The History of THR: Indonesia's Distinctive Allowance That Began as a Holiday Advance

Jakarta – The Holiday Allowance (THR) has become an integral annual tradition accompanying Eid al-Fitr celebrations in Indonesia.

THR is commonly understood as a bonus provided by employers to workers. However, this tradition is far more than a voluntary bonus—it constitutes a legal obligation in Indonesia.

THR is comprehensively regulated by the government through Government Regulation No. 36 of 2021 concerning Wages.

Notably, this mandatory annual THR tradition exists only in Indonesia. In neighbouring countries such as Malaysia, bonuses linked to religious holidays are not legally mandated.

What, then, is the historical background behind Indonesia’s mandatory THR scheme?

THR originated from an initiative by Soekiman Wirjosandjojo, Indonesia’s sixth Prime Minister, during President Soekarno’s administration. In 1951, Soekiman introduced an allowance to be paid to state officials and civil servants, formerly known as pamong pradja.

The allowance was originally termed “persekot lebaran” (holiday advance) rather than THR, as it was intended to be recovered through salary deductions in subsequent months.

Historian JJ Rizal, speaking on the Kompas.com podcast Ruang Jernih, explained that the scheme originated from Soekiman, who represented Islamic groups within the government. Coming from the Masyumi party, Soekiman recognised the difficulties faced by civil servants, who at that time had welfare levels below average.

“It was necessary for the government to provide relief,” Rizal stated. “Soekiman, being from Masyumi, understood the real conditions well and realised this situation could not be left as it was.”

At that time, the persekot lebaran of 120–200 rupiah was estimated to be equivalent to a month’s salary for civil servants.