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Jakarta Post

Government expands wage subsidy to include 3 million furloughed, reduced pay workers

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Tue, August 11, 2020   /   11:51 am
Government expands wage subsidy to include 3 million furloughed, reduced pay workers Workers assemble truck parts at a factory in East Karawang, West Java, in this undated file photo. (JP/Seto Wardhana)

A week after it launched the COVID-19 wage subsidy program, the government announced on Monday that it had increased the scheme to cover a total of 15.7 million workers to spur household consumption and prevent the economy from slipping further.

From its initial target of 13 million workers, the government increased the number of targeted recipients by an additional 2.7 million workers to help boost their purchasing power. The government also increased the budget for the program by 13.9 percent to Rp 37.7 trillion to cover the expansion in targeted recipients.

Those people eligible for the wage subsidy are workers who earn less than Rp 5 million (US$339.25) per month and are active members of the Workers Social Security Agency (BPJS Ketenagakerjaan) as of June 30.

Eligible recipients will receive a total wage subsidy of Rp 2.4 million starting in September, disbursed in installments of Rp 1.2 million every two months to cover a total period of four months.

“There was an [uncovered] group, namely workers who have not been laid off but have been furloughed or [have had] pay cuts because their employers are facing difficulties. They need assistance," Budi Gunadi Sadikin, who heads the national economic recovery task force, said in a virtual press conference on Monday.

The wage subsidy program was initially launched on Aug. 4 after Indonesia recorded an economic contraction of 5.32 percent year-on-year (yoy) in the second quarter as household consumption and investment shrank.

The government has allocated Rp 695.2 trillion in stimulus funding to minimize the economic impacts of the health crisis. But it has spent only 21.7 percent of the budget as of Aug. 6, at a time when when accelerated spending was needed most.

Budi said the expanded scheme was meant to fill the gap left by the existing safety net programs: The Family Hope Program (PKH), the Staple Food Card and the preemployment card social assistance programs have a combined budget of almost Rp 50 trillion and together cover around 29 million eligible households.

BPJS Ketenagakerjaan director Agus Susanto of said that the agency had collated the names and addresses of the eligible recipients in its database. But the available data did not include the recipients’ bank account information, which was needed for the government to disburse the wage subsidy as direct transfers.

“Hence, on Saturday we notified their employers to complete the bank account data for their workers [with] wages below Rp 5 million [to correspond] with the data they reported to BPJS Ketenagakerjaan,” he said.

The wage subsidy program applied to eligible recipients of all occupations, said Manpower Minister Ida Fauziyah.

Ida added that the government was involving law enforcement agencies, including the National Police, the Attorney General’s Office, the Supreme Audit Agency (BPK), the Development Finance Comptroller (BPKP) and the Corruption Eradication Commission (KPK) to prevent any irregularities and ensure that the program was administered well.

“This is to ensure that we, as users of the state budget, deliver the program to the correct target. We will [transfer] the money directly to the recipients’ bank accounts. So it will not go anywhere [else],” said the minister.

As of May, 3 million Indonesians have been either jobless or unable to work as a result of the health crisis, which has brought the economy to a virtual standstill. With a possible recession pending third-quarter growth, the government has projected 5 million job losses this year.