Welfare State or Welfare Society?
The perceived prevalence of unhappy citizens in the majority of welfare states should prompt us to find out the causes so that it becomes an insight for our country in view of seriously building the welfare state system
Todung Mulya Lubis’ discourse on "The Welfare State" (Kompas, 9/1/2023), has raised a reflective topic about Indonesia as a welfare state.
Lubis comes to a conclusion that the Constitution envisions Indonesia heading toward a welfare state. However, several inconsistent economic policies have meant this is not fully coherent with the vision of a welfare state.
The topic put forward by Lubis is relevant, especially if we look at the series of social and economic policy reforms that have been taking place recently.
Those policies include the introduction of the Pre-Employment Card program in the early stage of the Covid-19 pandemic, followed by the ratification of the "controversial" Job Creation Law at the end of 2020. Shortly afterward, the government came up with a scheme to restructure the provisions for National Health Insurance (JKN) contributions, changed the pension program to a fully funded scheme, and initiated the Unemployment Benefit Program (JKP), a laid-off workers’ security scheme that had previously seemed unfeasible.
No free lunch
In my opinion, what is currently seen as inconsistent economic policies can be seen as part of the searching process for a more contextual idea about a welfare state. With these inconsistencies, another question that arises as to whether to push Indonesia into a welfare state is still relevant.
We are dreaming about becoming like the one of those countries that fall into the category of welfare states (mostly in Western Europe) with the reputation of achieving the highest ratings on quality of life. This is mainly due to the almost fully committed central role of these states in guaranteeing the social rights of their citizens.
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> Regional Budget for People’s Welfare
Social care is also provided for those who are unemployed with a welfare state guaranteeing an amount of compensation equivalent to between 75 and 90 percent of income when they worked for a certain period. The most ideal example to illustrate this is Denmark, whose unemployment benefits scheme allows the unemployed to claim the disbursement for up to two years.
It looks so attractive any government in the world dreams of turning itself into a welfare state.
However, it should be noted that all guarantees offered by the welfare state do not come without costs. That said, rights privilege calls for obligations fulfilment. This law applies linearly: the greater the rights obtained, the greater the obligations imposed.
The above give-and-take rule makes it clear that a generous social policy may cost dearly in the form of income tax payments, which can be up to half of monthly earnings. The willingness to pay taxes greatly depends on the people's belief in whether their social welfare is truly guaranteed.
People’s concern about this guarantee must be responded to by the government's political goodwill. It must commit to allocate the proportion of spending on social protection, which can reach an average of 20 percent of GDP. Among the Scandinavian states, the social protection budget is already in the range of between 25 percent and 30 percent.
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> Expansion of Social Protection to Lower Middle Class
Compare this with Indonesia. National social protection spending, even during the pandemic emergency situation, is less than 5 percent. Based on Indonesia's past record on social protection, particularly during the 1998 monetary crisis, this country has never run out of ideas and ambitions about creating new social security programs. However, they appear to be wide but not deep. There are many programs, but they have never been able to significantly lift up the livelihoods of the beneficiaries.
The fact that nearly 60 percent of Indonesians work in the informal sector makes it difficult for the government to mobilize income tax as the main source of financing for a welfare state. This discouraging situation is coupled with taxpayers’ general negligence I meeting their obligations. They run away from their responsibilities. This reality shows us that the road to fulfilling the minimum preconditions for the establishment of a welfare state institution are still very far off.
The dark side of welfare states
Not many realize that in a welfare state there is a tendency for society to be unhappy. This is revealed from the increase in the use of antidepressant drugs in the majority of citizens in 18 European welfare state countries, which increased almost 2.5 times in 2000-2020, according to the Organization for Economic Cooperation and Development (OECD) 2022 reports. Surprisingly, people with the highest consumption of antidepressants in 2020 were found in countries that are often used as ideal examples of welfare state provision, such as Iceland, Sweden and Norway. Denmark and Finland were reported to be in eighth and ninth respectively. The reason for this anomaly is not yet known, but what is certain is that the high use of antidepressant drugs could be a representation of better access to mental health care.
This fact is in contrast to various reports, for example the OECD Report or The World Happiness Report (TWHR), which place them as the countries with high achievement in bringing about welfare and happiness for their citizens.
In the latest TWHR survey, Western European welfare state countries, such as Finland, Denmark, Iceland, Switzerland and the Netherlands, have relatively high scores, on average above seven out of a possible 10. Meanwhile Indonesia is on par with other Asian countries, such as Malaysia, Thailand, China, and South Korea, in the five to six score range.
The increasing use of antidepressant drugs has finally shaken the assumption that wealthier countries tend to have higher average happiness scores.
Welfare society
The perceived prevalence of unhappy citizens in the majority of welfare states should prompt us to find out the causes so that it becomes an insight for our country in view of seriously building the welfare state system.
We may have been fooled that a welfare state is vis-a-vis capitalism, which we always criticize. In fact, what happens is that the idea of a welfare state is synonymous with the term welfare capitalism (Esping-Andersen, 1990), or in Indonesian it is often referred to as “sistem kapitalisme baik hati" (a benevolent capitalism system).
This system engineers market liberalism to grow in tandem with the spirit of state-regulated redistribution. The social foundation is built on the materialism, which characterizes an individualistic society.
Materialism will only add to an individual's feelings of relative deprivation. Someone becomes prone to measuring wellbeing not only by how much they have, but how much they have compared with other people. Therefore, feelings of unhappiness will arise when they find themselves being unable to consume more than others.
The next question is whether we can really commit ourselves to a welfare state?
The indication of unhappy citizens in a welfare state can perhaps be linked to this feeling of relative deprivation. This is logical because the very high progressive taxes will make those who have the earning ability to make more money inevitably have to live with a level of consumption that is not much different from those who are categorized as being lower income earners. If this hypothesis is true, we can argue that the vaunted social solidarity has so far been only superficial.
In the context of our society, this phenomenon is nothing new. Those who fall into the category of the “sandwich” generation, for example, must be willing to share their income with their extended families in a proportion that may take more than half of the monthly income. This clearly forces their consumption level, like it or not, to be suppressed, leaving them unable to spend on a par with other people around them.
This income transfer process is what in the context of literature is referred to as a welfare society, which is a welfare system governed by informal rules. Are they happy? In theory, they are, given their cultural and ethical values that underline their spirit of sharing. In reality, it is within the realm of subjectivity, so the case will need further studies.
Back to the question of whether the dream of turning Indonesia into a welfare state is still relevant, it may be so if we start to think that happiness -- and success alike – doesn't weigh on the capacity level of our material consumption compared with those around us. Only then can the formal provisions governing social redistribution be interpreted in terms of what we have been practicing daily as part of giving.
The next question is whether we can really commit ourselves to a welfare state?
Tauchid Komara Yuda
Tauchid Komara Yuda, Lecturer at Department of Social Welfare Development, Gadjah Mada University (UGM) and Visiting Lecturer on Social Policy at Mahidol University, ThailandThis article was translated by Musthofid.
