letters: Labor outsourcing system

Indonesia’s labor force just commemorated “May Day” as the international day for workers. In discussing labor in Indonesia, we note that there are a lot of problems, from low wages to the labor outsourcing system.

The 2003 Law on Manpower indeed allows companies to hire people from other suppliers (outsourcing companies).

Many workers themselves do not have direct contract with the companies they work for, but with outsourcing companies, which provide labor to usually big companies in Indonesia. This means outsourcing companies act as suppliers of labor.

Of course workers will get paid less under such arrangements because their contracts are processed between user companies and outsourcing companies.

The second problem is that the law clearly mentions that outsourcing can be done for only certain jobs such as for drivers, cleaning services and office boys. In reality, however, many companies violate the ruling and use outsourced workers for many jobs within the companies that actually should be occupied by permanent staff.

And the third problem is in article 91 of the law, which says:

Paragraph 1. The amount of wages set based on an agreement between an entrepreneur and a worker or trade/labor union must not be lower than the amount of wages set under existing regulations.

Paragraph 2. In the case where an agreement as mentioned in the paragraph 1 in wage decisions (which are lower than the existing regulations), the agreement shall be declared null and void.

The employers should pay the workers/workers based on the regulations.

In fact, we can see many big companies (multinational corporations) that benefit from this regulation as they only pay workers slightly more than the regional minimum wage (UMR) and multinational companies (MNC) will proudly mention that their companies pay wages above the regional minimum.

In my opinion this is not fair because such companies use international working standards for all of their employees, including outsourced workers, but for the wages they only use local standards. This practice mostly happens in big companies in Indonesia.

Fourth, psychologically and professionally the outsourcing system will only create jealousy among employees. Outsourced workers will never be treated as well as permanent employees. This condition is not only in favor of employees, but also for employers and regulators (government).

Because of so many weaknesses, I suggest we end the outsourcing system. If a company is not ready to recruit permanent employees, it can hire non-permanent employees on a contractual basis without using third parties.

Aries Musnandar
Malang, East Java