Jokowi's Pre-Employment Card, Solution for The Precariat Class?

In early 2020, President Joko Widodo will issue a pre-employment card[1], which is a scheme carried out by the government to provide job seekers and workers in certain conditions with incentives. These incentives come in the form of job training, certification, incentives after the job training in the form of cash, and so on.

This brings a breath of fresh air for vulnerable job seekers who are unemployed, commonly referred to as the precariat class of workers. These workers desperately need job training to improve their skills and abilities to increase productivity and efficiency in work which will indirectly increase the income of these workers. They will also receive certificates after they complete the training and pass the various test mechanisms.

These certificates of competency can be used by job seekers who get pre-employment card programs to get jobs according to their competencies. In addition, post-training incentives that participants will receive in the form of cash will be given as compensation for transportation cost, consumption cost, and internet credit cost while participating in the pre-employment card program training.

However, the implementation of pre-employment cards was questioned by many parties. Jokowi was criticized  "making the wrong choice in political promotion" because it was seen by some parties as "paying" the unemployed. So, how is the pre-employment card policy implemented? And will this pre-employment card solve the problem of precariat class workers?

Paying the Unemployed?

The government through the Ministry of Manpower plans to distribute pre-employment cards which are vocational training assistance cards that will be given to jobseekers, active labor workers, and those affected by work cuts (PHK) which is expected to create increased competency. A sizeable budget of IDR 10 trillion is also provided for this program, which is expected to be distributed to 2 million participants in 2020[2], with 1.5 million participants who will be trained through digital media  and the remaining 500,000 taking offline training.

However, this policy certainly is not without several requirements. For prospective applicants for this program, those who will get a pre-employment card are: 1) those who have just graduated from college or are fresh graduates but have not yet found work; 2). those who have worked but want to acquire additional skills at work; and 3) those affected by layoffs.

The immediate benefits to be obtained by pre-employment card holders include: getting job training which costs range from IDR 3-7 million, certification with the cost of up to IDR 900,000, post-training incentives of IDR 500,000 for 3 months, and a training assessment and evaluation survey that costs IDR 150,000. So, according to Indonesia's Minister of Manpower Ida Fauziah, the total benefit to be gained per participant is IDR 3.65 to 7.65 million. This policy sounds attractive to the people who are eligible to receive its benefits. Animation training, graphic design, computer, coding, baristas and various training fields will be available to be selected by prospective pre-employment card participants.

In US, pre-employment incentives has been in effect since 1935, when the United States (US) had a similar policy, Aid to Families with Dependent Children (AFDC) However, in the 1990s this welfare policy gradually had a negative impact on the country. The negative impact caused is an increase in the unemployment rate, the tendency of the population to be lazy to work, and an increase in births outside the bond of marriage

In 1996 AFDS was abolished and replaced with Temporary Assistance For Needy Families (TANF). This policy is similar to before, it's just given a deadline of 60 months. Plus, each state is given the authority to regulate its own TANF program. Still,  this kind of policy has an adverse effect. The unemployed are very pleased with the large incentives from the TANF Program. This program does not motivate them to look for work, but instead wants to get more help. After 60 months, the unemployed made use of the system by asking for more help in different states. This case is known in the US as the practice of welfare-flipping.

In addition, there are also cases of unemployed people who use residential positions close to the boundaries between the two states. They will register the TANF program in two different states making it possible to get double incentives. Such cases are known as double-dipping[3].

Educated Yet Precarious?

The definition of "precariat" was popularized by Guy Standing in his book "The Precariat: the New Dangerous Class (2014)". In his book, Standing mentions that the precariat is someone who is a "precarious worker" with unclear working hours, job security, employment contracts, work environment, wages, work mechanisms, or work systems. On the other hand, although they both require an increase in the quality of life, the proletariat has more "clarity of work, workers' rights, even guarantees of the future" than the precarious.

This term has also developed in the past few years, where the precariat or "precarious workers" that exist today are not only defined as lower class workers who have a very unfortunate working conditions, but currently has expanded to the younger generation who are fresh graduates, both at the high school level, diploma and bachelor degree in universities. Although they are already relatively highly educated, they are "forced" to accept any available work[4], even with low wages/salaries and unclear employment contracts.

The shift in definition is in line with the current facts and data in Indonesia. Data from BPS shows the number of unemployed people per month in February 2019 is declining, but diploma and university graduates are increasingly unemployed. Unemployed diploma and university graduates rose by respectively 8.5% and 25% when compared to the same period in 2017. This was influenced by several factors, such as skills that did not match industry needs, higher income and status expectations of limited employment opportunities. This may make graduates feel pessimistic about the possibility of  getting the jobs they want. In the end, they are forced to accept whatever work is available, as is the case with lower class workers.

The phenomenon of the precariat class that is currently occurring in Indonesia's young generation is reflected in the fate of contract workers (outsourcing), internships, freelancers, part time workers or as partners in companies or community institutions. The current generations have become the precariat class, which can be easily removed at any time in the name of interests and benefits in companies supported by a flexible labor market system that aims to transfer risk and minimize the company's losses as an employer by guaranteeing it to the workforce.

This phenomenon needs attention by the government because according to the OECD, Indonesia will become one of the countries with the most young scholars in 2020, which can increase the number of college graduates who are unemployed and consequently increase unemployment in Indonesia. In addition, the demographic bonus that will be faced by Indonesia in the future also needs to be considered because the population of productive age will increase and will reach its peak in a few decades. These two things must be anticipated by the government so that the current unemployment rate in Indonesia does not increase.

By also targeting the fresh graduates, the government hopes that this pre-employment card program will increase their employment rate, thereby reducing the number of unemployed people in Indonesia.

The Right and Effective Solution?

If we look at a glance, this pre-employment card policy will certainly provide a solution to the current problems of the Indonesian precariat  class, namely the freshly graduated young generation. But, to what extent will this policy be on target and effective?

Institute for Development of Economics and Finance (INDEF) researcher Bhima Yudhistira stated that pre-employment cards are not necessarily effective in reducing unemployment[5]. Another problem that must be considered by the government is the absorption of its workforce. He explained that employment growth actually slowed, especially in the manufacturing industry which should be able to absorb a lot of labor.

In terms of improving quality, pre-employment cards are also considered to be less effective because there are opportunities for wrong motivation in participating in pre-employment card training programs. Instead of adding skills and competencies to work, it is feared that participants who take part in the program only target incentives to be given. So, it has the potential to cause moral hazard in the application of the pre-employment card program.

Another thing the government must prepare is a clear scheme and database of participants who will get pre-employment cards. This is because there is no clear database on who will be prioritized to obtain the cards[6], given the target audience of this program is only around 2 million participants, while the number of people in the open unemployment category reached 7.05 million per August 2019[7]. If the government does not prepare a clear database for pre-employment card recipients, potential mistargeting will occur. And of course this program cannot be a solution to the problems of the precariat class, which is the precarious young generation that exist now in Indonesia.

By: M. Fajar Ramadhan| Ilmu Ekonomi 2018| Staff of Studies Division Kanopi FEB UI 2019

Reference:

1. Detik (2019). Kartu Pra-Kerja, Tepatkah?. [online] detiknews. Available at: https://news.detik.com/kolom/d-4474322/kartu-pra-kerja-tepatkah [Accessed 29 Nov. 2019].
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6. Oecd.org. (2019). [online] Available at: https://www.oecd.org/economy/Overview-Indonesia-2015-Bahasa.pdf [Accessed 29 Nov. 2019].