Social security programs mandatory for expatriates

Ridwan Max Sijabat, Jakarta

Minister of Manpower and Transmigration Jacob Nuwa Wea has issued a ministerial decree requiring all expatriates working in Indonesia to join a social security program, which, according to Law No. 3/1992 on social security, is obligatory for all workers.

The decree has drawn strong opposition from employers, who say that most expatriates working in Indonesia are already covered by social security programs in their home countries.

According to Ministerial Decree No. 67/2004 that will take effect immediately, expatriates are required to register with state-owned security company Jamsostek.

"The programs are compulsory for all companies and all workers, including expatriates -- although, they are only employed here for a short time," Nuwa Wea said here on Friday.

The decree is a revival of Ministerial Instruction No. 02/1995, which was annulled by Fahmi Idris who was manpower minister in 1998.

Separately, president of Jamsostek Achmad Junaidi, said that the new decree reflected the company's own proposal that all expatriates should register in a social security program.

"The participation of expatriates would financially strengthen Jamsostek and cross-subsidize local low-income workers," he said, citing that Jamsostek was also targeting around 1.5 million Indonesian migrant workers.

Most expatriates are likely to resist the move owing to the fact that they may leave the country prior to being eligible for a refund. A person can only apply for a refund five years after their initial payment.

According to data from the manpower ministry, the number of expatriates working in Indonesia has drastically decreased to around 17,000 in Dec. 2003, from 50,000 in 1999.

The 1992 law stipulates that workers (and employers) are required to pay 12 percent of their gross monthly salaries in premiums to the health care program, industrial injuries insurance, life insurance and superannuation fund. So far, Jamsostek has collected a total of Rp 33 trillion in assets under the four social security programs.

The Indonesian Employers' Association (Apindo) has called the government unfair "to impose double taxes" on expatriates, who are mostly covered by social security programs in their own countries.

"The main mission of social security programs is to provide a financial guarantee, rather than fund-raising, for employees at the workplace. If they (the expatriates) have been insured under a better (commercial) insurance program they need not enroll in Jamsostek's programs," Apindo secretary-general Djimanto told the Post.

Djimanto said Apindo opposed the decree because both employers and labor unions had not been invited to discuss it, and its enforcement would certainly overburden both expatriates and their employers.

According to him, the timing of the new decree was not appropriate as Indonesia's economy was not yet healthy.

"The minister should bear in mind that the decree was lifted because Indonesia was hit by the economic crisis", he said, adding that such a move would deter foreign investors.