In the manpower cluster, for example, revision to Article 59 on temporary workers (PKWT) and Article 66 on outsourcing extends the contract period/time. The majority of outsourced workers are contract workers and they receive less protection. As a result, many of them dislike contracted or outsourced status.
There are several other provisions in the Job Creation Law which have seen reduction in the rights of workers compared to previous provisions contained in Law 13/2003 on manpower, such as additional reasons to lay off workers, the abolition of the 15% of salary compensation in the event of layoff, new variable in determining the increase of minimum wage so it is lower than inflation.
Similarly, the issuance of implementing rules was not transparent and hurried, resulting in contradictions between the PP and the Job Creation Law and the National Social Security System (SJSN) Law. For example, PP 34/2021 makes it simpler for foreign workers to work in Indonesia, potentially putting Indonesian workers out of a job.
There are more justifications for layoffs followed by lower compensation payout, as per PP 35/2021. Increase in annual minimum wage as per PP 36/2021 is determined using a formula that involves many variables with options to use GDP or inflation as a benchmark so the minimum wage can be significantly lower than inflation rate. As a result, workers’ real wages have declined, and their welfare decreased.
For example, this year, the average minimum wage increased by only 1.09%, while annual inflation rate (yoy) as of April hit 3.47%. This will continue to rise considering the prices hike of basic necessities such as edible oil, sugar, etc. Likewise, the 11% increase of value-added tax (VAT) and the government’s plan to hike prices of widely-consumed Pertalite fuel and 3-kg LPG canister will drive inflation even higher. This in turn will push real wages lower, impacting the workers and their families’ welfare.
Of course, PP 37/2021 on unemployment benefits (JKP) can help workers who have been laid off by giving them cash benefits, training and job market information. However, it eliminates access to benefits for temporary workers whose contract expires or resigns, who should also receive JKP according to stipulation in Article 16 of SJSN Law.
All these changes in regulations tend to undermine workers’ benefits or “race to the bottom”, and this means the struggle of the workers in the future will be even more difficult and longer. The fate of workers will be left to the market mechanism, with weaker protection for them.
Another impact of the Job Creation Law and its various implementing regulations in the manpower cluster is the rise of industrial disputes regarding the contents of the Collective Labor Agreement (PKB). Some companies unilaterally canceled the contents of the CLA, and replaced it with the provisions stipulated in PP 35/2021 in particular with regard to the reasons and compensation for layoffs in the Board of Directors decision letter.
This is very detrimental to workers. Some workers who were laid off received compensation based on PP 35/2021, not according to the PKB as mandated by Article 1338 of the Civil Code (KUHPer). If a company wishes to change the PKB content, it must go through a negotiation mechanism with its labor union.
At least there are two labor unions that have fled lawsuit with regard to PKB violation to have the industrial relations court reverse the board of directors’ decision. Of course, Job Creation Law will spark more industrial relations disputes in the future, and this is a bad omen for efforts to build harmonious and equitable industrial relations in the workplace.