Jakarta. President Joko “Jokowi” Widodo on Friday inked an emergency regulation on job creation law, about a year after the Constitutional Court declared the so-called omnibus law ‘conditionally unconstitutional’.

According to Chief Economic Minister Airlangga, launching the presidential regulation in lieu of the law on job creation was necessary to guard against the grim global economic outlook.

“There is an urgent need [for the emergency regulation]. The government needs to speed up anticipatory measures for global conditions, including those related to the economy. We are facing a global recession, rising inflation, and stagflation threats,” Airlangga told reporters on Friday.

More countries are lining up to receive assistance from the International Monetary Fund (IMF), thus painting a grim picture of the global economy. Not to mention the Russia-Ukraine war, coupled with the food and energy crises, as well as climate change.

The Constitutional Court in Nov. 2021 declared the controversial Job Creation Law as “conditionally unconstitutional” because its formation did not follow the mandatory procedures. The court gave the government two years to amend the law following the formal legislative process. But if the government did not do as told past the deadline, the legislation would be deemed “permanently unconstitutional”. 

"Constitutionally, this Perppu replaces the Job Creation law," Airlangga said.

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According to Airlangga, the court’s decision on the law has influenced the behavior of businesses, both at home and abroad. The government has set the 2023 state budget deficit to below 3 percent of the gross domestic product (GDP), meaning it would have to rely on investment.

Indonesia aims to attract Rp 1,200 trillion ($77.1 million) in total investment this year. The Southeast Asian country has raised the target to Rp 1,400 trillion in 2023 — something that Airlangga said to be “challenging” because the government usually aimed for around Rp 900 trillion.

“Businesses are in ‘wait and see’ mode for legal uncertainty and the developments of the job creation law,” Airlangga said.

President Jokowi has already informed House Speaker Puan Maharani concerning the latest development, according to Airlangga. 

The minister said that the emergency regulation has accommodated the labor union’s demands, particularly on outsourcing.

Previously, companies could only outsource certain types of work, namely cleaning services, worker catering services, security guard, mining and oil industry support, as well as employee transportation. But then the Omnibus Law deleted the legislation on what type of work could be outsourced, sparking labor unions' fury.

“The labor union demanded that outsourcing is only limited to certain sectors, and so we did that. Previously, outsourcing was open for all sectors,” Airlangga said.

"We will include the [applicable] sectors [for outsourcing] on a government regulation," he said