity and coordination with other stakeholders

Social Protection in Indonesia Possible Solutions Social Assistance: Improve coverage and quality of key safety net programs e.g. Raskin, PKH Build a national targeting system to be applied to all safety net programs improve accuracy, minimize inclusion and exclusion errors Improve coordination of different programs and agencies Improve transparency and increase implementation agency(s) accountability to prevent leakage

Consider lessons from countries that have successfully transitioned to middle-income status

knowledge-sharing

Thank You