Actuarial analysis of a proposed unemployment insurance scheme in Indonesia

Consistent with the social insurance principles on which the scheme is established and in line with good practice, the Unemployment Insurance (UI) scheme should be financed through employee and employer contributions. Contributions should be set in such a way as to support a countercyclical stabilization of the economy, namely that its revenue requirements should remain as stable as possible over time.

This report recommends that the financing approach of UI scheme in Indonesia is as follows: Employer and employee contributions are set at a fixed percentage rate of salary and at a level to target a reserve fund amount of two times the estimated annual benefit payment commitments in 2030.