Q&A Webinar #7: Impacts of the COVID-19 crisis on formal sector workers: (potential) social protection and employment responses

Please see below the questions and comments from the audience. We invite you all to send your comments and let us know if you have any further questions on the topic. 


Q1: What can work for developing countries or middle income. countries where the benefit schemes are non-existent? (From Umulkher Abdillahi)

This question was partially addressed during the webinar, please check it here.


Q2: to Mr. Khrais: thank you very much for the presentation! could you shortly explain the 3rd programme (support programme) for voluntarily registered self-employed? What are the exact benefits? Who can register for it? what about non-legal non-Jordanians? (From Charlotte Bilo)

The third program Supportive (Musaned) allows the Jordanians and Non-Jordanians to draw from their Lump-Sum Compensations (LSC) which comes under Old Age, Disability, and Death Insurance. Also, they can disburse from their Savings Accounts which comes under the Unemployment Insurance (UI). The eligibility to draw from through satisfying the following conditions; to be contributed NOT less than (12) contributions, the voluntary contributions amounts should be fully paid, prove interruption of coverage in case of mandatory contribution, and the covered wage should NOT exceed (500) JODs.  The benefits is 5% of the total covered wages with a celling of 450 JODs distributed over three months. Regarding the disbursement of the UI/Savings Accounts, the eligibility for the insured persons is to have credit balance not less than (150) JODs in his/her saving account, and has not practiced the right before. The benefits include an amount of payments should not exceed 60% of the balance, with a celling of 450 JODs distributed over three months.


Q3: Why less or little support for self-employed. Yet we need to support them as innovators and entrepreneurs? (From Umulkher Abdillahi)

Yes, the self-employed tend to be much less well covered by social protection system than dependent workers, and many of them are very heavily affected by the current crisis and the lockdown measures. This includes various types of entrepreneurs, but also people in the bar and restaurant business or in the cultural sector. When the crisis struck, many OECD countries have reacted by just making lump-sum cash grants to the self-employed and small businesses to keep them afloat. Nearly all OECD countries also provide access to credit at preferential conditions to small and medium-sized enterprises.


Q4: to Mr. Khrais: Could you please elaborate more the types of SS interventions for refugees during COVID-19 days? Thank you! (From Ayse Turunc Kankal)

The state of Jordan when it comes to testing and providing treatment from COVID-19, dealing with refugees like Jordanians. But for the social protection there are not under the mandates of SSC. They are under UNHCR whom coordinate services provided to them; including cash transfers, emergency benefits, food stamps, and all aspects of social protection.


Q5: What is covered in the health assistance program and how is it delivered (in Indonesia)? (From Martha Santos)

The big chunk of health assistance program, around 88%, is for Medical expenditure for handling the COVID-10 which includes Medical equipment, health infrastructure and manpower.  Medical personnel who directly involve in handling COVID-19 are provided with additional incentives. There is also a budget allocated for the fatality compensation of health workers.

In term of the health insurance before the pandemic, the government has already paid the insurance premium for around 35% of poor and vulnerable households. On top of this, during this pandemic, government also subsidised the health insurance premium/contribution for additional 30 million PBPU (Non-Wage Recipient Workers). Those who received this, can access all health services and facilities started from the locally appointed health clinics (Fasilitas Kesehatan Tingkat 1). However, if the medical condition cannot be handled by these clinics, then they will be transferred to the Covid-19 Referral Hospitals.


Q6: Who are the beneficiaries from all three stimulus and how do Indonesian government distribute it? and how does the pre-employment card work in emergency setting because even in "normal" situation, this mechanism did not really effective. (From Vinie Puspaningrum)

The first stimulus is mainly for strengthening the domestic economy through expansion for the food voucher program, coverage expansion of housing subsidy for low-income family, pre-employment card budget and incentive for the tourism sectors.

The second stimulus is mainly rolled out in the form of fiscal and non-fiscal policy. For fiscal policy, tax exemption is provided to workers specifically in the manufacturing sector with income less than IDR200 million, and for a selected type of industries. Non-fiscal policies include removing and simplifying limitation of export (for 740 HS Code product mainly fish, fish product forestry product) and import (for selected manufacture, food and health/medical products), accelerating the export-import process for reputable traders and improving export and import process through National Logistic Ecosystem (NLE)

The third stimulus recipient covers more heterogenic beneficiaries. The government is utilising the existing banking system for the existing PKH (Conditional Cash Transfer) and BPNT/Sembako Program (Food Assistance Program). The expansion of BPNT/Sembako and social assistance program utilize the existing unified database (UDS/DTKS managed by Ministry of Social Affairs/MoSA) as proposed beneficiaries and will be distributed using several mechanisms such as bank, post-office and online motorbike drivers.

Beneficiaries of electricity scheme also comes from the UDB/DTKS and paid directly to the national electricity company (PLN). Supports for eligible MSMEs are provided in the form of interest subsidy and postponed instalment payment and disbursed directly to the related financial institutions.

Pre-employment card is an open application type of program for those above 18 years old and is not in school. The beneficiaries will be given an electronic voucher that can be used to pay for selected online training (due to physical distancing policy but will also to include offline training in the normal situation). In addition, beneficiaries will receive incentive in the form of electronic money chosen by beneficiaries from the available lists. The program has just been launched last month and its effectiveness is yet to be seen. However, in the time like this, it is actually a good time to invest in skills that hopefully can be useful for those joining the program in finding a better job later or increase their productivity.       


Q7 for Pak Raden: Those HH in the in 900 VA electricity scheme are drawn from the UDB/SIKS-NG or from different database (e.g. local government)? (From Marco Schaefer)

The HHs in the 900 VA electricity scheme are also drawn from the Social Welfare Unified Database (DTKS or previously known as UDB/SIKS-NG) managed by Ministry of Social Affairs (MoSA). The national electricity firm (PLN) has previously matched the UDB data with their customer database and a complaint handling system also has been set up to respond to reports or complaints from the customers/public.


Q8 for Pak Raden: Please elaborate on training voucher in how does it work? (From Umulkher Abdillahi)

Beneficiaries will be provided with IDR 1 million training voucher which can be used to pay for one or more type of training or series of training in 8 marketplaces participating in the program (which can be added in near future). Beneficiaries have a free choice to choose the type and pace of the training program. After finishing a program, the voucher will be automatically deducted depending on the cost of each program they choose. Beneficiaries can also top up the voucher if they would like to have a more sophisticated program. Beneficiaries have to follow all material provided in the program and take an online test to have a certificate of completion.   


Q9 to Raden: How can applicants register for the Pra-Kerja programme? And how are they selected? Is it on a first come - first serve basis or do you apply certain selection criteria (as you mentioned that you already have more applicants than the quota initially set)? Are there any plans to extend it to cover additional applicants? Do you have any data if applicants belong more to formal sector (being laid off now due to the crisis) or informal sector? (From Martina Bergthaller)

This question was partially addressed during the webinar, please check it here.


Q10 to Sebastian (and maybe also Johannes): So far, we are seeing short time work only (mostly?) in high-income countries. In how far would you see that this model is also transferable to middle-income (low income?) country contexts to maintain formal sector employment in the wake of the crisis? What would be the necessary preconditions to implement short-time work schemes? (From Martina Bergthaller)

A well-resourced and effective public employment service is probably the most important precondition for implementing a STW scheme. In other words, the PES needs to have the capacity to process a large number of incoming claims, potentially verify the reported number on staff and hours worked and carry out payments. In principle, I think this could be possible in some middle-income countries. However, the current crisis evolved so quickly that even comparatively well-resourced PES in OECD countries were getting overwhelmed. For instance, the number of calls to German PES increased 20-fold during the crisis, from 100 000 calls per day in February to 2 million calls on a peak day in March. The second point to remember is that these schemes can be very expensive, as Johannes pointed out in his presentation, because the government essentially keeps paying a large share of workers’ salaries while they are idle. This can be a worthwhile “investment” if the economy picks up quickly again and the workers can return to work immediately rather than having to start looking for work. But it certainly requires substantial financial resources.


COMMENT by Alexandra Chaves: By now it is clear the general measures countries should take to financially protect non registered workers and registered workers and companies. The bigger challenge is how to fund these expenditures. This was not largely covered in this webinar, but I would like to hear how your countries are funding these measures and what will the impact be on public finances.

This is a very important question, which indeed is still generally under-discussed. At the moment, the focus in all countries needs to be on fighting the pandemic, bolstering the immediate shock of the crisis and hopefully steering the economy towards recovery. But it is clear that once the crisis is over countries will face substantially higher public-debt levels than when they entered the crisis. There will, therefore, have to be a discussion on how governments can raise additional resources from tax revenues in ways that reduce – rather than to further increase – economic inequalities and that don’t unnecessarily slow down the recovery. From what we have seen so far, workers at the margins of the labour market are being disproportionally affected by the crisis, and inequalities may further rise. So, there is probably a case to be made for requiring particularly more privileged households to make their contribution to helping reduce high public-debt levels.


For the case of Indonesia:

The Budget of some programs mostly come from the reallocation and refocusing of the existing budget in all ministries/bodies. Reallocation in local government budget also has been done to lessen the impact in local level and complementing central government programs. So, there is no additional budget implication for this

The government also provide tax stimulus and incentive for company form selected sectors and its employees. This is to reduce the burden of corporate expenses, smooth cash flow, and hopefully will reduce the probability of termination of employment. The consequence of this tax incentives is reduced tax revenue.

With the financial authorities, the government issued a regulation for credit restructuring to maintain the resilience of banking and financial institutions, so that it can indirectly maintain budget allocations to protect workers at the financial sector. The government also still have unallocated budget, endowment fund, and other sources of fund. Another alternative that the government have is by issuing a pandemic bond or apply for an external loan. 


COMMENT from Umulkher Abdillahi: Food distribution is being done in Kenya to most vulnerable but very limited nearly scratching the surface.