The Social Welfare Policy In Indonesia Economics Essay

In civilized and rapidly changing society, social welfare has become an important function within its national development strategy. In Indonesia the term of social welfare can be found in Law No.11/2009 concerning “Social Welfare”. It consists of two meaning: social welfare as a condition in which social need of citizens are fulfilled and social welfare as an organized activity (the development of social welfare) implemented in the form of social services consisting of social rehabilitation, social security, social empowerment, and social protection (Suharto 2009a).

Esping-Andersen (1990) identified three social welfare’s regimes: ‘liberal’ welfare regime, ‘conservative’ welfare regime and ‘social democratic’ welfare regime. Indonesia cannot in shape with one of those three models, but the closest regime to Indonesian social welfare policy is the conservative, where government is only responsible to targeted society (poor society) if the market fails (residual welfare).

The social welfare problems emerge when public policy in Indonesia is mainly concerned with state administration and bureaucracy affairs, thus social expenditures which include social protection and basic social needs provisions (health, education, and subsidies (beside fuel subsidy)) are very low compared to GDP. This case is quite similar with the ‘productivist’ regime where government relies heavily on economic production rather than social policy (Gough et al. 2004, cited in Dean 2006, pp. 31-32; Jacobs 2000, pp.2-4; Aspalter 2006, p.297).

Social welfare problem in Indonesia can be seen in the Human Development Index (HDI). In 2010, Indonesia’s HDI ranked 108 among 169 countries in the world. Compared with the index in the other ASEAN countries, the rank shows that this position was far below Singapore (27), Brunei Darussalam (37), Malaysia (57), Thailand (92) and Philippines (97) (UNDP 2010, pp.143-146).

The HDI is a combination index that measures the average achievement in a country in three basic dimensions of human development: economic (GDP per capita), health (life expectancy) and education (access to knowledge examined by adult literacy and expected years of schooling) respectively (UNDP 2010). Therefore, the low HDI does not only indicate the failure of economic development and the low quality of human resources, but also reveal the failure of social welfare policy. This data is supported by the fact that poverty is still among the most serious problems in Indonesia.

Although the rate of poverty between 2002 and 2010 tends to decrease, the absolute number is still considerably high. For instance in 2009 and 2010, the number of people living in poverty was 32.5 million and 31.02 million, accounting for 14.1 percent and 13.3 percent of the total population correspondingly (BPS 2011).

The causes of social welfare problem in Indonesia

Regarding the low HDI, high poverty rate, and as a country with various natural resources and comparative advantages, Indonesia shows a relatively slow progress in terms of social welfare development, rather than other ASEAN countries.

There are several main factors explaining why social welfare is ineffective so that Indonesia still encounters serious and multidimensional social problems. The first reason is related to the principle of distribution. Indonesia’s social policy programmes are dominated by project oriented. For instance poverty alleviation policies (rice for the poor, direct cash transfer, and family hope program) depend on means-tested targeting which shows that government distributes the benefits and services to those who are poor (Dean 2006, p 64). Therefore, people have to be formally poor to have aid from the government. Moreover, the social welfare policy cannot prevent a family to become poor or promote poor families to come out from their conditions; it is more curative rather than preventive.

The second cause is determination of recipients. Indonesia has a lot of potentials that can be also difficulties or obstacles to achieve social welfare. They are geographic aspect and population aspect. Since the most target of the social welfare policy is poor families, the Indonesian government, both central and local, do not have the exact data, for example computerized list of individuals and or households which are counted as poor category. Furthermore, Ministry of social affairs lacks the capacity to reach remote areas, and also the number of poor people is not comparable with the number of government officers.

Thirdly, the existing social protection systems are very limited and it can be accessed by only about 50 percent of population. For instance, the formal social protection schemes such as Health insurance (Askes) and Social Security for Workers (Jamsostek) have only protected a group of people who are working in formal sectors (government institutions and private sectors). Furthermore, social security assistance programs, provided by both central and local government, for people who work in informal sectors are very limited and partial.

Ministry of finance informed that in 2009 government expenditure related to the social protections, health, education and other subsidy were only about 7 percent of GDP (Ministry of finance 2010, pp. 6-8). This also indicates that government always keep the tax rate relatively low to let people spend their own income for basic social needs (Brondolo et al 2008, p.11).

The fourth cause is the economic policy only focuses to output growth. Spicker (2008, pp.109-110) argues that in developing countries, welfare has often been treated as subordinate to economic policy, because material resources have to be generated before they can be used. The economic processes will naturally involve household either as producer or consumer then they will get benefit from economic surplus. However, this condition is not entirely true, because government cannot be able to determine which households are become the player in the economic processes and which are still remaining poor because they cannot enter the market mechanism. It is obvious that economic growth cannot fully recognize poverty.

The condition is worsening by the decentralization system in Indonesia, where a lot of local government levels are applying the principle of ‘function follows money’ rather than ‘money follow function’ (Suharto 2009a). As a result, many of them are competing to increase higher local revenues rather than providing social protection for the society.

Social policy solution

There are several things that should be done by government to resolve social welfare policy problem. First is to change the paradigm of the development of social welfare. Suharto (2009a) suggests that social welfare system should be responsive to the rapid and complex change of social problems. Thus the way the social welfare policy is applied should consider the principle of human right, democratization and the role of civil society both in the formulation and the implementation of social policy programs.

In terms of relationship between economic policy and social policy, both should go together, social policy has to support economic development. This is a situation where social policy ought to correct the ‘diswelfares’ or negative externalities caused by the economic policy (Hill 2006, p.7). Since economic growth happens in a market or aggregate level, so it can be achieved by nation without involving the poor household in the economic processes, therefore government should commit to the pro poor growth policy where, the result of the development has to be able to reach all level of society. Benefit from economic growth must be used to increase opportunities for people with social problems getting access to social services and sustainable social protection schemes, for example the existing poverty reduction programs such as direct cash transfer (BLT) and family hope program (PKH) can be expanded and integrated into national social security system schemes for all citizens.

As well as having the paradigm changed, the most important solution for social welfare problem is people empowerment. Human being is subject of development not only an object of development. Giving the poor families a basic education such farming, budget management, entrepreneurship and other technical skills will open their mind and inspire them to be an active player in economic activities. Moreover, government has to develop their internal resources by capacity building. Because the approach of development need to reflect on local potential and culture (Suharto 2009a), therefore to educate government employees ,both central and local government, with knowledge about social resources, including local wisdom, socio-cultural values such as social solidarity, cooperation, and trust, are very needed to optimized social responsibility.

Another solution related to people empowerment is to make a joint commitment with local NGO’s to become government assistant promoting social welfare to the society, because empowering people with social problem cannot be done by government approach only, but also by individual, family member or community member approach. In this case, local society can be trained by ministry of social affairs to promote social welfare to people around them who have social problems.

Conclusion

Social welfare is a main factor in terms of poverty alleviation and reducing multidimensional deprivation. In the implementation, social welfare policy has to be combined with other approaches such as macro economic development, employment program, and education policies. Thus, together they would reduce capability deprivation as well as encourage growth with equity and sustainability.