Poverty hampers RI social security system

Poverty hampers RI social security system

JIMBARAN, Bali (JP): Aside from mismanagement, poverty and
overpopulation have aggravated the development of a social
security system in Indonesia.

Bambang Purwoko, the director of program development and
member service affairs at state-owned social security company PT
Jamsostek, said disadvantageous economic and demographic
conditions impeded government efforts to provide people maximum
social security protection.

He noted that the successful development of a social security
system often depended on economic and population growth, apart
from the government's political commitment.

It is generally easier for a social security system to develop
in a steadily growing economy with low unemployment, said
Bambang, who earned his doctorate in social insurance at
Australian National University in 1994.

Bambang said that in Indonesia around 60 percent of the 207
million population currently lived at or below the poverty line,
while some 80 percent of the 80 million workforce were still
earning the regional minimum wage.

Bambang, who was in Bali last week to attend the ASEAN Social
Security Association's annual meeting, further remarked that the
current situation was aggravated by the millions who had become
unemployed due to the economic crisis.

He cited as an example the fact that Jamsostek could only
extend limited benefits to workers, because 60 percent of
employees participating in the social security program were only
able to contribute a limited amount of money due to their low
wages.

Jamsostek has collected Rp 10.29 trillion from around 10
million workers participating in its programs. Much of its assets
have been invested in Bank Indonesia certificates, commercial
papers and bonds, banking deposits and stocks.

Bambang said Singapore, Malaysia, the Philippines and Thailand
had been more successful than Indonesia in developing their
social security systems because of their higher per capita
incomes.

Malaysia, with a population of 22.7 million, has a per capita
income of more than US$3,000; Singapore, with a population of 3.9
million, has a $22,000 per capita income; while the per capita
income in Indonesia is about $460, he said.

According to Bambang, in Malaysia the social security program
-- consisting of occupational accident coverage, health care and
death benefits -- was compulsory for workers earning 2,000
ringgit or less a month.

Malaysian employers are obliged to confer an equivalent of
1.25 percent of their employees' gross salary to the Social
Security Organization.

Workers in Malaysia pay 11 percent of their monthly wage into
a pension fund, while their employers contribute 12 percent to
the scheme under individual employees' names.

"Malaysia's Employees Provident Fund (EPF) and Singapore's
Central Provident Fund have played a dominant role in the two
countries' stock exchanges because of the huge amount of assets
raised through their workers," Bambang said, adding that EPF
recently purchased a small number of shares in Indonesia's PT
Astra.

He said Indonesia should learn from these two countries, where
the investment profits were accumulated to provide benefits for
workers. He further highlighted the fact that social security
institutions in these countries, unlike in Indonesia, were not
taxable.

Reform

Bambang also said it was vital that Indonesian social security
companies were revamped.

He argued that the five state-owned social security companies
-- PT Jamsostek, PT Askes, PT Taspen, PT Asabri and PT Jasa
Raharja -- should be dissolved and a single independent
organization be established to handle social security programs
for workers, civil servants and servicepeople.

"Such a merger is an urgent need in order to make the
companies efficient in social security management," he said.

He said the new independent organization should be run by an
executive board comprising representatives of the government,
workers, civil servants, servicepeople and professionals.

The executive board should have full authority in managing and
investing all funds raised from participants in the social
security program, he said.

He lamented the fact that the government had yet to show the
political commitment to provide better social security for the
people.

"According to the Constitution, it is the government's
obligation to provide social security protection for the people,
and not to use (social security) for business purposes," he said,
adding that a lack of monitoring contributed to past
mismanagement of social security funds.

Bambang claimed financial leakage in the five state-owned
social security companies was still rampant.

The financial leakage has a lot to do with the government's
intervention in the five companies, he charged without
elaborating.

He said the government should strictly enforce the 1992 Law on
Social Security, which makes it compulsory for companies
employing 10 workers or more to participate in social security
programs.

"Of the 80 million workforce, only 8 percent, or around 10
million, participate in social security schemes," he said,
adding that most workers were unaware of the advantages of
joining a social security program. (rms)