Managing social security

Managing social security

After some hesitancy, PT Jamsostek, the state-owned social
security company, has admitted that it took Rp 3.1 billion
(US$1.3 million at the old exchange rate of Rp 2,400 per $1), out
of its huge fund for what really amounted to "servicing" honorary
members of the House of Representatives in deliberating the
government-sponsored manpower bill this year.

On Wednesday, Jamsostek president Abdillah Nusi confirmed the
allegation which had been circulating for three days. But he
defended the move as being the company's contribution toward the
new law which he insisted was designed to give greater protection
to Indonesia's 90-million-strong workforce. "What's Rp 3.1
billion if it means protecting millions of workers?" he said
smugly.

Jamsostek and senior officials of the Ministry of Manpower had
been ducking the question for three days since copies of the
correspondence between the ministry and the insurance company
found its way to reporters Monday. Some, like Minister of
Manpower Abdul Latief, tried to hush persistent reporters. Others
even issued outright denials.

The ministry, which oversees PT Jamsostek, represented the
government in the deliberation of the manpower bill which the
House endorsed in September.

The bill had been a source of controversy from the start, with
labor activists, including those from the government-backed
Federation of the All-Indonesia Workers Union, denouncing it as a
step backward. Deliberation was postponed until after the May
election. When the House started debating the bill, it did so in
a swift manner, working overtime, while often taking the
deliberations to luxury five-star hotels. Hence, so the argument
goes, the huge contribution from PT Jamsostek.

While Wednesday's admission by Abdillah Nusi was welcomed, it
is but a first step toward clarifying what some newspapers have
already described as a scandal. There remain many unanswered
questions about the purpose of the money, the amount involved,
the extent to which the Ministry of Manpower can dictate to PT
Jamsostek, and about the way that Jamsostek's huge fund is
managed, or more aptly perhaps, mismanaged. There are also
questions about the delay in clarifying the issue, and about the
apparent lack of candor among the officials.

In all fairness to Jamsostek executives, some of these
questions should be answered by minister Latief. Already, some
labor activists suspect collusion between the government and the
House in ensuring the bill's smooth passage.

Jamsostek's fund -- the company collected Rp 1.1 trillion in
premiums from workers last year -- is essentially money entrusted
by hundreds of thousands of people to the social security
program. How the fund is managed, therefore, should be more
transparent. It is not enough to simply state that all its
spending had been approved by the board of commissioners, like
the Rp 3.1 billion for the deliberation of the bill.

The latest disclosure adds to the list of questionable
investments or expenditures that Jamsostek has made this year.

Last week, the Supreme Audit Agency ordered a reappraisal of
the cost of constructing the Rp 319.5 billion Menara Jamsostek, a
luxury office building on Jl. Gatot Subroto, noting an unusually
high markup. Then there was the disclosure that Jamsostek had Rp
125 billion deposited in five of the 16 banks that were
liquidated by the government this month. Jamsostek has also
admitted that it lost Rp 100 billion from the Rp 250 billion it
invested in the stock market because of the plunge in share
prices.

Accountability is one thing, but good management is another.
At the end of the day, Jamsostek may be able to account for every
rupiah it spends and invests, and it may have valid excuses for
some of the investments that go sour. But if some of these
investments and spending look questionable, it is hardly
comforting to the real shareholders -- the workers.

This negative publicity does not bode well for Jamsostek's own
campaign to recruit more participants into its social security
program. Despite a law compelling companies to enlist their
workers, PT Jamsostek -- at the last count in June -- only had
managed to recruit workers in 83,100 of the country's 400,000
registered companies.

Jamsostek's management, and its supervisors at the Ministry of
Manpower, must do a lot more explaining if it wants to convince
more and more workers to entrust their money -- and therefore
their fate and future -- with the company.