Since 1999, economic growth and the rise of the services sector in urban areas have contributed to reducing poverty in Indonesia. While official poverty is relatively low at 12% (30 million persons), an additional 27% of the population (65 million persons) live just above the poverty line and small shocks can drive them back into poverty. These poor and vulnerable people face high food price risks (especially for rice); are highly exposed to health shocks; and are either unemployed or employed in low-skilled, low- productivity sectors. However, many individuals, mostly in the vulnerable category, have inadequate or no access to social protection services.
Key points:
- the right to social security for all is enshrined in the Constitution since 2002. However, the social security system has had limited coverage, especially of the poor and the informal sector.
- in 2004, Law No. 40 on National Social Security System (SJSN Law) mandated the extension of social security coverage to the entire population. In 2011, Law No. 24 regarding Social Security Administrators (BPJS Law) stipulated two administrative bodies to implement social security programs. BPJS Health became effective in 2014, and BPJS Employment in July 2015.
- over the last decade, ADB has facilitated social security reform through support for developing laws and regulations, design of the health and pension, old-age savings, and death benefit programs, and analysis for improving fiscal sustainability of the reform
- social security reform is a long-term and ongoing process. The government has made significant progress, but there are several challenges to be addressed—e.g., increasing informal sector participation; improved fiscal and financial management; and integrated M&E systems