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Workers expendable as start-ups scramble for market dominance
Uncertain times: An employee shows the Bukalapak app on a smartphone
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ncertain times: An employee shows the Bukalapak app on a smartphone. The homegrown unicorn is in the spotlight following its decision to lay off hundreds of its employees this week, raising concerns about job security in the previously flourishing start-up sector.(Antara/ Aprillio Akbar)
In the bustling office of a start-up housed in a busy building in Jakarta’s business district sits Nina (not her real name) in between meetings and conference calls. Her mind wanders aimlessly to her office’s team of 50 people that has witnessed two colleagues being laid off in half a year, while a few others have not had their contracts extended.
That is not an ideal employment environment for 36-year-old Nina, who has asked to remain anonymous because of the sensitivity of the issue, as she financially supports her family in East Java. Financial stability is of utmost importance to her, but looking at her industry — the flourishing apps business and digital economy — she has come to accept that she will not stick around for a long time at her office.
“It’s an unspoken public secret. Layoffs and nonrenewal of employment contracts are common in the start-up world,” said Nina, who joined the company late last year and was instantly jolted by how workers’ contracts were easily terminated or not renewed.
“It’s so easy to replace you. Many people out there are longing for a ‘start-up job’,” she added.
Nina is among scores of contract-based start-up employees who are constantly haunted by the thought of being laid off at any moment in the face of cutthroat competition. As start-ups tend to change their business strategies on a dime to play catch-up with the dynamic market, human resources have become increasingly expendable.
For hundreds of employees at homegrown unicorn Bukalapak, collective paranoia over job security turned into a bitter reality as the e-commerce company failed to renew their contracts.
“As we further develop our technology to meet our customers’ needs, we feel the need for an internal reorganization to adjust to industry dynamics,” Bukalapak chief strategy officer Teddy Oetomo said in a statement on Tuesday, adding that the company was aiming to reap its first profit within the next five years.
“It is important for us to become a sustainable e-commerce [service provider],” he said.
Communications and Information Minister Rudiantara deemed the layoff of 100 employees insignificant against the company’s workforce of 2,600. “That’s a small [number] considering that it is a sector that is dynamic and ever-changing. I think this is normal,” he said at the Presidential Palace on Wednesday as quoted by kompas.com.
The Bukalapak case highlights the volatility of the industry amid the country’s push for more start-ups and a more robust digital economy.
The app business in Indonesia is defined as part of the creative economy, which employed 18.1 million workers last year, up from 17.4 million in 2017 and 16.9 million in 2016, according to the Creative Economy Agency (Bekraf). Meanwhile, the Investment Coordinating Board (BKPM) recorded a little over 2,000 start-ups in February.
The increasing employment calls for better worker protection in the sector, especially since many people are employed on limited contracts, as the number of start-ups is likely to grow.
Current provisions of the 2003 Manpower Law stipulate that employers can only keep workers on limited contracts for up to three years, after which the employer needs to either take them on as permanent employees or not offer them another contract.
As the so-called gig economy takes hold and the job market becomes increasingly flexible, the Manpower Ministry is exploring options to protect laid-off workers with unemployment insurance as well as training and certification schemes for the jobless, complementing the social security programs managed by the Workers Social Security Agency (BPJS Ketenagakerjaan).
“Finding a permanent job may become more challenging in the future, with many contractual jobs up for grabs. So how should the country protect these workers? There must be a flexible security system to protect the more flexible labor market,” Hanif told The Jakarta Post in a recent interview.
Indonesian E-Commerce Association (idEA) chairman Ignatius Untung said the start-up landscape had always been subject to unpredictability, due to the ever-changing demands of the market.
“Start-ups have always been unstable. They are not the place for those seeking professional stability,” Ignatius told the Post.
There is no “one-size-fits-all” panacea for start-ups’ ailments, he said. Every start-up has had its crisis — sometimes triggered by a turbulent industry, other times by a decision to pivot to an entirely new business model, Ignatius added.
Indonesian Workers Organization (OPSI) secretary-general Timboel Siregar said there were two main variables that every start-up needed to fulfill to remain afloat in the fast-paced industry: technological innovation and customer satisfaction.
“We have reached a point where the market is saturated with many start-ups that are competing for the same piece of pie. Consequently, start-ups will have to filter out their workforce as they experiment with different business strategies,” Timboel said. “There is simply no time for complacency.”
The same concern was voiced by Tristan, 28, who has worked for a local start-up for only seven months.
“My fear is that if I can’t deliver my best work for the client, I will get cut. I have a contract, but my concern is that I can’t sustain or retain it,” he said.
