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Job Creation Law Task Force hold meeting on minimum wage, outsourcing

Jakarta Globe - May 18, 2024

Jakarta – The Job Creation Law Task Force recently held a meeting with stakeholders to discuss minimum wage and outsourcing policies.

The task force's secretary Arif Budimanta said that the Job Creation Law sought to help the government create a business ecosystem that can generate jobs and eventually spur the economy.

The 2021 government regulation on outsourcing (also known as PP 35/21) became a key topic in the forum.

"We should discuss both regulations together because they go hand in hand. The PP 35/21 revolves around temporary workers, layoffs and so on. All these are mechanisms included in social security," Arif said.

Participants also discussed the 2023 government regulation on wages (PP 51/23), which made some changes to the previous government regulation PP 36/21.

According to the task force's monitoring head Edy Priyono, minimum wage components previously were only decided by inflation and economic growth. The changes added certain indexes to the existing components.

In the old Job Creation Law, the types of jobs that can be outsourced were handed over to the businesses. However, the revised law will state what sort of jobs would qualify for outsourcing. "We need to make those revisions soon. Hopefully, they will be ready before we shift to a new government," Edy said.

The head of the Institute of Advanced Studies in Economics and Business, University of Indonesia, Turro Selrits Wongkaren, said that what should require more attention is the wage structure and scale, not the minimum wage.

Data shows 60 percent of workers' wages are below the average. According to PP 51/23, the wage council is responsible for overseeing the implementation of the wage structure and scale in the company.

"Our Wage Council needs to be professional in the sense that they provide input to the government with studies and data that are not based on feelings and guesses," said Turro.

Feryando Agung Santoso, a senior official at the Manpower Ministry, revealed outsourcing had been on the rise with the system divided into labor service provider agreements and bulk contracts. Feryando added: "A worker's contract is split into 5 criteria, while a bulk agreement is based on the workflow."

The Indonesian Young Entrepreneurs Association welcomed the outsourcing policy. Rizky, who represented the association, said outsourcing was in line with the Job Creation Law, which sought to generate jobs. He said: "We hope that outsourcing will be more flexible but also focus on protecting workers."

According to Edy Priyono, the government will focus on protecting outsourcing workers. "Outsourcing companies are bound by minimum wage provisions, provision of social security rights, and so on. This is actually what is expected with the Job Creation Law," Edy said.

Source: https://jakartaglobe.id/special-updates/job-creation-law-task-force-hold-meeting-on-minimum-wage-outsourcin