Employers and Workers Question Perppu

Both employers and workers are questioning a change in the substance of the employment cluster in Government Regulation in Lieu of Law (Perppu) Number 2 of 2022 on Job Creation.

KOMPAS/HERU SRI KUMORO

Commuterline KRL train passengers, the majority of whom are workers in both the formal and informal sectors, leave Sudirman Station, Jakarta, Wednesday (4/1/2022). The issuance of Government Regulation in Lieu of Law or Perppu Number 2 of 2022 concerning Job Creation has caused polemics both by workers and employers.

JAKARTA, KOMPAS — The issuance of Regulation in Lieu of Law (Perppu) No. 2/2022 on Job Creation has sparked a polemic. In addition to the reasons for the coercive urgency that underlay its issuance, some substances have also given rise to pros and cons.

Workers and employers have questioned changes made to the “cluster” of provisions on employment. The Indonesian Employers' Association (Apindo) has highlighted differences in the formula for calculating minimum wage and employment outsourcing compared to the provisions in Law No. 11/2020 on Job Creation. The changes are deemed to have a potential to disrupt the investment climate.

Apindo deemed that the minimum wage calculation formula, which took into consideration economic growth, inflation, and certain indexes, would burden businesses. The Job Creation Law only lists one variable for consideration, either economic growth or inflation.

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The provision on outsourced workers has also been changed in Perppu No. 2/2022, with the government now setting some of the rules on outsourcing employment. Apindo is worried this will return the spirit of restrictive laws, such as Law No. 13/2003 on Employment. Restricting outsourced workers is believed to make it difficult to achieve the goal of creating a healthy and flexible economic ecosystem to attract investors.

"In the Job Creation Law, outsourcing workers is not limited. In fact, the outsourcing workers can play an important part in creating jobs. Outsourcing is not for [recruiting] cheap workers, but to find skilled workers and to make a company perform more efficiently," a member of Apindo’s regulatory and institutional committee, Susanto Haryono, said in Jakarta on Tuesday (3/1/2023).

According to him, restricting the kinds of jobs that can be outsourced is no longer relevant amidst the emergence of new jobs in the Industry 4.0 era and the surging demand for skilled workers.

"Our proposal [is that] the derivative regulations of Perppu No. 2/2022 should not be contrary to the conditions of the world, which has entered the era of [Industry] 4.0," he said.

We are even concerned that more investment will enter the capital-intensive, not the labor-intensive, sector.

Regarding the minimum wage, Apindo chairman Hariyadi B. Sukamdani expressed his hope that the government would carefully weigh a company's capabilities, specifically those in labor-intensive industries, and the workforce condition, which was still dominated by high school graduates. "We are even concerned that more investment will enter the capital-intensive, not the labor-intensive, sector," he said.

Meanwhile, workers also questioned the article on minimum wage. Earlier, Confederation of Indonesian Trade Unions (KSPI) president Said Iqbal had said that in the context of international labor laws, "certain indexes" are not known for being used to determine the minimum wage. According to him, the wage formula did not need to include indexes, only economic growth and inflation.

He also expressed his concern about potential changes in the provisions on minimum wage, as Article 88F of Perppu No. 2/2022 states that in certain circumstances, the government could establish a different formula for calculating minimum wage. As for outsourced workers, Said did not agree to the stipulations on outsourcing workers in either the Job Creation Law or Perppu No. 2/2022 (Kompas, 2/1/2023).

KOMPAS

The issuance of a Government Regulation in lieu of the Job Creation Law by President Joko Widodo on 30 December 2022 caused polemic.

Forcedurgency

The coercive urgency underlying the government’s move to issue Perppu No. 2/2022 is due to several factors, including the prolonged Russia-Ukraine war, inflation and stagflation, recession, climate change, and disruptions to global supply chains, which has also sparked pros and cons.

"The Perppu was issued in consideration of the urgent need to anticipate the global condition in relation to both the economy and geopolitics. The government needs to accelerate anticipation of the global condition," Coordinating Economic Minister Airlangga Hartarto stated in a press release on Friday (30/12/2022).

However, Institute for Development of Economics and Finance (Indef) director Tauhid Ahmad questioned the relevance and coercive urgency of Perppu No. 2/2022. The impacts from the geopolitical and global economic uncertainty this year was not expected to place Indonesia in a serious situation (Kompas, 2/1/2023).

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A number of international institutions have predicted that the Indonesian economy will still grow in the range of 4.7-5.1 percent this year. The government has also estimated that the economy would grow 5.3 percent, while Bank Indonesia’s growth projection indicates a range of 4.5-5.3 percent.

Executive director Mohammad Faisal of the Center of Reform on Economics (CORE) Indonesia is of the same opinion. According to him, there is no strong correlation between global economic pressures, its impacts on the national economy, and the urgency for issuing the Perppu on Job Creation.

Constitutional law lecturer Feri Amsari from Andalas University in Padang, West Sumatra, argued on Tuesday that the provisions in Article 22, Paragraph 1 of the 1945 Constitution that stipulated coercive urgency as a discretionary presidential power had been changed in Constitutional Court (MK) Decision No. 138/2009.

If there are those who want to continue to discuss [the Perppu], yes, let’s just discuss it.

Using coercive urgency as a reason for issuing the Perppu must fulfill three conditions: the existence of an urgent situation, the existing regulations cannot solve the issue at hand or such regulations do not exist, and that immediate issuance of a formal rule is necessary. Meanwhile, the Constitutional Court has given time until November 2023 to make improvements to the Job Creation Law.

Coordinating Political, Legal and Security Affairs Minister Mahfud M.D. said the government invited any parties to present their questions regarding the substance of Perppu No. 2/2022 to. However, if these questions dealt with procedural matters, the government believed it had followed the relevant procedures.

"I simply invite [the questions]. If there are those who want to continue to discuss [the Perppu], yes, let’s just discuss it. However, the government says this, that the Constitutional Court decision stated that the Job Creation Law is conditionally unconstitutional," said Mahfud.

This article was translated by Hyginus Hardoyo.