In Indonesia one of the biggest welfare states worldwide is evolving. The National Social Security System (SJSN) is a national program aimed to ensure social protection for all Indonesian people – in the formal and informal sector. Under the SJSN, all people are prospectively expected to obtain sufficient protection against any loss of or reduction in their income as a result of illness, work accidents, advanced or retirement age and death.
The BPJS Employment was established on January 1, 2014 and started operation on July 1, 2015 to provide Employment Social Security schemes consisting of Work Accident Security (JKK), Old-Age Security (JHT), Pension Security (JP) and Death Security (JKm). The implementation of the employment social security program and its sustainable financing is a huge task and requires strategic measures to be taken by the Government and the BPJS Employment agencies. One necessary condition is a comprehensive concept of financial sustainability to set adequate contribution rates - based on demographic and economic projections. Equally important is to gradually increase the membership, in order to achieve universal coverage of all formal and informal workers. The recruitment in the informal sector is however a major challenge, since questions like the cost-sharing formula for contributions between formal and informal workers are not clear. Furthermore it seems that the various pension or retirement schemes already existing have to be harmonized within the desired universal scheme.
In times of globalization, global supply/value chains, growing economic integration, the rising age of digital economy and hence a rapidly changing and highly competitive business environment, establishing good industrial relations practices is a progressive and essential step to support the innovation potential across all sectors, enhance the competitiveness of an enterprise, preserve existing regulatory frameworks as well as to respect workers’ rights and therefore to contribute to the social progress of a country. In an inclusive society and economy innovation potential cannot only be stimulated by recruiting young employees but also by opening up the labour market particular for women, senior employees as well as for persons with disabilities.
In close cooperation with our partner ministry Kemenko PMK, other government agencies and with partners from civil society FES is committed to make a contribution to support Indonesia’s social security reform and good industrial relations. For instance through Socialization workshops for journalists on national social security systems – organized together with the National Social Security Council (DJSN) and the Alliance of Independent Journalists; through an exchange on sustainable public pension plan financing with Kemenko PMK, DJSN and partners from Civil Society; by debates on the characteristics of different welfare state models and the different levels of inclusion; by discussions on the integration of the informal sector in the social security schemes, by activities on industrial relations and the labour markets; by exchanging ideas how to include persons with disabilities in the labour market and by seminars and studies on women empowerment.