Ridwan Max Sijabat, Bogor – Following its decision to drop the plan to revise the 2003 Labor Law, the government says it will soon issue a regulation detailing termination procedures and severance payments for workers to give them more job certainty.
Minister of Manpower and Transmigration Erman Suparno said the regulation would also detail crucial issues on outsourcing, contract-based workers and other contentious issues.
"The most important thing, is that the government regulation will not be contrary to the (labor) law but we are seeking the best solution so as not to burden employers in its implementation," Erman said in Bogor at the weekend.
The minister said the government would also revise the 1992 law on social security programs to allow state-owned labor insurance company PT Jamsostek to provide a termination scheme for dismissed workers.
"The government will discuss in details all these issues with other stakeholders, mainly the labor unions and employers, before issuing the government regulation and revising the social security program law in the House of Representatives," he said.
Earlier this year, the government dropped a plan to amend the labor law in line with recommendations from five state universities that conducted an indepth study of the legislation.
The study, ordered by President Susilo Bambang Yudhoyono, recommended cutting workers' conditions, especially the large mandatory payouts to dismissed workers, which employers said were too costly. The bill, which also gave employers more freedom to outsource employees, was fiercely opposed by labor unions and later dropped.
Employers on Monday hailed the planned government regulation, which they said could accommodate aspirations earlier included in bill. They also warned the government they would act "unilaterally" if it ignored their aspirations.
Indonesian Employers Association (Apindo) secretary-general Djimanto hoped the regulation would amend the nation's social security system. "With the severance payment scheme to be handled by PT Jamsostek, employers will have no problems in cases of massive layoffs," he said.
He said most small- and medium-companies in Indonesia were labor-intensive and that large layoffs were often unavoidable because of businesses dependence on foreign orders.
Jimanto said labor-intensive companies such as shoe, textile and garment factories would continue "rationalizing" their employees, recruiting contract-based workers to reduce their labor costs and outsourcing part of their labor to home industries. "This is a last resort and we have to do it for survival in this poor economic climate," he said.
Meanwhile, the chairman of the Confederation of Indonesian Prosperous Labor Unions (KSBSI), Rekson Silaban, said the regulation should not violate the labor law and change long-service and severance payments for dismissed workers.
"The regulation should also detail outsourcing, so that it will be clear which jobs outside (a company's) core business could be outsourced, and the ratio between permanent and non-permanent workers should create job security among workers," he said.
The unions have also proposed an increase of mandatory employer contributions to social security premiums to at least 20 percent of workers wages from the current 13 percent to provide more for workers in retirement.
Rekson said the rise would mirror similar social security programs in Malaysia and Singapore, where employees automatically had from between 30 to 44 percent of their salaries paid into the schemes.