Incentive for employers to raise PwD (People with Disability) employment rate in Indonesia

Abstraksi

According to Buckup (2009), excluding PwD (People with Disability) from labor market leads to GDP loss potential around 3%-7% per-year. Therefore, it is important for Indonesian Government to capture this potential by increasing PwD employment rate as there were only 24% PwD aged 18-64 years old recruited in 2015, compared to 42.8% Pw/oD (People without Disability) in the same age category (Supas, 2015). As one of the efforts to raise PwD employment rate, Indonesian Government issued Law No. 8 of 2016 on PwD, mentioning that out of their total employees, Government, Local Government, and State-owned Enterprises should hire at least 2% PwD, while Private Companies should hire at least 1% PwD. Despite law issuance, however, Cameron and Suarez (2017) found that PwD in Indonesia are still under-represented in government employment, while the recruitment rate of PwD in private companies is only 3% compared to Pw/oD which reaches 17% in total. Many employers hesitate to employ PwD because of the stigma that PwD are incapable of working appropriately (Pramana, 2018). Moreover, the concerns over high accommodation costs in hiring PwD to conduct apprenticeships, workplace modification, job redesign and support often discourage employers to hire PwD (Kaye, Jans, & Jones 2011). As a response, this paper proposes policy recommendation for Ministry of Social Affairs (MSA), especially Directorate of Social Rehabilitation for PwD, to raise PwD employment rate in Indonesia by incentivizing employers with subsidies to conduct training for employers and PwD and to reduce the accommodation expenditures in hiring PwD. This incentive scheme is recommended based on the successful experience in Singapore. To adopt similar scheme, however, several adjustments based on Indonesian context are required through institutional and financial capacity building by coordinating with other related stakeholders, such as Ministry of Finance (MOF), Ministry of Manpower (MOM), employers’ associations, and PwD organizations. Incentive scheme through subsidies to conduct training for employers and PwD in the workplace and to reduce the accommodation expenditures for hiring PwD has successfully worked in Singapore under the Open Door Programme (ODP) managed by SG Enable, an agency under Ministry of Social and Family Development that supports PwD’s needs. ODP covers course fee subsidy up to 90% for PwD, course fee subsidy up to 90% for non-disabled employees to provide natural support for PwD, and job redesign grant up to 90% of costs incurred with cap at SG$20,000 per-PwD hired. Since its establishment in 2007, ODP has benefitted 650 PwD by funding SG$3.2 million subsidies for 220 companies (Disabled People’s Association Singapore, 2015). In terms of advantages, this scheme promotes long-term integration of PwD in labor market. The subsidies to conduct training for employers and PwD can gradually replace employers’ negative perceptions toward PwD with better knowledge on PwD’s potential contributions and how to tap into them. Meanwhile, the subsidies for PwD accommodation costs make employers’ expenditures more cost-efficient. However, in terms of disadvantages, this scheme requires strong institutional and financial capacities that the current MSA is still lack of. The scheme implementation is rather complex due to potential implications in the form of additional roles for the apparatus and reduced budget for other flagship programs within MSA, such as Program Keluarga Harapan and Bantuan Pangan Non-Tunai, to allocate more budget for the scheme. Therefore, it takes time to apply this initiative. It is possible to adopt such incentive scheme through several adjustments with Indonesian context. The immediate actions include increasing institutional capacity of Directorate of Social Rehabilitation for PwD, MSA. This can be done by extending the functions of its apparatus and building their capacities to play special role in managing this scheme. Also, since disability is a cross-sectoral issue, coordination with other related stakeholders such as MOF, MOM, employers’ associations, and PwD organizations, is required to define the incentive procedure itself, such as the roles of stakeholders and the scope of incentive coverage. The medium-term actions include increasing financial capacity. There is a need to increase the allocated state budget for disability issues as it is only 0.015% (IDR 309 billion) of total state budget (IDR 2,080 trillion), much lower compared to 1.1% state budget allocation for disability issues in Australia (Pramana, 2018). Besides, the allocated budget for disability issues is mostly spent on salary payment, and only the remaining IDR 76 billion can be used. As some alternatives to finance this incentive scheme, enforcing progressive taxation system and tapping into donors’ supports are necessary. The long-term actions include conducting pilot project for monitoring and evaluation.