Indonesia Wage Support Policy during Covid-19

Covid-19 pandemic continues to slow down Indonesia economic output. It has also fundamentally affecting the Indonesia workforce – especially for low wage workers. Pandemic-induced job losses, underemployment, lost of productivity, and education interruption, put a strain on the common households.

The current Minister of Manpower Regulation No. 14 of 2020 issued on 14 August 2020 intents to give a much needed break for the Indonesia formal workforce while keeping skilled workers rate of participation in the labour market. Article 2 of the Minister of Manpower Regulation Government in question stipulates that the assistance in the form of subsidized salary/wage for workers/laborers aims to protect, maintain, and increase economic capacity on workers/laborers in handling the impact of the Corona Virus pandemic.

The Government wage subsidy assistance is given in the form of money amounting to IDR 600,000 per month (equivalent to US$ 40.69) for four months from the issuance of the Regulation or as per availability of the Ministry of Manpower budget ceiling concerning the implementation of the wage subsidy policy (Article 4).

The wage subsidy only applied for formal workers who receive wage less than IDR 5,000,000 per month (equivalent to US$ 340) from their employer and registered in the Employment Social Security (BPJS Ketenagakerjaan) up to June 2020 (Article 3).

The Employment Social Security agency will verify and validate the wage subsidy recipient data and transfer it to the Budget User Proxy (Kuasa Penerima Anggaran/KPA) that is the official at the Directorate General Development of Industrial Relations and Labour Social Security. Payment of the wage subsidy to the verified recipients would be done by designated Government Banks (Article 5 and 7).

Although, the Ministry of Manpower Regulation No. 14 of 2020 likely lessen the gravity of financial burden of the common household, as the Regulation only applies for formal worker in a formal employment relations, it does nothing to help the informal and gig economy workers – those who are at the very bottom of the labour market food chain. This group of workers, which before the pandemic reached around 70 million workers, typically did not have secure employment contracts, benefits or social protection.

Also, the processes of the disbursement of funds could be improved. It further initiates question about a much streamlined administration processes during national emergency. Also, discourse on eradication of unnecessary bureaucracy in the era of governmental administrative reform.

The Article on Ministry of Manpower budget ceiling concerning the implementation of the wage subsidy policy creates a notion of transparency on budget management. Whether or not a statement of budget ceiling should be specified and informed to all stakeholders for the purpose of external monitoring on the agency accountability and program impact (Chapter V of the Regulation stipulates internal monitoring by the Director General).

Lastly, the Regulation does not provide complaint or appeal avenue for recipient candidates who are rejected during the verification and validation, or wage subsidy recipients who later on are deemed as false recipients. In other words, the Regulation does not guarantee procedural justice for the already strained workforce.

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