JKP Unemployment Benefit Needs Review

Kompas/Heru Sri Kumoro

Workers on the construction project for business premises and apartments leave their work area during their lunch break in Serpong, South Tangerang, Sunday (13/2/2022). Regulation of the Minister of Manpower (Permenaker) of the Republic of Indonesia Number 2 of 2022 raises pros and cons among workers.

The government's decision to return the function of the Old Age Savings, known as JHT, to its original purpose as savings for retirement has drawn protests from workers.

Manpower Ministeral Regulation No. 2/2022 dated 2 Feb. 2022 stipulates that workers participating in the JHT savings program who stop working or those who are laid off are allowed only to withdraw their JHT savings when they 56 years old.

The regulation changes Manpower Ministerial Regulation No. 19/2015, which allows workers who stop working or are laid off to withdraw their JHT savings a month after the company they work issues its working termination letter.

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However, workers oppose the change because they are worried that if they are laid off, their severance pay will not be sufficient to live on. The government has argued that it is the time to return the original function of the JHT savings as savings for retirement because, starting on 22 Feb. 2022, the Job Loss Guarantee (JKP) program, or unemployment benefit, will be implemented as part of the implementation of Law No. 11/2020 on job creation.

The government assumes that if the workers stop working or are laid off, they will receive severance pay and if the amount is added to the JKP benefit, the money they receive will be sufficient to make a living.

KOMPAS/RADITYA HELABUMI

Police wearing personal protective equipment (PPE) unfurls a banner appealing to health protocols when thousands of workers demonstrate in front of the DPR Building, Senayan, Jakarta, Monday (7/2/2022). The mass of workers from the Federation of Indonesian Metal Workers Union (FSPMI) and other elements again demonstrated by demanding to reject the Job Creation Law and ask for a revision of the minimum wage in areas other than DKI Jakarta.

The government announced its plan to implement the JKP unemployment benefit in October 2021 but the workers did not receive enough information about the actual benefits and the sources of the funding for the JKP program. According to the Job Creation Law, the JKP funding comes from three sources, namely the government's initial capital, which is set at a minimum of Rp 6 trillion, workers’ contributions for other social security programs, and/or the operational funds of the Workers Social Security Agency (BPJS Ketenagakerjaan) or BP Jamsostek.

According to the government, the amount to be received by workers from the JKP program will be greater than JHT savings, but the reliability of the JKP program has not been tested. Workers who stop working or are laid off normally receive 45 percent of their salaries for the first three months and 25 percent for the last three months. The government's claim must be shown through a calculation that includes a number of variables, such as length of service and accumulation of the workers’ JHT contributions.

If the government wants its policies to be accepted, it should hold an open dialogue with the people.

The current economic situation is filled with uncertainty not only due to the Covid-19 pandemic and geopolitical tensions. Workers are worried about being laid off and not having enough savings. This situation is compounded by the increase in wages this year that does not match the expectations of workers while high inflation erodes their purchasing power.

If the government wants its policies to be accepted, it should hold an open dialogue with the people. Moreover, the atmosphere of the political year has begun to be felt. In order to prevent workers’ protests from worsening, the government must be able to guarantee that workers will get severance pay if they lose their jobs, even though the layoff should be taken as the last resort. Although the government promises that the JKP received by workers will be greater than JHT, a comprehensive and independent transparency study on the JKP is needed in order to build a strong mutual trust.

This article was translated by Hendarsyah Tarmizi.