The Jakarta Post
Indonesia needs to have an unemployment insurance scheme and clear regulations for per-hour employment to ensure workers’ protection, an economist and a government official have said.
Institute for Development of Economics and Finance (INDEF) researcher Bhima Yudhistira said unemployment insurance was needed as a safety net to ensure workers were paid in accordance with the minimum wage.
“In this hire-and-fire context, workers might not get decent pay even at the amount of the minimum wage,” he said during a seminar discussing an omnibus bill on job creation in Jakarta on Monday.
The government is preparing the bill as a part of its efforts to ease doing business and eventually attract more investment to jack up economic growth. Once passed into law, the bill will amend hundreds of articles in dozens of prevailing laws, including the Labor Law.
According to a presentation shared by the Office of the Coordinating Economics Minister, the bill creates a possibility for hourly-based employment for certain professions, such as consultants, freelancers and those working at start-ups.
However, labor unions have voiced objections to the bill over certain proposed provisions, which they say could undermine the right to decent pay.
Bhima said employers would be more inclined to outsource tasks under an hourly-based scheme, leaving employees in a more vulnerable position.
“The hourly payment system should not apply to labor-intensive manufacturing industries because it can encourage employers to assign fewer hours to workers especially when factories need to lower their production,” he said. “I think the government still needs to review what type of job is relevant for the scheme.”
On that basis, unemployment insurance was needed. He added that outsourcing and hourly pay systems worked in developed countries because they had such insurance.
The insurance scheme, he went on to say, would enable the government to provide training for unemployed people, among other purposes.
“Nobody is talking about this insurance scheme,” he said. “I hope that it will be included in the omnibus law.”
Meanwhile, Manpower Ministry Directorate General for Industrial Relation Development and Social Security secretary Adriani said implementing unemployment insurance was “not that easy.”
“Indonesia has yet to formulate regulations about social security for hourly workers,” she said during the same discussion. “So, we want to stipulate it in the bill.”
Adriani went on to say that hourly work would only apply to certain jobs, such as in the media and arts and performance industries. The scheme, she stressed, was not intended to eliminate the monthly payment system for other professions.
“Our work now is highly influenced by technology, and this changes how we do our jobs,” she said, explaining one of the reason for the government to propose the scheme.
Coordinating Economic Minister Airlangga Hartarto said last year that the government in the proposed omnibus law would provide “flexibility” for outsourcing tasks to foreigners working in Indonesian start-ups while also paying attention to the development of domestic workers.
“A lot of our unicorn companies [start-ups valued at more than US$1 billion] source work out to Bangalore [India]. With more flexible regulations, we are hoping they could move to Indonesia,” he said.