6 - Designs and Implementation of the Indonesian Social Safety Net Programs

Summary

INTRODUCTION

At the onset of the Indonesian economic crisis, an important concern was raised over whether the achievements that had been made in the social sectors and poverty reduction over the previous decades could be sustained. Furthermore, there were some warnings about the looming social impacts of the crisis. This prompted the Indonesian Government to react rapidly and to institute a number of interventions aimed at safeguarding real incomes as well as access to social services for the poor.

To mitigate the social impact of the economic crisis, the Indonesian Government established a series of new and expanded programs known as the JPS (Jaring Pengaman Sosial, or Social Safety Net) programs. They were launched in early 1998, although many did not start until the second half of the year. It was hoped that through the implementation of these programs, the worst impacts of the crisis, such as widespread hunger, malnutrition, poverty, unemployment, and children dropping out of school, could be prevented or at least reduced.

This paper is an evaluation of how effective the various social safety net programs have been in reaching their intended target, namely, the traditionally poor and those newly poor due to the crisis. This is done by assessing the coverage of the programs among the poor as well as the way in which the benefits of the programs have been distributed between the poor and the non-poor.

THE SOCIAL SAFETY NET PROGRAMS

Indonesia's Social Safety Net Prior to the Crisis

The Indonesian people had never relied heavily on government-run safety net programs. The country has had neither the economic apparatus nor the political mechanisms necessary to deliver large-scale and widespread transfer programs. Instead, government social spending was largely focused towards “social services” such as health and education, while the family and communities provided “social insurance” in times of difficulty. There was some subsidized health care and a workers’ social security program, made compulsory for all formal sector employees by the 1992 law on Workers’ Social Security (McLeod 1993), but Indonesia did not have a social safety net system like the JPS. Establishing the social safety net programs in 1998 was, therefore, more like casting a new net rather than merely expanding an existing one.