Indef Predicts WFH in Jakarta May Reduce Economic Growth by 0.73%

TEMPO.CO, Jakarta - An economist from the Institute for Development of Economics and Finance (Indef), Ahmad Heri Firdaus, projected the economic impact of implementing the work from home or WFH policy in Jakarta as one of the efforts to reduce air pollution.

“Enforcing WFH in Jakarta will result in a decline in economic growth. It will reduce the growth by 0.7 percent,” Heri said at the discussion forum of Continuum Indef held virtually on Tuesday, August 22, 2023.

He explained that the capital city's gross domestic product (GDP) would drop by 0.73 percent, employment absorption by 1.76 percent, and real wages by 1.73 percent due to remote working.

“In West Java, it (the GDP) could increase slightly,” Heri added. In detail, the province’s GDP could increase by 0.13 percent, employment absorption by 0.38 percent, and real wages by 0.31 percent.

Banten Province was also expected to experience a slight increase, with GDP rising by 0.8 percent, employment absorption by 0.16 percent, and real wages by 0.11 percent. Meanwhile, national GDP was predicted to decrease by 0.02 percent, employment absorption by 0.06 percent, and real wages by 0.13 percent.

“Jakarta is the national barometer so it will affect the national economic growth,” said Heri.

He reiterated that public spending in big cities, especially Jakarta, is for transportation. “Let’s say that 10 percent of the total spending is on transportation. If it’s removed, the employment absorption will be corrected down, and wages will also decline,” he said, adding that it is because people are less mobile.

Moreover, he continued, office canteens will also be affected by the WFH policy, leading to falling wages.

AMELIA RAHIMA SARI

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