Employee social security programs in line for reform

JAKARTA (JP): Despite making strides in its performance, state-owned worker insurance company PT Jamsostek needs revamping to provide maximum benefit for workers and their families, company president Ackmal Husin said.

He recommended that the government revise the 1992 Social Security Law, which obliges all companies with at least 10 workers to participate in schemes administered by Jamsostek.

The programs provide health care, occupational accident, retirement and life insurance.

"The social security programs should not cover workers only, but all members of the work force, including teachers, lecturers, state-owned company employees and even the jobless. PT Jamsostek should also be converted into an independent nonprofit institution," he told The Jakarta Post here last week.

Under the proposed scheme, a tripartite board representing the government, companies and workers would manage a trust fund collected from workers in the form of a monthly premium.

Due to its larger scope of services, the new insurance institution would fall under the president's supervision, Ackmal said.

The government has to contribute to the insurance program as indicated in the 1945 Constitution and the Universal Declaration on Human Rights, he said. In the current scheme, the government, through the finance ministry, is Jamsostek's biggest shareholder.

Due to Jamsostek's nature as a non-profit organization, Ackmal said it was impossible to privatize the social security institution.

"Private companies would be unable to administer the insurance programs because they would suffer losses," he said.

Ackmal said the proposed scheme was similar to ones in Singapore and Malaysia, where the social security programs are run by an independent tripartite agency directly under supervision of the prime minister.

He added that Jamsostek established a tripartite team to amend the 1992 law.

Ackmal acknowledged Jamsostek was frequently a target of criticism because of allegations of graft and malfeasance.

"The leakages have a lot to do with the government's intervention in the company's internal affairs," Ackmal said.

The company was at the center of a payoff scandal in 1997 for reportedly providing funds to legislatures to ensure the House of Representatives' approval of its labor bill.

An audit by the state comptroller later found misuse of funds in the construction of Jamsostek Tower on Jl. Gatot Subroto in South Jakarta. Former manpower minister Abdul Latief was named a suspect by the South Jakarta Prosecutor's Office.

Performance

Ackmal said PT Jamsostek's significant progress was underscored by its Rp 10 trillion investment.

According to the company's data, the number of participants of security programs increased to 8.7 million in 1999 from 7.2 million in 1998. Premiums collected from workers and their employers soared 13 percent to Rp 1.2 trillion during the same period. The company's income from reinvestment climbed 22 percent to Rp 1.8 trillion last year.

Ackmal said reinvestment programs included the purchase of shares in the stock market, bank deposits, commercial papers and obligations.

He said the company's capital which was reinvested was secure.

"Jamsostek would be able to pay its obligations to workers even if the country collapsed," he said, adding that the company set aside part of its income from its reinvestment to cover its annual operation costs.

He believed the social security programs had yet to provide optimum protection for the entire work force.

"Despite the compulsory programs, only 10 percent of more than 80 million workers have been insured under the four schemes."

He said Jamsostek was waiting for an initiative from the government to reform the social security insurance programs and the company itself. (rms)