The government’s plan to encourage a one-day-per-week work-from-home (WFH) policy emerges under unusual circumstances: global geopolitical tensions that may disrupt the world’s oil supply. The conflict involving Iran, the United States, and Israel increases the risk of rising oil prices, widening Indonesia’s energy trade deficit, and putting more pressure on the state budget due to higher energy subsidies. In this context, reducing fuel consumption becomes a policy priority.
At first glance, WFH appears to be a quick and relatively low-cost solution. The logic is simple: if millions of workers do not commute daily, fuel consumption, especially gasoline and diesel for transportation, should decline significantly. Some policy simulations even estimate that national fuel consumption could fall by 10–20% under a partial WFH scheme. In fiscal terms, this could reduce energy subsidy spending by tens of trillions of rupiah annually and lower the need for oil imports.
However, from a macroeconomic perspective, policies that seem efficient often carry less visible consequences. WFH is not just a change in work arrangements; it is an intervention that affects economic mobility and, ultimately, national consumption patterns.
From a fiscal standpoint, the benefits are relatively clear. Energy subsidies are one of the largest expenditure items in Indonesia’s state budget, often exceeding Rp300 trillion depending on global oil prices. Reducing domestic fuel consumption could ease this burden.
In Keynesian economic theory, lower subsidy spending creates fiscal space that can be redirected toward more productive sectors such as infrastructure, education, or social protection. In theory, this improves the quality of government spending. However, there is also a potential downside: reduced government revenue. Consumption taxes, especially value-added tax (VAT), depend heavily on economic activity tied to mobility. When WFH reduces out-of-home activities, spending in transportation, retail, and informal services declines. As a result, savings on the spending side may be offset by weaker tax revenues.
This creates fiscal ambiguity: reducing subsidies does not automatically improve the budget balance if the tax base also shrinks.
Household Consumption: A Shift, Not Growth
Indonesia’s economy relies heavily on household consumption, which contributes more than 50% of GDP. Any policy that changes consumption patterns will directly affect economic growth.
WFH does not necessarily reduce total consumption, but it changes how people spend. Spending on fuel, transportation, dining out, and impulse purchases in shopping centers tends to decline. On the other hand, spending on household electricity, internet services, and digital consumption increases.
The COVID-19 pandemic provides a useful reference. In 2020, when WFH was widely implemented alongside mobility restrictions, Indonesia’s economy contracted by -2.07%. More than 80% of businesses reported declining revenues, especially in informal sectors and location-based small enterprises. However, that situation involved a full-scale health crisis and strict restrictions. A one-day-per-week WFH policy would have a more moderate effect. Consumption would not collapse, but it would be redistributed across sectors.
The problem is that this redistribution is not neutral. Digital sectors and large firms tend to benefit, while small businesses, such as food stalls, informal transport providers, and street vendors, face reduced demand. From a welfare economics perspective, this may increase inequality.
From an energy standpoint, WFH does bring clear benefits. The transportation sector accounts for a large share of national fuel consumption, particularly in urban areas. Reducing commuting frequency, even by one day per week, can generate significant aggregate savings.
However, these savings are not entirely “clean.” There are substitution effects to consider. As activities shift to the home, electricity consumption rises. In addition, the growth of delivery services and e-commerce logistics increases activity in other types of transportation. In other words, energy consumption shifts from fuel to electricity and logistics. Overall savings still exist, but they are smaller than the initial assumptions that focus only on reduced commuting.
Unavoidable Frictions
A key question is how WFH affects productivity and economic growth. Neoclassical growth theory emphasizes the importance of total factor productivity. If WFH reduces efficiency in coordination, collaboration, or innovation, it may slow medium-term growth.
Global experience shows mixed results. Digital-based jobs are generally unaffected and sometimes even become more efficient. In contrast, sectors that rely on direct interaction often experience productivity declines.
In addition, agglomeration theory highlights the importance of geographic proximity in improving efficiency and innovation. Major cities such as Jakarta, Surabaya, and Bandung thrive because of concentrated economic activity. Even partial WFH may gradually reduce this agglomeration effect.
In the short term, the impact may be small. However, if such policies are expanded or become permanent, the potential decline in economic efficiency cannot be ignored.
The key question is not whether WFH can reduce fuel consumption. The answer is relatively clear: yes, to a certain extent. The more important question is whether these savings are worth the economic and social costs.
This is where policy quality is truly tested, not by its intention, but by its ability to balance efficiency, equity, and long-term sustainability.
