Workers rally in Jakarta on July 3, 2015 to denounce a change in the policy governing a savings scheme that will now entitle them to their full payout only when they reach the retirement age of 56 years. Under the previous policy, workers were allowed to cash out after five years of continuous employment. (Antara Photo/Reno Esnir)

Government Backtracks on New Rules for Workers’ Savings Scheme

JULY 04, 2015

Jakarta. The government has backed down on a controversial new regulation on a workers’ savings scheme, saying it will now allow policy holders to cash out after five years instead of 10, but with conditions attached.

Manpower Minister Hanif Dhakiri said late on Friday that President Joko Widodo had acknowledged the public outcry over the change in policy governing the Social Security Administration Body for Employment, or BPJS Ketenagakerjaan, and would cede to workers’ demands, after an online petition calling for a rollback of the regulation drew more than 100,000 signatures in three days.

Under its previous iteration as Jamsostek, the government-run savings scheme saw workers pay in with a mandatory 2 percent cut of their salary each month, for which they were entitled to cash out in full after five years of continued work.

Under the new regulation, which took effect on Wednesday, along with the full transition of Jamsostek into BPJS Ketenagakerjaan, policy holders may only receive 10 percent of their money after 10 years, and the full amount only upon reaching the retirement age of 56 years.

“The president has heard the aspirations of the people,” Hanif told reporters in Jakarta on Friday night. “That’s why workers who have been laid off [and worked at least five years] will now be able to claim their full payment one month after being laid off, instead of waiting 10 years.”

To be eligible, though, claimants must have been laid off no later than July 1. Those who resign or are fired for cause are not eligible, Hanif said.

He added the government was considering revising the regulation so that those laid off after the July 1 deadline could still access their money.

Workers took to the streets and to social media in hordes this past week, accusing the government of blindsiding them with the change in regulation from the previous policy.

The government’s backtrack on the BPJS regulation marks the latest in a long list of U-turns it has been forced to make on controversial and ill-planned policies.

Another regulation that went into force on July 1 was a requirement that all financial transactions taking place in Indonesia use the rupiah as the default currency – a requirement that the energy minister immediately conceded would be virtually impossible to enforce in the oil and gas and mining sectors.