News & Publication Preemployment Card as Solution For COVID 19 Crisis. Is it the solution that people need for short term?

Preemployment Card as Solution For COVID 19 Crisis. Is it the solution that people need for short term?

Posted By Sandya Institute On Friday, 1 May 2020

By: Sidney Ririmasse


It’s been two months since the COVID 19 outbreak in Indonesia and worldwide. Because of this many workers have been working from home but many workers are also laid off or have received salary cuts. This condition leads to the increase of unemployment during pandemic. But in spite of that, there is a bigger problem that Indonesian government faces related to unemployment because of the pandemic and Indonesian Migrant Workers (or TKI, Tenaga Kerja Indonesia). Many TKI are forced to return from their destination country because the lockdown policy is implemented globally. This repatriation may not be temporary; according to the news these workers may not be able to reenter the workforce if their contracts expire post-quarantine. Some of them are also undocumented workers without any clear and legal contract, facing uncertainty because of their status.

We can surmise that migrant workers will return as unemployed workers and will have to start over. However, looking for a job during this pandemic when many retails and businesses are closed without any clear reopening date will be a huge obstacle. They need supports from the government to survive the pandemic and lockdown policy. Furman argued that “The global aftershocks could also be large. Some countries may succeed in containing the virus more quickly than others. Some countries may succeed in containing the economic and financial damage associated with the economy more quickly than others. A rolling set of epidemics in individual countries and economic crises in individual countries would create global limits on travel and continue to strain global supply chains” (Furman, Jason, 2020, p.192). We do not know how long this pandemic will go on, and that is why we need a proper policy to face this unemployment issue.

But before we talk about the policy, unemployment and layoff should be predicted and calculated by the government when the outbreak began across Asia. Take a look at another pandemic case that took place in 1918, The Spanish Flu. The Spanish Flu lasted for 36 months and infected 500 million people. After this pandemic, several researchers analyzed the economic effect of the Spanish Flu and they found that the economic impact included: “A surge in demand for hospital and other medical services; A temporary upsurge in sick leave and school closures requiring withdrawal of parents from the labour force; Some deaths with a related permanent reduction in the labour force; and Temporary reductions in inbound and outbound international tourism and business travel” (Verikios, George, et al., 2011, p.13). From this analysis, governments around the world should have known that layoffs and unemployment cannot be avoided and they should be ready with alternative solutions in the short term and the long term.

Even without our migrant workers returning to Indonesia, our government are already facing many laid-off and terminated workers. With the return of migrant workers that had just lost their job, the amount of unemployed citizens that needs supports will increase. Take a look of America for example. According to the latest research, “prior to the crisis, most respondents out of the labor force claimed that it was because they were retired, disabled, homemakers, raising children, students, or did not need to work. Only 1.6% of those out of the labor force were claiming that they could not find a job as one of their reasons for not searching” (Coibion, Olivier, et al., 2020, p. 5). I will focus on other countries’ policies as a point of comparison to Indonesia’s condition.

Even when people are being laid-off or have no way to receive income, they still need money to pay for taxes, electricity and other bills. Then we have people that cannot find a job, eg. migrant workers with low skills and education, such as people working as laborers, retails, sailors, that do not require specific education or skills. Based on the research they are included as labor force instead of unemployed. But that’s not the main point of this writing. The point is, this labor force needs to make a living and pay their bills. As more migrant workers return, Indonesia have large amount of labor force or unemployment rate that needs support to make a living during the pandemic crisis.

Most people that need to find work are people that work in retails or other businesses that are forced to closed during COVID-19. It is difficult for them to find a new job especially if their current or previous jobs do not require specific skills. Many migrant workers from Indonesia choose this occupation expecting better wages or because of how difficult it is to find a job in Indonesia. They go to another country as migrant workers to support their family but because of pandemic they are back to square one. They are now coming back and facing a situation where many people are also looking for a job after being terminated. In future it would be a tough competition between labor force especially those without specific skills and education.

Regarding this, the Indonesia government proposes a solution with a new policy called Kartu Prakerja (preemployment card). It is launched on the basis of Presidential Regulation No. 36 of 2020, that demands the government to provide educational programs to improve the competency of job seekers, laid-off workers, and workers in need of competency improvement. These training programs involve digital platforms, and existing state-owned or private-owned training centres are obliged to collaborate with designated digital platforms. People wishing to enrol in the program must register themselves through the website (prakerja.go.id) and their application will be assessed by related authorities. Once selected, they will be given a sum of money to pay for the training. Upon finishing the training, participants will receive certificate and incentives (Virgil, Dominique, The ASEAN Post, April 2020). So based on this regulation the government tries to provide skill training platform for labor force. Is this a good solution for the long term and will it help in the short term?

Regarding with the effectiveness of this solution, we can look at research that evaluated the Spain’s training program for the unemployed. Their program is rather similar to Indonesian's pre-employment card. The result of the research shows that training program reduces unemployment duration but does not eliminate gender segregation in the labour market because women only benefit slightly more from the courses than men. The effect is even greater for participants in medium-level courses (Occupation and Specialization) and trained women get better results than trained men, although these training courses cannot offset the gender gap in labour market since the average unemployment duration in the sample is 165 days for men and 191 days for women Arrellano, Alfonso F, 2010, p. 63). This research also shows that all training programs do not have the same efficiency to help unemployed workers in finding jobs earlier. Thus, we can conclude that skill training program may be helpful but not proportionate enough for different fields and genders.

This result raises questions about Indonesia. Will this training programme help the labor force find a job earlier and shorten their unemployment time? In relation to this, the government have already prepared a solution for migrant workers repatriated from Malaysia. According to Public Works and Public Housing Minister Basuki Hadimuljono, “A total of Rp 10.22 trillion will also be designated for labor-intensive programs in rural regions. The program aims to sustain rural citizens’ purchasing power.” The labor-intensive projects include the construction of village irrigation systems, sanitation systems, utilities and self-subsistent housing (Parama, Mardika, The Jakarta Post, April 2020). But this program may exclude migrant workers in domestic sectors. They do not have skills in construction work so they will be excluded from this program. As we have known, many of Indonesia’s migrant domestic workers are women. Many of these women are the breadwinners in their families. So will this short term program end up like Spain's program that eventually resulted in a larger gender gap?

In conclusion, unemployment card cannot be regarded as a bad solution as our labor force, especially low skill workers, needs this training to compete in the labor market. But training takes time and there is no guarantee this training will give them a job instantly. Work from home requirements force many businesses to close down temporarily for an uncertain amount of time and this affects the availability of job vacancies. People need short term solutions on how to cover their basic needs and monthly bills. With layoffs and salary cuts, many citizen face difficulty in surviving, while their savings are only enough to support them for several months. This is the problem that requires quick solution.


Reference:

Alfonso, Arellano F. (2010). Do training programmes get the unemployed back to work? A look at the Spanish experience. Revista de Economía Aplicada, vol. XVIII, núm. 53, 2010, pp. 39-65.

Verikios, George, et al.,. (2011). The Global Economic Effects of Pandemic Influenza. General Paper No. G-224, Monash University, Australia.

Furman, Jason. (2020). Protecting people now, helping the economy rebound later. In Richard Baldwin and Beatrice Weder di Mauro (ed), Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes (p. 191-196). London: CEPR Press.

Virgil, Dominique. (26 April 2020). Employment Security In Indonesia Post COVID-19. Quoted from https://theaseanpost.com/article/employment-security-indonesia- post-covid-19

Parama, Mardika. (14 April 2020). Migrant workers repatriated from Malaysia to get construction jobs at home. Quoted from https://www.thejakartapost.com/news/2020/04/14/migrant-workers-repatriated-from-malaysia-to-get-construction-jobs-at-home.html