Evaluating the Impact of Subsidies and Auto-Debit Payment on the Retention of Informal Workers in the National Employment Social Security Programs 

The Government of Indonesia (GoI) aims to include more informal workers in national employment social security (Jamsosnaker) programs, which provide coverage for workplace accidents or death. However, retention is a major concern, since premiums for informal workers cannot be automatically deducted from payrolls. The GoI is considering premium subsidies, but small-scale initiatives to date have had mixed success and raised concerns about fiscal sustainability. A promising strategy is to incentivize auto-debit from member bank/e-wallet accounts, which could streamline these person-to-government (P2G) payments and promote financial inclusion by strengthening informally employed households’ ties to banking systems. Using a randomized control trial (RCT) design, researchers work with the GoI to test different ways to incentivize the use of auto-debit, identifying factors in the retention of informal workers in voluntary insurance programs, as well as effects of auto-debit for P2G payments on households’ use of other financial services and responses to financial shocks.