Discrimination wage subsidies

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Timboel Siregar
Timboel Siregar, BPJS Watch Advocacy Coordinator/OPSI-KRPI Manager

Jakarta, IO – The Government has once more indicated it intends to provide financial incentives to workers in the form of wage subsidies (BSU). The Minister of Manpower (Menaker) states that subsidizing workers is intended to protect and maintain their economic capacity, which will in turn increase people’s purchasing power and revive national economic growth. 

This time, it will be the third BSU, following the 2020 and 2021 BSUs rolled out by the Government, which provided IDR 37 trillion and IDR 8.8 trillion, in their respective years, to formal workers enlisted in BPJS Ketenagakerjaan (BPJS Employment, Indonesia’s compulsory social security agency) as their subsidy target. 

Unlike previous BSUs, which were endowed for the slumping economy, victim of the COVID-19 pandemic only, the present BSU makes allowances for the global economic conditions, due to the breakout of war between Russia and Ukraine, not to mention Indonesia’s internal condition, crippled by the pandemic. 

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Global economic problems have raised world energy prices, which affects Indonesia. The increase in staple food prices, especially those of cooking oil, soybeans and sugar, either packaged or bulk, has caused a shortage of staples (cooking oil in particular) in the marketplace, followed by a surge in retail prices (HET) of nearly 100 percent. Cooking oil, which previously only cost IDR 14,000 per liter, is now IDR 23,000 – IDR 26,000 per liter. 

Statistics Indonesia —BPS— has reported the inflation rate in Indonesia at 2.64 percent (year on year/ YoY) in March 2022, with the Consumer Price Index (CPI) measured at 108.95, indicating an escalation from the 2.06 percent reported in February 2022. The number rose, compared to last year’s 1.37percent (YoY) in March 2021. 

Statistics Indonesia also reported that nearly all sensitive sectors suffered inflation: food, beverages and tobacco contributed 3.59 percent (YoY), while food and beverages/ restaurant service contributed 3.13 percent. 

Price increases will persist after March 2022. Value Added Tax (PPN) as of April 1, 2022, has gone up to 11 percent. The increase did not stop there but was also followed by a rise in the price of Pertamax automotive fuel. Prices for Pertalite and three-kilo gas cylinders, which will also be expected to rise, will also trigger a price surge for public necessities. Several religious and annual events, such as Eid, Christmas and New Year, will also contribute to higher inflation, as Bank Indonesia predicted: Indonesia’s inflation in 2022 will reach 4 percent, higher than the Asian Development Bank’s (ADB) prediction at 3.6 percent, while economic growth was estimated at just 5 percent.