Labour Law Reform in Indonesia: A Comparison with International Labour Standards

Abstract

In October 2020, the Indonesian Parliament passed the Omnibus Law (Law No 11/2020 on Job Creation), introducing significant changes in the country’s legislative regime on employment, investment, immigration, environmental standards, business licensing and building permits. In the field of employment, it revised several articles in the following laws: Law No. 13/2003 on Manpower; Law No. 18/2017 on Foreign Workers; Law No. 40/2004 on National Social Security; and Law No. 24/2011 on Social Security Agency.

Earlier this year, the Indonesian Government issued the following four implementing regulations to facilitate the implementation of the Omnibus Law.
1. Government Regulation No. 34 of 2021 on foreign manpower (GR 34);
2. Government Regulation No. 35 of 2021 on fixed term employment, outsourcing, hours of work and termination of employment (GR 35);
3. Government Regulation No. 36 of 2021 on wages (GR 36); and
4. Government Regulation No. 37 of 2021 on unemployment insurance benefits (GR 37)

This brief focus only on reforms that are included in the above-referred employment legislation. The Omnibus law came into effect on 2 November 2020. The above referred implementing regulations have also been effective from this year, with different effective dates. This brief is not exhaustive, and the economic data from Indonesia must also be looked into in order to fully assess the impact of reforms, e.g. the percentage of workers affected by reforms. Similarly, the local teams must be engaged in understanding the ramifications of these reforms since these are more nuanced and need a local background for greater comprehension. Moreover, the brief is more a comparative exercise in understanding the Omnibus Law and its implementing regulations vis a vis international labour standards and labour regulations elsewhere in the world. Hence, it should be supplemented by other briefs from local organizations.