Unemployment Fund

KOMPAS/FERGANATA INDRA RIATMOKO

Workers from a partner company PT PLN in Bukit Bintang, Piyungan, Bantul, DI Yogyakarta, Tuesday (12/11/2019).

The passing into law of the job creation bill by the House of Representatives (DPR) on 5 October 2020 introduced the establishment of a new unemployment fund (JKP) as a new instrument for protecting workers. Under the JKP scheme, workers who have been terminated (from work) are entitled to receive cash, job training and access to labor market information.

The implementation of the instrument, which in global terms is called unemployment insurance (UI), has made Indonesia increase its compliance in implementing the ILO Convention No. 102/1952 concerning Social Security (Minimum Standard) and ILO Convention No. 168/1988 concerning Employment Promotion and Protection against Unemployment. The substance of both conventions is to protect workers who have lost their jobs and their families from poverty, and increase their access to reemployment through training.

However, it should be noted that in the Job Creation Law, JKP is applied simultaneously with the severance pay system; while in global practice, the state chooses either the severance pay system or the UI. The ILO convention chooses the UI system because it is sustainable to guarantee job security.

Read also: Not All Regions Follow Instruction to Maintain Minimum Wage

How is the JKP implementation under this scheme? This is where a series of challenges must be answered, especially with regard to funding and the agencies implementing the JKP, including coordination between ministries/agencies and the regional administrations. The government regulation (PP) which the law requires to regulate all of those issues is targeted to be issued soon this year.

Duration and Amount

Institutionally, the Workers Social Security Agency (BPJS Ketenagakerjaan) and the government are mandated to be the administrator of the JKP. In terms of distributing cash benefits, there will certainly be relatively no significant problems for BPJS Ketenagakerjaan to implement it, although of course the database and distribution mechanism cannot be taken lightly in order to achieve beneficiary satisfaction.

However, technocrats can quickly calculate once the benefit scheme has been agreed.

It is quite complicated to determine the period and amount of cash benefits, considering that it has to calculate the projection of the long-term JKP funding capacity. However, technocrats can quickly calculate once the benefit scheme has been agreed.

UI practices that are effective in a number of countries can be used as a reference. Although each country is unique, UI generally provides cash benefits within 3-6 months, such as in Thailand (6 months) and Vietnam (3-12 months) although there are also countries in Europe that provide it in 9-12 months. The amount also varies, although generally it is below the minimum wage. This cash benefit amount is taken from a certain percentage of the wages received: 50 percent in Thailand, Korea and the US; 60 percent in Vietnam.

Funding scheme

However, what about the funding? The draft law states that JKP funding comes from the government\'s initial capital (amounting to Rp 6 trillion), consisting of the social security program contributions and the operational funds of the BPJS Ketenagakerjaan. This formulation is in line with the tripartite agreement, namely, regarding the funding side, there are no additional contributions from the employers and workers apart from the current BPJS Ketenagakerjaan contributions.

The question is, can the funding scheme guarantee the continuity of the

JKP program?

There are several notes regarding this funding. First, if the government wants to be credible, it is the tripartite agreement contained in the bill that must become the basis for the formulation of the derivative policies. Simply put, there are no additional fees. Second, the Rp 6 trillion fund from the government is only the initial fund for the operationalization of JKP, far from being sufficient to provide the cash benefits and training.

Third, the recomposition of contributions from the labor social security program. What is the most feasible program for BPJS Ketenagakerjaan? Is it work accident insurance (JKK), death benefit (JKM), old age security (JHT) or pension fund (JP)?

Funds from JKK and JKM can be used because those who experience the risk (work accident or die) are far less than those who pay contributions. But because the amount of dues is so small, the accumulation of funds is also very limited. JHT and JP, which are essentially post-employment protection, are closer conceptually to their funding. Even so, it was too risky to use the JP funds because the funds are designed for post-employment protection.

KOMPAS/FRANSISKUS WISNU WARDHANA DANY

Workers reject the Omnibus Law and the increase in the dues of the Health Social Security Administering Body at the House of Representatives / People\'s Consultative Assembly, Senayan, Jakarta, Monday (20/1/2019).

The funds from the JHT are still possible for funding, as long as it is not taken from the employee contributions, because this has been limited by the law. The option is to take the JHT funds paid by the company. For that, in the context of social insurance, the active participation of BPJS Ketenagakerjaan must be increased so that the managed funds collected are large.

Fourth, reallocation of funds from the State Budget (APBN) which has been so far allocated for job training at various ministries/agencies for JKP.

Given the limited funding options, it is necessary to formulate the details of the participants who are entitled to JKP benefits, not only those who have made contributions within a certain period (for example, at least one year). Participants who fall into the category of layoffs but should be

exempted from receiving the benefits are: retired employees, employees whose work contracts have ended, resigned employees, employees who committed serious wrongdoing/crimes and white collar workers. Participants who are entitled to JKP benefits must also show their seriousness in finding a new job.

Other challenge

Another challenge for JKP is the organization of training. As the provider of social security, BPJS Ketenagakerjaan will carry out this new assignment along with other operators, namely the ministries/state agencies. Regarding the reallocation of budgets at the ministries/state agencies mentioned earlier, the major challenge is how to diminish the sectoral ego and, instead, building synergies between the ministries/state agencies and the BPJS Ketenagakerjaan. This is not a simple matter because each ministry/state agency has different training objectives and it is necessarily impossible to synergize them with the JKP training objectives.

Furthermore, in the global UI scheme, training does not stand alone, but is linked to other issues that must be handled by JKP operators. First, determining the types of skills that can be given. This is directly related to the availability of types of work produced by the Indonesian economy. Entrepreneurial skills training should also be a benefit of JKP.

Second, the determination of training providers who have technical competences according to needs, whether training institutions, government or private. Third, channeling training participants to employment again. These three things are also related to the fourth issue: institutional capacity to be able to provide consultants who are tasked with providing/guiding JKP beneficiaries to determine the type of training needed, credible training institutions, and labor market access.

In global best practices, countries that have succeeded in creating the UI ecosystem provide personal assistance to JKP beneficiaries. This means that the provision of a massive number of consultants is not a simple matter.

Cooperation

Apart from the ministries/state agencies and BPJS Ketenagakerjaan, in the context of regional autonomy, the implementation of the JKP also requires strong cooperation with the provincial or regency/city administrations. The organization of training under the scheme above will involve local administrations in various aspects related to labor inspectors, job training centers and labor market information.

The talks on technical issues regarding these matters cannot be rushed with the issuance of a government regulation (PP), given the complexity of the challenges. The Ministry of Manpower and other related technical ministries, including the National Social Security Council, which has a role in synchronizing social security policies, must draft comprehensive government regulations.

FRANSISKUS WISNU W DANY UNTUK KOMPAS

Director of the Indonesian Employers\' Association Agung Pambudhi (left) and Deputy Secretary for Business Restructuring of the Ministry of Cooperatives and Small and Medium Enterprises Wardoyo inspected shop stands at the National Retail Party, ICE, Tangerang, Benten, Thursday (22/11/2018) night.

Regulatory impact assessment, which is basically a cost and benefit study through a participatory approach, is expected to be implemented well like the spirit of the Presidential Instruction No. 7/2017. All parties want JKP to be a solution to labor challenges and the parties concerned are responsible for ensuring that this new JKP instrument can strengthen the social security system that was built through difficult times, not the other way around, weakening the system because it is not properly prepared.

P Agung Pambudhi, Director of Apindo Research Institute