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Indonesia is growing fast, as is the demand for social welfare, but is evidence keeping pace?

By 19 February 2013

We often assume that policy and political decisions move fast and by instinct, while the research evidence moves slow. Yet policy makers are under constant pressure to mange the agenda they have promised to implement. How does that fit with the time required to generate empirical evidence to inform the policies they put in place?

I thought about this while I was in Indonesia recently, doing a study on community resilience to natural disaster, and it reminded me of something I read few years ago about of the experience of Scandinavia with the creation of welfare systems that are seen as models the world over.

Indonesia’s economy has been growing fast for the last twelve years. In 2000 the economy grew 4.8%. In 2010, the annual growth rate was 6.1%, the same in 2012.  Economic growth and development are making the Indonesia citizens better off and, at the same time, are creating an unprecedented demand for welfare entitlements such as unemployment benefits, public pensions, and health insurance, which the Government of Indonesia has to address.

In October 2012 the government passed a new law pledging to provide health insurance to its 240 million citizens from January 2014.  If put in place, it will be the biggest single-payer health system in the world (Economist). At the moment it is unclear how the system will be paid for, but 2014 is also the year of the next presidential elections and social welfare promises can win many votes.

According to the Economist, the increase in the demand for welfare entitlements (and better public services) in Indonesia during the last 20 years is linked to three issues: 1) Changes in the Asian development model, previously reliant on welfare from traditional, tightly knit families, as women slowly acquire more autonomy  ; 2) the Asian financial crisis that in 1997 and 1998 made government realize that they could not abandon to their fate millions of citizens who lost their jobs; 3) The erosion of authoritarian regimes (e.g. Suharto in Indonesia or Marcos in the Philippines) and with them rulers who could afford to show no interest in the welfare reforms their citizens were asking for.

Indonesia is at the beginning of the process of laying down a welfare state: other countries have followed this path years before. The creation of a welfare system in Scandinavia dates back to the 1870s, prompted by the social demands for access to education, unemployment benefits, technical training, free health care, and support in the old age, similar to the questions that Indonesian citizens pose their government today.

In a paper titled The Developmental of the Welfare State in Scandinavia. Lessons for the Developing World, Kuhnle and Hort show that Sweden was the first country to introduce social insurance schemes, although with partial coverage, in 1913. What is interesting, from the point of view of the use of evidence and research into policy, is that before launching social welfare polices and funding them, the Swedish state built and reinforced the systems and processes required to collect and analyse social data that would then inform its welfare policies. In other words, the production of public and official statistics was firmly institutionalized. As a result, the capacity to collect data increased significantly in the late half of the XIX century in Sweden and the other Scandinavian countries that pursued similar policies.

What can we learn from these experiences?

Frist, without data and without a statistical basis, social insurance polices are unlikely to work. Second, state awareness about the importance of research-evidence and the ability to provide statistics are key to the design of new welfare policies. Third, research and data informed the design of welfare policies which were initially modest and limited and were gradually extended.

What about Indonesia? Is the growing demand for social welfare matched by an increased attentiveness about the importance of data and research-evidence to inform policy decisions? Not yet.

A paper by Greta Nielsen argues that Indonesia appears to be suffering from stagnation in this regard as the government is dissatisfied with the quality or applicability of research to policy making. Petrarca Karetji in his Overview of the Knowledge Sector in Indonesia mentions that the country does not lack knowledge sector institutions and structures. The deficit lies in effective collaboration between stakeholders, a problem stemming from Indonesia’s decades of authoritarian government, when the state did not help develop a policy and funding framework to support high quality social science research. I agree with Oey-Gardiner and Sejahtera’s suggestion that the government ‘…takes the driver’s seat and allocates significant resources to develop and allow a knowledge sector to become a significant source for social and economic improvements in society.’

I think that Indonesia requires an (endogenous) big push to strengthen and institutionalize the use of research and data analysis for the design and implementation of public policies. This will be a crucial factor in determining the success of the welfare policies that the government is currently designing.