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Outsourcing ban won’t fix job market, employers say
Indonesia’s Job Creation Law, once touted as a fix-all to make employment more flexible and attract investment, is now drawing flak for increasing job market uncertainty, with both business and labor leaders pointing to the President’s demand to end outsourcing as a sign the system is cracking.
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Workers participate in a May Day rally in Jakarta, demanding higher minimum wages and the abolishment of outsourcing. (JP/Seto Wardhana)
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ndonesia’s revoked and then reincarnated Job Creation Law, once touted as a fix-all to make employment more flexible and to attract investment, is now drawing flak for increasing job market uncertainty, with both business and labor leaders pointing to the government’s demand to end outsourcing as a sign the system is cracking.
The Indonesian Employers Association (Apindo) has rejected President Prabowo Subianto’s recent proposal to eliminate outsourcing, calling it “unrealistic” in today’s economic climate.
“We must be realistic regarding the President’s directive to eliminate outsourcing,” Apindo labor affairs chair Bob Azam told reporters on Friday, adding that scrapping outsourcing could bring formal job creation to a standstill, an unaffordable outcome for an economy already showing signs of stress.
Read also: Businesses fret labor law revamp spells investment uncertainty
The national economy grew 4.87 percent in the first quarter of 2025, its slowest pace in over three years, according to Statistics Indonesia (BPS). At the same time, widespread layoffs continued across sectors and have pushed more workers into the informal sector.
Bob admitted there were flaws in outsourcing practices but stressed that what the country needs was stable, long-term labor reform to improve the regulatory environment rather than frequent revisions.
“Constantly changing labor laws only adds to the chaos. What we need is real reform and less regulation, not more,” he said, adding that the Job Creation Law had not delivered on jobs and investment, citing years of legal instability that had deterred investors.
