Dinna Wisnu, Jakarta | Tue, 05/04/2010 8:49 AM | Opinion
Of other “typical” labor demands, the implementation of a national social security system was the central theme of the May Day 2010 labor demonstration.
Going into May 1, various groups and forums beyond labor also held discussions and research, and even initiated pilot projects to assess ways of implementing a national insurance-based social security program.
Indeed there is growing awareness on this issue. Demand to implement the mandate of the Constitution and the 2004 National Social Security System Law is evident.
With the support of several parliament members, a bill on the National Social Security Agency, which will define the implementing body of the national social security system, is now part of the national legislation priority within Commission IX.
This is an important step forward after years of idle development in the formation of rules and law to implement the 2004 law.
There is now the Komite Aksi Jaminan Sosial (Action Committee for Social Security) consisting of 54 elements of labor unions, NGOs, student groups and mass organizations, which also have received support from dozens of regional parliamentarians.
Is Indonesia ready to have a national insurance-based social security system? Let’s note the myths and reality based on records of economic development, globalization and experience of countries around the world.
The typical answer, which actually had been rebuked for nearly two decades among students of globalization and social security studies, was that unless a country has reached a certain level of economic wealth, a national social security system will create more burden than help.
Another answer involves the need to compete in the global market with the lowest economic cost. Others may accuse the proponents as socialist.
Skeptics may also highlight the risk of having big governments in an open market economy.
To discuss on the same ground of understanding, one should note that social security is different from charity or social assistance that is provided free-of-charge as assistantship upon life failure or disaster.
Social security is a contributory system that smooths out periods of bust in one’s life so they can cope reasonably.
Around the world, national social security systems vary by the models of economic development, the degree of openness of economies, and the political systems.
Some used heavy tax-based funding to secure social security funds (as in most Scandinavian countries), some rely on required savings of income portion to create individual accounts usable during approved life misfortune (as in Singapore or Malaysia), others use employer-based insurance systems to secure pension and healthcare benefits (as in the US or Japan), most Middle Eastern countries rely on a royal family’s “gift”, but most rely on nationally regulated and managed insurance systems where workers and employers contribute while the government either subsidizes the administrative fees for running the system or pay some premium to each member’s account.
For sure, a social security fund is always managed as a separate fund than another state’s fund.
In a world of economic interdependence, competition may be one keyword but not the sole one. Any countries competing in the global market will expose itself to the risk of crisis for various reasons including those that have nothing to do with national policy let alone workers’ productivity.
As the World Bank noted in its 2010 East Asia Pacific Economic Updates, the trend in global economic engagement is no longer to demand fair trade but rather to move up the ladder of the production chain, even to integrate economies.
The implication would be for countries with low skill standards to be absorbed by those that are stronger.
If sovereignty is desired as the supreme identity amid economically integrated countries, a citizen-protection focus would be an inevitable step to take.
In Indonesia, the trend as noted by sakernas is for increasing employment in the service sector.
It means more investment in skill development is imperative in order to be competitive in production rather than becoming retail sellers merchants or social and personal workers as most Indonesian currently are.
According to the Central Statistics Agency (BPS), only about 1 percent of Indonesians work in the business, real estate and financial sectors.
Indonesia is now a middle-income country. It’ll be careless to continue relying on low-cost products made with low skills.
Investments through a national program should be made to place Indonesian workers at higher competitive edge.
With an average national income of Rp 1.2 million per month (US$112), it is foolish to expect that an ad-hoc program let alone a citizen-driven program will boost the country to achieve its dream.
History shows how efficiency and skill development is not an automatic product of competition; it should be supported by a national program of empowerment.
Check out the strategy of every industrialized country in handling economic crises (and depression). While the initial step may be to cut back on government intervention (usually to cut the potential for corruption and inefficient bureaucracy, or to give room for capital owners), the next step is always to put capability back at the hand of the majority of citizens in order to boost consumption, cut back on government subsidies and create employment.
The experience of other countries also showed that it’s the political rightists who usually open the way for such reform.
How successful will the state be in boosting economic growth through investment in capacity building of their working citizens depends on the size, form and performance of the instrument that the government chooses.
In a country as vast as Indonesia, with nearly 40 million unemployed, a low monthly average income, poverty and a socioeconomic gap across provinces, relying on cutting back government intervention alone will not enable the country to move up the economic ladder fast.
This is like a time-bomb waiting to explode into louder demands. With the tendency of investors to pull out amid signs of citizens’ disappointment with the government, why not adopt a national program that puts capability back at the hand of the majority citizens; beefing up the statement of giving opportunities to everyone to contribute to the economy?
A national social security system has been for various countries an asset rather than a liability when managed with accountability and transparency, given its contributory nature.
With a series of reforms undertaken to improve the taxation system, this should be part of the reform in Indonesia.
The social security contribution may not go directly to the state’s budget as revenue, but it will help cut down on costs for appeasing citizens over the inability to cope fast with socioeconomic inequality.
The implicit message is to have a long-term view of the potential of working citizens. All countries are fast applying every strategy possible to exist in a global market.
Demand for the national social security system is unlikely to wind down. It’s better to discuss a suitable model for Indonesia.
A national social security system has been for various countries an asset rather than a liability.
The writer is the dean at Paramadina Graduate School of Diplomacy and Strategic International Policies.
Of other “typical” labor demands, the implementation of a national social security system was the central theme of the May Day 2010 labor demonstration.
Going into May 1, various groups and forums beyond labor also held discussions and research, and even initiated pilot projects to assess ways of implementing a national insurance-based social security program.
Indeed there is growing awareness on this issue. Demand to implement the mandate of the Constitution and the 2004 National Social Security System Law is evident.
With the support of several parliament members, a bill on the National Social Security Agency, which will define the implementing body of the national social security system, is now part of the national legislation priority within Commission IX.
This is an important step forward after years of idle development in the formation of rules and law to implement the 2004 law.
There is now the Komite Aksi Jaminan Sosial (Action Committee for Social Security) consisting of 54 elements of labor unions, NGOs, student groups and mass organizations, which also have received support from dozens of regional parliamentarians.
Is Indonesia ready to have a national insurance-based social security system? Let’s note the myths and reality based on records of economic development, globalization and experience of countries around the world.
The typical answer, which actually had been rebuked for nearly two decades among students of globalization and social security studies, was that unless a country has reached a certain level of economic wealth, a national social security system will create more burden than help.
Another answer involves the need to compete in the global market with the lowest economic cost. Others may accuse the proponents as socialist.
Skeptics may also highlight the risk of having big governments in an open market economy.
To discuss on the same ground of understanding, one should note that social security is different from charity or social assistance that is provided free-of-charge as assistantship upon life failure or disaster.
Social security is a contributory system that smooths out periods of bust in one’s life so they can cope reasonably.
Around the world, national social security systems vary by the models of economic development, the degree of openness of economies, and the political systems.
Some used heavy tax-based funding to secure social security funds (as in most Scandinavian countries), some rely on required savings of income portion to create individual accounts usable during approved life misfortune (as in Singapore or Malaysia), others use employer-based insurance systems to secure pension and healthcare benefits (as in the US or Japan), most Middle Eastern countries rely on a royal family’s “gift”, but most rely on nationally regulated and managed insurance systems where workers and employers contribute while the government either subsidizes the administrative fees for running the system or pay some premium to each member’s account.
For sure, a social security fund is always managed as a separate fund than another state’s fund.
In a world of economic interdependence, competition may be one keyword but not the sole one. Any countries competing in the global market will expose itself to the risk of crisis for various reasons including those that have nothing to do with national policy let alone workers’ productivity.
As the World Bank noted in its 2010 East Asia Pacific Economic Updates, the trend in global economic engagement is no longer to demand fair trade but rather to move up the ladder of the production chain, even to integrate economies.
The implication would be for countries with low skill standards to be absorbed by those that are stronger.
If sovereignty is desired as the supreme identity amid economically integrated countries, a citizen-protection focus would be an inevitable step to take.
In Indonesia, the trend as noted by sakernas is for increasing employment in the service sector.
It means more investment in skill development is imperative in order to be competitive in production rather than becoming retail sellers merchants or social and personal workers as most Indonesian currently are.
According to the Central Statistics Agency (BPS), only about 1 percent of Indonesians work in the business, real estate and financial sectors.
Indonesia is now a middle-income country. It’ll be careless to continue relying on low-cost products made with low skills.
Investments through a national program should be made to place Indonesian workers at higher competitive edge.
With an average national income of Rp 1.2 million per month (US$112), it is foolish to expect that an ad-hoc program let alone a citizen-driven program will boost the country to achieve its dream.
History shows how efficiency and skill development is not an automatic product of competition; it should be supported by a national program of empowerment.
Check out the strategy of every industrialized country in handling economic crises (and depression). While the initial step may be to cut back on government intervention (usually to cut the potential for corruption and inefficient bureaucracy, or to give room for capital owners), the next step is always to put capability back at the hand of the majority of citizens in order to boost consumption, cut back on government subsidies and create employment.
The experience of other countries also showed that it’s the political rightists who usually open the way for such reform.
How successful will the state be in boosting economic growth through investment in capacity building of their working citizens depends on the size, form and performance of the instrument that the government chooses.
In a country as vast as Indonesia, with nearly 40 million unemployed, a low monthly average income, poverty and a socioeconomic gap across provinces, relying on cutting back government intervention alone will not enable the country to move up the economic ladder fast.
This is like a time-bomb waiting to explode into louder demands. With the tendency of investors to pull out amid signs of citizens’ disappointment with the government, why not adopt a national program that puts capability back at the hand of the majority citizens; beefing up the statement of giving opportunities to everyone to contribute to the economy?
A national social security system has been for various countries an asset rather than a liability when managed with accountability and transparency, given its contributory nature.
With a series of reforms undertaken to improve the taxation system, this should be part of the reform in Indonesia.
The social security contribution may not go directly to the state’s budget as revenue, but it will help cut down on costs for appeasing citizens over the inability to cope fast with socioeconomic inequality.
The implicit message is to have a long-term view of the potential of working citizens. All countries are fast applying every strategy possible to exist in a global market.
Demand for the national social security system is unlikely to wind down. It’s better to discuss a suitable model for Indonesia.
A national social security system has been for various countries an asset rather than a liability.
The writer is the dean at Paramadina Graduate School of Diplomacy and Strategic International Policies.
Comments
Post a Comment