“Minus Malum” of the Perppu on Job Creation

Government Regulation in Lieu of Law (Perppu) No. 2/2022 concerning job creation was issued over a month ago. The House of Representatives, however, has yet to deliberate the regulation.

KOMPAS/TOTOK WIJAYANTO (TOK)

Question and answer activity for participants in the Kompas Collaboration Forum discussion in Jakarta, Friday (3/2/2023). The discussion on the Job Creation Perppu presented the Minister of Manpower Ida Fauziyah, Chief Editor of Kompas Daily Sutta Dharmasaputra, Deputy Chair of Apindo Shinta W Kamdani, Expert Staff for Regulation, Law Enforcement and Economic Resilience of the Coordinating Ministry for Economic Affairs, Elen Setiadi, Research and Development Researcher at Kompas, Ignatius Kristanto, and Kompas Economy Editor, Mukhamad Kurniawan, as resource persons.

The House was in recess when the Perppu was issued on 30 December, 2022. Although the House sitting session began again on 10 January, the Perppu has yet to be deliberated. Meanwhile, the House is set to enter another recess period on 14 February.

Article 22 Paragraph (2) of the 1945 Constitution states that a Perppu must obtain the approval of the House in the following sitting session. According to Paragraph (3), if approval is not granted, the Perppu must be revoked.

So why did the House not immediately deliberate the Perppu? Was it not urgent enough? Has the House lost its focus or sense of crisis while busy preparing for the general elections that are only a year away?

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The Perppu on job creation was intended to support Law No. 11/2020 concerning job creation. There was such enthusiasm in carrying out structural reforms to improve the competitiveness and investment climate of Indonesia, employment, empowering cooperatives and micro, small and medium enterprises (MSMEs) as well as accelerating national strategic projects. Because of this, various laws and regulations deemed a hindrance were combined or changed through a sweeping omnibus law legislation method.

However, the Constitutional Court (MK) deemed the Job Creation Law constitutionally flawed as the omnibus method was not acknowledged by Law No. 12/2011 concerning the formation of legislation (P3). The law was also declared conditionally unconstitutional, meaning that it is still valid but revisions must be made no later than two years after the court’s ruling on 25 November, 2021.

KOMPAS/RUNIK SRI ASTUTI

Workers' activities work on the construction of PT Freeport Indonesia's copper processing factory or smelter in Gresik, East Java, Thursday (2/2/2023). The Government is convinced that the Government Regulation in lieu of the Job Creation Law aims to make it easier for investors to build a business in Indonesia.

The government and House then issued Law No. 13/2022 concerning the second amendment to the P3 Law. The omnibus method is now acknowledged as a way to establish definite and standardized laws. Now, all that is left is for the House to assess whether this Perppu is urgently needed and whether its substance is useful for the country in facing an increasingly fierce global competition.

The government assessed this urgency based on three aspects, namely global, national and limitations of the court’s ruling. The Russo-Ukrainian war with no end in sight and projections that one-third of the global economy will enter a recession are both crucial global considerations. The declining trend of investment ratios and employment, coupled with the falling trend of the workforce in 2022 due to the impact of the global crisis, are amongst the threats present at the national level.

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> Job Creation Law Endures a Steep Road of Revision

The court’s ruling, which stated that the Jobs Law was conditionally unconstitutional and must be revised immediately, has also led to legal uncertainty amongst investors. Meanwhile, with the elections only a year away, 2023 is a political year.

Now it is up to the House to take up a stance. In law, there are the principles of minus malum and maximum bonum: When making a decision, consider the option that has the smallest negative effect or the largest positive effect.

This article was translated by Kesya Adhalia.