The New Indonesian Social Security Law: A Blessing or Curse for Indonesians?

The Indonesian Government has recently passed a new national social security law, which supporters have said would make the existing social system works better for the beneficiaries and would extend social security coverage to more workers and their families, both in the formal and informal sector. However, opponents have stated that the new law is flawed in many ways. The paper attempts to critically analyse the law and to predict its possible impacts on Indonesian workers and economy in general. From this analysis, we can conclude that there are several serious flaws in the government plan as outlined in the new law, such as a worsening of Indonesia's labour market conditions, financial unsustainability, and added pressures on the state budget. Also, it does not allow competition in the provision of social security benefits to Indonesians. A better policy would be to strengthen the family support system, which has been the major source of old-age support for elderly Indonesians. In addition, Indonesia should seriously consider adopting a social security scheme based on the widely used multipillar approach to replace the current public social security monopoly.