Experience of Developing Countries

In essence, pension insurance (for workers in general) and old-age insurance for farmers are the same, both of which aim to ensure income for the insured when they reach retirement age or encounter other risks that lead to their inability to work, while still having minimum living conditions. However, they are also different in terms of insurance organization and insurance obligations as well as conditions for receiving insurance services.

- Accident insurance for farmers: Basically, the services of accident insurance for farmers are the same as those of general accident insurance. However, accident insurance for farmers has some differences compared to general accident insurance in terms of organization, obligations and services. Agricultural accident insurance was also funded by the federal budget from 1993 to 2003, the funding level was up to 30%. Thus, in about 10 years, the cost increased by about 20%. The total contribution of members increased by about 46%. The share of the federal budget decreased slightly (currently fixed at 250 million Euros), but it is still very large.

Table 1.4: Cost and funding levels of agricultural accident insurance

Year

Cost (million Euros)	Contribution level of agriculture (million euros)	Federal budget
		Million Euros	%
1993	720.0	415.7	304.3	42.3
1998	888.0	578.6	309.4	34.8
2003	859.0	609.0	250.0	29.1

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Source: [19]

- Personal insurance for farmers. Personal insurance for farmers is basically the same as general personal insurance in the social insurance system. Except for the insurance obligations of participating members, for these subjects, the insurance obligations are not calculated on the basis of income with a certain percentage like general personal insurance but are considered as an additional obligation to the health insurance obligations for farmers. This additional level is determined at 7.5% (for the former West Germany) and 7.7% (for the former East Germany).

health insurance premium for farmers. This additional premium is borne by the farm owner for all other family members.

- Unemployment insurance for farmers. Most farms that were abandoned due to objective reasons, resulting in a reduction in employment, will receive support to adapt to the new situation. The monthly support level is determined from 200 to 500 Euros for the former West Germany and from 140 to 350 Euros for the former East Germany. For older workers (up to 50 years old), this benefit can be enjoyed until they are eligible for a pension. For those who have additional work outside of agriculture, the maximum benefit is only 5 years.

Not only farmers as wage earners but also farm owners receive unemployment insurance services in the form of support in situations such as changes in farm production due to objective requirements (development of technology, changes in the market, weather or implementation of state policies to change the economic structure). The benefit level is determined for the former West Germany at 850 Euros plus 150 Euros for children per month, for the former East Germany at 510 Euros plus 90 Euros for children per month.

In addition to the usual insurance support as presented above, farmers also receive other social benefits. These are:

- Benefits related to insurance policy issues

In addition to the above insurance policies, farmers also enjoy benefits related to pension insurance and health insurance. For example, for old age insurance, workers in this sector, due to low income, receive lower pension benefits than those in other sectors. To close this gap, workers can receive additional benefits from the state through insurance organizations in one of the following two types:

 The first type, for every 12 months of performing the compulsory insurance obligation, the insured will receive an additional 2.5 Euro increase in monthly pension. For this benefit of the employee, the state will support

part and the employer must assume part of the obligation to pay an additional 10 Euros of monthly insurance premiums for each employee. The condition for receiving this benefit is that by the time of retirement, the period of contribution for this type must be at least 180 months.

 The second type is that the insured person will receive an additional 54 Euros per month in pension if he is single, and if he is married, this amount will be 90 Euros. The cost of this benefit for workers is entirely borne by the state.

In the health insurance, family members of the farmer as the farm owner will have to pay health insurance obligations equal to 37.5% to 70% of the health insurance obligations of the farm owner. However, non-working members such as children under 18 years old, or housewives, are exempted from health insurance obligations, although they still enjoy the services from the farm owner's insurance in the family and the farm owner still does not have to pay additional health insurance obligations.

- Support related to agricultural sector protection

Farmers also receive other support from the state related to agricultural sector protection such as price subsidy policies, emergency subsidies and especially regional development policies. Accordingly, areas identified as agricultural areas will receive special incentives related to agricultural activities, including abandoned areas or areas covered with grass to preserve the land or create green space.

According to this policy, farms that, due to objective reasons (natural disasters or land use change), result in a part of the land not being used for production, will receive support to carry out the transition, develop techniques, change according to market demand or overcome natural disasters...

It is noteworthy that the rural social security system in the Federal Republic of Germany is highly legalized. Social law in agriculture is one of the systems.

special features of German social law. The basis of the special character of this legal system is that it addresses the most diverse situations of specific groups of people and economic sectors. The main features of social law in agriculture in the Federal Republic of Germany are:

 The insured group is made up in practice of landowners, their spouses and family members who work together and have the right to maintenance.

 The independent agricultural social insurance system is aimed at specific life-changing events such as age, accident, illness and need for support.

 The objectives have been adjusted to the living and working conditions of farming families.

 Key points especially in the areas of Law on obligations and contributions.

Thanks to the independent social law system, Germany is prepared to provide professional assistance within the appropriate scope. The implementation of such an independent law system makes it possible to realise the objectives of restructuring agriculture; to realise solutions to reduce the income burden in line with EU law; and at the same time to finance agricultural policy objectives from the federal budget.

Although many problems have arisen and there are many different opinions about the existence of an independent social insurance system in agriculture, in principle the independent social insurance system in agriculture has been maintained until now because people do not want to eliminate the advantages of this system.

Another noteworthy point is that the organizational structure of social insurance in the Federal Republic of Germany is very diverse. Participating in the social insurance organization system in agriculture in the Federal Republic of Germany are the Federal Federation of Agricultural Cooperatives; the General Confederation of Old Age Insurance Funds in Agriculture; the Federal Federation of Health Insurance Funds in Agriculture; supplementary care insurance and supplementary care facilities for agricultural and forestry workers.

Second, welfare system for farmers in Japan

(The author references this entire section from sources: [48], [52])

In 1961, the Japanese government enacted the Basic Law on Agriculture to initiate the agricultural reform process. According to that law, the Japanese government decided to implement the “Rural Structure Improvement” program with state funding. The law determined that the state must help implement comprehensive projects, improve agricultural infrastructure and environment, and bring modern equipment to rural areas to improve production management. This was also a time of rapid growth of the Japanese economy, rural laborers flocked to the city and the number of elderly people working in agriculture increased, especially after 1965. To overcome this situation, a pension system for farmers was established. This was a tool of social insurance policy at that time. Specifically, in 1961, a national subsidy system to ensure income for the elderly, self-employed people and farmers was applied. Under this system, self-employed people and farmers start paying into the pension scheme at the age of 20 and receive pension benefits from the age of 65. The pension scheme for farmers is based on the “ National Pension ” fund. This is a broad insurance fund for people working in agriculture, small businesses (including private businesses) and their family members. Participants in this fund have the highest retirement age (65 years old) and also have the lowest income in society. Of these, only about 1/3 of the participants have an independent source of income. The rest have unstable incomes (such as women), or have no income.

Regarding health insurance in Japan, there are still differences between regions and between rural and urban areas, although the rural population is only a small proportion. For example, in 1990, in the national health insurance system, the average medical expenses per capita in the country was 216,000 yen, while the average in urban areas was 506,000 yen, while in rural areas it was only 55,000 yen. The proportion of doctors working in rural areas is also lower than in urban areas, and hospital equipment is also poor. Especially in rural areas , the aging population is faster than in urban areas, and the elderly in rural areas have familiar needs.

with home care than urban elderly. Therefore, the burden of elderly care has become one of the problems in rural Japan. Furthermore, home care services for the disabled are being expanded in rural Japan today: The government provides additional financial support to establish small-scale day care centers with a capacity of about 8 patients or more with the aim of developing services in towns, cities, and villages where the majority of the disabled or handicapped cannot be admitted to large welfare centers. In addition, the multilateral assistance system (mutual assistance) has worked very well in rural areas. This system has helped the rural poor and prevented large-scale migration from the countryside to the cities [52].

1.3.1.2. Experience of developing countries

First, social security reform in Indonesia

(The author references this entire section from source: [55])

On September 28, 2004, the Indonesian parliament approved the bill on the national social security system (SJSN). The Indonesian government will gradually implement this bill starting with free health care for the poor.

The bill specifically provides for the establishment of social security policies for citizens, including: old-age pensions, old-age savings, national health insurance, occupational accident insurance, death benefits and other special payments for laid-off workers. This system will provide social security benefits to 220 million people, expanding the coverage of the system to all citizens, including the informal sector, the unemployed and the poor, while the current system only serves about 20% of the population. These schemes will be financed by payroll taxes levied by employers and employees, mainly in the formal sector, while the government will subsidize contributions for the poorest citizens. The government will also issue a regulation to determine the unemployed. Unemployed single people will only have to pay health insurance equivalent to

3% while unemployed people with families pay 6% of the average regional salary.

Unlike the provisions in the first bill, the national insurance agencies that currently provide social security to private sector workers, government employees and the service sector such as PT Jamsostek, PT Taspen, PT Askes, PT Jasa Rahaja and PT Asabry will not be dissolved. The new bill acts as an umbrella for all activities to implement the new social security system.

Under the new law, the scope of social security will include all Indonesian citizens, unlike the current regulation that people working in the informal sector, the unemployed and the poor will enjoy appropriate social protection.

In the new national social security system, the regimes will include: retirement benefits, old-age savings, health insurance, work accident and death benefits. Workers in formal sectors will enjoy the above regimes while workers in informal sectors will enjoy all or part of the regimes. The unemployed and the poor will enjoy health insurance subsidized by the government.

The pension scheme consists of a one-time payment of the total amount paid and invested. The beneficiary is only eligible for this scheme if he/she has participated for at least 10 years and meets certain other conditions.

The benefit will be paid monthly after 15 years of contribution unless the subject dies. If the contribution is less than 15 years, the subject will be paid a lump sum of the total amount paid plus investment interest.

Health insurance covers preventive and curative medicine, rehabilitation services and prescription drugs.

Work accident benefits include necessary health insurance benefits or lump sum payments in the event of a worker becoming disabled or dying.

The death benefit will be paid in one lump sum based on the last salary received. If the subject does not receive a salary, a certain amount will be paid.

Initially, PT Jamsostek has piloted the program in a number of labor groups working in the informal economic sector (freelance workers) and will gradually expand the scope of the program.

In addition, the new law also includes provisions regulating contribution rates, government subsidies for the poor, and benefits.

A social security council was established to assist the Indonesian president in formulating overall policy for the national social security system. The council is chaired by a government representative and consists of 15 members representing the government, workers, employers and one expert. The council's functions include: organizing studies and research on social security, providing opinions on investment policies for the national social security fund and proposing the proportion of the government budget that should be contributed to the social security fund for the poor and low-income population. The council will report directly to the Prime Minister's Office.

Second, Thailand expands social insurance programs in the informal economy.

(The author references this entire section from source: [4] )

Like other developing countries in the world, Thailand’s informal economy is large, providing employment and income for the majority of the workforce. Thailand’s total workforce is about 34 million, of which about 20 million work in the informal sector. Although the informal sector plays an undeniable role in the Thai economy, workers in this sector still lack good employment opportunities as well as social insurance. Without social security for the informal sector, the majority of the population continues to suffer and face various risks that hinder sustainable and stable socio-economic development, or there is a risk of large social costs if the government participates in the national budget burden and affects living standards and competitiveness.

Some significant informal economic groups in Thailand currently without social insurance are: farmers, fishermen, domestic workers, taxi drivers,