The Job Creation Perppu exists as a form of the government's commitment in confronting uncertain global economic conditions and is a continuation of the Job Creation Law that was mandated to be improved until November 2023.
The world, including Indonesia, is currently working to avoid the impact of a declining economy, geopolitical uncertainty, climate change and disasters, and crisis in the food, energy, and finance sectors.
Indonesia requires a legal umbrella that can protect businessmen and workers to minimize the impact of global recession. With clear legal certainty, investors will be drawn to invest in Indonesia.
This Perppu is not only beneficial for businessmen, as the government is also committed to providing adaptive protection to workers in confronting increasingly dynamic manpower challenges.
Moreover, the Job Creation Perppu is deemed to be able to develop Indonesia's economy since it has numerous advantages.
These include convenience in business licensing for micro, small, and medium enterprises (MSMEs) through Online Single Submission (OSS) and acceleration of halal certification.
They also involve stipulation on compensation and protection for workers that have just been fired as well as licensing, supply chain, and financing access facilitation.
In 2023, Indonesia has set an investment target of Rp1,400 trillion, or US$9.1 billion, that will be achieved more quickly through special formulation, such as the Job Creation Perppu.
More investors will also indirectly lead to manpower absorption.
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Manpower protection
Within the context of manpower, the Job Creation Perppu is an improvement from the earlier regulation: Law No. 11 of 2020 on Job Creation.
Several points that become the main focus in manpower is the stipulation on outsourcing, minimum wage calculation, wage structure and scale, disability terminology usage, and job loss insurance.
The Job Creation Law does not stipulate what type of jobs can be outsourced while in this Perppu, there is a limitation in the jobs that can be outsourced.
The government has improved and adjusted the minimum wage calculation within the Job Creation Perppu. Minimum wage is calculated by considering economic growth, inflation and certain index.
The formula for minimum wage calculation, including certain index, will be stipulated within the governmental regulation.
This Perppu also underlined that governors should set the provincial minimum wage and can set district or city minimum wage if the latter is higher than the former.
Deputy Chairperson of the Indonesian Chamber of Commerce and Industry (Kadin) Shina Widjaja Kamdani expects that the government can involve businessmen to provide inputs concerning the minimum wage, so that it suits its philosophy as a security net.
The business world's outsourcing seeks flexibility that is a global trend while also ensuring protection of the workers' normative rights over wage, work hour, social protection, and others.
The Job Creation Perppu also stipulates obligation to set the wage structure and scale from businessmen for workers that have a working period of one year or more.
In relation to disability, the Job Creation Perppu stated that businessmen that employ disabled workers must provide protection based on their type and degree of disabilities.
Workers' wage will be paid full while using their break time right. Workers, who are terminated, will receive severance pay of 45 percent from the salary that they earn.
Moreover, these workers will receive retraining or reskilling provided within six months.
Changes within the Perppu is a result of the input concerning the Job Creation Law that the government has absorbed, and they had been reviewed by several independent institutions.
All of them exist with the intent of protecting workers, creating jobs, and ensuring business sustainability.
Impact
A clear umbrella on manpower and convenience in business licensing has a considerable impact on the business world. Moreover, a conducive investment climate can encourage job creation.
Data from the World Investment Report noted that Indonesia's ranking dropped five places as compared to other countries in terms of foreign investment.
This is because several foreign companies experience hurdles, such as taxation issue, economic policy certainty to manpower. As a result, push and pull tends to occur in the investment world.
Economic observer at the Institute for Development of Economics and Finance (INDEF) Dzulfian Syafrian noted that economically speaking, the Job Creation Perppu will bring certainty to the economy.
Throughout this time, uncertainty lingered as to when the Job Creation Law should be revised in accordance with the decision of the Constitutional Court (MK).
For economic players, this uncertainty is undoubtedly harmful, as several of them adopt a more cautious approach during decision making. However, it cannot be denied that the main issue lies in the legal process.
In terms of content, the Job Creation Perppu has several economic benefits than drawbacks.
To realize economic growth above five percent and make Indonesia a developed country by 2045, workers and businessmen should cooperate to implement the Job Creation Perppu.
While it cannot be denied that the Perppu had yet to meet the expectations of the two parties, Indonesia at least has a strong legal umbrella to face global economic instability.
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Translator: Maria C G P, Fadhli Ruhman
Editor: Sri Haryati
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