Social protection for precarious workers - a union struggle

Text / Jenny Holdcroft

Alex used to work as a contract worker in the Cavite Export Processing Zone in the Philippines, for CQS Stainless Corporation which produces metals for the automotive industry. Safety equipment at the factory is only supplied to regular employees, who comprise less than half of the workforce. Two months into his employment, the machine Alex was working at malfunctioned and he was hit in the face by a piece of metal the size of a basin. He was taken to the hospital, but when he got there he found out that his employer had not paid any social security contributions for him, so there was no money to pay for his medical care. He was forced to return home against medical advice and when he reported unfit for work he was dismissed.

Sadly, Alex's story is not untypical. Today, millions of precarious workers all over the world are excluded from social security provisions solely because of their employment status. In Chile, 63 per cent of part-time workers do not contribute to social insurance schemes. When IMF conducted its comprehensive survey of affiliates on changing employment practices and precarious work, affiliates responded that the most common area in which employers use precarious employment to avoid their responsibilities is that of social security and pensions. This exclusion was made evident in the treatment of precarious workers during the financial crisis. Not only were they among the first workers to be laid off, but it soon became clear that many unemployment insurance schemes, which were widely used by governments to respond to the crisis, were unavailable to precarious workers who lost their jobs.

Attempting to extend the scope of social protection to ensure that workers employed under the myriad forms of precarious employment do not miss out is liable to be particularly difficult in an environment where, in many countries, unions are being forced to defend existing social security provisions. Government austerity packages arising from the financial crisis and neoliberal demands for ever smaller government are resulting in restrictions on health care coverage, extension of retirement ages and lowering of unemployment benefits. Even the viability of many contributory schemes is being put at risk as their coverage shrinks. In this context, extending benefits to precarious workers is a massive challenge.

FIGHTING FOR SOCIAL PROTECTION

In Indonesia, trade unions have been at the forefront of a struggle to extend social protection to all workers. Pressure for a comprehensive social security system mounted after Indonesia's economic crisis in 1997-98. It ultimately resulted in the National Social Security System Law (NSSS) being passed on 19 October 2004. This law would ensure a minimum living standard for all, in accordance with the ILO Social Protection Floor. However, nearly 7 years later, the law has yet to be implemented.

IMF affiliates FSPMI and Lomenik have taken a leading role in pushing for social security provision for precarious workers. Roni Febrianto from FSPMI explains some of the difficulties.

'After 7 years the social security system cannot run because no law has been passed to regulate the bodies that run the social security system. This is why we request the government and the parliament to approve this law and we request that all these bodies be controlled by a trust fund. Now the situation is that the money is controlled by government so that government can use the money every time and for everything. For example last year they used the money for a political party campaign.'

According to the Friedrich Ebert Foundation, social insurance carriers in Indonesia are run as profit-oriented state enterprises that have to pay corporate tax and dividends to the government. This has resulted in an IDR 10 trillion (US$ 1.1 billion) deduction from social security for private sector workers. To make matters worse, compulsory contributions by Indonesian employers and employees are the lowest among ASEAN countries.

Precarious workers are not the only workers in Indonesia who are not covered by social security provisions. For the 64.84 million informal workers (out of a total workforce of 104.49 million) there is no social security at all. Social security benefits in the private sector are run through a state owned body called Jamsostek which covers employment accidents, old age benefits, death benefits and health services. Despite the system being compulsory, coverage of workers is extremely patchy. All enterprises with a minimum of 10 workers or a salary bill above IDR 1 million must join, but since Jamsostek has no enforcement powers and relies on the Labour Ministry to ensure compliance with the scheme, many companies simply do not comply. Membership is currently at about 20,000 companies.

UNIONS MOBILIZE

Union frustrations with the amount of time that the Government has taken to implement its legislation led to a massive demonstration involving 100,000 workers on May Day 2010. Workers gathered in central Jakarta from the early hours of May 1 to demand changes in the social security laws and system. The size of the crowd was unprecedented in the history of the Indonesian labour movement, with workers travelling from as far afield as Bandung, Tanggarang and Bekasi to join in. Thousands of FSPMI members led the march from the Thamrin area of Jakarta towards the Presidential Palace for a demonstration that lasted till late evening.
For Lomenik and FSPMI, the goal is a social security system that is independent from government and able to deliver social protection to everyone including precarious and informal workers. For Prihanani of FSPMI, protection of precarious workers is essential. 'Now precarious workers don't have social security, they don't have health insurance, they don't have pension benefits but in our struggle for social security reform they will be covered by the law and it means that they will have the same benefits as permanent workers,' said Prihanani. 'They will have health insurance, they will have pension benefits, that's why the precarious workers have to support our struggle for social security reform.'
Many other trade unions and NGOs in Indonesia share this goal and together set up a Committee on Social Security Action (Komite Aksi Jaminan Sosial, KAJS) to fight for improved social security, particularly health insurance for life and a mandatory pension fund for all.

Eduard Marpuang, President of Lomenik explains: 'To change legislation we cannot be alone because trade unions in Indonesia are fragmented. We have on average 100 national federations and 5 confederations and 3 bigger confederations. We had the idea to discuss social security implementation with the government because it has been six years that it has not been implemented. We established KAJS together with 64 trade unions and civil society united together to push for implementation of social security law. It has already been one year that we have discussed but the government does not implement the laws so we campaigned to the media and to the public as well as to the government and the employers and also the civil society economists, politicians.'

Actions taken by KAJS have included a series of mass demonstrations and lobbying government and political parties. KAJS also initiated a citizens' lawsuit against the President and Vice President, Chairman of the House of Representatives, and eight of the relevant Ministers. The claim was that by failing to implement the law on social security, they are violating Indonesia's Constitution. Represented by Said Iqbal, President of FSPMI, KAJS was involved in 27 hearings at the National Court in Central Jakarta before the case was decided on July 13, 2011. The three sitting judges found that the President and the other defendants were guilty and derelict in their duty. They were ordered to immediately legislate to implement the National Social Security Act and pay court fees.

The President and the parliament agreed to continue discussing the legal drafting. KAJS is closely monitoring the process and held another mass rally on July 22 in front of the parliament building to support union demands for universal health insurance, pensions for the formal sector, and a social security body established as a trust fund and controlled by a tripartite body. A result is expected by the end of October.

TAKING THE FIGHT TO THE ILO

Just prior to this momentous court decision being handed down, in June 2011 Indonesian unions had taken their fight to the International Labour Conference (ILC) where Indonesia President Susilo Bambang Yudhoyono was delivering an address on the effects of the global economic crisis. The unions submitted a statement to the ILC, which was supported by IMF, ICEM and ITGLWF and demanded that the Indonesian government comply with the Global Jobs Pact by providing comprehensive social security for all Indonesian people. The statement pointed out that "the people of Indonesia continue to face problems of low wages which are not comparable with the needs of a decent standard of living, unsafe working conditions with the expansion of contract work and outsourcing and the absence of comprehensive social security for all people."

Their intervention was timely, since the ILC was in the midst of a discussion on the role and importance of social security as a key pillar of decent work. 1952, ILO Convention 102 on minimum standards for social security has set the benchmark for minimum social security coverage for people in employment. However, in 1952 the world of employment was very different and the Convention does not take account of the myriad employment relationships that have developed and which deny workers access to social protection. Neither did it envisage that the majority of the world's workers would become trapped in informal employment.

For these reasons, the focus of the ILC debate was on establishing a basic social protection floor for all that would provide coverage for health, child benefits, a basic pension and some form of income protection for working age people.

SOCIAL SECURITY UNDER PRESSURE

In many industrialized countries, social security systems have evolved to offer greater levels of protection than the minimum standards of Convention 102. However, these systems are coming under increasing political and financial pressure as a result of ageing populations, increased costs of health care and the ongoing fallout from the financial crisis that has diverted public funds into propping up financial systems. Governments are increasingly taking policy measures to limit the scope of health care coverage, extend retirement ages, restrict eligibility for unemployment benefits and reduce the amounts of those benefits. Under such conditions, precarious workers become even more likely to miss out on social protection. Following the financial crisis, the most common social protection measures taken by governments to respond to the mass layoffs were unemployment insurance schemes. However, these were not extended to the massive numbers of precarious workers who were among the first to lose their jobs.

Unions face a massive challenge not only to defend existing social security systems against these pressures, but to extend their coverage to all workers, including those in precarious employment. The radical transformation of employment relationships threatens not only workers' wages, conditions of employment and job security, but their access to health, unemployment and retirement benefits. Social security systems need to take account of these ongoing changes to employment relationships in order to ensure that precarious workers do not fall through the gaps.

But precarious workers themselves are not the only ones to suffer the consequences of their exclusion from social protection. For many workers in permanent employment relationships, protection is guaranteed through contributory schemes. The success of these schemes depends on them having enough contributing members to be financially stable enough to be able to withstand financial and political pressures over the long term. As employers continue to replace stable jobs with precarious ones, and increasing numbers of precarious workers become unable to access these contributory schemes, the risk is that the schemes themselves will become less viable as they cover a shrinking minority of the workforce.

SOCIAL PROTECTION FOR ALL

Extending coverage of social security to all workers is crucial. When feasible steps to achieving this objective are debated, as they were at the ILC, a strong emphasis is put on facilitating workers' transition from informal to formal employment, and with good reason. Once people enter formal employment, they start paying taxes and contributing to enlarging government budgets for social security. Furthermore, with 80 per cent of the world's working age population with no effective access to comprehensive social protection, social security systems where they do operate tend to be based on the model of Convention 102 and target their protection at formal workers.

It is tempting therefore to conclude that shifting employment from informal to formal will in itself be enough to extend social protection to workers who do not currently benefit from it. Certainly, the importance of formalizing employment and the benefits it delivers to workers and nations should not be minimized. However, nor should the existing gaps in social security provisions be overlooked. In order for everyone to be able to benefit from a shift from informal to formal employment, social security coverage gaps must be fixed. Only then will we avoid the scenario of workers making the move from informal to formal employment, only to find themselves once again without social protection because the only available job is a precarious one.

The discussion at the ILC concluded in a commitment to establishing social security for all as a powerful and affordable tool to promote economic growth, reduce poverty and mitigate the impact of crises, in particular through a Social Protection Floor. The ILC passed a resolution that the next ILC in 2012 should include on its agenda a standard-setting item on the Social Protection Floor with a view to the adoption of a Recommendation. The published conclusions of the discussion, while failing to address the problem of lack of access by precarious workers to social protection, nonetheless referred to the need for Social Protection Floor policies to aim at reducing informality and precariousness. The conclusions also referred to the need for integrated national policies to promote productive employment. Among a long list of suggested policy options are policies to enable all workers including those in atypical (sic) employment to take advantage of social security (union efforts to change the terminology, since precarious work is now more often typical than atypical, were unsuccessful).

Unions must use the opportunity of the 2012 ILC discussion on a Recommendation to push strongly for the ILO, governments and employers to recognize how the growing prevalence of precarious employment denies workers access to social protection, and for any resulting Recommendation to take proper account of the impact of the transformation of employment relationships in proposals for social security reform.

UNION ACTION NEEDED

Every day, unions are seeing more and more examples of employers replacing permanent employment with precarious forms of employment such as contract work and agency work, even outsourcing their entire workforces. It is crucial that trade unions take up the battle for social security reform, to ensure that precarious workers are not excluded from the very protections that they are most in need of because of the insecure nature of their employment. Union action is needed both at national level, as in the case of Indonesia, and at global level to put pressure on governments and employers through international bodies such as the International Labour Organization.

At the next meeting of the IMF Central Committee in Jakarta, Indonesia on 6-8 December 2011, the challenge of ensuring that precarious workers have effective access to social protection will be discussed by delegates. An important contribution to the debate will be an explanation from the Indonesian trade unions on how they were able to mobilize workers on this issue.
As the number of workers forced into precarious employment continues to rise around the world, the struggle must continue towards the goal of social protection for all.

In Thailand, access to social security payments is central to the struggle to gain permanent employment for subcontract workers.
Duangmanee Sopeng has direct experience of the difference permanent employment can make to access to social security. Both she and her husband were employed at Ford/Mazda in Thailand as subcontract workers up until May 2009 when the Auto Subcontract Workers' Union of Thailand succeeded in winning them permanent status. Subsequently, when Duangmanee's husband severed an artery in his arm whilst cooking, the 50,000 Baht (US$ 1,400) surgery needed to repair it was covered by their new permanent worker benefits, which includes cover for injuries sustained at home as well as at work. If the accident had happened while he was still a subcontract worker, they would have struggled to pay for the surgery.
According to Yongyuth Menta Pao, General Secretary of IMF affiliate TEAM, one of the principal reasons that employers prefer subcontract workers is because they want to reduce costs by not paying social security contributions.
In 2009 after three years of temporary employment at Ford/Mazda in the Rayong Province, Duangmanee Sopeng is now a permanent employee thanks to the efforts of the Auto Subcontract Workers' Union of Thailand.