Thursday, March 23, 2023

The pros and cons of job creation Perppu: Opposed by workers, not friendly for investors

Reading Time: 4 minutes
Gusty da Costa





The labor unions have planned to stage a massive protest against the newly signed government regulation in lieu of job creation law (Perppu). Whereas the Indonesian Employers Association (Apindo) claimed the Perppu was a form of inconsistency in government policies that confused investors.

Objection from workers

The Congress of Indonesia Unions Alliance (KASBI) Chairwoman Nining Elitos said the alliance would deliver an open letter to both the government and the House of Representatives (DPR). The letter would voice the alliance’s rejection against the government’s authoritarianism way of issuing the Perppu without taking into account the aspirations of the majority of the people.

“We will also stage a massive protests along with other people’s movement,” she told Indonesia Business Post on January 4, 2023.

Elitos said the alliance and other parties had criticized and protested the controversial Law No. 11/2020 on Job Creation. The workers had hoped the president would issue a government regulation to annul the law, instead of issuing a Perppu. “That should be noted,” she said.

The Constitutional Court already declared the law “conditionally unconstitutional”. The court ordered policymakers to restart the process within two years, or it would be deemed unconstitutional. The court also decided that the government should not issue a strategic policy during the revision period.

However, Elitos said the government did not revise the law based on transparency, public participation, and benefit principle as stipulated in the law on lawmaking. “That’s what the Constitutional Court decided. But the government did not do that,” she said.

On the contrary, the government has maintained the contents and substances of the job creation law in the newly issued Perppu. “The government only changed the ‘wrap’ of the law, because based on the principles the job creation law is unconstitutional. The government issued the Perppu to legitimate the enactment of the law,” Elitos pointed out.   

Read also: Government regulation in lieu of job creation law faces criticism 

Previously, the Confederation of Indonesian Trade Unions (KSPI) President Said Iqbal said that the unions rejecting the Perppu due to minimum wage issues, outsourcing, lay offs and foreign workers employment.

Riden Hatam Aziz, President of the Federation of Indonesian Metal Workers Unions (FSPMI), said the workers would go to the street to protest the Perppu. “We will put up a fight and reject the Perppu so the government will annul the Perppu. We request the government to restore our rights and obligations in the context of Law No. 13/2003 on Manpower,” he said.

Confusion for businesses

Apindo’s Chairman on Manpower Division, Anton J. Supit, said the issuance of the Perppu was too hasty and caused uncertainty for investors.

“This means [the Job Creation Law] has only been running for more than a year, but the substance has been changed. Of course, investors are questioning that. Why do policies change too quickly. It will be difficult for them to predict the future,” he said as quoted by

Executive Director of the Segara Institute, Piter Abdullah, said the Perppu issuance did not guarantee an increase in domestic investment as the government wanted.

“I don’t believe with this Perppu the investor confidence will increase and consequently raise investment,” he said as quoted by He added that the Perppu issuance would create a new conflict as it could be sued at the Constitution Court, thus reducing the investor confidence.

Economist at the Center of Economic and Law Studies (Celios) Bhima Yudhistira said there were 5 factors that may not able to increase investments: the Perppu issuance creates policy uncertainty, there is lack of urgency in issuing the Perppu, the Perppu does not answer investment issues, the Perppu is not effective and in the end the Constitutional Court will annul the Perppu.

Government’s position

Manpower Minister Ida Fauziyah said the substance in the Perppu basically was an improvement from the Law No. 11/2020 on Job Creation.

“The improvement of the substance on manpower in the Perppu is actually an effort by the government to protect workers from the dynamic challenge of the manpower sector, ” she said in a statement on January 4, 2022.

The substance improvement in the Perppu, among others, includes outsourcing. In the job creation law, there is no limitation on the jobs that can be outsourced, while the Perppu limits the jobs that can be outsourced.

“With the Perppu, not all kind of jobs can be handed over to outsourcing companies. The kind and form of jobs that can be outsourced will be regulated in the government regulation,” Fauziyah explained.

The Perppu also improves and adjusts the minimum wage calculation. The minimum wage is calculated by considering economic growth, inflation, and certain index. The latter factor will be regulated in a government regulation.

Fauziyah said the Perppu stipulated that local administrations were obliged to decide the provincial minimum wage. Governors can also decide the regency/mayoralty minimum wage if the calculation of the minimum wage is higher than the provincial minimum wage.

The Perppu reiterates the obligation of businessmen to apply the salary structure and scale for workers, who have worked for 1 year or more.

Besides the three issues, the Perppu also improves references in the article that regulates the use of break time that will be fully paid, and also the use of the Unemployment Benefit Scheme (JKP), and the use of the word disability as regulated in the law on disability.

Fauziyah said the changes in the substances on the manpower sectors were the results of the aspiration of workers in several cities including Manado, Medan, Makassar, Yogyakarta, Semarang, Balikpapan and Jakarta.

Gusty da Costa






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