BackgroundIndonesia is in an early stage of implementing employment insurance or better known as Jaminan Kehilangan Pekerjaan (JKP). The law has been passed by the house of representatives on October last year and the government has finalized the regulation to further guide the implementation on February 2021. Through this regulation, the government intends to create linkages and synergies between cash payment and active labour market policy (ALMP). By doing so, the government aims at providing assistance for the unemployed during adjustment period and at the same time, improving national economic by reducing unemployment.
While the government has started to collect the contribution and planned to make the first payment of cash benefit in the next 12 months, the ALMP part is still under preparation to take up a role in providing job training and consultancy for the unemployed. With technical assistance from the ILO, the government is now developing a module for PES staff training to strengthen capacity of labour administration as well as creating synergy among employment institutions to facilitate the re-integration of the unemployed into labour market.
ALMP is a common feature of labour market policies of most advanced economies with social welfare programmes. The combination of employment insurance and ALMP provides necessary financial support for the unemployed and helps maintain competitive workforce for the economy through training programmes, while job-search assistance reduces the duration of unemployment, hence the unemployment benefit pay-out.
Most advanced economies have gone through rather complex processes of ALMP establishment. As ALMP is a set of broad ranging policies, establishment of
ALMP requires a strong political will to carry out reforms on multiple fronts. Sufficient budget allocation to ALMP also calls for political debates over costs and perceived benefits. Policymakers in Indonesia may wish to learn from a successful country case and understand socio-economic backgrounds, rational behind and political complexity of ALMP development.
The United Kingdom was the first country that implemented a modern unemployment benefit scheme under the National Insurance Act of 1911. While employment insurance is over a century old, the country formed ALMP in 1980s as employment measures after the oil crises evolved into coherent and permanent support mechanisms for the unemployed. ALMP in the UK and other countries eventually influenced employment policies of the European Union in early 2000s. The European Commission promoted a combination of safety net for the unemployed with a flexible labour market. When the global financial crisis of 2007/08 hit Europe, countries were ready to deploy employment measures to mitigate the impact of the significant pressure on labour markets.
Socio-economic backgrounds of the UK back then and today’s Indonesia are different, and it is not expected that Indonesia will follow exactly the same path of the UK four decades later. However, Indonesian policymakers will eventually face similar policy questions and debates because ALMP requires a certain set of decision making in the UK, Indonesia and elsewhere. In this sense, learning from the history of the policy evolution in the UK, will provide ample helpful insights for Indonesian policymakers to address current policy issues at hand.
To help Indonesian policymakers learn from the UK’s experiences, the ILO with the support of Fast Retailing Co., Ltd., will facilitate a lecture delivered by a former member of the Department of Employment and the Manpower Services Commission (MSC), UK. The lecture will be based on his report “Countering Unemployment in the United Kingdom” which was published earlier this year.
The seminar aims at:
- Sharing key policies and regulations specifically concerned with manpower issues to counter unemployment in the United Kingdom and showing how the policies evolve and interact with each other during economic changes, particularly during crisis.
- Providing the key national stakeholders with reflection on what works and what does not work for considerations in the future dialogues for improvement of employment protection scheme in Indonesia.