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Social

Protection in
Indonesia
Current Situa+on and Challenges

Social Protection

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

Social
Security
Income Support
Programmes

Public
Intervention

Social
Assistance
Social Services
Programmes

Economic, Social, and Political


Framework

7.00

18.00
16.00

6.00

14.00
5.00

12.00

4.00

10.00

3.00

8.00
6.00

2.00

4.00
1.00
0.00

2.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Growth (Real GDP, %)

Source: BPS

Ina@on (%, RHL)

0.00

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

Economic, Social, and Political


Based on National Poverty
Framework

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.

45
40
35
30

Who were categorized in 2009


as

25

Poor

20
15
10
5
0

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

5.37

86.98

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

No. of Poor (Rural, Millions)


No. of Poor (Urban, Millions)

Source: BPS, SMERU

Share of Non-
Poor(%) in 2008

7.65

Economic, Social, and Political Framework


2004 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%

43%
57%

Agriciulture (%)
Other Sector (%)

2012
35%
65%

Agriciulture (%)
Other Sector (%)

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.
Source: WDI World Bank

Labour Market Overview


100

90

2008
2013

80
70
60
50
40
30
20
10
0
Employment Unemployment
Youth
Female
Employment to Informal
Growth Rate
Rate (%) Unemployment Par@cipa@on Popula@on Employment
(%)
Rate (%)
Rate (%)
Ra@o (%)
Rate (%)

Source: G20

School
Comple@on
Rate (%)

Literacy Rate
(%)

Economic, Social, and


Political Framework
18.00

Indonesia
16.00

Brazil

Social Protec@on Index

14.00

0.140
12.00

0.120

10.00

0.100

8.00

0.080

6.00

0.060

4.00

0.040

2.00

0.020
0.000

0.00
Health
Public Spending
Expenditure, on Educa@on
Public (% GDP)
(% GDP)

Health
Public Spending
Expenditure, on Educa@on
Public (% Gov.
(% Gov.
Expenditure) Expenditure

Source: WDI World Bank, ADB

INDONESIA

INDIA

Labour Market Programme


Social Assistance
Social Insurance

CHINA

Economic, Social, and Political


Framework
Public Social Protec@on Expenditure (% GDP)
20

15

10

0
Indonesia

Brazil

Chile

China

India

2000

Source: ILO

Mexico

Peru

Latest Available year

South
Africa

Thailand

The
Vietnam
Philippines

Social Protection in Indonesia Ministry of


Social Welfare Programmes
Macroeconomic Policies
Near-
Poor
HHs
Poor
HHs
Very
Poor
HHs
Near-
Poor
HHs
Poor
HHs
Very
Poor
HHs

Cluster I
Family-based Social
ProtecKon
Programs:
1. KKS
2. PKH
3. Raskin
4. BOS

1.
2.
3.
4.
5.
6.

Cluster II

Community
Empowerment
Program

PNPM

Cluster II

SMEs Empowerment
Program

KUR

Cluster IV
Aordable housing programme
Aording public transportaKon programme
Clean water programme
Aordable electricity programme
Fishermens life improvement programme
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
BPJS Kesehatan and BPJS Ketenagakerjaan

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

Social Protection in Indonesia Social


Assistance Programmmes
Ministry of Social Welfare:
Income
Support
Income
Support
Social
Protection and Security
Programmes e.g. Cash
Transfer (Program Keluarga
Harapan)
Income
Support
Social
Social
Services
Rehabilitation Programmes
e.g. social services for neglected
children, elderly, and disabled.

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
12

10

Poor Households* Neglected children


& elderly

Target Group (mil)

Source: Kemensos

Disabled

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