The Jakarta Post
The government’s new preemployment card program comes as millions of workers are losing their jobs as the COVID-19 pandemic paralyzes businesses. What was supposed to be President Joko “Jokowi” Widodo's campaign pledge to distribute training subsidies to develop workers’ skills has now turned into a social safety net with unemployment benefits.
Around 4 million people applied after Saturday’s launch of the program, which offers a Rp 3.55 million (US$225) subsidy per recipient for four months. While this indicates the successful outreach of the program, the bitter reality is that people are losing their jobs and are in dire need of a social safety net. Indonesia’s 133 million workforce, 7 million of whom were unemployed as of August 2019, cries for a wide-ranging social safety net during this difficult time. The government is estimating 2.9 million to 5.2 million more workers could lose their jobs during the COVID-19 pandemic.
Tourism-related businesses from airlines to hotels and restaurants have stopped or limited operations, while factory activity contracted to its deepest level in history in March, according to the Bank Indonesia Prompt Manufacturing Index. More than 70 million informal workers, who account for more than half of Indonesian labor, are at the greatest risk as they rely on weekly if not daily pay with no safety net.
The Rp 2.4 million incentive and Rp 150,000 overall bonus for participating in training surveys would ease the burden to make ends meet for the 5.6 million preemployment card recipients planned for this year. However, the Rp 1 million in training funds per person needs to be used properly.
The designated funds are part of a total preemployment card budget of Rp 20 trillion, less than 5 percent of the state budget to fight COVID-19. The training funds would be funneled into training institutions registered under eight digital platforms including Tokopedia, Bukalapak and Skill Academy by Ruangguru.
These funds should therefore be continuously reviewed to uphold the integrity of the receiving training institutions and digital platforms, as well as to maximize the effectiveness of the training programs. At a time when skills may probably be the last thing on the minds of vulnerable workers as they focus on staples and bare necessities, there needs to be a strong monitoring system for relief efforts.
In the short run, the preemployment card program management needs to implement a carrot-and-stick mechanism for training institutions and digital platforms that underperform. It also has to strengthen its database and expand outreach to focus on those who have not received other forms of government aid.
In the medium term, especially under a scenario in which the pandemic lasts longer than expected or the economy takes a long time to recover, the government needs to consider reallocating funds from the program’s budget toward social aid, which is urgently needed.
Training programs would only be beneficial under the assumption that, four months after joining, there are employers to recruit. Otherwise, cash transfers and staple food aid are much more important for the most vulnerable as they cope with the financial shocks associated with COVID-19.