WFH Can Save Budgets, but Triggers Domino Effect on Consumption and SMEs

Researcher from the Institute for Development of Economics and Finance (Indef), Ariyo D.P. Irhamna, assesses that the work-from-home (WFH) policy has the potential to aid efficiency in government and company budgets, particularly through reductions in operational costs such as electricity, transportation, and office facilities. However, on the other hand, the implementation of WFH is considered capable of triggering a domino effect on the economy, especially in the form of a decline in household consumption and income for micro, small, and medium enterprises (MSMEs) around office areas. “Indeed, there is potential for savings from WFH, but WFH can suppress household consumption, which has been the main pillar of the economy,” he told Media Indonesia on Monday (23/3). Ariyo added that WFH also risks lowering income in the transportation sector, online motorcycle taxi services, as well as MSME food stalls that have previously served the needs of civil servants (ASN) and private sector workers for lunch. In the transportation sector, online motorcycle drivers, angkot drivers, and parking attendants are said to have no option to work from home. Their income is highly dependent on public mobility. At the same time, there is a shift in cost burden to households. Costs during WFH, such as electricity, data packages, and self-catered meal logistics, are often greater than the savings from transportation. This situation means that the government’s fuel subsidy savings do not truly disappear but are transferred to workers’ pockets. Ariyo views the government’s claim that WFH can save fuel by up to 20% as needing to be tested through more realistic scenarios. “Such calculations must consider offices that remain operational, the shift of energy burden to households, and workers’ behaviour that cannot be controlled as tightly as during the pandemic,” he explained. In addition, Ariyo highlights a broader dimension, namely the potential decline in productivity in the manufacturing sector if WFH is applied widely in the private sector. According to him, not all types of work can be done from home, so applying a uniform policy to diverse sectors risks creating new problems. For this reason, he emphasises the need for a balance between budgetary efficiency and economic activity sustainability. “The WFH policy should be implemented selectively and measurably based on regions and sectors, not merely for political considerations,” he stressed. In addition, offices must be fully closed during WFH implementation to achieve optimal efficiency, accompanied by stimuli for affected MSMEs and improvements in public transportation as a long-term solution. According to Ariyo, the WFH policy of one day per week is essentially a short-term emergency measure to respond to fiscal pressures due to oil prices. However, he highlights the lack of a comprehensive cost-benefit analysis from the government, particularly calculations of potential losses on the consumption side, MSME income, and the energy burden shift from the one-day WFH policy. Therefore, according to him, the government needs to conduct more careful calculations so that the benefits of fuel subsidy savings are not paid for by other sectors bearing the impacts.