What’s next?
The Job Creation Law has been in force since November 2, with many of its derivative regulations also enacted, but to comply with the MK ruling I truly hope that the Government and lawmakers can become more inclusive, by immediately involving members of the public and all stakeholders in the urgent process of revising the Job Creation Law.
The Government and the House must also be fair and transparent, not only inviting particular stakeholders to participate in the discussion but opening the window for wider community participation, in a spirit of public interest.
The Government should also comply with the MK decision ordering it to immediately suspend any implementation of the law which may exert a broad or strategic impact.
In its legal considerations of Point 3.20.5, the Constitutional Court justices were of the view that the implementation of the Job Creation Law has in fact broadly impacted society, hence the heightened opposition and resistance to it. Thus, in my view, the Government should first focus on reviewing articles that have created such fierce resistance, to soften the impact of the law on communities, while it remains effective during the two year “grace period.” Reciprocally, the public and other stakeholders can also provide input on the problems faced on the ground, following the implementation of the law.
As a follow-up, the Government and the House can invite labor unions to revisit controversial articles in the manpower cluster of the law. Articles that should receive priority are those related to PKWT, outsourcing, grounds for and compensation for termination, along with a wage and a job loss security program. Simultaneously, LKS Tripartit should work to review it and advise the President on the implementation of the Job Creation Law thus far.
In fact, since the Job Creation Law and PP 35/2021 were implemented, many workers have suffered unilateral layoffs and received compensation smaller than that stipulated under the previous law. In addition, retired workers only received 1.75 times their severance pay with no 15% compensation of rights. Under the previous law, they were entitled to 2 times severance pay and 15% compensation of rights.
Likewise, the provisions with regard to work rules in the Collective Labor Agreement (PKB) and Company Regulations (PP) are currently being abridged by companies intending to align with Job Creation Law and PP 35/2021.
This despite the CLA as a legal product, born out of a mutual agreement between labor unions and company management. Since the Job Creation Law was implemented, many companies have unilaterally changed the contents of their CLA though a circular letter without engaging in any further negotiation with their labor union. This has sown further conflict between labor unions and employers. Already, several labor unions have brought this dispute to the attention of the Industrial Relations Court.
As many workers have been adversely impacted by the implementation of the law and PP 35/2021, I am of the view that this has already met the definition of “broad and strategic” nature of the MK ruling. Furthermore, it has sparked new conflicts and exacerbated industrial relations disputes being fought, up to the Supreme Court.
To avoid inciting a bigger mess, the Government should immediately postpone the implementation of the law and its PP, in accordance with the legal considerations by MK judges to protect workers’ rights.
The promulgation of a 2022 minimum wage at the provincial (UMP) and city/regency (UMK) levels, whose formula is based on PP 36/2021, was also “broad and strategic” as it affects the welfare of workers and their families who see an insignificant wage increase being eroded by inflation.
After all, hasn’t the Government designated the minimum wage matter as a national strategic concern? This is an even stronger rationale to immediately postpone the two pieces of legislation, as well as all Governors’ decrees on the increase of UMP and UMK.
Hopefully, this can alleviate the tension that has reached fever pitch with the many demonstrations and strikes currently conducted by labor unions. Moreover, with the threat of a new Covid-19 variant (Omicron) and the fear of a third wave in Indonesia, the deferral can also help to prevent new infection clusters in the workplace and disruption in production and processing.
In the meantime, the Government, Apindo and labor unions should sit down together and come up with new formula to determine a minimum wage. The Government can use both the GRP and infation rate, instead of providing the option to use either GRP or infation rate, whichever is greater, as the current regulation stipulates. This way, the increase in UMP and UMK will be guaranteed to exceed the infation rate.
Likewise, central and regional governments should consider supporting workers’ purchasing power. It is time to allocate special funds in the state budget (APBN) and regional budgets (APBD) to subsidize the expenditure of workers who are earning a minimum wage. This provision can be included in PP 36/2021.
Should PP 37/2021 on Job Loss Security (JKP) program be deferred? In my opinion, as the JKP program has not yet come into force (scheduled for February 2022), it does not need to be postponed.
However, there are several provisions in PP 37 which call for revision. Article 20, for example, stipulates that JKP benefits do not apply to termination due to resignation or expiration of PKWT. This provision contradicts Article 46c(1) of the Job Creation Law and Article 16 of Law 40/2004 on the National Social Security System (SJSN).
Article 46c(1) defines a JKP participant as anyone who has paid in contributions, and Article 16 of SJSN Law stipulates that every participant is entitled to benefits and information about the implementation of the social security program that he/she participates in. This should logically apply to workers who resign or whose PKWT expires because they have also paid in contributions. As PP is below the Law according to the Indonesian legal hierarchy, the Government must revise the provision of Article 20, by providing JKP benefits to these cohorts.
In addition, the JKP program should ensure that participation in social security for workers who have been laid off continues, so that they remain protected. This should be part of the revisions.
Room for improvement
Of course, the spirit of the Job Creation Law, which the Government believes will attract meaningful investment and open up more job opportunities in the urgent quest to reduce the open unemployment rate must be supported by the people. Therefore, the MK ruling should serve as a wake-up call for the Government and the House that there are still major problems with its formation and derivative regulations at the moment.
This should be taken as an opportunity to evaluate and refine its implementation. If the Government and the House fail to respond properly and wisely to this decision, the debate and legal battle is likely to continue at MK, Supreme Court, or other judicial levels.
The success of the Government’s aspirations in the future is to be determined by its response to MK’s ruling now. Hopefully, room for improvement can mark the beginning of a better Job Creation Law, one that is accepted by all Indonesian people.