Jakarta. The hotly debated mandatory housing savings policy Tapera is expected to cut hundreds of thousands of jobs, according to economic think-tank Celios.

President Joko “Jokowi” Widodo recently inked a government regulation on the national housing scheme. This regulation mandates a 3 percent salary deduction from state and private employees, as well as freelancers. Employers will bear 0.5 percent of the costs, while employees have to pay the remaining 2.5 percent. This scheme immediately sparked concerns. 

A recent report by Celios said that the Tapera scheme provided more benefits to the government compared to the employers and their employees. As a case in point, the scheme is expected to cut a whopping 466,830 jobs as companies consume and invest less.

“This shows that the Tapera policy has a negative impact on employment because companies will consume and invest less. We are aware that [this policy] will slightly increase the net state revenue by Rp 20 billion [approximately $1.2 million], but these gains are still extremely small compared to the economic losses in other sectors,” Celios’s executive director Bhima Yudhistira said.

According to Celios’s director for economic affairs Nailul Huda, estimates show that the Tapera policy will cause a decline worth Rp 1.21 trillion in Indonesia’s gross domestic product (GDP). 

“[Our estimates] show that the businesses’ surpluses will suffer a Rp 1.03 trillion decline, and this will affect how much the employees earn. With a contraction of Rp 200 billion, this means that the people’s purchasing power is weakening and lowering the demand across many business sectors,” Huda said.

The government is banking on the policy to address the national housing backlog. However, Huda said that the Tapera would likely not be enough to tackle the problem. Huda added: “There was a time when our housing backlog dropped, but that was because young people were not into staying in the same place. They prefer moving from one house to another.”

Celios also gave some recommendations on what the government should consider to improve the Tapera policy. For instance, it should only be the civil servants, police, and military officers that are subject to the mandatory housing saving scheme. The Tapera policy should be optional for formal workers and freelancers. Celios called for transparency in the fund management. The Anti-Corruption Commission (KPK) and the Supreme Audit Agency (BPK) should be actively involved for better governance.

The think-tank also said that it would be best for the government to allocate its public spending on providing homes to the people rather than megaprojects with small impact such as building an entirely new capital from scratch, Celios said.