Indonesian House asks regional governments to finalize PPPK status amid spending relaxation

Indonesia's House of Representatives (DPR) is calling on regional governments to resolve the employment status of full-time and part-time contract-based workers (PPPK). Dede Yusuf, Deputy Chairman of Commission II of the DPR, urged regional heads to take advantage of relaxed regulations on personnel spending, which now permit budgets exceeding 30% after approval from the Ministry of Finance.

The relaxation of the 30% personnel spending cap was agreed upon to prevent a rigid fiscal burden on regions by 2027. "So (the policy of not exceeding 30 percent) does not have to apply in 2027," stated Dede Yusuf during a meeting between Commission II, the Minister of Home Affairs, and regional heads. He emphasized that regional governments should prioritize personnel spending, particularly for PPPK.

This flexibility allows regional governments to spend more on personnel while their financial conditions stabilize. The agreement follows difficulties many regions faced in complying with Law Number 1 of 2022 concerning Financial Relations between the Central and Regional Governments (HKPD). Article 146 of this law limits regional government personnel spending to no more than 30% of the regional budget, with full effect from January 2027.

However, a mapping by the Ministry of Home Affairs revealed that a significant majority of regions, approximately 87.7% (479 out of 546), still have personnel spending above this threshold. This situation had previously caused controversy, with some regional governments considering mass layoffs of contract workers to cut expenses. For instance, the governor of East Nusa Tenggara had planned to dismiss 9,000 PPPK, and the governor of West Sulawesi was prepared to lay off around 2,000, citing the upcoming spending limit.