Indonesia Launches First-Ever Unemployment Benefit Scheme
May 27, 2021

In a debut for Indonesia – although its seems a little late from the view of regional peers –, the country has introduced its first-ever unemployment benefit scheme as part of the government’s social security programme.

The scheme is designed to provide jobless people with cash stipends, skills training and career guidance for up to six months.

To be eligible, workers must have participated in the government’s social security programs for healthcare and pensions. Employers are obliged to register their staff in the two schemes, and if they don’t, they have to pay cash compensation to the employee as a lump sum.

Indonesia’s social security programme is run by two organisations, the Social Security Administrator for Health (BPJS Kesehatan) for healthcare and the Workers Social Security (BPJS Ketenagakerjaan) for pensions. The universal healthcare programme is already considered one of the largest single-payer national health insurance scheme, covering over 83 per cent of the country’s 270 million people.

Monthly cash support capped at five million rupiah ($350)

Overall, employees who are made redundant must meet the following conditions to be eligible for unemployment benefits:

They must be an Indonesian citizen below 54 years of age when registering for the benefits. They must have been formally employed and have been registered in the healthcare and pension scheme at least six months before the termination of employment.

Employers will contribute 0.46 per cent of their monthly wages to the new program, whereby the government takes on 0.22 per cent of the rate.

In terms of financial support, eligible jobless people will receive a monthly cash stipend at 45 per cent of the previous monthly wage, but capped at five million rupiah ($350) for the first three months, and then 25 per cent in the following three months.

The unemployment rate in Indonesia increased to 6.26 per cent in the first quarter 2021 from 4.94 per cent in the same quarter a year earlier amid the Covid-19 pandemic.