The Workers Social Security Agency (BPJS Ketenagakerjaan) has joined forces with the Cooperatives and Small and Medium Enterprises (SMEs) Ministry to expand the social protection program to small businesses.
The two institutions signed on Wednesday a memorandum of understanding (MoU) on social protection for workers of cooperatives and of micro, small and medium enterprises (MSMEs).
BPJS Ketenagakerjaan president director Agus Susanto said the agency and the ministry shared the same vision and mission to provide social protection for workers in the segment.
“We are ready to work together to improve their welfare, maintain purchasing power and business sustainability of MSMEs,” he said during the live-streamed MoU signing ceremony.
The MoU also covers the integration of data between the two institutions to promote social security literacy among workers and cooperatives and MSMEs business owners, Agus added.
Small and medium enterprises, which account for more than half of the country's gross domestic product (GDP), have been hard hit by the economic downturn.
Falling demand has become a major factor affecting small businesses, with 85 percent of MSMEs seeing declining sales between March and June, a survey conducted by the Demographic Institute of the University of Indonesia (UI) in collaboration with ride-hailing firm Gojek found.
Cooperatives and SMEs Minister Teten Masduki said he hoped the partnership with BPJS Ketenagakerjaan could also help transform SMEs from informal to formal businesses.
While around 97 percent of the country’s workforce were employed by cooperatives and SMEs, most were still in the informal sector, Teten said.
The government has been pushing for MSMEs to formalize their businesses, which would help them access funding from financial institutions and ultimately upgrade their businesses.
Meanwhile, BPJS Ketenagakerjaan data show that only 8.1 percent of the cooperatives had registered with its protection program.
Teten stressed the importance of getting more small businesses to be a members of cooperatives to expand BPJS Ketenagakerjaan’s protection to workers in the informal sector.
“If we can encourage MSMEs to be members of cooperatives, I think we can boost BPJS Ketenagakerjaan’s membership and the workers can get the protection they need,” said Teten.
