Welfare in transition: the political economy of social protection reform in Indonesia

Abstract

There has been significant reform in social protection systems in developing countries in recent years. The extent, nature, and timing of such reform has varied significantly both between countries and within countries between sectors. Most scholars have explained these developments in terms of technical issues of design, implementation, finance or administration rather than political dynamics. However, recognition is growing that these varying patterns of reform and their implications for improving social protection need to be understood in terms of the underlying political context. This dissertation aims to contribute in this respect by examining the political dynamics surrounding social protection reform in Indonesia. I begin the dissertation by advancing a framework for analysing the politics of social protection reform in developing countries, drawing on ‘social conflict’ theory. Applied to social protection reform, this approach entails identifying the actors, interests, and agendas at work in relation to social protection; assessing the relationships of power between them; analysing the way these shift over time; and how this translates into differing levels of ability to influence policy and its implementation. Having developed this analytical framework, I examine the politics of social protection in Indonesia during the New Order (1965-1998) and post-New Order periods (1998-the present), focusing on three sectors: food security, social security and income support. I put forward two broad arguments. First, I argue that the nature of Indonesia’s social protection system has changed slightly over time. Specifically, I argue that the country’s social protection system has gone from being productivist, particularist, unequalising, informal and predatory in nature under the New Order, to remaining productivist and predatory, but becoming more universalist, equalising, and formal in nature during the post-New Order period. The principal change has been the expansion of rights and coverage of social protection in Indonesia, a shift relevant to the particularist-universalist dimension of social protection. Yet, change has varied across different sectors. Reform has been strongest in the case of income support and social security, and weakest in the case of food security. Second, I argue that the above continuities and shifts in the nature of Indonesia’s social protection system are a product of the country’s political and social order. Specifically they have reflected: i) continued control by predatory political, bureaucratic and corporate elites nurtured under the New Order over the state apparatus in the post-New Order period; ii) the increasing power of donors and technocrats in policy-making between 1997-2003, during which their advice and funding were required to ease the crisis; iii) the increased power of politicians and political parties to promote social protection policies to help them foster political support and, in turn, secure votes at election time following democratisation; and iv) the expanding power of popular forces to access, contest, and influence social protection policy following democratisation. I conclude by discussing the implications of this analysis for proponents of social protection reform in the developing world. In this respect, I make four recommendations. First, proponents of social protection reform should focus their activities on areas where the prospect of change is greatest. Second, international organisations should provide increased funding and intellectual support to NGOs and unions. Third, proponents of social protection reform should coordinate their efforts as their influence has been greatest when they have acted collectively. Fourth, supporters of social protection reform should pursue strategies for ensuring that social protection programs circumvent bureaucratic involvement.