Social Protection Assessment Based National Dialogue in Indonesia

Social Protection Assessment Based National Dialogue in Indonesia: Existing schemes, gaps, recommendations and scenarios Jakarta, 13 December 2011 Sinta Satriana

Health “Official” Coverage < 1% of informal economy covered by Jamsostek pilot program Jamkesmas and Jamkesda: 100% poor & near poor covered Near poor & Poor One third Informal economy two third Jamsostek: 18% of private sector employees 100% of civil servants / police / military & families Private sector Civil serv Formal Economy One third

Health Real coverage Jamsostek for informal Economy 50% of the poor through Jamkesmas & additional % through Jamkesda 18% of private sector employees covered 100% of the civil servants / police / Jamkesmas & military & families Jamkesda, through Askes Near poor & Poor One third Informal economy two third Private sector Civil serv Formal Economy One third

Health Coverage mandated by Law 40/2004: 100% Contribution paid by the government Near poor, Poor, disabled, unemployed Contribution paid by workers, in nominal amount Non-poor informal economy Contribution paid by workers&employers, in % of salary Formal Economy

Health Main gaps and implementation Issues: • • • Non poor informal economy workers and their families not covered Low coverage in the private sector, desoite mandatory participation Targeting issues lack data on beneficiaries and utilization of Jamkesmas Unclear benefit package in Jamkesmas leading to unanticipated out-of-pocket payments Exclusion of diseases such as HIV and cancer Main Recommendation • • Develop a specific benefit package for the Jamkesmas program and Improve database system Improve linkages with Health Care supply (reception of patients, payment system of the hospitals…) Increase enforcement of Jamsostek Law in the private sector Increase coverage of Informal Economy workers through the design of adapted enrolment & contribution mechanisms, a mapping of IE workers, the expansion of Jamkesmas to a larger population, the development of regulations to implement Law #40, 2004, etc.

Costing Exercise Low Scenario: • Extension of Jamkesmas to the uncovered poor due to mis-targeting (Current Jamkesmas cost assumption) • Inclusion of HIV treatments and checkups for all active age population • Introduction of a universal package to reduce Mother to Child HIV Transmission Costs 0. 27% of GDP b 2020 Near poor & Poor Non-por Informal One third Private sector One third Civil serv

Costing Exercise High Scenario: • Health care for all informal economy population, higher level of benefits based on WHO’s report of the Commission on Macroeconomics and health (USD 49, 2011 price) • Inclusion of HIV treatments and checkups for all the population • Introduction of a universal package to reduce Mother to Child HIV Transmission Costs 0. 76% of GDP by 2020 Near poor & Poor One third Informal economy two third Private sector Civil serv Formal Economy One third

Children The “official” coverage 4. 1 million very poor students receive scholarships PKSA 17% of the poor HH covered by PKH Universal coverage of BOS Raskin Near poor & Poor One third Informal economy two third Small child allowances for civil servants Private sector Civil serv Formal Economy One third

Children The “real” coverage Raskin and Scholarships have targeting errors scholarships PKSA 17% of the poor HH covered by PKH Raskin Near poor & Poor Universal coverage of BOS Informal economy Low family allowances for civil servants Private sector Civil serv

Children Gaps and Implementation Issues: • • • Limited coverage area of the PKH program Insufficient supply of health and education services to ensure fulfillment of the PKH conditionalities Lack of reliable data and efficient targeting mechanisms Despite BOS allocation, schools still apply extra fees in practice Unclear targeting mechanism of the Scholarship for the poor program Main recommendation • • Extend the coverage of the PKH and scholarship programs, and calculate the corresponding costs Explore the possibility of introducing a universal child allowance, and calculate the corresponding cost Increase availability of Schools and Health care services in remote areas Develop more linkages between access to health, nutrition and education Improve targeting and data collection under all programs Reduce administrative costs of Raskin Explore the merger of PKH and Scholarship program to avoid duplication

Children Low Scenario Extension of the PKH program to all poor households (and not only the very poor households) Will cost 0. 05% of GDP by 2020 scholarships PKSA PKH Universal coverage of BOS Low family allowances for civil servants Raskin Near poor & Poor Informal economy Private sector Civil serv

Children High Scenario Universal child allowance (400, 000 IDR/year, 2011 price) Will cost 0. 2% of GDP by 2020 Universal child allowance Near poor & Poor Informal economy One third Private sector One third Civil serv

Working Age Current coverage If the legislation was enforced the total private sector would be covered 33% of private sector covered in work injury, sickness& death Jamsostek pilot program for informal (injury & death): <1% Scattered interventions (Asekesos, PNPM, KUR, BLK, …) Near poor & Poor One third Informal economy two third 100% of the civil servants / police / military Private sector Civil serv Formal Economy One third

Working age Coverage mandated by Law 40/2004: 100% Contribution paid by workers, in nominal amount Informal economy Contribution paid by workers & employers, in % of salary Formal Economy

Working Age Main Gaps and Implementation Issues • • • Almost no income security measures for informal economy workers and extension of the Jamsostek pilot scheme is very slow Limited coverage of formal sector workers due to high evasion Severance pay provides insufficient protection compared to unemployment insurance Lack of harmonization of the maternity benefits formal employees Low coverage and low level of protection under the Askesos program The provision of income security benefits is rarely linked with measures to increase employability, facilitate job creation or return to employment

Working Age Main Recommendation: • • • Improve enforcement of the Labor Law to reduce evasion (explore the TWIN system) Feasibility study of an unemployment insurance scheme Develop linkages between Public Employment Programs and skills development Explore the possible introduction and calculate the cost of a maternity benefit for women in the informal economy Design and pilot test a Single Window Service mechanism for workers in the informal economy that would : Facilitate their registration and access to social protection and employment services Assess their vulnerability and skills needs Ensure proper monitoring and evaluation of existing programs Enhance coordination between institutions and interventions

Working Age Scenario Establishment of a public works program linked with vocational training (30 days of work, minimum wage, vocational training) Would cost 0. 35% of GDP by 2020 Minimum income security through integrated PWP & skills development Near poor & Poor One third Informal economy two third Private sector Civil serv Formal Economy One third

Old age and disability protection coverage Allowance for elderly with no family support (1% of estimated need) Severe disability allowance 33% of private sector employees, Jamsostek saving < 1% of informal economy covered by Nursing home Jamsostek pilot program subsidy Near poor & Poor Informal economy One third 100% of the civil servants / police / military: Pension and savings Private sector One third Civil serv

Old age and disability Law 40/2004: Old age saving for all workers and periodical pension formal workers Old age savings, contribution in nominal amount One third Informal economy two third Pension and old age savings, contributions in % of salary Formal Economy One third

Elderly and Disabled Main Gaps and Implementation Issues • • Almost no income security provisions for the elderly in the informal economy High evasion in the private formal sector Old age lump sums do not provide adequate protection The sustainability of the unfunded defined-benefit scheme for civil servants is questioned The coverage of the non-contributory minimum pension program is limited Lack of harmonized definition of disabled people (across Ministries, BPS, etc. ) Lack of comprehensive and comparable database with a clear classification of the disabled people

Elderly and Disabled Recommendations • Conduct a Feasibility study of a defined benefit pension scheme for • • • formal sector workers Explore the possible extension and calculate the cost of a noncontributory minimum pension scheme for the elderly and people with permanent disabilities Create a comprehensive database of disabled people and elderly, to facilitate targeting Increase the budget allocation to nursing and other charitable homes

Low Scenario: • Extension of existing non-contributory pension scheme for all severely disabled persons and all vulnerable elderly (i. e. without family support) would cost 0. 09% of GDP by 2020 Allowance for elderly with no family support Severe disability allowance Near poor & Poor Informal economy One third Private sector One third Civil serv

High scenario Universal pension at the level of poverty line Would cost 0. 95% of GDP by 2020 Near poor & Poor Non-poor Informal One third Private sector One third Civil serv

Thank you Sinta Satriana sintasatriana@yahoo. com