Interview: Elvyn Gaji Masassya
How do you assess the roll out of the new social security system so far, and what remaining challenges will there be before full implementation?
ELVYN GAJI MASASSYA: The new social security system was established at the beginning of 2014 and is set to be fully operational by July 2015. This new system will bring many positive changes to the Indonesian public and, in fact, many of these improvements are already well under way. One key goal is to encourage as many Indonesians to enrol as possible. As such, we have to make the system user-friendly and attractive. While people previously had to visit a local branch to register, this can now be completed via our website or app, greatly reducing this barrier to entry, especially for those without convenient access to a physical branch. This electronic expansion is taking place not only for registration, but also for payment and claims services. In addition, we aim to have a branch in each of Indonesia’s 497 cities. Another improvement is institutional cooperation between public institutions, which helps to provide a faster service in areas such as identity verification. However, the transition is not without its challenges. There are ongoing discussions with the government relating to various regulations, including for the pension programme. This is difficult. An understanding has to be reached between employers and employees in both the formal and informal sectors. While social security previously covered 40m formal workers, we are expanding this to another 70m workers in the informal sector, thus increasing the total to 110m people. There are many unique factors to consider in the informal sector, especially given that these workers are spread across Indonesia’s vast geographical area.
How many people are set to sign up for the new system, and does the country have the infrastructure to support this increase in membership?
MASASSYA: By 2015, social security membership is projected to reach more than 23m people, and this figure is set to double to more than 47m by 2018. In order to facilitate this growth, our budget as a public institution is expected to rise from $15bn to $40bn over the next five years. In terms of infrastructure, the focus is on enhancing efficiency and delivering easier access to service for our members. Not only are new branches being opened, but also the social security system has improved notably in terms of electronic access. Better information technology and databases will successfully support rapid growth in membership. Further, we are working locally with governors to ensure that institutions comply with social security regulations regarding the registration of workers, so that those in the informal sector can have a degree of protection that was not previously available. Through these channels the Indonesian public will have access to a stronger, more functional social security system.
What impact will this programme have on Indonesia’s competitiveness in the labour market?
MASASSYA: It is certain that there will be a positive correlation between the new social security system and Indonesia’s competitiveness, especially in terms of productivity. In both the formal and informal sectors, expansion in the coverage of social security means that the risks to workers are reduced. This will increase workers’ productivity, which in turn will boost the revenue of Indonesian companies as well as the income of employees. Social security also serves to curb social unrest in terms of conflict between employers and workers, in the process enhancing confidence among foreign investors considering investments.
We also recognise that there is still a significant problem in Indonesia in terms of income distribution inequality, and the new programme seeks to deliver not only basic welfare for workers, but also to improve the situation of those that are worst off through food and transportation benefits. There is a sense of urgency for social security across the archipelago, and I am confident that this new system can be a part of the engine of economic growth for the country in the years to come.
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