Social Security Coverage of Workers in the Informal Economy in Indonesia
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International Labour Organization Promoting decent work for all Background Paper for the Regional Workshop: “Quality Apprenticeships and Work Experience Measures to Improve the School-to-Work Transition” Theo van der Loop, Phnom Penh, 6-7 October 2015 1. Problem Statement 2. Background & Objectives 3. The Apprenticeship Life Cycle 4. Definition & Potential of QA 5. Comparison with Internships 6. Four Building Blocks 7. Cross-Cutting Issues 8. Steps to Set-up/Improve a QA System 2 “The number of young people out of work globally is nearly as big as the population of the United States.” The Economist, April 27th 2013. 3 Globally 75 mln. young people are actively looking for a job (ILO 2013). But many more (290 mln.) are NOT in Employment, Education or Training (NEETS). =25% of the planet’s youth. Almost equal to the US Population of 311 mln. Source: The Economist, April 27th 2013. 4 The economic crisis has hit youth in a disproportionate way: ‘last in, first out’ There are almost 8 Million more unemployed youth since the start of the crisis Source: ILO 2012. 5 Unemploy- Youth Philippines(Q3) Country ment Unemployment (in %) (in %) Indonesia(Aug) Thailand (Q2) 0,6 2,2 New Zealand (Q3) Singapore (Q3) 2,5 6,8 Pakistan Macau, China (Aug) 2,6 6,7 Korea, Rep.of (Oct) 2,9 8,3 Australia (Oct) Japan (Sep) 3,3 7,2 Taiwan, China(Sep) Sri Lanka (Q2) 4,2 19,0 Taiwan, China(Sep) 4,2 13,8 Sri Lanka (Q2) Australia (Oct) 4,3 10,3 Japan (Sep) Pakistan 5 10,6 New Zealand (Q3) 5,7 16,2 Korea, Rep.of (Oct) Indonesia(August) 6,56 19,9 Macau, China (Aug) Philippines(Q3) 6,6 17,9 Singapore (Q3) Sumber: Publikasi ILO. Keterangan: Thailand (Q2) 1. Tingkat Pengangguran Terbuka: Umur 15+, kecuali 0,00 5,00 10,00 15,00 20,00 25,00 Macau,China (16+), Pakistan (10+), dan Sri Lanka (10+). 2. Tingkat Pengangguran Terbuka Usia Muda: Umur 15- Tingkat Pengangguran Terbuka Usia Muda 24 tahun, kecuali Hongkong, China( 15-19), Macau, Tingkat Pengangguran Terbuka China(16-24), Pakistan (15-19), Singapore (15-29). Source: BAPPENAS 2013. 6 G20 – 2012 SDGs 2016 – 2030 7 Landmark decision by the G20 Labour and Employment Ministers to: “…promote, and when necessary, strengthen quality apprenticeship systems that ensure high level of instruction and adequate remuneration and avoid taking advantage of lower salaries.” QA as one of the key policy tools to promote effective school- to-work transitions. 8 17 sustainable development goals and 169 indicators One dedicated goal - SDG 8 - to Decent Work for All. 9 35 30 Ireland Italy y = -0.5601x + 31.633 R² = 0.6499 25 France 20 US UK 15 Denmark Canada Australia 10 Switzerland Austria Germany Youth unemployment rate 2011 in (%) 5 0 0 5 10 15 20 25 30 35 40 45 50 Apprentices per 1000 employees Source: Axmann and Chatani (2014). 10 11 The objective is to develop a comparative analysis of existing apprenticeships programmes in view to catalyse thoughts and inspire dialogue. The present background paper is focused on what apprenticeships and other work based training programmes exist in the region and beyond. 12 Source: UNESCO 2012.UNESCO Source: 13 14 Stage 1: Apprentices are mostly recruited directly by employers based on their labour needs. Exceptions: e.g. Australian Group Training Organisations. 15 Stage 2: Dual systems: combination of on-the-job and off the- job training, typically in Germany. Singapore and China: the “Train and Place” model. India: a laddered system. Stage 3: Support fro the apprentice, e.g. from an external training provider, or from the employer. Stage 4: In some countries (Australia) it is common for completed apprentices to remain with their companies, but in others (India) it is not. 16 A "job interview from hell" 17 A unique form of vocational education/training Combining on-the-job training and school-based learning Gaining professional experiences Learning applied knowledge as well as soft skills Defined competencies and work processes Regulated by law Based on an oral or written employment contract Includes a compensatory payment Includes a standard social protection coverage Formal assessment Recognized certification at completion A clearly defined duration. Source: ILO 2015a. 18 G20 Task Force on Employment (OECD 2012): 16 Key Elements (Annex 1) 10 key Features (Table 3, page 8) World Bank & ILO (2013) Study of 11 countries: 9 principles (Table 3) Measures of Success (Annex 2) Interrelation between these frameworks attempted in Table 3. 19 Five Reasons You Should Consider an Apprenticeship 1. You will learn valuable job skills 2. You will earn a salary 3. You will gain independence 4. You will jump-start your career 5. You will open doors Potential for Employers: Raise level of workforce skills cf. needs of companies Raise competitiveness and productivity Potential for Society: Avoid skill shortages and tackle skills mismatch Reduce unemployment. Raise school enrolment rate and avoid school drop-outs. Support economic growth 20 21 Wage Legislative Program Off-the- Social Formal Recog- Duration framework of learning job Security assess- nized training ment certific- ation Trainees- Maybe No No No Yes No No 12-24 hip months Internship Maybe No No *) No No No *) No *) 3-6 months Informal Pocket No No No No No No Variable apprentice money or in kind -ships Industry Yes Maybe Maybe No Maybe No No Variable attach- ment Apprentice Yes Yes Yes Yes Yes Yes Yes Fixed -ships 1-4 years 22 Internships are typically short-term ways of acquiring work experience often for white-collar & professional careers, while: A QA is a complete and comprehensive study in itself whereby one earns a structured wage as well. Six differences: 1. Internship programs outnumber apprenticeships (esp. US) 2. Apprenticeships are longer term 3. The pay is greater than with an internship 4. Apprenticeships give you hands on training 5. Classroom training is tied to the apprenticeship 6. You’ll come out of the apprenticeship with a job. Another difference: Internships do not require a direct investment in training by the employer, like in the case of QA. 23 A UN intern camping in Geneva. Other Types of Internships: An International Student aiming for an Internship in the U.S. (interview). US College Students increasingly take up Internships in China. Virtual internship, in which the intern works remotely. 24 1) Social Dialogue 2) Roles & Responsibilities 3) Legal Framework 4) Financing Arrangements 25 A necessary pre-condition. Not in all countries there is a tradition of active cooperation between social partners in this area. Step 1: Promote Social Dialogue and Coordination ◦ Multiple layers of coordination ◦ QA work best if they are jointly managed by the social partners and relevant institutions (e.g. reluctance of TU in Indonesia). Step 2: Launch a broad, national Socialization Campaign. 26 Proved very effective in the World Bank supported Lifelong Learning and Training Project in Chile, entitled Chile Califica Objectives of Campaign: Explain roles & responsibilities of the main actors, Make employers aware of their crucial role to make sure skills learned are needed in the labour market, and that this is beneficial for their productivity and innovation capabilities. Make apprentices more aware of their social and labour rights and obligations. Reduce social stigma, broaden youths’ perspectives, and improve impressions about apprenticeships and jobs. 27 Reach out to training institute in the cities/districts Media socialisation by briefing key journalists. Media visits to the boards of selected major media outlets in the provinces. Radio-spot campaigns at a large number of radio stations (e.g. 12 times a day for 40 days). Run a radio talk show program on major networks. Use of social media and website development. Involvement of celebrities and issuing of awards. ADECCO Group’s Global Street Day (54 countries). ‘The Apprentice Asia”: another example of media attention. Involve networks such as GAN, EAfA, EYF, ILO/CINTERFOR, SENAI, and FKJP. 28 1) Employers: Should be in the driver’s seat (social dialogue). 2) Government: Co-pilot, or temporary in driver’s seat. 3) Training providers: work closely with enterprises. 4) Chambers of Commerce / Associations of small business owners: Support enterprises by sharing knowledge & training workshops. 5) Trade Unions: key role in design & implementation and in safeguarding the rights and welfare of apprentices. 6) The Apprentice him/herself: Pro-active participation; Payment as employee, or receive a stipend/allowance. 29 Step 3: Involve Small Enterprises Step 4: Take a Sector Approach Step 5: Formalize the Informal Economy 30 MSMEs typically make up 90% or so of enterprises in many countries; both formal and informal. Most apprenticeship programs in Germany and Austria are offered by SMEs (more Medium-sized). Constraints for SMEs to take on more apprentices: 1) Operations are too limited to provide sufficient scope; 2) Concern that trained apprentices would be “poached”; 3) High costs of training by experienced workers and of meeting regulations on training quality and working conditions. EC: 7 Guiding Principles for support for SMEs which offer QA: page 20. Case Study: Apprenticeship pays off for SMEs in India, if apprentices are retained 31 Traditionally in manufacturing & construction. Expanding apprenticeships to: Service sectors: Retail, Tourism & Banking (Women) Higher-up in the Value Chain Computer technology Key Success Factor for QA: Sector-based approaches sustain PPP, and assure the quality of apprenticeship training and the quality of apprentices’ employment. Multinational companies can be Drivers of Change to expand QA: exporting the BMW system to the US. 32 The informal economy is dominating employment in many developing countries: 50 to 70% of labour force. Informal apprenticeships function as an important training mechanism. Based on an oral training agreement, a young person acquires the skills of a trade or craft from a master craftsperson while working in a SME.