Jamsostek told not to seek profit

Moch. N. Kurniawan, The Jakarta Post, Jakarta

State social security firm PT Jamsostek must change its status as a public limited liability company to improve its service to members rather than seeking profit, according to an International Labor Organization (ILO) study.

The study said that Jamsostek must be made into a public social security institution that holds its members' premiums in a trust under the supervision of a tripartite board.

"A public limited liability company is required to make profits and pay taxes, which is inappropriate for a system based on state responsibility and constitutional rights," read the publication, launched on Tuesday.

Once the new form is established, Jamsostek could limit the degree of direct government control over investment of funds.

Thus, a revision of Law No. 2/1992 on Jamsostek was necessary, which could be also the start of an integration of all social security schemes in the country, the report said.

The study commenced on April 1, 2001 and was completed on Dec. 31, 2002.

Jamsostek is responsible for providing social security schemes to private employees in the country. It provides the schemes as protection for wage earners against interruption in earnings due to accident, sickness, death and retirement.

Aside from Jamsostek, there is also state-owned firm Askes that provides a public service health insurance scheme; Asabri which provides a social security scheme for military officers; and Taspen that provides pension and endowment insurance benefits for civil servants.

The government plans to create a single national social security system under the umbrella of a non-profit institution, a move that will force all public limited liability companies to provide various social security schemes for their employees.

The publication also said the government must help extend compulsory coverage to all formal sector enterprises by repealing the sections of Regulation No. 3/1993 that restricts coverage to enterprises with 10 or more employees or a monthly payroll of more than Rp 1 million to improve the coverage of Jamsostek.

"It could help increase Jamsostek membership from the current 32.5 percent of potential formal sector employees to at least 80 percent," it read.

In 2001, Jamsostek members were about 9.3 million of 27.3 million employees in the formal work sector. The total labor force in the country reached 90.81 million at that time.

The publication also said that extension of social security entitlements to the entire population would not be an instant process but a long-term goal.

"There is no doubt that the process in Indonesia will be no more swift than in other countries and the ongoing financial problems may even mean that it takes a good deal longer than most," read the publication.

The publication pointed out that with different programs operated by separate institutions the actual coverage of the social security system was very limited.

"Only 13.5 million workers or only 14 percent of a total potential workforce of about 98 million people (are covered by social security)," it read.