Social security system
Social security system
I am writing in response to an article written by Dr.
Hasbullah Thabrany in The Jakarta Post, May 27, in which he
responded to my May 4 article on the National Social Security
System Bill (SJSN) currently being considered by the House of
Representatives.
The reason why workers and employers alike do not put much
faith in the proposed SJSN scheme is because the benefits offered
by the current social security schemes (Jamsostek, Taspen, and
Askes) are very small, due to the low return on investments in
these schemes, which is far below the market interest rate.
In addition, there are many anecdotal accounts of poor
governance that exist in the schemes' management. Without major
reforms, it is feared that the SJSN scheme would suffer the same
fate as the current social security schemes. That is why workers
are reluctant to invest their salaries.
The Chilean private social security scheme mentioned by Dr.
Thabrany in his article was created because the country suffered
from the same problems as our social security system today (low
benefits, poor governance, and a rapidly aging population).
After more than two decades of implementation, it has been
credited with increasing economic growth in the country, and
improving the investment climate, savings rate, and workers'
retirement benefits, and has led to Chile's economy being
considered one of the strongest in Latin America.
Due to this success, other countries have established similar
private social security schemes. They range from developed
countries, such as Australia, Sweden, and the United Kingdom to
developing countries such as Argentina, Mexico, and Poland. In
addition, several other countries such as Brazil, China, and
India (developing countries); Russia (a former socialist
country); and Italy and the United States (developed countries)
have either planned, or already started, the reform of their
national social security schemes, using the private social
security system.
Instead of pursuing a monopolistic government-run social
security scheme, such as has been abandoned by most countries in
the world, Indonesia should seriously consider adopting a private
social security scheme, since it has proven successful in
increasing economic growth, investment returns, and workers'
welfare in all the countries that have adopted it.
ALEX ARIFIANTO
The Smeru Research Institute
Jakarta