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February 18, 2025 | 02:24 pm
TEMPO.CO, Jakarta - Prabowo’s government budget cuts policy has forced a number of state-owned enterprises (SOEs) to terminate the contracts of honorary employees, despite Finance Minister Sri Mulyani’s vow about no layoffs for workers. In several regions across Indonesia, reality paints a contrasting picture.
President Prabowo Subianto instructed a budget efficiency of Rp306.69 trillion in the State Budget and Regional Budget for the 2025 Fiscal Year. The directive is outlined in Presidential Instruction No. 1 of 2025, which obliges ministries and institutions to trim nonessential budgets and prioritize public services.
Despite the government’s pledge to ensure no dismissal of honorary workers in ministries and state agencies, on-the-ground reports show that some workers have had their contracts terminated in several regions due to budget constraints.
One example occurred in Jember, East Java, where 16 honorary gatekeepers at a railway crossing were dismissed because of insufficient regional budget to extend their contracts.
According to the head of the Jember District Transportation Agency, Agus Wijaya, the main obstacle is the lack of legal basis under Law No. 20 of 2023 to extend the contracts. As a result, the railway crossing gate was left unattended before volunteers and Transportation Agency officials intervened.
According to the Social Security Institute (Jamsos Institute), budget efficiency policies can have a broad impact on the economic ecosystem. Executive Director of Jamsos Institute, Andy William Sinaga, mentioned that budget cuts can lower the public's purchasing power due to job losses. Service sectors, such as hospitality, will especially feel the impact, as it depends on government activities.
Furthermore, thousands of honorary workers in various central and regional government agencies are expected to lose their jobs. The majority of them are already married, so the dismissal will directly affect the welfare of their families.
Budget cuts also hinder ministry programs that have a real impact on society, such as infrastructure improvements, transportation, and agriculture. With reduced funding for outreach and assistance to farmers and small and medium enterprises, the potential for economic degradation is even greater.
As a preventive measure, the Jamsos Institute suggests that the government encourage the Employees Social Security Agency (BPJS Ketenagakerjaan) to be more proactive in providing the Job Loss Insurance Program for honorary workers who lose their jobs. It is, however, a temporary solution for the affected employees.
Finance Minister Sri Mulyani emphasized that further research will be conducted to ensure that budget cuts will not impact honorary employees in negative ways. The government is also seeking solutions to ensure employee expenses, including honorary workers, remain intact without sacrificing public services.
David Priyasidarta contributed to the writing of this article.
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