maintenance(*)

The State and Social Security in Indonesia and Thailand.

Thailand
Health 0.66 1.00 1.15
by M. Ramesh Income 0.61 0.57 0.55
It is widely believed that the dynamic economics of East and Southeast Asia grew as fast as maintenance
they did because they concentrated on economic development and avoided populist social Total Government Expenditure
programs. The reality, however, is far more complicated than this characterisation suggests.
1972-79 1980-89 1990-95
In this article we look at two rapidly growing lower middle income countries in Southeast Indonesia
Asia and show that, contrary to popular perceptions, they have a range of social security Health 2.28 2.18 2.69
Income n.a. n.a. 5.75
programs, defined here to include retirement and health care programs. What distinguishes maintenance(*)
Indonesia and Thailand, the article will show, is not the absence of such programs but their
Thailand
bias towards state employees, and the well-off generally, and inadequate protection for those Health 4.24 5.57 7.56
most in need of state protection. The article will explain the superior programs for the state Income 3.68 3.13 3.61
maintenance
employees with reference to the political circumstances in the two countries which make it (*) Data available only for 1994-95. Source: Based on World Development Indicators
politically unnecessary to provide comprehensive social security to the rest of the population,
1998.
though this may be changing because of the social and political turmoil triggered by the
current economic crisis. As a percent of GDP, public expenditure on health has decreased somewhat in
But before we turn to discuss their social security policies, we need to ascertain a proximate Indonesia and increased substantially in Thailand. Income maintenance expenditure's
idea of the economic conditions which have formed the context in which their public share of GDP has decreased in Thailand; Indonesia did not publish figures on its
policies have been designed and implemented. Between 1970 and 1995, per capita GNP in income maintenance until recently which makes detection of trend difficult.
Indonesia increased from US$ 80 to US$ 980, at an average annual rate of 4.82%, and in Provision and Financing of Social Security
Thailand from US$ 210 to US$ 2,740 at an average annual rate of 5.35%. Their achievement An outstanding feature of the social security programs in Indonesia and Thailand, as
in reducing poverty was equally impressive: from 64.3% to 11.4% in Indonesia, and from indeed Southeast Asia generally, is the different sets of programs for public and private
8.1% to less than 1% in Thailand between 1975 and 1995 (Ahuja et al, 1997). The picture is, sector employees, with superior benefits available to the former.
however, less sanguine when we consider their income distribution record. The Gini Public Sector Employees: Civil servants in Indonesia are covered by TASPEN (The
coefficient for income inequality was 0.504 in Thailand in 1990 (Medhi, 1994). While no Government Civilian Employees' Saving and Insurance Scheme) and pension, whereas
comparable data is available for Indonesia, expenditure inequality data, which greatly their military and police counterparts are covered by ASABRI (the Armed Forces Social
underestimated its extent, show that the Gini has stayed at around 0.33 since the early 1970s. Insurance Plan). Their health care is provided for under the ASKES (Asuransi
Similar to other countries in the region, total public revenues as a percentage of GDP in
Kesehatan Pegawai Negeri) scheme.
both Indonesia and Thailand are small, approximately 18% on average during the 1990s, but
TASPEN was originally established in 1963 as an endowment insurance scheme but
their expenditures are even smaller, about 17% in Indonesia and 15% in Thailand on average
was expanded in 1981 to provide life insurance to civil servants, their spouses, and
over the same period. Both countries enjoyed healthy budget surplus -- 0.7% of GDP in
children. Members contribute 3.25% of their monthly salary to the scheme and in
Indonesia and 3% in Thailand -- over the 1990-96 period, though the deficit has ballooned return receive a lump sum amount roughly equivalent to nineteen times the final
recently because of the decreased revenues and increased expenditures associated with the
monthly salary in the event of retirement or death. In 1995, 100,837 members received
economic crisis.
lump sum benefits totalling Rp 393 billion under the scheme (Indonesian National
The following table shows the percentage of government expenditure devoted to income
Social Security Association, 1995: 54; TASPEN, 1995: 7, 8). While it is Supposed to be
maintenance and health is small but not insignificant.
a self-funding scheme, its assets (Rp 3.1 trillion in 1995) are less than half its accrued
liabilities and it is projected that benefits will exceed contributions by the year 2006, and
Table 1: Share of Government Expenditure on Social Security, Annual Average, Percent
Gross Domestic Product
the assets will be exhausted completely soon after, leaving a huge financial burden on
the government (World Bank, 1996: 27-28).
1972-79 1980-89 1990-95
Civil servants are also beneficiaries of a pension scheme established in 1969. The
Indonesia scheme was originally funded solely from the government's general revenues, but civil
Health 0.51 0.48 0.47
Income n.a. n.a. 0.88
servants have been required to contribute 4.75% of their monthly earnings since 1994.
After twenty years of public service and at the age of fifty years, members can expect
monthly pension equivalent to 75% of their final monthly salary. In 1995, there were 1.54
million pensioners who together received Rp. 3.37 trillion, or Rp. 183,036 per pensioner per
month on average (TASPEN, 1995:10). The scheme's contributions and other income cover
only 22.5% of the total benefits provided, leaving the government to cover the remaining
77.5% from its general revenues. The government's payment towards civil servants' pensions
amounted to 22% of its total wage bill in 1995; this is projected to increase to 66% by the
year 2020 (World Bank, 1996: 27).
ASABRI was established in 1971 and covers military personnel, civilian employees of the
Ministry of Defence, and the police force. In early 1996, its memberships stood at 0.5
million. While the scheme's rate of contribution is similar to that for civil servants, it is
available at the age of 50 and benefit levels are differentiated by rank. The secrecy
surrounding military affairs in Indonesia makes it difficult to arrive at precise assessment of
the scheme.
All state employees and pensioners, and their dependents, in Indonesia are eligible for health
care under ASKES, which was established in 1968. It is a compulsory insurance scheme
requiring a contribution of 2% of the wages from all eligible employees, though the
contribution receipts are considerably lower than expenditure, with the shortfall met by the
government. In 1993, the scheme covered 4.76 million members (of whom 21% were
pensioners) and their 9.9 million dependents. ASKES members utilise health facilities more
than five times the rate for non-members (World Bank, 1991: 94-95).
In Thailand, civil servants, military personnel, police officers, and employees of state
enterprises have been receiving pension benefits under Government Officials Pension Act
since 1951. It is a non-contributory scheme funded entirely from the governments' general
revenues. Since March 1997, however, state employees have been required to participate in
two separate schemes: the pension scheme as before and a new provident fund scheme. The
pension scheme continues to be non-contributory and paid from the government's general
revenues on an annual basis, but unlike the maximum of 100% of their last-drawn salary
which state employees were entitled to in the past, their pension is capped at 70% of the
average salary over the last five years of service. Under the provident fund scheme, the
employee and employer (the government) each contribute 3% of monthly salary to the plan;
the government contributes an additional 2% of salary to offset the lower benefits because
of changes. The accumulated contributions and investment earnings in one's account are
released to the member as a lump sum at the time of retirement.
Under Civil Servants Medical Benefits (CSMB) scheme, active and retired military personnel,
policemen, civil servants and employees of state enterprises, and up to their three
dependents, are provided free medical care. It is a non-contributory scheme paid for from
the government's general revenues. Expenditure on the program grew on average by around
20% each year over the past decade, even though the total number of beneficiaries increased
only marginally (Sanguan and Pannarunothai, 1997: 148).
Private Sector Employees: Private sector workers were covered by ASTEK (Asuransi Sosial
Tenaga Kerja) between 1977 and 1992, when it was replaced by JAMSOSTEK (Jaminan
Sosial Tenaga Kerja). In its present form, the scheme provides provident fund, health care,
employment accident insurance, and death insurance. Unlike the programs for the state
employees, it is funded from private contributions by employers and/or employees.
Participation in JAMSOSTEK is compulsory for firms with at least ten employees or
monthly payroll of Rp one million. The rate of contributions to the provident fund
component is 5.7% of the salary, with the employer paying 3.7% and the employee 2%.
Employers are entirely responsible for paying the premium for employment accident
insurance (0.25 - 1.70% of salary, depending on the level of risk) and death benefits
(0.3% of salary) schemes. JAMSOSTEK paid out Rp. 6.38 trillion in benefits in 1995;
close to 90% of the total was towards provident funds and death benefits, and the
remainder towards employee accidents.
The health care component of the scheme involves contribution of 3% of gross wages
for single persons and 6% for families by the employer. Its members receive inpatient
and out-patient services at government or approved private facilities. Rp 29.8 billion
was paid out in health care benefits by JAMSOSTEK in 1995 (ASTEK, 1995: 27). In
1995, the government launched a new program which gives villagers a modest amount
(Rp 2,000 in 1996) from the contribution of 2% of profits by large firms. The money is
credited to each family which they may use to pay for health services. No details are as
yet available on the scheme's performance.
Although Thailand has seriously considered establishing a statutory income
maintenance system for private sector employees since the early 1930s, it was not until
1990 that the Social Security Act (SSA) was adopted and implemented in the following
year. It initially provided only sickness, maternity, invalidity, and death benefits, but on
31 December 1998, the Old Age Pension and Child Allowance programs came into
effect. The SSA currently covers all employees in private firms employing at least ten,
but in 2001 the scheme will be expanded to cover all employees in firms employing at
least five; the self-employed are covered on a voluntary basis.
The SSA requires a contribution of 1.5% of the wages each from employer, employee,
and the government, which adds up to a gross total of 4.5% of the wages. However, to
cope with the economic crisis, in 1997 the rate was temporarily reduced to 1% each for
three years. Since 1 January 1999, the three parties have each contributed an additional
2% of wages towards pension and 1% each towards children's allowances. In 1996, 6.67
million claimants received Baht 6.24 billion in benefits, of which almost 65% went
towards sickness benefits and 30% towards maternity benefits (Social Security Office,
1997).
The following contingencies are covered under the SSA schemes: health care;
maternity; physical disability; death; retirement; and child birth. Retirement pension is
available only to those who contribute for at least fifteen years; in other words, benefits
will not be payable until the year 2013. The benefits are equal to 15% of the average
wage over the last five years of service plus 1% of salary for every additional year over
fifteen.
All state enterprises, listed firms, financial institutions supervised by the country's
central bank, and those receiving government contracts are required to establish
provident funds for their employees. Employee's contribution is limited to 3-5% of
salary, and the employer is required to at least match it. Employees' contribution is also
exempt from taxes, subject a maximum of Baht 7,000 per annum. The accumulated fund in a
member's account may only be withdrawn at the time of retirement or termination of
employment. In 1996, the scheme covered only 906,000 employees, or about 13% of the
labour force.
There are several overlapping health care financing schemes providing varying kinds and
levels of service in Thailand. The main schemes include Social Security Scheme (SSS) under
SSA, Workmen Compensation Scheme (WCS), the Community Health Card (CHC), and
Free Medical Care for the poor, aged and children. The SSS scheme covers nearly all out-
patient and in-patient expenses at nominated hospitals and pays 50% of wages in sickness
benefits for a maximum of six months. The scheme also provides maternity benefits that pay
for all medical expenses and pays cash benefits equivalent to 50% of wages while absent
from work for a period not exceeding 90 days. The Workmen Compensation Scheme, which
is funded entirely by employers, pays for all curative expenses, to the maximum of Baht
30,000 per episode, as well as cash benefits equivalent to 60% of wages. Disability benefits
equivalent to 60% of wages is also available for a maximum of ten years.
The Free Medical Care For the Low Income program (FMCLI), launched in 1976, is a public
assistance scheme for the poor which covers about eleven million people. It is funded
entirely from the government's general revenues, at the cost of Baht 4.8 billion in 1996
(Sanguan and Susapit, 1997:152). There are also public assistance schemes, established in
1992, which provide free out-patient and in-patient care to the elderly (aged sixty and above)
and children in primary and lower secondary schools. In 1996, the various public assistance
programs for the poor, children, and aged together covered 28% of the population (Anuwat,
1996: 3-4). The Community Health Card project (CHC) was launched in 1983 as a prepaid
health care financing scheme for the rural self-employed population. It covers in excess of
7% of the entire population (Anuwat, 1996: 3-4). Only adult individuals on income below
2,000 Baht a month or families on income below 2,800 Baht a month are eligible for the
card. The government contributes about 1,000 Baht a year for each family; the families
themselves pay 300-500 Baht per family per year. A health card carrier is entitled to medical
care at state and member hospitals and health institutions.
The Privileged Position of the Public Sector Workers
The formal social security programs in Indonesia and Thailand cover only a small share of
the labour force and even a smaller share of the population. Income maintenance programs
cover 7% of the population in Indonesia and 10% of the population in Thailand. Health care
financing schemes programs have a larger coverage: 16% of the population in Indonesia
(Jakarta Post, 26 September 1997) and 55% of the population in Thailand. Of all covered by
various social security programs, more than one-half in Indonesia (Vittas, 1991: 34) and
about two-fifths in Thailand are in the public sector. The low coverage is largely a result of
exclusion of the unemployed or those employed in informal sectors or in small firms from
the schemes. What is unfortunate is that it is the excluded portion of the population that
suffers from greater incidence of poverty (Firdausy, 1996) and, as such, is most in need of
statutory income maintenance.
The schemes for state employees generally provide considerably higher rate of income
replacement than those for their private sector counterparts. In Indonesia, for a person
with 35 years of service in the civil service or military, retirement benefits provide a
rather generous replacement rate of 100% of final pay. In contrast, the replacement rate
for private sector workers covered by JAMSOSTEK is, under the most optimistic
assumptions, around 10%. Its low benefits are not only a function of low contribution
rates, but also high administration costs and poor returns on investment. Indeed, it
would appear that JAMSOSTEK members would do better by simply depositing their
entire contributions in a normal savings account with a bank. Similarly, the full pension
for state employees in Thailand is 70% of their last salary -- it used to be 100% until
1998 -- compared to 35% of the average wage during the last five years of employment
for SSS members.
Not only are the replacement rates for public sector employees higher, their benefits are
funded from public exchequer, unlike the private sector employees' schemes which are
funded by the employees themselves and their employers. Indeed a significant
proportion of the Indonesian and Thai governments' social security expenditures,
though small overall, is directed at such employees. The Indonesian government funds
half of lump sum retirement benefits and more than three-quarters of pension benefits
for state employees. Similarly, a significant proportion of ASKES expenditures is
derived from the government's general revenues even though it is supposed to be a
contributory scheme. In contrast, private sector workers covered under JAMSOSTEK
receive no state contribution. The scheme's shortcomings are compounded poor
administration, low returns on investment, and high administration costs. Of those
covered, only 25% are in compliance with contribution requirements. Worse, about
40% of the assets under its management are not posted to individual accounts (World
Bank, 1996: iv), which is a significant lapse for a scheme based on individual savings.
JAMSOSTEK's administrative expenses are very high -- almost 12% of contributions --
and real returns on investment negligible, in the order of 0-1.3%.
In Thailand, the situation is somewhat better in that while the government fully funds
the schemes for state employees, it also pays for one-third of the total contributions to
SSS. However, the SSS scheme's tripartite is not entirely equitable because the majority
of the population does not benefit from the scheme; in other words the tax payers pay
for benefits only available to a small proportion of the population. Moreover, by tying
benefits entirely to contributions, SSA does nothing to redistribute benefits to those
who held low-wage jobs in their last five years of employment.
As with income maintenance, the publicly-organised health care financing schemes in
Thailand favour government employees, who pay only a small share of the costs. The
government subsidy for CSMB scheme is eight times higher, and for the SSS five times
higher, than the Free Medical Care scheme for the poor (Anuwat, 1996: 6-4). There is
also a wide gap in the level by which budgetary allocations have increased: the civil
servants' health benefits soared from Baht 6.9 billion in 1992 to Baht 13.9 billion Baht
in 1996, whereas the SSS budget rose from Baht 3.2 billion to Baht 4.8 billion during
the same period, even though the latter covers more workers (Bangkok Post, 6 September
1996).
The Politics of Social Security in Indonesia and Thailand
The question before us now is why do social security programs in Indonesia and Thailand
accord superior benefits to the state employees and, relatedly, why do they neglect the
income protection needs of the private sector workers, especially those outside formal
employment. The existing literature on both developed and developing countries provides
few clues in explaining this seemingly anomalous policy, as the brief literature in this section
will show. It will be more fruitful, the article will show, to examine the domestic political
circumstances obtain in the two countries to understand the phenomenon. Examination of
the domestic political conditions will also explain why Thailand has done more than
Indonesia to expand social security programs in recent years. Early studies on the origin and
development of social security attributed heavy causal significance to industrialisation and
the associated socio-economic processes, mainly urbanisation, ageing and rising income
(Wilensky and Lebeaux, 1958; Cutright, 1965). Regardless of its explanatory potential and
shortcomings -- there are numerous empirical and theoretical flaws despite the considerable
empirical proof supporting their position -- this essentially functionalist approach is pitched
at too high a level of abstraction to account for the differences that exist between different
segments of the work force in our case studies. The realisation that rapid industrialisation,
economic growth and urbanisation in Eastern Asia have not been accompanied by
proliferation of social welfare programs of the type found in the West spawned cultural
arguments. It is claimed that in Asian societies individuals and families look after themselves
and their family members in times of need (Jones, 1993; Rozman, 1991; Vogel, 1991). While
intuitively appealing, it is difficult to take the argument seriously because if individual
responsibility and filial piety were truly as embedded in the culture as claimed, then
policymakers would not have established generous income maintenance programs for
themselves.
In contrast to their socio-economic counterparts, political explanations eschew determinism
and emphasise political pressures and the policy-makers' responses to them. Commentators
from a variety of perspectives argue that competition among political parties and candidates
leads them to offer increasingly more social welfare benefits in order to win votes (Amenta
and Carruthers, 1988: 665; Myles, 1989; Verbon, 1988). While electoral competition clearly
has an effect on public policy in democracies, the level of political competition has been low
in Southeast Asia (Taylor, 1996) and policymakers have not had to resort to social policies to
garner votes except for some brief periods, when we do see evidence of expansion of social
programs. According to some analysts, it is not democracy itself, but the strength of trade
unions and the electoral success of the political parties that espouse their interests that
determines the quality and level of social welfare entitlements; (Korpi, 1980; Shalev, 1983;
Myles, 1989). The explanation is of limited use because unions and Left parties have been
woefully weak in both countries. Instead of class competition, Meso-Lago (1978) argues for
the importance of competition among social groups, claiming that social welfare programs in
Latin America were established in response to, and reflect, the political strength of the civil
service and military. There is nothing to suggest that such programs were launched as a
response to pressure from these groups in Indonesia and Thailand. What is more likely
the case is that the ruling elite established and expanded the programs to reinforce the
bureaucracy and military's loyalty to the regime.
Since the early 1980s, a large literature has emerged which emphasises the goals and
capability of the state itself to explain policies, though its application to social policies
in Eastern Asia is still rare. In a pioneering study, Crone (1991) explains the differences
between the social welfare policies in Indonesia and Thailand in terms of their regimes'
different security outlooks. He argues that the need to contain the threat from the Left
led the Thai government to pay special attention to welfare concerns, whereas the New
Order Indonesian state feared the elites more than the masses and hence could afford
to neglect social welfare programs. This is a promising line of argument, despite the
fact, it exaggerates the level of statutory social welfare in Thailand and the role of the
Indonesian military in policy-making. It was not until the late 1980s that Thailand
established comprehensive social security programs, at a time when there was no visible
threat to the regime from Leftist forces. In the following discussion, I will build on
Crone's insights and show how the politics of regime survival has shaped the
contemporary social welfare programs in the two countries.
To understand the current social security programs, we need to go back to the time
when they were established. The establishment of social security programs in Indonesia
is concentrated in three short periods: the tumultuous last days of Sukarno's rule, after
the nation was rocked by riots in the mid-1970s, and during the late 1970s when
industrial unrest was on the rise. It is remarkable that no significant new social security
or health was launched during the 1980s or 1990s, the hey-days of Suharto's regime and
economic growth.
President Sukarno established and expanded social security programs for the state
employees because of the political challenges his government was facing. He had
unleashed democratic forces, most evident in the 1955 election, that he could not
control and raised popular expectations he could not satisfy. He responded by
instituting Guided Democracy (1959-1965) measures to protect his government from
conflicting social and economic pressures. Faced with a thoroughly disgruntled
population, Sukarno relied increasingly on the bureaucracy and military to remain in
office (Anderson, 1996: 31) and the establishment of social programs for them was
designed to win their support.
The Suharto government, in contrast to its predecessor, was never really under serious
challenge until the final days of its rule in early 1998, except for the initial few years
when it was still in the process of consolidating its hold on power and during the mid-
1970s when it was raked by street protests. The political instabilities that lingered on in
the late 1960s precipitated the establishment of ASKES in 1968 whereas the student
demonstrations in 1973 and the riots in Jakarta in 1974 led the government to
undertake social policy initiatives, including the establishment of ASTEK in 1977. The
firmness of Suharto's grip on power for much of his term in office made it politically
unnecessary to establish new social programs. The few new social policy initiatives his
government did take in later years were of minor significance and intended for
employees of large firms who tended to be concentrated in urban areas and were more likely
to join trade unions.
The fact Suharto faced elections every five years did not noticeably reduce his government's
autonomy or capacity, as he and his party handily won all elections they contested. Nor was
the legislature a threat to his rule, as he personally appointed 60% of the members of Majelis
Permusyawaratan Rakyat (People's Consultative Assembly). Trade unions, which played a
key role in the expansion of social programs in the industrialised countries, were similarly
too weak to affect policies. The level of open industrial unrest was generally low or non-
existent, except for the late 1970s and early 1980s when the manufacturing sector in the
Jakarta area was hit by significant strike activity (Manning, 1993: 70-71). The government
responded to the unrest with increased control over the union movement, but it also offered
some concessions, especially in the form of ASTEK, which targeted medium to large firms
in which unions were concentrated. Moreover, while only 3-5% of all employees and 5-10%
of all manufacturing employees were members of trade unions in the early 1990s, about one-
third of all enterprises with twenty-live and more employees had unions (Manning, 1993: 70).
This perhaps explains the origin of JAMSOSTEK, which essentially caters to employees of
middle-sized private sector firms. Employees in smaller firms posed little threat to their
employers, much less the government, and did not need to be catered for. Those in informal
sectors were politically even weaker in this regard and the government could afford to
exclude them from social security protection.
Statutory social security in Thailand has been shaped by long periods of conservative military
dictatorships and political fragmentation among the supporters of expansion of social
security. While the government first proposed social security programs in the 1930, and the
legislature actually passed an Act to the effect in 1954, they did not lead to any concrete
result because of the powerful forces opposed to it. In the 1950s, both employers and
employees in the non-agricultural private sector were mostly Chinese, whereas the public
sector was mostly Thai (Pawadee, 1986) which made it politically unnecessary and even
awkward to extend social security benefits to private sector workers. Public sector workers
and employees of large firms already had income maintenance and health schemes superior
to what was being proposed and so had solid reasons to oppose any legislation that might
dilute their superior protection.
Chances of adoption of a comprehensive social security program for private sector workers
improved after the overthrow of military government in 1973. The expectations were
partially realised with the establishment of the Workmen's Compensation Fund in 1974,
followed by health care initiatives in the following year. In 1975, the Social Action Party
government inaugurated a broad social policy reform agenda, establishing the Free Medical
Care scheme for the poor (later expanded to include the aged and children) which continues
to this day. These health programs together continue to be the largest programs, in terms of
the number of people they cover, in Thailand.
The pace of reform picked after the new government led by Chatichai was sworn in 1988.
This was a period of heightened labour unrest in Thailand, because increasing economic
disparity amidst economic boom fostered demands for higher wages and better social
security. Chatichai, ever a skilful politician, sought to solidify his support base by establishing
the Ministry of Labour and Social Welfare and, no less remarkably, deciding to sponsor
the Social Security Act. In July 1990, the Thai Parliament unanimously passed the bill,
thus overturning the earlier Senate veto. The Act almost died following the coup of
February 1991, but the military government decided to go ahead and implement the
Act as scheduled. The unpopularity of the bureaucracy and military with the economic
elite and the general public alike helped overcome resistance from the bill's opponents
who had scuttled similar efforts in the past (Reinecke, 1993: 90-91).
The protracted difficulties with the adoption of social security proposals in Thailand
reflected the military's dominance and the absence or weaknesses of democratic
institutions and processes until the late 1980s. For much of the period under
consideration, the military either directly ruled the country or had a vital say in all major
policy issues. While the military personnel themselves were recipients of generous social
security benefits, they used their dominant position to thwart proposals to provide
similar benefits to private sector workers for almost four decades. The situation
changed in the late 1980s when democratic elections forced governments to devise
policies to appeal to voters and ignore the military's opposition. SSA was a part of such
an effort, which was especially popular in the Bangkok area where there are a large
number of seats. The rural voters too were catered for, but not through formal social
security but piecemeal development projects dispensed by local politicians (Suchit,
1996; Laothamatas, 1996). Similar to Indonesia, trade unions have played only a
peripheral role in the social policy process in Thailand because of government- and
employer-sponsored intimidation and low union density (3% of industrial workforce in
1991) and their own internal fragmentation. The problems were compounded by the
fact union membership was concentrated in the public sector which was already
protected by rather generous social security programs.
Conclusion
The article showed that unlike the common perception that social security programs are
absent from the Southeast Asian countries, a close look at Indonesia and Thailand
shows the existence of a range of programs. What is remarkable about the programs is
the separate treatment of public and private sector employees and the availability of
superior benefits for the former. The generous state-funded programs for state
employees are both inefficient and inequitable, as they impose heavy long-term
liabilities on the state, the cost of which is borne by taxpayers, who themselves are
denied the same benefits.
There is no defensible reason why public employees should be given more income
protection than other workers. The argument that pension benefits are a partial
compensations for the lower wages in government services holds little water, as this is
true only for the higher echelons; private sector wages tend to be lower in the bottom
rungs. In any event, if low salaries are indeed a problem it should be addressed directly
through higher salaries rather than retirement benefits. What is particularly troubling is
that the schemes for state employees are funded from general tax revenues but are not
subjected to the same level of scrutiny that proposals for expanding programs to the
private sector have to endure because they are an ongoing budgetary commitment.
M. Ramesh, Dept. of Government, University of Sydney
Publication Information: Article Title: The State and Social Security in Indonesia and
Thailand. Contributors: M. Ramesh - author. Journal Title: Journal of Contemporary Asia.
Volume: 30. Issue: 4. Publication Year: 2000. Page Number: 534. COPYRIGHT 2000
Journal of Contemporary Asia Publishers; COPYRIGHT 2004 Gale Group