Government Subsidizes Employee’s Salary Due to Fuel Price Increase

With the recent increases of fuel prices that impact many sectors such as groceries, the Government through the Minister of Manpower issued Minister of Manpower Regulation No. 10 of 2022 dated September 5, 2022 on the Guideline for Providing Government Assistance in the Form of Salary Subsidies for Employees (“Regulation 10”).  Regulation 10 was enacted just two days after the increase of fuel prices.

Previously, the Government introduced the Government Assistance in the form of salary subsidies for employees through Minister of Manpower Regulation No. 14 of 2020 dated August 14, 2020 on Guidelines for Providing Government Assistance in the Form of Salary Subsidies for Employees in Handling the Impact of Corona Virus Disease 2019 (Covid-19) and its amendments (collectively, “Regulation 14”).  In the current circumstances, Regulation 14 is deemed no longer relevant. Thus, a new guideline is needed to address the current issue of the society. Regulation 10 replaces Regulation 14.

Regulation 10 intends to maintain the purchasing power of employees in meeting their daily needs due to the fuel price increases.

We set out below the key provisions of Regulation 10.

  • Requirements to Receive the Government Assistance

Employees who are eligible to receive the Government Assistance must (i) be citizens of Indonesia, (ii) active members of the Manpower BPJS (Social Security Program or Badan Penyelenggara Jaminan Sosial), and (iii) receive a monthly salary of up to Rp3,500,000.

The salary shall be the latest salary that is reported by the employers to the Manpower BPJS and shall consist of the basic salary and fixed allowances. In the event that the regional minimum salary is higher than Rp3,500,000, the employees shall be eligible for the Government Assistance as long as their salary is less than or equal to regional minimum salary. If the region does not stipulate any minimum salary (such as Administrative City of Jakarta), then the provincial minimum salary shall apply and the employees whose salary is less than or equal to the provincial minimum salary shall be eligible for the Government Assistance.

It is also important to note that the Government Assistance is prioritized for employees who have not received the pre-employment card program (program kartu prakerja), Indonesian conditional cash transfer program (program keluarga harapan), or micro business productive assistance program (program bantuan produktif usaha mikro). The Government Assictance shall not be applicable for state officials or the Indonesian National Armed Forced/Indonesian National Police.

  • Amount and Disbursement of the Government Assistance

The Government Assistance is a one time payment in the amount of Rp600,000 and will be paid at once. Before disbursing the Government Assistance, the Manpower BPJS will verify and validate the registered employees data. Should an employer provide incorrect data for the verification and validation of the Manpower BPJS, the  employer will be imposed with a sanction in accordance with the laws and regulations.

The disbursement of the Government Assistance will be conducted by the State Treasury Service Office through the State-owned Banks (e.g., Bank Mandiri, Bank Negara Indonesia, Bank Syariah Indonesia) and PT Pos Indonesia (the Indonesian Post Office).

September 8, 2022

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Thomas P. Wijaya (twijaya@aksetlaw.com), or Ammarsyarif Ghazyandra Goenawan (agoenawan@aksetlaw.com) for further information.

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