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Building an inclusive, integrated social safety net
While the government’s effort in ramping up the social protection system is worthy of appreciation, top-down integration of the different components is needed in order to optimize the efficiency and effectiveness of the whole program.
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Residents wait in line at the Health Care and Security Agency (BPJS Kesehatan) office in Matraman, Central Jakarta On Nov. 11, 2019. (JP/Dhoni Setiawan)
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ccording to Daron Acemoglu and James Robinson’s seminal work Why Nations Fail, institutions are what stand between prosperity and poverty. When institutions are inclusive, rather than extractive, prosperity prevails.
Inclusive economic institutions encourage people’s participation in economic activities and champion economic freedom. Such institutions are embodied in quality public services, among other things.
By this logic, the Indonesian government is right in making inclusive growth the North Star of its macroeconomic policy for the 2020 fiscal year. Among the objectives of the government are a marked reduction in poverty, inequality and unemployment levels.
This will push quality public services and social protection programs high up the policy agenda, buttressed by this year’s national development theme of “boosting human capital for quality growth”.
While the government’s effort in ramping up the social protection system is worthy of appreciation, top-down integration of the different components is needed in order to optimize the efficiency and effectiveness of the whole program.
According to the 2020 state budget, the central government is allocating over Rp 700 trillion (US$50.2 billion), approximately 41.7 percent, of its spending for public services and social protection this year.
This does not include the sizable transfers made to regional governments, all the way down to the village levels, aimed at improving the living standards of the most vulnerable.
