Social Protection in Indonesia:Past Experiences and Lessons for the Future

Prior to the Asian financial crisis, social protection in Indonesia was largely based on informal arrangements. When the country sank into a deep social and economic crisis in 1998, the government had no alternative but to create new, more formal social safety nets explicitly aimed at helping the chronic poor and vulnerable non-poor cope with the impact of the crisis. A comprehensive set of safety net programs covered food security, employment creation, education, health, and community empowerment. Several years after the crisis as the economy slowly recovered and welfare stabilized around pre-crisis levels, the government redesigned several of these programs while discontinuing others. Throughout this latter, post-crisis period, the government also implemented a range of new social protection programs, including several conditional and unconditional cash transfer programs, to replace highly regressive fuel subsidies. Recently, the government has formed a National Team for the Acceleration of Poverty Reduction (TNP2K) with the mandate to reduce poverty incidence to 8% by 2014. This essay analyses Indonesia‟s experience with social protection during and after the crisis, drawing key lessons for the future of social protection policy in Indonesia.