T

he government fully enforced the 2004 National Social Security System (NSSS) Law wednesday, when President Joko '€œJokowi'€ Widodo launched NSSS Employment for salaried and non-salaried workers ,which covers pensions, old-age savings, work accidents and death benefits. The other component of the NSSS, the universal healthcare program, was launched in January 2014 also under the same law.

Even though the Workers Social Security Agency (BPJS Ketenagakerjaan), which runs the pension program, has so far registered only about 17.20 million of the estimated 35 million salaried workers in the private sector as participants, that number has been considered adequate as a starter because registration will continue as a work in progress.

Of utmost importance is that the level of the contribution rate, previously the most contentious issue between the government and the employers'€™ association, has been set at 3 percent of the payroll (1 percent paid by employees and 2 percent by employers).

But it is good to know that the contribution rate will be reviewed every three years to make adjustments to the prevailing economic condition and financial sustainability of the program. This is vital because the contributions that are collected must be sufficient to pay for all future promised benefits and cover the program'€™s administrative and operating expenses. We should take a great lesson from the universal healthcare program ,which has plunged into a big deficit after only one year of operation as a result of low premium income and the large number of poor participants who cannot contribute to the program.

The level of the contribution rate is, considered the most appropriate at least for the initial stage because a high payroll contribution could discourage the hiring of new workers, reduce workers'€™ take-home pay and raise labor costs to such punitive levels as to make Indonesia less attractive to investors.

But an appropriate contribution rate is not enough. The next most pressing challenge is to register all employers and their employees as the participants. This is the task of BPJS Ketenagakerjaan, which took over from Jamsostek, previously the managing agency of the workers social security and protection program. It is encouraging to learn that BPJS Ketenagakerjaan has so far opened 11 regional offices, 121 branches and 205 service points to administer and register new participants.

BPJS Ketenagakerjaan should develop collaborative enforcement systems that include the participation of line ministries, regional governments and other relevant agencies to ensure that within the next two to three years all salaried workers, recently estimated at more than 35 million, will participate in the program.

The next task for BPJS Ketenagakerjaan is to develop a strategy and system for effectively and efficiently collecting contributions from unsalaried workers or workers in the informal sector, including the self-employed, who account for more than 70 percent of the total workforce or about 70 million. This is rather complex because, unlike the rules on salaried workers, non-salaried workers will pay a flat contribution.