Salary Subsidies Are Expected To Increase Purchasing Power, But Not Help Avoid Recession

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - The Indonesian Chamber of Commerce and Industry (Kadin) assesses that the wage subsidy assistance program for workers or laborers who receive a salary below IDR 5 million can help increase purchasing power in society.

"This program is indeed very helpful for the purchasing power that is needed by us in order to survive amid the pressure of the pandemic," said Kadin General Chairman Rosan Roeslani quoted from Antara, Thursday, September 3.

Rosan said this, after meeting with the Chief Executive of the Committee for Handling COVID-19 and National Economic Recovery Erick Thohir regarding "Supervision of Salary Subsidy Distribution" in Jakarta, Wednesday.

He said that his party ensures that the program that has been launched by the government can be right on target and its implementation will run well.

"It has begun to run in several companies, of course, God willing, this can run well because this program is a program that really helps us," he said.

On the same occasion, the Chief Executive of the Committee for Handling COVID-19 and National Economic Recovery as well as the Minister of BUMN Erick Thohir invited Kadin to participate in the data validation process for workers who receive salary subsidies.

"Because we know and I believe that members of the Chamber of Commerce and Industry also want this program to be successful, because this really helps than employees who are in dire need or who have been greatly affected by the presence of COVID-19," he said.

Erick explained that out of 14 million account numbers, 11 million of them have been validated. The government is targeting the program recipients to be 15.7 million workers with a total value of IDR 37.8 trillion.

"One of the points we convey to Kadin, please also help validation, because this is for employees, we want to make sure this assistance from the government can go directly to the people or workers without going through other things," he said.

Erick also said that people who have not worked and informal workers who do not receive salary subsidies will receive assistance through the pre-employment program.

"That is why the pre-employment program was designed which was launched early, in which the pre-employment program was indeed categorized as unemployed or informal," he said.

Staying in a Recession

In fact, this salary subsidy program is intended to boost people's purchasing power in order to stimulate the country's economy, which experienced minus 5.32 percent in the second quarter of 2020. Many parties, including the ranks of ministers, assess that Indonesia will again experience a contraction in the third quarter of 2020, and culminate in recession because in two periods there was no positive economic growth.

Observers assess that this salary subsidy program will not do much to help the country avoid a recession. This is because the salary subsidy that is distributed is still small and tends to be late because it was only done at the end of August. While the third quarter will end this September.

The number of workers who receive this assistance is still small when compared to the country's workforce, which reaches 133 million people. Researcher Indef Rusli Abdulah said in an interview on the radio that this salary subsidy should have been distributed in July, August and September in order to really be able to raise purchasing power before the third quarter ends.