Local Governments Urged to Be Creative and Implement Efficiency to Prevent PPPK Layoffs
The government or local governments (pemda) are urged to implement efficiency measures and breakthroughs in local revenue to prevent the termination of employment contracts for government employees with work agreements (PPK PPPK). Minister of Home Affairs (Mendagri) Tito Karnavian believes that local governments have not yet undertaken these two actions.
“They must carry out efficiency in other expenditures. I am concerned that they have not done so,” Tito stated in Jakarta on Monday (30/3).
He exemplified that budget efficiency by local governments could involve eliminating unnecessary meetings, reducing official travel, or cutting consumption budgets.
When asked about the threat of PPPK facing layoffs in the regions, Tito mentioned the scheme for maximum regional personnel spending of 30 percent from the regional revenue and expenditure budget (APBD) by January 2027, as regulated in Law No. 1 of 2022 on Financial Relations between the Central Government and Regional Governments (UU HKPD).
A member of Commission II questioned the Minister of Home Affairs regarding the issue. Budget efficiency in local governments is feared to lead to mass PPPK layoffs.
In response, the Minister of Home Affairs stated that local governments can implement budget efficiency and allocate it wisely.
“There are regions that can carry out efficiency, and that efficiency can cover the payment for PPPK,” he said.
He urged local governments not to solely rely on transfers to regions (TKD) funds and to be creative in seeking sources of revenue.
He exemplified that revitalising Regional Owned Enterprises (BUMD) as well as micro, small, and medium enterprises (UMKM) needs to be enlivened to increase original local revenue (PAD).
Additionally, the Minister of Home Affairs mentioned that local governments can maximise revenue through taxes from large companies, for example, restaurants and hotels.
In Article 146 paragraph (3) of the UU HKPD, the Minister of Home Affairs said, local governments are indeed allowed to apply adjustments to the percentage of regional personnel spending. However, he emphasised that this is the last option.