MP Warns of Layoff Storm in Government Sector: The State Must Not Be Absent

Jakarta – A member of Commission IX of the Indonesian House of Representatives, Pulung Agustanto, has warned of a potential storm of layoffs looming over local government sectors. The surge in the recruitment of Government Employees with Work Agreements (PPPK), previously intended to strengthen public services, has now turned into a serious threat to workforce stability in the regions. On one hand, local governments are compelled to ensure that education and health services continue to operate. On the other hand, regional fiscal conditions are increasingly strained. This combination creates a precarious situation: an excess burden of employees without adequate budgetary support. Pulung emphasised that the potential reduction in PPPK personnel is no longer mere rhetoric but a real risk faced by many regions. “Such reductions will not always appear as direct layoffs. But they will be carried out covertly through the non-renewal of work contracts. This is still a layoff, just in a more subtle manner,” Pulung stated in a written release on Monday, 27 April 2026. Pulung assessed that the surge in the number of PPPK personnel is not solely the fault of the regions. The pressure of public service needs, especially for teachers and health workers, has forced local governments to act swiftly. This situation is compounded by the central government’s policy on organising honorary staff, which has driven a massive conversion to the PPPK scheme. According to Pulung, the problem becomes serious when regional fiscal space narrows. Declines in central transfer funds and limitations in original regional revenues have placed many regional budgets under heavy pressure. At the same time, regions must comply with the maximum 30 percent limit on employee expenditure as stipulated in Law Number 1 of 2022 on Financial Relations between the Central Government and Regional Governments. “We are talking about facts on the ground. There are still many regions where employee spending exceeds 30 percent, even reaching 50 percent in some cases. When this limit is fully enforced in 2027, employee reductions will become inevitable,” Pulung asserted. Several regions with limited fiscal capacity, such as Nusa Tenggara Timur, Maluku, and certain areas in West Java, are said to be in the most vulnerable positions. Their dependence on central transfers and narrow fiscal space make them potential epicentres of the PPPK reduction wave.