Jakarta, The PRAKARSA — The Institute for Policy Research and Advocacy PRAKARSA consistently continue to push for policies on the fulfillment of the rights of all workers to have pension security. Pension security is currently still limited to wage earners (formal), while there is no national scheme for pension security for independent workers.
Talk Show with the theme "Pension Guarantee Policy Reform: Will Independent Workers Always Be Stepchildren?". This activity was carried out in a hybrid manner at the office of The PRAKARSA and live on the youtube channel The PRAKARSA. On Friday (23/08/2024).
Researcher The PRAKARSA Aqilatul Layinah, explained that this theme was raised because it is relevant to the context of the challenges faced by independent workers in accessing pension insurance.
Pension guarantee program for self-employed workers will protect them in old age
The program manager PRAKARSA, Herni Ramdlaningrum presented the results of the latest research by The PRAKARSA regarding pension security for non-wage workers. “We want to know the specific needs and challenges for non-wage workers to be able to access pension security,” he said.
In her presentation, Herni emphasized that the demographic bonus that will end in 2035 presents challenges as well as opportunities for Indonesia, especially in integrating the workforce into the social insurance scheme. According to Herni, "We need to take advantage of this moment to ensure that every individual gets adequate social protection."
It is estimated that the number of elderly people will increase to 48,2 million people or 15,8% of the population in 2035. This will shift the proportion of the workforce and can increase the risk of poverty in old age. "Around 41% of the lowest income group are elderly. We must try to reduce this risk," explained Herni.
The growing elderly population can also add to the economic burden on the younger generation. sandwich, namely those who have to care for both parents and children. "It is important to provide adequate support so that this generation is not burdened," said Herni.
Herni further explained that even though these challenges exist, there is a willingness and ability from Non-Wage Receiving Workers (PBPU) to participate in the Pension Guarantee (JP) program. The Survey PRAKARSA (2024) shows 83% of PBPU are enthusiastic to participate. "This is a positive step towards a safer future for all," said Herni.
Data shows that PBPU households that receive benefits from the pension program have 13-17% higher expenditure compared to those who are not beneficiaries. "This shows that the pension guarantee program can have a significant impact on improving welfare," said Herni.
To accommodate non-wage earners in the pension guarantee system, a number of important changes need to be made in Government Regulation Number 45 of 2015 concerning the Implementation of the Pension Guarantee Program.
“First, the definition and scope of participants must be expanded to include self-employed workers, the informal sector, and freelancers. Second, the contribution mechanism must be more flexible, adjusted to the economic capacity of non-wage workers, and there needs to be a subsidy from the government for those with irregular incomes or below the poverty line. Third, pension benefits must be adjusted to the contribution of non-wage workers, providing basic benefits that are equivalent to formal workers,” Herni explained.
In addition, according to Herni, what is also important to note is that the registration and participation procedures must be simplified through online registration or mobile applications, as well as involving local communities and organizations. "This is important to do to reach informal workers," he said.
The need for expansion of coverage and formalization of the workforce
In line with this, Lecturer of Social Development and Welfare at Gajah Mada University, Tauchid Komara Yudha, said that in an effort to improve pension welfare, there are two main targets that need to be achieved. First, is to increase net pension replacement rate approaching 70% of previous income. Second, expanding the coverage of mandatory pension income to the informal sector.
In addition, Tauchid explained that supporting policies are also needed to achieve this target. One of them is the implementation of a single payroll system. "With this system, the calculation net pension replacement rate not only based on basic salary, but also on total income before retirement," he said.
In addition, formalization of the labor market is also a major focus. Tauchid referred to the example of Hong Kong, which has succeeded in formalizing a number of informal jobs into the productive service sector. "Jobs that are often considered low in Indonesia, such as care work, must be recognized as professions that are as important as office work," he added.
Present as a respondent at this talk show was Yanu Endar Prasetyo, Director of IndoBig Network and Researcher of the National Research and Innovation Agency (BRIN). On this occasion, Yanu highlighted the importance of pension security for the Indonesian people, especially for those in the vulnerable and poor classes.
"When retiring, many people immediately fall into the vulnerable class, even approaching the poverty line. This shows that without adequate security, retirees can lose purchasing power and fall into poverty," said Yanu.
Yanu also emphasized the need for a clear taxonomy for workers in the informal sector. "We don't have a clear definition, so it's hard to know how many people need to be protected," he said. He proposed that the informal sector be defined more simply, so that data and potential participation in the pension program can be measured properly.
In the context of the elderly dependency ratio, Yanu stated, “Every productive citizen has to support the elderly, and this is a heavy burden.” This problem is further complicated by the health and income challenges of vulnerable elderly people. “Nutritious lunches for school children are also important, but we must not forget the needs of the elderly,” he explained. He emphasized that the basic needs of the elderly must be met so that they remain healthy and independent.
Yanu also highlighted the changing social values related to elderly care. “The family is still considered the best social cushion, and this creates challenges for pension risk management, there is a gap between modern and traditional values in this regard,” Yanu concluded.