T

he government ban on companies hiring outsourced workers to handle their core business activities has led to automation in several industrial sectors, according to the Indonesian Outsourcing Association (ABADI).

The association, which groups a dozen companies involved in providing workers for a wide range of business activities, said many companies had replaced some of their manpower with machines since the ban was issued in 2012.

The association says government'€™s decision to ban outsourcing in 2012 has led to some companies replacing some of their manpower with machines, which leads to higher unemployment.

A former chairman of the association, Wisnu Wibowo, said companies could now either directly recruit employees without the help of external companies, which cost more money and time, or shift to automation.

'€œJobs that were handled by people in the past are now filled by machines,'€ he said. He cited banks and toll road companies as examples of firms that had started shifting to automation. '€œTo some extent automation is inevitable, but the decree has accelerated the process,'€ Wisnu said.

Under Manpower and Transmigration Ministry Decree No. 19/2012 on outsourced workers, companies are only allowed to employ outsourced workers to do five types of jobs: cleaning, security, driving, support services at mining sites and catering.

Outsourcing, which is the practice of hiring workers from external companies, has been widely criticized because the practice is often used by companies in order to avoid providing worker benefits such as health coverage and pension payments as enjoyed by permanent employees.

Meanwhile, association chairman Inda D. Hasman said that on average labor outsourcing services had seen a 30 percent decrease in demand for outsourced workers since the decree was issued in 2012.

The government issued the decree in order to protect workers from contract uncertainties and uncertainties over wages, health and pension benefits.

But the association says the decree has been counterproductive to its aim of protecting workers. Instead, it has created more unemployment, with companies turning to automation or abandoning positions altogether, Wisnu said.

The association has made efforts to stop the decree from having a further impact on its members'€™ businesses.

In 2013, it filed a judicial review against the decree with the Constitutional Court. The court, however, rejected the association'€™s review proposal.

Besides challenging the decree, the association is now encouraging its members to change their businesses to wholesale services in order to save their businesses.

According to the decree, companies outsourcing work outside the allowable five job sectors can still operate under '€œwholesale services'€.

Under that regulation, a firm, for example, can no longer hire an outsourced worker as a receptionist. Instead, it has to procure such a service from a company that specifically provides reception work as well as supporting equipment for the job, such as telephones and desks.

'€œWe are trying every avenue that can save our businesses,'€ Inda said.

The association is also working to educate society to improve the image of outsourcing services.

'€œWhat we do now is encourage our members to carry out business according to fair rules, which benefit both the workers and the service. That'€™s why we are looking to increase our members,'€ Wisnu said. (saf)