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The Jakarta Post
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Outsourcing policy in doubt

  • Ridwan Max Sijabat and Andreas D. Arditya

    The Jakarta Post

Jakarta | Fri, November 9 2012 | 11:43 am

The Manpower and Transmigration Ministry has postponed issuing a controversial revised decree on labor outsourcing after unions and businesses failed to reach a compromise on several sticking points.

Manpower and Transmigration Minister, and chairman of the National Awakening Party (PKB) Muhaimin Iskandar said on Thursday that he had suspended the planned revision indefinitely until a compromise was reached.

The revised decree was previously scheduled to be issued on Nov. 2.

“We hope the conflicting parties will reach an agreement on two crucial issues so the decree can be signed,” Muhaimin said.

The issues include jobs that may be outsourced and the implementation period of the decree.

A revision to the decree was drafted after the government bowed to pressure from unions following major rallies in the past couple of months in several industrial cities, many of which ended in violence.

On several occasions, the union organizers resorted to ransacking production facilities of firms that were not willing to allow their workers join the rallies.

The planned decree would make it more difficult for companies to practise outsourcing — a move that would affect 14 million outsourced workers — and faces challenges from the private sector.

According to the planned decree, companies would not be permitted to outsource their core business and outsourcing would be limited to five types of jobs: cleaning services, security, driving, support services on mining sites and catering.

Due to the rigidity of the labor law, labor-intensive companies have preferred to outsource their core workers from third parties on a contract basis to avoid making them permanent employees.

The companies have argued that under the existing labor law it is costly and difficult to fire underperforming permanent staff.

Chairman of the Confederation of Indonesian Workers Union (KSPI) Said Iqbal said the unions had already agreed to compromise on some issues in order for the revised decree to be immediately signed to limit outsourcing practices.

Iqbal said unions and the ministry’s team had agreed to limit outsourcing to the five job types and that employers would be allowed to outsource other jobs with ministerial approval. He also said the unions had demanded that the revised decree be implemented one month after its issue, while the government proposed 12 months.

“But the unions will tolerate companies making changes to their employees’ status within three months after the issue of the decree,” he said.

In response to the planned decree and the recent violence at labor rallies, the Indonesian Employers Association (Apindo) has warned the government that its members will temporarily close their factories or relocate overseas.

The association also alleged Muhaimin’s plan was politically motivated and that the decision was made to improve his standing among workers amid declining support for his party.

However, another influential business lobby group, the Indonesian Chambers of Commerce and Industry (Kadin), did not share Apindo’s concerns.

Kadin’s vice chairman for trade, distribution and logistics Natsir Mansyur doubted that Apindo members would have the courage to lock out their workers or relocate their factories overseas.

“It’s not easy for companies to quit their businesses instantly. We are not talking about street food vendors who can simply move their stoves if they want to relocate,” said Natsir.

“Doing business in Indonesia is still profitable. I urge Apindo not to exaggerate things,” he said.

Most of Kadin’s senior officials are Golkar Party or Democratic Party politicians.

In a separate development, the Jakarta Labor Forum has threatened to hold a massive strike on Nov. 13 and 14 should the Jakarta administration refuse to raise the new minimum wage by around 80 percent to Rp 2.79 million (US$295) per month.

Mohammad Toha, the forum’s secretary-general said the strike would be held at industrial estates in Pulogadung in East Jakarta and KBN Cakung-Cilincing in North Jakarta.

“We are a coalition of 13 workers’ associations. We have 400,000 members under our coordination,” Mohammad said. (sat)


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