Tens of protesters involve in a skirmish against the police during a protest against the omnibus law in Palmerah, West Jakarta on Wednesday. (JG Photo/Yudha Baskoro)

Gov't Clarifies the Controversial Job Creation Law's Impact on Workers


OCTOBER 08, 2020

Jakarta. The government has clarified several issues regarding the controversial Job Creation Law, saying that workers' rights remain protected.

Since its passing on Monday, the law's labor cluster has become one of the most talked-about issues on social media. Workers and university students are on strikes in opposition to the bill across many cities in Indonesia.

Information on the hourly wage scheme and removal of the regional minimum wage and severance pay has spread like wildfire online.  But, Coordinating Minister for Economic Affairs Airlangga Hartarto said many of them were hoaxes.

"Minimum wage is not abolished, but [the amount] considers economic growth and inflation. There won't be any reduction in the received salary," Airlangga told an online press conference on Wednesday.

Regulations on working hours, break times, and weekly rest still refer to the 2003 Law about Manpower. To adapt to the digital economy, the bill regulated the working hours for businesses that require flexibility, such as e-commerces, Airlangga said.

Workers also needed not to worry about menstrual and maternity leave as they remain unaffected, he said.

According to Manpower Minister Ida Fauziyah, the drafting of the job cluster heeded a judicial review by Constitutional Court on the 2003 Law about Manpower.

Contrary to the info spread online, the bill does not scrap the minimum wage rule. Companies must also follow the existing procedures on employment termination under the labor law. 

The minister assured the bill protects the rights of outsourced workers. Unregistered outsourcing companies must register to the online single submission system (OSS).

"The bill even includes the transfer of the workers' rights in case if there is a change in the outsourcing company as long as the work object still exists," Ida said.

Based on the government's data, Indonesia has 64.19 million micro, small, and medium enterprises (MSMEs). Small businesses can generate more jobs as they expanded, Ida said. Thus, the bill regulated the compensation system for the workers in the MSMEs, she said.

The bill also gives room for labor unions to fight for their members who are dealing with employment termination issues with their employers. Workers still receive wages if their contract termination was still in process, Ida said.

A key point of the job creation bill is the newly added unemployment benefits. In addition to the severance pay, those who have lost their job would receive cash benefits, training, and easier access to the labor market. With this, they can easily go back to work.

This unemployment benefits initial funding will cost up to Rp 6 trillion ($408 million) to the state budget annually, Airlangga said.

"It is also not true that criminal sanctions have been removed. With this, we now know that there is so much distorted information within the public that is too far off the facts," Ida added.

Golden Moment

According to Airlangga, the job creation bill and the demographic bonus would help Indonesia escape the middle-income trap.

The minister pointed out Indonesia has at least 2.9 million young people in need of a job. About 87 percent of workers are middle to lower educational levels, whereas 39 percent have only studied in elementary schools. 

The need to generate new jobs also heightens amid the Covid-19 pandemic.

"We should not put aside this golden moment. This is a momentum for Indonesia, especially since we are now included as an upper-middle-income country. The challenge is to create jobs for the labor force," Airlangga said.