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Jakarta Post

Wage subsidy may continue into next year, minister says

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Fri, September 4, 2020   /   06:50 pm
Wage subsidy may continue into next year, minister says Office workers eat at a canteen during lunch in Jakarta on July 28. The government's wage subsidy program may continue into next year as the government works to boost people’s purchasing power and stimulate consumer demand, State-Owned Enterprises (SOEs) Minister Erick Thohir said on Wednesday. (JP/Seto Wardhana. )

The government's wage subsidy program may continue into next year as the government works to boost people’s purchasing power and stimulate consumer demand, State-Owned Enterprises (SOEs) Minister Erick Thohir said on Wednesday.

“We are hoping that if the program turns out to be effective, we can continue it [next year]. But the decision now is that the program will run until December,” he told reporters on Wednesday.

The government will transfer the cash aid for millions of workers in September or October, as well as in November or December, he went on to say.

Some 15.7 million workers earning less than Rp 5 million (US$339.6) and who are registered with the Workers Social Security Agency (BPJS Ketenagakerjaan) will receive Rp 600,000 in monthly assistance over four months. The government has allocated Rp 37.7 trillion from the state budget for the program.

The government started the cash aid disbursement last week as part of its latest measure to boost consumer spending. It had transferred the aid to 1.9 million workers as of Wednesday, according to Manpower Minister Ida Fauziyah as reported by kompas.com.

The government has allocated Rp 695.2 trillion in stimulus to jack up the economy, which is expected to shrink by 1.1 percent at worst or grow by 0.2 percent at best this year, marking the worst economic performance since the 1998 Asian financial crisis.

The economy contracted 5.32 percent in the second quarter as household spending, which accounts for more than half of Indonesia's gross domestic product (GDP), shrank by 5.51 percent.

Despite the falling consumer spending, the government had only disbursed around 28 percent of the stimulus as of Sept. 2, five months after the start of the outbreak, as red tape and a lack of citizens’ data held up the release of the much-needed assistance.