Indonesian government has sent the controversial  Omnibus Law on job creation to parliament last week, marking a labor reforms that are intended to seduce investors and accelerated the economic growth - Photo by President Office

JAKARTA (TheInsiderStories) – Indonesian government has sent the controversial  Omnibus Law on job creation to parliament last week, marking a labor reforms that are intended to seduce investors and accelerated the economic growth. In the 1,194 pages in 82 laws, the country is looking to reform five issues to create a more jobs.

According to manpower minister, Ida Fauziyah, basically the draft focusing on minimum wages, work hours, severance pay, social security and foreign workers. A sweetener for workers is also introduced in the bill.

Major labor groups have rejected the bill because of its potential detrimental effect on labor rights. They rated, President Joko Widodo’ planned bill may hurt domestic workers.

“Our concerns because some of the regulations will allow foreign unskilled worker (to be employed), massive use of outsourcing, flexible working hours, and a change in payroll scheme from monthly to hourly,” chairman of Confederation of Indonesian Workers’ Unions, Said Iqbal said in a written statement.

He conveyed that his party and other labor federations had prepared a strategy in dealing with the new law. If the parliament continues to process the bill, his party along with other labor federations will take legal steps.

Iqbal felt that the aspirations of the workers were not heard by the government in drafting bill, especially related to the employment. In addition, the omnibus law was formed only to accommodate the interests of employers, he adds.

Labor issues are discussed specifically in chapter IV at the law. Among them are several provisions which are amendments to Law Number 13 of 2003 concerning Manpower and have the potential to cause controversy.

Some key points and changes related to labor reform in the omnibus bill are Indonesia will open more chances for expatriates to work in the country, especially in startups. They will also be allowed to work in the country without a permit, in positions that range from members of boards of directors and commissioners, diplomatic or consular staff, to researchers and emergency engineers.

The law also amends the possibility for outsourcing agencies to hire workers for various tasks, including freelance and full-time workers. Under Article 66 of the existing Manpower Law, workers from outsourcing agencies are prohibited from doing core tasks or those that directly relate to the production process.

In article 89 point 22, it contained, employers are required to give time off and leave for workers. Rest must be given at least 30 minutes after working for 4 hours, and weekly rest one day for 6 working days in one week.

The longest working time is eight hours per day and 40 hours in one week. On overtime provisions (article 89 point 20), employers can impose working hours that exceed the provisions for certain types of work or business sectors. Further provisions regarding certain types of work or business sectors and work period schemes are regulated by the Government Regulation.

Then, the minimum wage is set by the governor and is not regulated nationally (article 89 point 24). The minimum wage is calculated by considering inflation and economic growth. These provisions do not apply to small industries. For the workers at the industry, separate provisions will be made. The article 89 point 30 states that employers conduct periodic wage reviews with regard to company capability and productivity

On the termination scheme, employers are required to provide severance pay or long service awards for workers. In article 89 point 45 it is stated that severance pay is calculated according to the length of service.

And on the provisions, the employee with working period less than one year get severance pay one month wages. For 1 – 2 years period gets two months of wages, 2 – 3 years period get three months salary, and so on. The calculation of the work tenure award is set as follows 3 – 6 years work period get 2 months wages and follow the next multiple.

However, the employer can provide compensation money regulated in a work agreement, company regulations, or collective labor agreement. Further provisions regarding the amount of severance pay as well as years of service awards will also be regulated by Government Regulation.

On annual bonus (article 92) states, that employers give other awards to workers or laborers. Workers with a work period less than three years amounting to one time wages. Workers who have a working period of 3 – 6 years amounting to two times the wage an so on.

This award is given once in a period of no longer than one year after this Law comes into force.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com