INDONESIA COUNTRY REPORT

INDONESIA COUNTRY REPORT

I.        GENERAL

Historically, the social protection system in Indonesia was started in 1977 by introducing a social insurance for workers in the formal sector (i.e private and state-owned companies), known as ASTEK (Employees’ Social Insurance/Asuransi Sosial Tenaga Kerja). The aim was to provide employment accident insurance, a provident fund and death insurance. The schemes were administered by PT. ASTEK, a state-owned company. In 1992, Indonesia enacted a major reform of its social security system, as a new social security law was adopted.

This law established a new security system known as JAMSOSTEK (Social Security for Private Sector Employees). Under this revised law, the ASTEK scheme was changed to JAMSOSTEK scheme and broadened with medical care benefits. PT ASTEK changed to PT. JAMSOSTEK. This new program greatly improved the benefits for workers covered by the scheme. It provides basic protection in the formal sector for workers and their families. It provides savings for old age and certain other circumstances, death benefits, benefits for accidents occurring at work or occupational illnesses as well as medical care coverage.

But this social security system still has several weaknesses, such as:

1. Limited Coverage

-         The Jamsostek scheme’s coverage of only focus on employees/workers in the formal sector. Home industries and informal sector workers are not under statutory coverage, even though since economy crisis hit Indonesia in 1998 the growth of small enterprises and informal sector workers has been increased rapidly.

-         Provision of “opting-out” for qualified schemes

-         Low compliance rates (less than 50 %)

-         Contribution evasion by under declaration of tax base (especially health care).

2. Insufficient Protection

-         Inadequate benefit level and payment method (especially old age)

-         Problems with the legal status (obligation of dividends and tax, weak law enforcement mechanism)

-         Gap in the range of protection (unemployment) 

3. Not all Jamsostek schemes comply fully with the low and government regulations on employees’ social security or with international standards (as defined by the ILO).

The social security system in Indonesia is less developed than other countries, even if we compare to other developing countries, government spending on social security is relatively small. For example, in 1996 spending on employment injury, medical care, old age and death on average was not higher than 5% GDP. This is very likely due to the economic, political and social environment as well as the people’s negative attitude towards the government because of corruption, collusion and nepotism. The political and social environment for the development of a social security system in Indonesia is not very conducive at this time.

II.      ILO CONVENTION, NATIONAL LEGISLATION AND REGULATIONS

Indonesian Government has already ratified 14 (fourteen) ILO Convention, which is:

1.       ILO Convention on Human Rights:

a.       ILO Convention no. 29 on Forced Labor

b.      ILO Convention no. 98 on Right to Organize and Collective Bargaining

c.       ILO Convention no. 100 on Equal Remuneration

d.      ILO Convention no. 87 on Freedom of Association and Protection of the Right to Organize

e.      ILO Convention no. 105 on Abolition of Forced Labor

f.         ILO Convention no. 138 on Minimum Age

g.      ILO Convention no. 111 on Discrimination (Employment and Occupation)

2.       General ILO Convention:

a.       ILO Convention no. 19 on Equality of Treatment (Accident Compensation)

b.      ILO Convention no. 27 on Marking of Weight (Packages Transported by Vessels)

c.       ILO Convention no. 45 on Underground work (Women)

d.      ILO Convention no. 106 on Weekly Rest (commerce and Offices)

e.      ILO Convention no. 120 on Hygiene (Commerce and Offices)

f.         ILO Convention no. 144 on Tripartite Consultation (International Labor Standards)

g.      ILO Convention no. 69 on Certification of Ships’ Cooks

The Government of Indonesia has not ratified the ILO Convention no. 102 year 1952 on Social Security Benefit yet due to the present economy situation. We could not able to implement the whole content of this convention.  But, however, the government takes it as a general guideline to formulate the social security schemes. Recently, the government has proposed a draft of new law on social security system, including the Jamsostek schemes to the House of Representatives and involving several trade unions to give their main views.

The current social security schemes are provided under various legislations, and delivered under different programs, methods, systems, rates of contribution, and benefits.

1.       The social assistance is provided under Law number 6 year 1972 on social welfare which also contain social security provision.

2.       The compulsory social insurance is provided under several legislations based on the membership.

a.       Law number 11 year 1969 for the Civil Servants, Law number 6 year 1966 for the Armed Forces, and Law number 3 year 1992 for the Private Employees;

b.      The social insurance for the civil servants and the armed forces are basically pay-as-you-go, defined benefits plans; whereas the private employees social insurance is essentially advance-funded defined contribution plans;

c.       The civil servants and the armed forces social insurance are financed wholly by the employee; whereas the private employees social security are financed jointly by the employer and the employee;

d.      The benefits of the civil servants and the armed forces are basically in monthly payments, whereas the private employees are paid in a lump sum.

3.       The voluntary private/commercial insurance is provided under Law number 2 year 1992 on Insurance, and Law number 11 year 1992 in Pension Fund.

      Sometimes the above-mentioned law contradict and conflicting each other.

III.    TRADE UNIONS ACTIVITIES IN THE PROMOTION OF SOCIAL PROTECTION

The involvement of Trade Union in the social protection activities begin in 1972 when the Indonesian Tripartite Body established, comprising representatives of the government, workers and employers.

As a result of good cooperation between the three institutions, they have already issued many joint decrees. Both workers and employers representatives have strong influence in the preparation or formulation of decrees. One example of a joint decree that has been issued as a result of strong influence by the trade union is the issued of Law no. 3 year 1992 concerning the workers’ social security program, in which the coverage for workers has been expanded and improved.

At present, the trade unions actively involve in the formulation of new law on social security system. They urged the government to continue the internal reforms in the social security programs, increased their concerned with worker welfare issues and stop external interferences in the company’s internal affairs that have, so far, cost the statutory body (PT. Jamsostek) billions rupiah. The law hopefully will serve as an umbrella over a comprehensive and integrated social security schemes, which provides protection for the whole labor force “from the cradle to the grave”. i.e. from maternity benefits to survivor or death benefits.

IV.    INDONESIAN TRADE UNIONS CONGRESS (ITUC) STRUCTURE AND EDUCATION PROGRAMS

ITUC was declared and established on February 2, 2003. It is consist of 11 Affiliation from various trade unions organization.

ITUC structure is as follow:

1.       National Convention

2.       National Council

3.       National Executive Board

      The National Executive Board has 6 departments, which are:

1.       Department of Organizational Development and Publication

2.       Department of Foreign Relation

3.       Department of Education, OSH and Environment      

4.       Department of Economy, Wages and Social Security

5.       Department of Industrial Relation, Law and Advocating

6.       Department of Research, Productivity and Development

The action plans of Department of Education, OSH and Environment

§  Support curriculum development for workers education by affiliating national federations members

§  Support affiliating federation members in organizing workshop, training including assistance in mobilization for funding support

§  Organize training on Women Leadership; Collective Bargaining and Negotiation; OSH

§  Set up library and information center

§  Establish a training center

The action plans of Department of Economy, Wages and Social Security

§  Design and advocate standardization on wages system in Indonesia

§  Recommend to government the application of minimum wages as social safety net

§  Reform of social Security system and establish Social Security Watch

§  Empowerment of Small, Medium, Enterprises, informal sector and involve in poverty reduction

§  Set up solidarity fund for Indonesian workers

§  Increase access of workers for share ownership

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