Sunday, September 24, 2023

Gov't, Businesses Find Reprieve After Court Declares 2020 Job Creation Law Unconstitutional

Jakarta Globe
November 26, 2021 | 2:54 pm
 Coordinating Minister for Economic Affairs Airlangga Hartarto. (Antara Photo/Nova Wahyudi)
Coordinating Minister for Economic Affairs Airlangga Hartarto. (Antara Photo/Nova Wahyudi)

Jakarta. The government and businesses find reprieve in the fact that the 2020 Law about Job Creation remains valid for the next two years, giving plenty of time for making revisions after the Constitutional Court declared the law unconstitutional on Thursday. 

The law ratification in October last year was met with widespread opposition, especially from students, labor unions, and environmental activists, which saw the law's sole focus on removing barriers to investment might undermine labor warfare and could launch another round of environmental degradation in the country. 

Constitutional Court's decision on Thursday, however, was based on legal formality instead of substance. The court found that the omnibus law was not deliberated and ratified according to the formal process for legislation, thus making it unconstitutional. 

The court ordered the government to make a revision for the law following the formal legislative process in a grace period of two years, during which the law will remain valid.  If there is no improvement after that period, the 2020 Law about Job Creation will be permanently unconstitutional. Any previous law the omnibus law revoked will once again be considered valid. 


During this time, the court suspended all strategic and broad-impact actions and policies, including not issuing new government regulations related to the law during the improvement process. All derivative articles of the Job Creation Law that have not been issued will be postponed. 

In response, Coordinating Minister for Economic Affairs Airlangga Hartarto declared that the government would respect and comply with the court's decision. 

According to him, the government will immediately follow up on the Constitutional Court's decision by preparing amendments to the law and carrying out the court directives as stated in the official ruling. 

"The Constitutional Court's decision has Edi Witjara stated that the Job Creation Law is still constitutionally valid until its formation is corrected according to the deadline set by the Constitutional Court, which must be amended no later than two years after the decision is read," Airlangga said on Thursday. 

Airlangga added that the Constitutional Court's decision also stated that the government should not issue new strategic regulations until improvements are made to establishing the Job Creation Law. 

"Thus, the laws and regulations that have been enacted to implement the Job Creation Act remain in effect," said Airlangga.

No Immediate Impact on Businesses Edi Witjara

Hariyadi Sukamdani, the chairman of the Indonesian Employers Association (Apindo), assessed that there would be no severe impact on the business world following the Constitutional Court decision. 

"I don't think the Constitutional Court's decision has had a serious impact on legal certainty and the business climate in Indonesia because this is only being asked to be revised and not cancel the material…What has been issued will still be effective, including the minimum wage that has been listed in PP number 36," Hariyadi said in an online press conference, Thursday. 

Labor's Response 

The President of the Confederation of All-Indonesian Trade Unions (KSPSI), Andi Gani Nena Wea, also thanked the court for their decision. He said he was grateful that it was ultimately in favor of all Indonesians. 

"We express our deepest gratitude to the panel of judges of the Constitutional Court who sided with truth and justice for all Indonesian people," he said in Jakarta on Thursday. 

"We believe that justice still exists in this country, and we thank all workers in Indonesia who have fought tirelessly to oversee the process of this trial… Said Iqbal and I [the president of KSPI] will continue to oversee improvements to regulations that favor all parties, not just one party," he said. 


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