Assessment Based National Dialogue and the Indonesian experience

Assessment Based National Dialogue and the Indonesian experience Presented by V. Schmitt & T. Muhamad Training “Social protection: Assessment, Costing and Beyond”, 15 -19 October 2012

Structure of the presentation • Objectives, process, actors • Details on the three steps of the ABND • Experience in Indonesia

What do we want to know? “Is the social protection floor a reality? ” Full achievement of the SPF !! Still some gaps recommendations to the government to reach the full accomplishment of the SPF

“Is the social protection floor a reality? ” DO all residents have access to essential health care? DO all children enjoy income security through transfers in cash or kind access to nutrition, education and care? DO all those in active age groups who cannot earn sufficient income enjoy a basic income security? (particularly in case of sickness, unemployment, maternity, disability) DO all residents in old age have income security through pensions or transfers in kind?

“Is the social protection floor a reality? ” Some countries may have the Floor for Health Level of protection But many gaps for children or the working age or the elderly Poor Rest of informal sector Population Formal sector

“Is the social protection floor a reality? ” 1. What is the Social Security Situation? 2. How far are we from the achievement of the SPF? -> gaps, issues 4. How much would it cost today and in the future? 3. What should be done to complete the floor? 5. Can the Government afford it? Do we need to increase the fiscal space? 6. How to ensure that the recommendations are endorsed and listen to? 7. How to advocate for the SPF as a whole or specific recommendations? (ROR…)

“Is the social protection floor a reality? ” Step 1 – Building the assessment matrix including the identification of priority recommendations Step 2 – Rapid Assessment Protocol to estimate the cost of implementing the social protection provisions Step 3 – Finalisation of the assessment report for endorsement and further action by the higher levels of government ASSESSMENT FACTSHEET:

Step 3 Step 1 9. Endorsement by UN/RTG joint team and presentation to the government (Oct-Nov 2012) 8. Finalization of Costing, Fiscal space, Writing ABND report (May. August 2012) 1. Inventory of schemes (June 2011) 2. Draft Assessment Matrix (July 2011) 3. Dialogue # 1 on ABND matrix (August 2011) ABND Process Thailand 7. Dialogue # 3 on results of costing (March 2012); Training on costing (May 2012) 6. Data collection for the RAP protocol and costing of the scenarios (Nov 2011 - March 2012) 4. Translation of policy recommendations into “costable” scenarios 5. Dialogue # 2 on proposed scenarios (November 2011, February 2012) Step 2

Stakeholders Line ministries (Labour, Health, Social Welfare, Planning, Education, Finance, Rural Development) Worker and employer organisations National Statistics Office, academia UN agencies involved in SPF (ILO, UNICEF, WHO, UNESCAP, UNFPA, UNAIDS, UNESCO, UNWOMEN, UNDP, WFP), World Bank, ADB, other development partners Local governments Civil society

Structure of the presentation • Objectives, process, actors • Details on the three steps of the ABND • Experience in Indonesia

STEP 1: Building assessment matrix SPF objectives Existing Planned SP Policy SP provisions gaps provisions (strategy) Implement- Recommation issues endations Health Children Working age Elderly Four SPF guarantees Identifying existing situation in the country Identifying policy gaps and implementation issues, addressing which would complete the SPF Priority policy options, to be decided through national dialogue

STEP 1: Building assessment matrix • Policy gaps = Missing legislation or policy leading to the exclusion of a share of the population from some parts of the floor Only formal sector workers and the very poor are entitled to social health protection Only formal sector workers are entitled to a child allowance for their pre-school children There is no Unemployment protection scheme in case of loss of employment (for all workers)

STEP 1: Building assessment matrix • Implementation issue = Despite existing policy or legislation, the effective access has not yet happen Despite universal access to social health protection people from rural areas have only limited protection due to poor health care infrastructures There is a lack of enforcement of the Social Security Act due to low compliance among employers to register their staff and lack of resource to reach out informal sector workers

From Step 1 to Step 2 2 Types of recommendations! Recommendations = Increase benefits or population covered, introduce new SPF benefits We can use the RAP Protocol Qualitative recommendations on the management of existing schemes, review targeting & registration mechanisms, introduce a social insurance scheme (unemployment insurance, pension system), conduct a tax reform, improve the quality of health or education … We need to conduct complementary studies

STEP 2: Rapid Assessment Protocol What is it? What is it for? RAP is a simplified Excel tool developed by ILO to estimate the cost of providing SPF benefits (for health, children, working age and the elderly)

STEP 2: Rapid Assessment Protocol A set of excel sheets 1 - Data collection Labour market model (EAP) General govt operations model (GGO) Macroeconomic model (ECO) 2 - Cost calculation & projection Expression as % of GDP & Govt expenditure Demographic framework (POP) Costing of benefits Summary and results 3 - Projected cost of combined benefit packages

STEP 2: Rapid Assessment Protocol How to use the RAP? Recommendations are translated into scenarios (specific social protection provisions) that need to be introduced or further expanded Cost of implementing the scenarios is calculated using RAP work sheets

STEP 2: Rapid Assessment Protocol How to use the RAP? The estimated cost can be linked to available fiscal space (government budget, GDP) to check the financial feasibility of recommendations

STEP 2: Rapid Assessment Protocol The additional cost of SPF packages expressed in % GDP and Government expenditure

STEP 2: Rapid Assessment Protocol Fiscal space analysis We add the cost projections of the proposed scenarios to the budget projections of the government in the GGO sheet : Case 1: The new projected budget is balanced: There is fiscal space Case 2: The new projected budget is in deficit: The fiscal space needs to be increased through (i) changes in budget allocations, (ii) an increase in Government revenues, e. g. through additional taxes In both cases (and particularly in the second one) the Government needs to be convinced that investing in the SPF is good for the country, growth, and other parameters

STEP 3: Finalization for endorsement Presenting the final report to higher levels of Finalising the assessment report with stakeholders Government for endorsement and further action Government may conduct a pilot for testing the recommendations Or Government may conduct further feasibility studies: • financial or actuarial studies • legal framework review & revision • personnel and capacity review

STEP 3: Finalization for endorsement Convincing policy makers 1. Evidence from other countries 2. Models to assess expected impact on poverty reduction, reduction of inequalities, employability and productivity, growth 3. Models to assess return on investment (ROR) 4. Marketing and communication to inform the general public, civil society, workers & employers, the parliament and the Government

Strengths of the ABND It provides a coordinated, holistic and coherent approach to the development of social protection in a country It initiates a national dialogue on social security strategy, completion of the SPF, priority policy options, problems in providing social protection to all and ways to address the issues It provides evidence on the feasibility of different policy options It can serve as a baseline for monitoring of SPF implementation (in the framework of national plans)

Limitations of the ABND The analysis conducted under STEP 1 is simplistic and does not go into the details of operations and institutional capacities The social dialogue happens usually at the technical level and higher level policy makers or “champions” may need to be involved during STEP 3 The RAP is based on a number of assumptions (as any model) leading to rough estimates of future costs; additional actuarial studies are needed for the finalization of the design of the proposed schemes

Structure of the presentation • Objectives, process, actors • Details on the three steps of the ABND • Experience in Indonesia

Assessment Based National Dialogue in Indonesia