10/09/2009

Social security programs need review

, The Jakarta Post, Thursday, September 10, 2009 -

The management of state-owned PT Jamsostek urged President Susilo Bambang Yudhoyono to revamp social security programs and revise their regulations to maximize financial and social benefits for workers.

Jamsostek director Hotbonar Sinaga said the President had to evaluate the current programs, which have been carried out for almost three decades, and revise the regulations that were less workable, if he was committed to providing protection and maximum benefits for workers in general.

"The social security programs will remain ineffective and will not help change the poor labor conditions in the coming decades unless the programs are revamped and the existing regulations are reviewed," he told The Jakarta Post on Wednesday.

After three decades, the social security programs that originated from social security funds (DJS) in 1978 and were officially regulated under Law No. 3/1992, have so far covered only 8.2 million of 101 million workers and collected Rp 71 trillion under the pension benefit program.

This lack of coverage has left more than 90 million workers unprotected and has created difficult conditions for the minority participants upon their retirement.

"Due to weak law enforcement and the small payroll strictly regulated by the law, the majority of workers have been uncertain of their retirement age, while participants receiving an average of Rp 9 million in pension benefits can only live off their pensions for the first six months of their retirement," he said, adding they could only spend around Rp 1.5 million as annual living cost.

Hotbonar said SBY should firstly decide whether to enforce Law No. 40/2004 on national social security system, which was had an October deadline, which would allow the government to implement the programs, including social security funds for the unemployed.

"Then the President should decide the fate of social security programs for workers, civil servants and servicemen by reviewing their respective laws," he said.

If the government has yet to be ready to meet the deadline with relevant regulations to launch the national social security system, the President should issue a regulation-in-lieu-of-law (perppu) to show his political commitment to protecting the unemployed as required by the amended 1945 Constitution, he said.

Regarding the 1992 social security law, he said, like Malaysia and Singapore, the government should give full authority to Jamsostek in enforcing the law and carrying out the four programs and raise the payroll from the current 11 percent at least to 20 percent of participants' gross monthly salaries.

"The law enforcement has been ineffective because it has been seriously mishandled by the Manpower and Transmigration Ministry, prompting Jamsostek to forge cooperation with district attorneys to prosecute employers violating the law," he said.

According to him, Jamsostek will be able to provide better service than banks do with their clients if the government facilitates full legal authority to the state-owned company to carry out the four programs.

"If the annual payroll jointly paid by employers and their workers, is raised up to 20 percent, Jamsostek will become a main player in the stock market and a main engine in the national economic development."

Separately, spokesman for Jamsostek Ilyas Lubis criticized the rife outsourcing practices allowed by the 2003 labor law, contributing the workers' law participation in the labor protection programs.

"The number of Jamsostek has been fluctuating from one month to another because in one month, workers whose contract terminate quit the programs but in another month, new workers are registered for one or two years," he said.

He said a repressive approach was needed but the government should firstly show its political will in law enforcement.

Jamsostek's director of operation and service affairs Ahmad Anshori said the company netted more than one million workers as new program participants and gained Rp 591 billion in profits during the first semester of this fiscal year.

"We are targeting 1.05 million new participants and booked 14.16 percent in profit from the investment program this fiscal year. The profit from the investment of the pension benefit funds in the first semester is Rp 3.8 trillion and Rp 3.1 trillion has been already distributed to program participants," he said.

He added Jamsostek had spent Rp 5.54 billion in the first semester to finance the ongoing construction of affordable flats in industrial areas in Riau Islands and West Java and disbursed Rp 40.25 billion in mortgage credits to workers nationwide.

During the first semester, Jamsostek also spent Rp 6.45 billion in scholarships for more than 1,500 children of workers participating in the social security programs.

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