Thousands of government employees under work agreements (PPPK) are at risk of dismissal due to a regulation that caps personnel expenditure at 30 percent of Regional Revenue and Expenditure Budgets (APBD). Several regions, including the Provincial Governments of East Nusa Tenggara, Bangka Belitung, and West Sulawesi, are reportedly planning to lay off thousands of PPPK employees because personnel spending has exceeded budget capacity.
In response to these plans, a Public Policy and Management lecturer at Universitas Gadjah Mada, Dr. Agustinus Subarsono, assessed that the potential dismissal of thousands of PPPK employees in regional governments indicates a lack of prudence by authorities, particularly personnel agencies, in their recruitment.
“At the macro level, this condition reflects the absence of comprehensive and well-prepared personnel policies, as they are not based on regional financial capacity,” he said on Monday (March 30).
According to Subarsono, provincial governments have known from the outset that PPPK salaries are funded through the APBD. Moreover, the five-year contract period should have been used by local governments as an opportunity for learning and evaluation. In line with PPPK regulations, he argued that if regional financial capacity is fluctuating and unstable, employment contracts could be shortened to two or three years.
Subarsono also highlighted that any reduction in PPPK numbers, for example, from 12,000 to 3,000 employees, requires clear mechanisms and criteria to determine who should be retained or dismissed. This, he emphasized, is closely linked to good governance principles, including the rule of law, transparency, and accountability.
He further stressed that local governments are bound by a limit on personnel expenditure, which must not exceed 30 percent of the APBD. If local governments insist on exceeding this threshold, Subarsono warned, the consequence will be reduced funding for other sectors such as education, healthcare, public works, and agriculture. Ultimately, he noted, such conditions would harm the broader public interest.
As an alternative solution, Subarsono suggested that local governments could seek additional civil service positions from the central government. However, he acknowledged that such efforts would require lobbying and would not be easy, given current national economic pressures. He added that another viable approach is to increase Regional Original Revenue (PAD) through stronger efforts by local officials, rather than relying solely on transfers from the central government.
Furthermore, Subarsono warned that if the dismissal plans are realized, the impacts could extend across various aspects of society.
“If 9,000 PPPK employees are indeed dismissed, it will trigger social, economic, political, and legal consequences,” he said.
He explained that socially, such a situation could increase unemployment and potentially lead to higher crime rates. Economically, it may weaken purchasing power and slow regional economic growth. Politically, unemployment could be exploited by opportunistic actors to disrupt public order. From a legal perspective, PPPK employees dismissed before the end of their contracts could pursue legal action through the State Administrative Court (PTUN).
To minimize these potential impacts, Subarsono recommended that local governments open dialogue with affected employees. He also suggested that authorities provide forms of appreciation, such as goodwill compensation and certificates, to recognize their service during their tenure as PPPK employees.
Regarding the possibility of support from the central government, Subarsono predicted that such assistance is unlikely. He argued that the central government is currently facing fiscal constraints due to budget efficiency measures and the need to fund priority programs. Moreover, providing assistance to only one region while excluding others could set a negative precedent in governance.
“Without clear and fair criteria, it could create political tensions that are unfavorable for the central government,” he concluded.
More broadly, Subarsono viewed this case as a reflection of deeper structural issues, akin to the tip of the iceberg, in the relationship between central and regional governments. He noted that the PPPK cases in East Nusa Tenggara, West Sulawesi, and Bangka Belitung could serve as an entry point for evaluating macro-level policies on regional governance. Under Law No. 32 of 2004 on Regional Government, he explained, the central government retains authority over six key areas: foreign affairs, defense, security, judiciary, national monetary and fiscal policy, and religion. All other affairs are delegated to regional governments.
On the other hand, regional financial capacity, which relies heavily on PAD, is often limited, making it difficult for regions to implement development across sectors. Therefore, Subarsono recommended adopting an asymmetric decentralization approach in regional governance.
He argued that the number and types of responsibilities assigned to regions should not be uniform but adjusted to each region’s financial capacity. Regions with stronger fiscal capacity could be given broader authority, while those with lower capacity should have more limited responsibilities.
“It is therefore necessary to conduct research or academic studies to map the levels of regional financial capacity,” he concluded.
Author: Hanifah
Editor: Gusti Grehenson
Post-editor: Zabrina Kumara
Photo: Freepik