The Forgotten Shortcut to Raising Lecturer Income Since 1999

The controversy over the welfare of state university lecturers has again drawn public attention. Various proposals have emerged, from raising basic salaries and performance allowances to increasing the state budget allocation for higher education. Nearly all the solutions on offer share the same pattern, namely increasing the state’s contribution so that lecturers’ incomes rise accordingly.

That approach is certainly not without reason. As state institutions, public universities should draw their main funding from the state budget. On the other hand, raising tuition fees is not a wise option because it risks reducing people’s access to higher education. As a result, the government’s fiscal space appears to be the sole hope for improving lecturers’ welfare.

But is that really the only alternative available? Looking back at the history of higher education regulation in Indonesia, there is an idea far more fundamental than simply adding to the state budget. It is contained in Government Regulation No. 61 of 1999 on the Establishment of State Universities as Legal Entities.

Although that regulation has been revoked and replaced by newer rules, the philosophy it carried lives on: building universities that are independent, professional, and free to manage their own resources. Ironically, one of the most important parts of that design has never truly been realised.

By the late 1990s, the government had realised that universities could not possibly compete globally if they were still treated as ordinary bureaucratic units. Government Regulation No. 61 of 1999 therefore offered a new paradigm, turning universities into non-profit state-owned legal entities with far broader autonomy.

For its time, the substance of the regulation was highly progressive. It introduced modern governance principles such as strategic planning, performance indicators, accountability, audit functions through a Board of Audit, and a strengthened role for the Board of Trustees as a supervisory organ.

Universities were also given freedom to manage their assets, design their financial systems, establish business units, and develop professional internal governance. All of this was intended to enable universities to respond more adaptively to changes in the strategic environment.

Most of these ideas have now been realised through the existence of State Universities with Legal Entity status (PTN Badan Hukum). Universities have gained greater flexibility in financial management, partnerships, investment, and the development of business units. Yet one aspect has not fully followed the spirit of that autonomy: human resource management.

Unlike financial management, which has largely been devolved to each PTN Badan Hukum, human resource management remains dominated by the national civil service system. Within a single university one can find various employment statuses: civil servants, government employees on work contracts, permanent non-ASN staff, contract staff, and various other forms of employment. As a result, some staff fall under the university’s internal regulations while others remain subject to state civil service rules.

The consequences are far from trivial. The income structure for lecturers who are civil servants must follow national policy, while their performance is also assessed against evaluation instruments set by the university. In practice, this frequently creates duplicative administration that adds to lecturers’ bureaucratic burden. This situation shows that university autonomy is still incomplete.

Interestingly, Government Regulation No. 61 of 1999 actually anticipated this problem. Its employment provisions stipulated that lecturers are employees of the university, and that lecturers and educational staff who still held civil servant status would be transferred gradually to become university employees. This provision is often understood as an attempt to abolish civil servant status. In fact, the essence of what it sought to build goes far deeper.

The transfer of employment status is the logical consequence of a change in institutional form. Once a university becomes an independent legal entity, the employment relationship should sit directly between the university and its staff.

All human resource policies, from recruitment and career development to performance appraisal and remuneration, could then be designed in an integrated manner according to institutional needs. What was intended was not merely a change in employment status, but the completion of the design of university autonomy.

From this perspective, the problem of lecturer welfare may not be simply that the state cannot afford to pay more, but that the transition to autonomous human resource management has never been properly completed.

To this day, PTN Badan Hukum stand at a crossroads between the ASN employment system and a corporate employee management system. As a result, universities’ room to formulate comprehensive human resource policies remains far below expectations.

As long as lecturers remain on the ASN pay scheme, universities have limited scope to design remuneration systems aligned with their own characteristics and strategies. The various income components set by national regulation cannot always accommodate the needs and priorities of individual universities. Meanwhile, lecturers must still meet administrative obligations stemming from both the national employment system and the university’s own performance appraisal system.

Yet every university has distinct characteristics. Some excel at winning research grants, producing patents and intellectual property royalties, developing teaching hospitals, running professional education programmes, or building strategic partnerships with business and industry.

These achievements strengthen institutional capacity, but are not necessarily matched by the freedom to reward proportionately the individuals who contribute to them.

If lecturers became corporate employees, universities would have far greater freedom to design remuneration systems based on institutional capacity and each lecturer’s contribution. Income would no longer depend entirely on the national pay structure, but could be adjusted to the university’s development direction.

Rewards could also be tied to indicators that genuinely reflect institutional performance, such as scholarly publications, research grants secured, patents, innovation, international partnerships, and other strategic achievements.

In this way, the income system would serve not only as a welfare instrument, but also as a means to boost productivity, strengthen a merit culture, and enhance universities’ competitiveness. Such practices are common at world-class universities that manage their human resources more adaptively to organisational needs.

This capability allows institutions to allocate resources more efficiently while rewarding more proportionately the lecturers who deliver the best performance.

Such flexibility is certainly hard to achieve when human resource management sits within two different regimes. On one hand, universities are expected to move quickly in line with developments in science, technology, and societal needs. On the other, most of their staffing policies must still comply with nationally applicable rules. This limits institutions’ room to restructure their workforce, develop talent, and design adaptive reward systems.

The biggest objection to the idea of transferring employment status usually concerns the loss of civil servant status and its pension guarantees. Such concerns are understandable. However, losing ASN status is not synonymous with losing old-age protection.

On the contrary, PTN Badan Hukum have the opportunity to establish professionally managed institutional pension funds, either independently or through cooperation among universities. With such freedom, universities can design benefit schemes better suited to their organisational characteristics, including pension benefits that could potentially exceed the ASN pension scheme.

This is possible because benefit levels would no longer be entirely determined by a national formula, but could be set according to funding capacity, investment returns, and each institution’s policies. Such practice is not new. Various state-owned enterprises have long operated their own pension funds with benefits designed around their organisational characteristics.

Of course, establishing institutional pension funds requires sound investment governance, long-term funding, and rigorous actuarial calculations. But those challenges should be seen as matters to prepare for, not reasons to rule out old-age protection outside the ASN pension scheme.

A change of this magnitude also cannot be done all at once. The transition needs to be designed in stages through a combination of natural retirement, recruitment of new staff as corporate employees, and voluntary mechanisms for those who choose to switch status. With that approach, institutional transformation can proceed gradually without causing organisational upheaval or reducing the rights of existing staff.

For more than two decades, the debate over lecturer welfare has almost always revolved around the same question: how much extra state budget is needed to raise lecturers’ incomes. Yet Indonesia once designed a different approach.

Through Government Regulation No. 61 of 1999, the government built an institutional design granting universities broader autonomy, including in human resource management. That idea was not intended merely to change employment status, but to open space for universities to build reward systems that are more adaptive, competitive, and aligned with their strategies.

The debate over lecturer welfare should therefore not stop at the size of additional state funding. The more fundamental question is whether the regulatory framework provides sufficient room for PTN Badan Hukum to manage their human resources independently, including deciding whether a corporate employment system better fits their institutional needs.

With that room, the decision to keep the ASN scheme or move to a corporate employee system would no longer be determined entirely by the government, but would become a strategic choice for each university. Until that room exists, the debate over lecturer welfare will keep circling the budget issue, while the institutional design formulated back in 1999 remains an unfinished reform agenda.