Transformation of Social Welfare System

The dominance of the Nordic countries as the "Mecca" for the welfare state has waned since the mid-1980s.

A welfare state system, as in the illustration of Gosta Esping-Andersen (1990) in which the state is the only provider of welfare programs, faces internal and external pressure. Internal pressure arises because of declined state revenue from the workforce to finance the welfare scheme, while the burden from the budget for pensioners has increased.

This financing deficit is an impact of the neoclassical economic agenda with its idea of global labor flexibility. The decline in the supporting capacity of the state to allocate social policy budgets has opened up opportunities for right-wing parties to push for a "streamlined state" architecture. One of them is by cutting off the social welfare scheme.

Productive-empowerment scheme

The variant of the East Asian-style productive welfare system has been discussed since the late 1990s. Some scholars considered the typology of the welfare state regime described by Esping-Andersen as not yet covering the East Asian model, such as Japan, South Korea, Taiwan and Hong Kong, countries known as Newly Industrializing Countries (NIEs).

Also read: Ensure the Result of Social Restrictions

In these countries, the productive welfare scheme means the government prioritizes making social investments in education and health to get a productive workforce. Social security programs, such as pension funds in the form of social insurance offer a membership premium, which is voluntary and non-universal in nature.

Economic growth that is supported by an educated workforce is capable of producing leaps in economic progress and improvements in living standards.

Social policy serves as support for economic policy (Holliday 2000; Kuhnle 2002). Although it is different from the Nordic scheme, the achievement of the welfare indicators is no less impressive. Economic growth that is supported by an educated workforce is capable of producing leaps in economic progress and improvements in living standards. Unexpectedly, the exposure to the coronavirus pandemic has left the market economy suspended, countries in various parts of the world have become a mainstay, providing social protection cushions.

Thousands of trillions of dollars is disbursed to support the lives of billions. And innovative social protection schemes have sprung up. The evolution of the global welfare system shows the emergence and expansion of social protection scheme during natural disasters, pandemics or economic crises. This phenomenon also occurs in East Asian countries, which have added welfare schemes from productive cooperatives to hybrids because they combine them with a universal and productive scheme (Holliday 2005; Ramesh and Asher 2000).

The development of the welfare system in Indonesia is similar. The post-1998 monetary crisis saw an increase in the variety of program schemes and the expansion of the coverage of beneficiaries. For example, the universal and reliable National Health Insurance (JKN) scheme was developed from the Health Safety Net scheme that was introduced during the monetary crisis.

Kompas/Hendra A Setyawan

A resident takes care of health insurance contributions at the office of the Health Social Security Administration (BPJS), Pancoran, Jakarta on Monday (4/11/2019).

During the current pandemic, the government is again expanding and broadening its social assistance and security programs. Several new schemes have been introduced, such as the provision of assistance for workers (cash labor-intensive programs, subsidized salaries incentives for MSMEs) and insurance due to economic shocks, including pre-employment cards and the unemployment insurance scheme, which is now being deliberated.

The expansion of this welfare scheme shows the commitment of the state to ensure that all citizens are protected and to get a decent life insurance. With the increase in welfare scheme during the pandemic, Indonesia has the most comprehensive variety of social protection programs in the world.

Also read: COVID-19 Pressure on the State Budget

It\'s just that, in terms of improving the quality of life -- seen from several indicators, such as the poverty rate, the Gini index, the Human Development Index -- it has slowed down. Although the social protection budget has continued to increase since the beginning of 2000, there has been a stagnation in improving welfare indicators in the last decade.

The variety of schemes is not diverse, making it easier to manage and measure its success.

Data from the National Team for the Acceleration of Poverty Reduction (TNP2K) indicate that a large proportion of the poor are elderly people. It is predictable, some of them in their youth were informal workers, unskilled laborers, so that their income is only for subsistence without provision for old age. No wonder the poverty rate is difficult to cut again. In view of the success of social policy in South Korea, Taiwan and Hong Kong, what recipe can be used for Indonesia? The concept and direction of the social policies adopted by these East Asian countries are the focus and actualization of persistent policies in order to achieve goals. The variety of schemes is not diverse, making it easier to manage and measure its success.

The choice of productive model makes budget allocations focuses on education that increases skills, job protection so that productivity increases and there is health insurance for workers. The miracle of economic growth and industrialization was supported by a capable workforce. No wonder they can jump from third world country to first world country.

Program transformation institutions

The condition of Indonesia and the regional economic development are already different from the condition when the East Asian economic tigers started to arise. Moreover, during this pandemic, the aspiring middle class strata have experienced a degradation of class, even into jobless. Thus, the logical policy direction is to pair the social protection programs between charity and productive ones.

Kompas/Wawan H Prabowo

Workers protest against the increase in National Health Insurance contributions in front of the MPR / DPR Senayan Complex, Jakarta, Wednesday (29/7/2020).

The households that receive the benefits of the Family Hope Program (PKH) and Non-Cash Food Assistance (BPNT) must be ensured that they do not only receive a Smart Indonesia Card (KIP) and become recipients of BPJS Kesehatan premium aid (PBI), but also receive job training, microfinance funds/MSMEs and BPJS Ketenagakerjaan insurances. This combination, let’s call it a productive empowerment scheme, also covers the informal workers, such as domestic helpers, small shop owners, farm laborers, home industry workers and so on, so that they can access skills enhancement, business capital and worker insurance (work accident insurance, employment insurance and pension funds).

The role of the state is vital in a productive empowerment welfare scheme, not only as a protector but also as an enabler to improve the living standards and at the same time encourage productivity. In the East Asian (economic) tiger, the social policy is designed to serve economic policy. Under current condition, that paradigm is switched into economic policy to serve welfare.Of course, an institution is needed to transform social protection programs into productive empowerment welfare schemes. The pandemic actually creates an opportunity for that. At a time when all countries are experiencing hibernation and economic growth has contracted, this is the right moment to reset our policies and welfare schemes. Also, the corruption case at the Social Affairs Ministry can become an entry point for the creation of the Empowerment and Welfare Ministry that serves as the guardian of productive empowerment social protection schemes. Don\'t let opportunities go to waste.

KOMPAS/SIDIK PRAMONO

Luky Djani

Luky Djani, Researcher at Institute for Strategic Initiatives

(This article was translated by Kurniawan H. Siswoko).