Ida Fauziyah: Layoff Should be the Last Option

KOMPAS/ALIF ICHWAN

Minister of Manpower Ida Fauziyah gave a speech at the Coordination Meeting of the Heads of Provincial Manpower Offices in Indonesia on the Job Creation Bill in Jakarta, Thursday (20/2/2020).

Earlier this year, along with the easing of community activity restrictions, the Indonesian economy had begun to show signs of economic recovery. The wheels of the economy and the business world had started to move again. The country’s labor condition had also gradually improved. Statistics Indonesia (BPS) reported that as of February 2021, the number of working age population affected by the pandemic had declined compared to that in August 2020.

However, at the end of the second quarter of 2021, as a consequence of the easing of the social restrictions, the number of new Covid-19 cases rose again. The implementation of emergency public activity restrictions (PPKM Darurat), which is really needed to halt the spike in new Covid-19 cases, hurts the economy again.

The employment sector is hit again. A number of companies affected by the emergency measures have warned that they may have to lay off some of their workers in order to survive. In the midst of these challenges, the government has repeatedly called the business sector to avoid layoffs. What concrete steps will be taken by the government?

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In an interview with Kompas on Tuesday (6/7/2021), Manpower Minister Ida Fauziyah highlighted the challenges faced by the government as well as the possible solutions to be taken to cope with the labor problems amid the surge in Covid-19 cases and the implementation of the PPKM Darurat. The following are excerpts from the interview.

How does the government anticipate the impact of the PPKM Darurat on the labor sector?

What we can do is to urge companies to refrain from laying off their workers. This is a warning that we have conveyed many times. If we look at our experience in coping with the pandemic last year, the biggest impact was seen in the large number of workers being temporarily laid off. The number of people subject to Termination of Employment (PHK) was, in fact, smaller.

We hope that the PHK measure will be the last resort. We have mediated with a number of companies to avoid PHK such as with Garuda Airlines and Giant hypermarket chain. For Giant, it could not be helped any more, but we continue to support the workers. Giant will open a new business unit. They promised to reemploy the dismissed workers in the new business unit.

What is the possible impact of the PPKM Darurat?

I really can\'t predict it, but there will definitely be an impact. At the very least, there will be a lot of reduction in working hours as production decreases. In the end it will affect workers’ earnings.

Kompas/Priyombodo

Property project workers walk to their workplaces in the Bendungan Hilir area, Central Jakarta, Tuesday (12/8/2020).

I have issued a new circular which in principle urges that in the current difficult condition, everything must be discussed together by employers and workers/labor unions. There is no other choice, but to talk transparently within the company.

Because, there are no companies that want to have a bad condition like this. But, this bad condition must be accepted by both parties (employers and workers).

What concrete steps have been taken by the government to prevent the PHK and to maintain workers\' purchasing power?

The mitigation to cope with the impact of the pandemic on employment is the shared responsibility of the business world and the government. It is not just the Manpower Ministry. In order for the business world to survive, the Finance Ministry has provided fiscal incentives to the affected companies. The Cooperatives and Small and Medium-Sized Enterprises Ministry has also provided capital assistance.

There are also labor-intensive programs in all ministries/agencies, but the largest ones are in the Public Works and Housing Ministry. This way, there will be new job opportunities for the people who have lost their jobs or who have been temporarily laid off and those whose wages have been cut.

Will the wage subsidy assistance program that was introduced last year be provided again?

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This will be reviewed by The COVID-19 handling and national economic recovery committee. But, for sure, the government’s spending for handling the pandemic will be increased. We have to refocus or reallocate the budget again. The wage subsidy is one of the available options and we will see which one is the most effective.

Regarding the gig economy (businesses that depend on partners without permanent contracts), at present there is no specific regulation that protects those with partner status. How does the Manpower Ministry respond to this?

The change is quite fast. When we are still at the stage of thinking about the regulations, the problems have moved the other way.

To respond to the changing dynamics of employment relations, we should first look at the Job Creation Law, which has provided room for this flexible labor market dynamic. For example, the provision of working hours outside the standard working hours of 7-8 hours per day has actually been accommodated in the Job Creation Law.

The most important thing is actually how we protect the workers. Does the existing labor law provide significant protection for this type of work? If not, what kind of regulation is needed? This is what we are studying. The change is quite fast. When we are still at the stage of thinking about the regulations, the problems have moved the other way.

This article was translated by Hendarsyah Tarmizi.