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Fiscal and Monetary Policies: Their Impact on the Human Resources Budget

In: Macroeconomics for HR Managers: Managing Talent in Market Dynamics

Author

Listed:
  • Amleni, Wilfridus

    (University of Timor)

Abstract

This chapter analyzes the influence of government macroeconomic policies, specifically fiscal policy (taxation and government spending) and monetary policy (interest rates and liquidity control), on the strategic decisions of Human Resources (HR) departments and the financial well-being of employees. The discussion begins with an analysis of the mechanism of Income Tax Article 21 (PPh 21) in Indonesia under the Harmonization of Tax Regulations Law (UU HPP). Numerical simulations in this chapter demonstrate how changes in tax rates and the threshold for non-taxable income (PTKP) affect employees' take-home pay. Subsequently, the chapter examines the impact of changes in Bank Indonesia's interest rates on long-term compensation instruments, such as pension funds and severance pay investments, using the theoretical framework of monetary policy transmission through financial markets. This chapter also presents mathematical evidence regarding the influence of interest rate fluctuations on the discount rate for pension and severance liabilities. Finally, the chapter explores the strategic role of HR as a crisis manager in responding to economic shocks, integrating crisis management literature with case studies from the 2008 financial crisis and the COVID-19 pandemic.

Suggested Citation

Handle: RePEc:lgn:lgncvl:702809
DOI: 10.66452/702809
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More about this item

JEL classification:

  • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
  • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
  • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
  • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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