The Indonesian administrative landscape is currently facing a significant fiscal challenge as regional governments struggle to fulfill the salary obligations for Government Employees with Work Agreements, known locally as PPPK. In response to this mounting pressure, Professor Agus Pramusinto, a senior academic from the Department of Management and Public Policy at the Faculty of Social and Political Sciences, Gadjah Mada University (UGM), has put forward a bold proposal. He suggests that the central government should implement a strategic restructuring of the state apparatus expenditure, specifically by cutting the allowances of high-ranking officials and eliminating double-income streams for those holding multiple positions in state-owned enterprises.
Professor Pramusinto’s recommendation is rooted in the necessity of prioritizing essential public services. He argues that the budget for the state apparatus must be recalibrated to ensure that those on the front lines of service delivery—specifically teachers and healthcare workers—are adequately compensated. According to the professor, the current allocation of funds is disproportionately skewed toward high-level bureaucracy, leaving regional budgets (APBD) strained and unable to meet the recruitment targets mandated by the central government.
The Proposal: Targeted Cuts for Bureaucratic Efficiency
The core of Professor Pramusinto’s proposal involves a 20 percent reduction in the performance allowances (tunjangan kinerja) for Echelon I and Echelon II officials. These positions represent the highest tiers of the Indonesian civil service hierarchy, often involving director generals, secretaries-general, and heads of regional agencies. Beyond these cuts, Pramusinto has taken aim at the practice of "rangkap jabatan" or dual-office holding, where high-ranking civil servants also serve as commissioners in State-Owned Enterprises (BUMN).
"Imagine a situation where a commissioner receives between Rp200 million to Rp300 million per month, and in some cases, they even receive annual bonuses or ‘tantiem’ worth tens of billions of rupiah," Pramusinto stated in a public release on Sunday, July 19, 2026. He argued that if these excessive funds were redirected toward the PPPK payroll, the government could stabilize the employment status of thousands of essential workers. Furthermore, he suggested that the allowances of members of the House of Representatives (DPR) should also be subject to review and potential reduction to contribute to the national effort of securing PPPK salaries.
This proposal comes at a time when the "Tenaga Honorer" (honorary worker) system is being phased out in favor of the PPPK scheme, a transition that has placed an unprecedented financial burden on local administrations. While the central government sets the recruitment quotas, the actual disbursement of salaries often falls upon the regional governments, many of which lack the fiscal capacity to absorb thousands of new permanent-contract employees.
Background: The PPPK Recruitment Crisis and Fiscal Mismatch
The crisis surrounding PPPK salaries is not a new phenomenon but has reached a breaking point in 2026. The shift began in earnest with the enactment of Government Regulation (PP) No. 49 of 2018, which mandated that the government resolve the status of honorary workers by late 2023. This deadline was later adjusted under the new ASN Law (Law No. 20 of 2023), which sets a final target for the transition of all non-ASN workers into the formal system by December 2024.
The recruitment drive for one million teachers and hundreds of thousands of healthcare workers was hailed as a landmark policy to improve the welfare of public servants. However, the implementation has been plagued by a "fiscal gap." The central government provides funding through the General Allocation Fund (DAU), but regional leaders frequently claim that these funds are either insufficient or already earmarked for other mandatory spending.
Professor Pramusinto highlighted that this disconnect reflects a lack of synchronization between national policy-making and regional fiscal reality. When a central mandate is issued without a corresponding and sustainable funding mechanism, the burden falls on local departments, often leading to delayed payments, reduced take-home pay for existing staff, or a total halt in recruitment despite a desperate need for more teachers and nurses in rural areas.
Chronology of the Salary Dispute
The tension regarding PPPK funding has escalated over the last few years through several key milestones:
- Late 2023: As the initial deadline for honorary worker elimination approached, several regions reported they could only afford to hire 10-20% of their allocated PPPK quota.
- Early 2024: The Ministry of Finance and the Ministry of Administrative and Bureaucratic Reform (PANRB) issued a joint circular clarifying that DAU funds were "earmarked" specifically for PPPK salaries. However, many regional heads (Bupati and Walikota) argued that the calculation did not account for the rising cost of local infrastructure and social assistance.
- July 2026: Reports emerged of some regions proposing a 30 percent cut to the salaries of existing civil servants (PNS) to cover the shortfall for PPPK. This sparked an immediate backlash from civil service unions and caught the attention of the DPR.
- Current Status: The DPR has intervened, calling the 30 percent salary cut "too extreme" and urging the government to find alternative funding sources that do not penalize the existing workforce.
Supporting Data: The Cost of Bureaucracy vs. Public Service
The disparity in income within the Indonesian state apparatus is a central point of Professor Pramusinto’s critique. While a junior PPPK teacher might earn a base salary and allowance totaling roughly Rp3.5 million to Rp5 million per month, the "tunjangan kinerja" for top-tier officials in certain ministries can exceed Rp100 million per month, excluding their base salary and other benefits.
Data from the Ministry of State-Owned Enterprises indicates that the remuneration for commissioners in "Tier 1" BUMN companies is indeed astronomical compared to the average public sector wage. For instance, a commissioner at a major state bank or energy firm can earn hundreds of millions in monthly honorariums. If even 10% of the total commissioner remuneration budget across all BUMNs were redirected, it is estimated it could cover the salaries of over 50,000 PPPK teachers for an entire year.
Furthermore, the "Belanja Pegawai" (Personnel Spending) in many regional budgets already accounts for 35% to 45% of total expenditure. Adding thousands of PPPK staff without reducing costs elsewhere threatens to bankrupt smaller municipalities or force them to abandon critical infrastructure projects.
Official Responses and Parliamentary Stance
The House of Representatives (DPR) has expressed concern over the "chaotic" management of PPPK payrolls. Members of Commission II, which oversees home affairs and the state apparatus, have noted that the issue stems from a lack of transparency in how DAU funds are calculated and distributed.
Responding to the rumors of cutting existing PNS salaries, the DPR has stated that such a move would be counterproductive and would damage the morale of the civil service. Instead, they have called for a "middle ground" that involves a more flexible budget reallocation from the central government. However, the proposal from Professor Pramusinto to cut the top-heavy allowances of Echelon officials and commissioners provides a specific, albeit politically sensitive, target for that reallocation.
The Ministry of Administrative and Bureaucratic Reform has maintained that the PPPK program is essential for the professionalization of the bureaucracy. They argue that by bringing honorary workers into the formal ASN system, the government can better regulate quality and provide long-term career paths. Nevertheless, they acknowledge that the "budgetary synchronization" remains the biggest hurdle to full implementation.
Implications and Analysis of the Proposed Restructuring
Professor Pramusinto’s proposal to cut Echelon allowances and eliminate double honorariums for commissioners is more than just a fiscal fix; it is a call for "Social Justice in the Bureaucracy."
From a fiscal perspective, cutting 20 percent of Echelon I and II allowances nationwide would save the state trillions of rupiah. These funds are currently concentrated among a few thousand individuals. Redirecting them to the PPPK pool would distribute that wealth among hundreds of thousands of families, likely providing a larger stimulus to the local economy.
However, the political implications are significant. High-ranking officials and those in "double-hatted" commissioner roles often wield considerable influence. Any attempt to reduce their income is likely to face stiff internal resistance within the ministries. Critics of the proposal might argue that high salaries are necessary to attract top talent to the bureaucracy and to prevent corruption. Pramusinto counters this by suggesting that the current levels have surpassed "competitive" and moved into "excessive," especially when the state is struggling to pay for basic education and health services.
If the government fails to address this salary gap, the implications for public service are dire. We could see:
- Mass Resignations: PPPK workers, frustrated by unpaid or underpaid salaries, may leave the public sector for the private market.
- Declining Education Quality: Teachers preoccupied with financial instability are less effective in the classroom.
- Legal Challenges: Regional governments could face lawsuits from employees for breach of contract.
Conclusion: A Path Toward Sustainable Governance
The proposal from UGM’s Professor Agus Pramusinto serves as a wake-up call for the Indonesian government. It highlights a fundamental truth: a nation cannot expand its public service workforce without first ensuring its fiscal house is in order. By suggesting cuts to the highest levels of the bureaucracy, Pramusinto is advocating for a more equitable distribution of state resources.
As the 2026 fiscal year progresses, the central government must decide whether to continue with the status quo—which leaves regional governments in a state of perpetual financial anxiety—atau to undertake the difficult work of structural budget reform. Whether the government adopts the 20 percent cut for top officials or finds another way to bridge the gap, the resolution of the PPPK salary crisis will be a defining moment for the administration’s commitment to public service and bureaucratic reform. The eyes of millions of teachers, health workers, and civil servants remain fixed on Jakarta, waiting for a sustainable solution to a crisis that threatens the very foundation of Indonesia’s public service delivery.
