Policy Shift from Electricity Subsidy to Wage Support for Greater Aid Effectiveness and EfficiencyBy: Cahyo Widjaya
The government has cancelled the planned 50% electricity tariff discount for the June–July 2025 period. Rather than a step backward, this decision reflects a policy repositioning effort aimed at ensuring that economic stimulus truly reaches its intended targets and delivers maximum impact in a timely manner.
According to the Ministry of Finance, the electricity discount scheme was deemed less effective in boosting public purchasing power. Therefore, the government has opted to redirect the funds to the Wage Subsidy Assistance (BSU) program, which directly targets active low-income workers.
The original electricity subsidy program was expected to reach over 79 million household customers, particularly those using electricity capacities of 1,300 VA or below. However, its implementation was hindered by budgeting obstacles that rendered timely execution unfeasible. Minister of Finance Sri Mulyani Indrawati emphasized the importance of timely policy delivery. Without guaranteed distribution within the planned timeframe, the intended economic stimulus effect would have been lost.
Rather than persisting with a suboptimal policy, the government chose a more precise and targeted approach. Funds originally allocated for electricity subsidies were redirected to increase the BSU allocation, a program whose effectiveness was proven during the COVID-19 pandemic in both Indonesia and globally.
With cleaner, more accurate data from the Workers Social Security Agency (BPJS Ketenagakerjaan), the government is now directing assistance to approximately 17.3 million workers earning no more than IDR 3.5 million per month. This marks a shift towards a data-driven and fiscally efficient budget allocation strategy.
Sri Mulyani stated that BSU is not only more accurately targeted but also has a stronger economic multiplier effect than electricity subsidies. The government plans to disburse IDR 10.72 trillion, with each eligible worker — including teachers under the Ministry of Education and the Ministry of Religious Affairs — receiving IDR 300,000 per month for two months.
Minister of Manpower Yassierli confirmed that the BSU is currently in the final stages of recipient data validation. The Ministry is working with BPJS Ketenagakerjaan to ensure that only active participants with qualifying incomes receive the assistance. Civil servants, military, and police personnel are excluded from the program, which prioritizes workers not currently benefiting from other programs like the Family Hope Program (PKH).
Ministerial Regulation No. 5 of 2025 provides the legal basis for BSU disbursement. The regulation outlines the criteria and mechanisms for disbursement, which will be done in a lump sum over the two-month period. This simplification aims to accelerate aid distribution and minimize delays, which have historically plagued social assistance programs.
Public policy expert Dr. Trubus Rahadiansah from Trisakti University regards the move as a concrete response to the needs of the lower-middle class, a group often excluded from regular social assistance programs. According to him, this group faces a dual burden: not poor enough to qualify for conventional aid yet still vulnerable to inflation and rising living costs.
Trubus highlighted that BSU offers significant psychological and economic benefits. Though the nominal amount may seem modest, it can ease household burdens — from basic necessities to education expenses. More importantly, the validity of recipient data helps close long-standing loopholes in social assistance distribution.
From a public policy perspective, the government’s decision represents a shift from populist gestures to pragmatic solutions. Impact-oriented policies like BSU signal that the government is taking a more focused and results-driven approach. Instead of spreading assistance thinly and ineffectively, BSU targets strategic groups with concentrated intervention.
Replacing electricity subsidies with BSU is not merely a budgeting decision, but a strategic policy shift. It reflects the government’s intention to move away from broad-based consumption subsidies, which often have limited economic impact, toward interventions at critical pressure points to preserve purchasing power, drive household consumption, and support socio-economic stability amid global uncertainty.
The IDR 24.44 trillion June–July 2025 stimulus package, which includes the BSU, signals the government’s intent to strengthen the social safety net in a more calculated and measurable way. This policy is not only timely but also demonstrates both execution readiness and the political will to act decisively.
When public policy tangibly impacts the lives of working people, the government’s commitment is no longer mere rhetoric. The shift from electricity subsidies to BSU is a critical move showing that the state is present — actively, thoughtfully, and strategically — in addressing the needs of its citizens.
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People’s Economy Researcher – Institute for Prosperous Economics
