Governing Social Security: Economic Crisis and Reform in Indonesia, The
Total Page：16
File Type：pdf, Size：1020Kb
ABSTRACT How do newly industrializing countries in Asia reform their social security programs after the 1997 financial crisis? Going beyond previous studies whose concern were on the relative decline of the welfare state in the midst of global economic competition, this study identifies that after crisis Indonesia, the Philippines and Singapore experienced different shifts in their structure of provision of social security benefits. The shifts vary on two important dimensions of social security provisions: the benefit level and the political control of the state over the private sector. In Indonesia there was a shift that eroded benefit level and strengthened the state’s political control over the private sector. In the Philippines there was a shift that improved benefit level and weakened state control over the private sector. Meanwhile in Singapore the shift improved benefit level yet at the expense of deeper penetration of state control over the private sector. This study asks: what explains the variation in the shifts in the dimensions of social security provisions in Indonesia, the Philippines and Singapore after the 1997 financial crisis? Such variation, I argue, cannot be explained with the usual explanatory variables: fiscal constraints at the national level, the ranking of economies in the global competition, or the intervention of international financial institutions. This economic context after financial crisis only affect the initial proposal of the reform, i.e. the degree ii of dramaticness of change proposed for the social security reform. Once the reform proposal is advanced, however, it was domestic politics that matter more, reshaping the proposal and thus the reform output. The output is influenced by a process of compromise-building among employers, workers, state leaders and bureaucrats as the reform proposal affected the groups’ playing fields differently. More specifically, the reform outputs differ by the variation of the expectations of employers and workers on the conduciveness of the overall economy (low or skeptical, medium or hopeful, and high or optimistic) and the degree of relative intensity of symbiosis between bureaucrats of social security agencies and state leaders (low or relatively less political in leadership and management and high or relatively highly political in leadership and management). By focusing on the variation in the shifts on the two dimensions of social security, this study also reveals the broader reasons why the state leaders pushed toward certain direction of reform, i.e. the need to generate domestic funds that would enable them to be autonomous from outside pressure, the need to develop incentives and punishments for private sector players, and the need to secure certainty for all stakeholders. Indeed this study demonstrates the critical importance of social security reform to market governance. Beyond earlier study of market governance, which identifies the presence of initiative and active intervention of the state in leading the market, this study specifies three areas of market governance that the state leaders push through social security reform: the state autonomy vis-à-vis international pressure, the state control over worker- employer relations, and the overall sense of predictability for all stakeholders. iii Dedicated to my mother C. L. Kustati Prapto Rahardjo iv ACKNOWLEDGMENTS Praise the Lord for the completion of this dissertation and the rich journey I went through because of my pursuit for PhD in Columbus. I am deeply grateful for the blessing of support, hope and love from the people I met along this chapter of my life, in the United States, in the Philippines, in Singapore and in my own beloved country, Indonesia. I wish to thank Prof. R. William Liddle, my advisor who is more known as Pak Bill. Thank you for giving me the freedom and trust to explore this field of research, for days of one-to-one discussions almost whenever I asked, for the marathon meetings to complete this dissertation at Caribou Coffee Shop or in your “office-on-wheel”. You made learning so easy. I also thank Wanda, Pak Bill’s wife, for her hospitality and understanding that there were occasions where Pak Bill and I had to have working meetings at their house. I wish to thank Prof. Sarah M. Brooks for generating confidence and curiosity in political economy and for teaching me about the inspiring work of Gøsta Esping- Andersen. I will not forget our months of intensive discussions in the early stage of my dissertation project and I cherish the opportunity to serve as her research assistant, which allowed me to see up close how fascinating political economy is. I also wish to thank Prof. Irfan Nooruddin, Prof. Goldie Shabad, Prof. Alex Thompson, Prof. Paul Beck and v Prof. Michael Neblo for intellectual support. I especially want to thank Prof. Mary Cooper, who enthusiastically read my chapters, provided prompt input and suggestions and brought cheer through her sincere kindness. I am also very grateful to Diana Camella, the fiscal and human resource officer of Political Science Department, who loved and comforted me as a mother would. This study benefits from the research grant of the Ohio State Chapter of Sigma Xi (Student Research Grant) and the Graduate School of the Ohio State University (Alumni Grants for Graduate Research and Scholarship), also the technical assistance from the Center for Integrative and Development Studies (CIDS) of the University of Philippines in Diliman, the Department of Political Science of the University of Philippines in Diliman, the Indonesia’s Field Office of Friedrich Ebert Stiftung, the Center for Strategic International Studies (CSIS), and the Research and Development Department of the Headquarter of PT JAMSOSTEK. I especially want to thank the following individuals for their support, generous cooperation or assistance, and friendship. In Indonesia, I especially thank Dr. Hadi Soesastro, Raymond Atje, Tommy Legowo, Fifi Muhibat, Dr. Hans J. Esderts, Rina Julvianty, Mian Manurung, Dewi, Veve, Arum Rehmiyati, Teguh Purwanto, Ibu Hani, dr. Nani, Anton Supit, Djimanto, Faisal Basri and Timboel Siregar. In the Philippines, I especially thank Prof. Violeda Acosta Umali, Dr. Jonathan L. Salvacion, Joy Aparis, Prof. Noel Morada, Aries A. Arugay, Prof. Virginia Teodosio, Sonia Tiong-Aquino, Clarita Esteban, Blessilda Clerigo, Prof. Malou Rebullida, Prof. Ruth Lusterio Rico, Horacio Templo, Rizaldy Capulong, Marianita Mendoza, Rose Baculo, and Secretary Roberto M. Pagdanganan. In Singapore, I especially thank Prof. Ho Khai Leong, Prof. Mukul Asher, and Dr. Selina Lim. I also thank every informant in vi the three countries, whose names I cannot mention for reasons of confidentiality and space limitation, for their time, expertise, generosity and trust to share valuable information and insights. This journey would not be as memorable and cheerful without the love, friendship and prayers of these following individuals. I thank Dr. Paul and Ellen Rundquist, Dr, Sherrie Wolff, Prof. Juwono Sudarsono, and Dr. Blair King for opening the way to study at the Ohio State University. I also thank K. Theodor Wolf, SJ, P. Gunawan Tjahja, Pr, A. Djita Pandriya, SJ, Vinny McKiernan, CSP, and Chuck Cunniff, CSP for prayers and spiritual support. I thank the especially sincere and warm friendship of Ira Sudardja, Jiwon Suh, Yasue Tada, Lina Juswara, Diana Theresia, Valentine Mukuria, Unislawa Wzolek, Dianne Bautista, Cheryl Hamblin, Anne-Marie Pouchet, Magda Mejia-Gomez, Karaniya Dharmasaputra, Yusuf Sarfati, Rustam, Herman Hakim, and friends from CFM. Most importantly, I am very much grateful for my mother, Lidwina Kustati Prapto Rahardjo. She is a “Professor” at heart, a very smart yet humble and thoughtful lady, my biggest supporter who enthusiastically follows my journey. She always surprises me with her love: from taking the initiative to collect any news she thought would be relevant with my dissertation to allocating time and money to visit me in Columbus nearly every year in my first four year, the time when I never had the chance to go home. Her constant prayers and determination in life fueled my spirit throughout this often challenging journey. I owe my enthusiasm in studying politics, economic and social issues to her. Last but not least, I am grateful for my sisters: Helena Clara Andith and Josephine Fransisca Ditta. I thank them for encouragement, prayers, cheerful daily online conversations, and the great time together as sisters. vii VITA September 4, 1976 .................Born – Jakarta, Indonesia 2004........................................M.A. Political Science, The Ohio State University 1996 – 1998............................Writer and Journalist, Suara Karya Daily 1999 – 2001............................Junior Lecturer, Department of International Relations University of Indonesia 1999 - June 2001....................Program Officer, National Democratic Institute, Indonesia’s Field Office June - August 2001 ................Program Director, National Democratic Institute, Indonesia’s Field Office 2001 – present........................Graduate Teaching and Research Associate, The Ohio State University PUBLICATIONS Research Publication 1. Dinna Wisnu, “Risks and Social Protection in Indonesia, the Philippines and Singapore”. In Bridging Disciplines, Spanning the World: Institution, Identity and Inequality, eds. Rachel Beatty Riedl, Sada Aksartova, Kristine Mitchell (Princeton, New Jersey: Princeton Institute for International and Regional Studies, 2006).