The Project builds on the achievements made by ‘the ILO/Japan project for promoting and building social protection in Asia (3rd phase): Extending social security coverage in ASEAN (2016 – 2019)’ as well as other development cooperation projects. This new project targets two countries: Viet Nam and Indonesia. Both countries have social protection system that have not yet reached its maturity stages and the extension of coverage is still a challenge. With ILO’s technical supports through the previous project, both Indonesia and Viet Nam have developed comprehensive plans, strategies and national capacities to reform social security systems. The new phase of the ILO/Japan project will build on these roadmaps and enhance further national capacities towards the improvement of the social security systems.
One of the highest priorities for Indonesia in the coming years will be the design and implementation of the new employment insurance scheme. The government submitted a draft ‘Omnibus Law on Job Creation’ to the House of Representatives on 12 February 2020; and the President signed and released the Law Number 11 of 2020 concerning Job Creation on 3 November 2020. Now that the law is adopted, the Government of Indonesia has to determine the detailed design of the scheme and its implementation arrangements; and therefore, the government requested the ILO to support their efforts in this regard.
Discussions on the establishment of an employment insurance has been part of stakeholders’ plan to overhaul the entire social protection system. On 4 December 2018, the National Tripartite Committee members requested the ILO to conduct a comprehensive assessment of the social security system; and more recently in the wake of the COVID-19 crisis, the government’s stakeholders did so too.
There are a number of issues that need improvement. For example, an old-age individual saving account scheme (JHT) collects the largest contributions of BPJS Employment and plays an overlapping function with the incoming employment insurance (JKP) and the existing old-age pension (JP). The old-age pension legally excludes a large majority of workers (i.e. wage earners who work at micro-enterprises and non-wage earners) and offers inadequate benefits compared to the requirement of the ILO’s social security minimum standards, while means-tested old-age benefit narrowly targets extremely limited beneficiaries without linkage to the BPJS’s old-age pension. Moreover, adding maternity and sickness benefits to the existing range of benefits would attract working age populations to participate in the BPJS Employment schemes; and as a consequence, would contribute to the formalisation of the informal economy.
The project will focus on creating conditions to gradually build comprehensive sustainable social protection systems for all by enhancing the expansion of the system coverage to workers (both in formal and informal economy), with a particular focus on the creation or reinforcement of the employment insurance branch and improving its linkages with ALMPs, and increasing its effectiveness and efficiency. In Indonesia the project will conduct a series of policy research; and facilitate policy dialogues and capacity building based on knowledge and evidence produced through the research activities.
- More workers are covered by social security schemes, through gender sensitive and rights based improved policy and legal frameworks, and enforcement and delivery mechanisms in Indonesia.
- Better understanding and increased awareness at the regional level on the importance of social protection, with a focus on Employment Insurance.