Social Protection System Review of Indonesia

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Indonesia has made impressive progress in reducing income inequality and improving living standards since the Asian Financial Crisis but the decline in poverty has slowed in recent years while inequality has risen and a large part of the population remains vulnerable. The Government of Indonesia has recognised the potential of social protection to address these challenges and to underpin a long-term development strategy based on more inclusive economic growth. As a consequence, social assistance programmes have grown significantly in recent years while social insurance has undergone major reforms. The Government is gradually realising its vision of a system of social protection, based on comprehensive and coherent coverage for all age groups.The Social Protection System Review of Indonesia charts the evolution of social protection. It explores the current context for social protection and how this is likely to evolve in the future, analyses the extent to which existing programmes are aligned to those needs and how effective these programmes are at reducing poverty. It also examines the financing of social protection. Finally, it proposes policies to enhance the social protection system across a number of dimensions, including programmes, institutions, financing and information architecture.



A forward-looking assessment of social protection needs

Thanks to a prolonged period of robust economic growth, combined with political and social stability, Indonesia has achieved a dramatic reduction in poverty and major improvements in living standards for the majority of its population over the past two decades. However, there remain structural barriers to the inclusive growth that the government has identified as key to its economic ambitions and sustained social cohesion – barriers that social protection can overcome. This chapter examines the context for social protection, assessing the trajectories of poverty and inequality and analysing the risks individuals face along the life cycle, including pervasive informality. Finally, it maps the threats and opportunities that lie in store for Indonesia, its population and its economy in the future.


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