Page 12 - e-KLIPING KETENAGAKERJAAN 30 SEPTEMBER 2020

The strike is planned to take place from Oct. 6 to 8, when the House is expected to hold plenary
sessions to pass the bill into law.
The deliberation on the cluster containing revisions to the 2003 Labor Law has been the most
difficult part in passing the bill as it has been marred by protests from labor unions. There had
been plans to leave the cluster out of the bill deliberation process due to the strong resistance
from the unions.

During a session held from Friday to Sunday, lawmakers and the government agreed upon at
least nine points in the revisions.

Among the points that have been agreed is abolishing the sectoral minimum wage (UMSK) by
only recognizing the provincial minimum wage (UMP) and regency or municipality minimum
wages (UMK), the formulas for which are based on economic growth and the inflation rate.

“Workers are still calling for the UMSK to remain in the law, and we want there to be a limit on
how long workers can be employed on a contract basis or outsourced, as well as the type of
work allowed,” Confederation of Indonesian Trade Unions (KSPI) president Said Iqbal told The
Jakarta Post on Monday.

The government and the lawmakers also agreed to change the maximum severance pay scheme
in which the government also covers the payment under a newly established unemployment
insurance (JKP). The insurance, which at the moment does not exist in the country’s social
security system, will reduce companies’ obligation from paying 32 times an employee’s monthly
salary to only 23. The government will make up the nine-times salary payment for the severance
pay under the JKP.

It is, however, still unclear whether workers who lose their jobs after the passage of the bill will
receive the JKP.

Elen Setiadi, an expert staff member at the Coordinating Economic Ministry, said during a hearing
on Sunday that the current maximum severance pay scheme of 32 times was too burdensome
for businesses and could reduce their interest in investing in Indonesia.

“Therefore, we are reducing it and adding our JKP program,” he said.

Responding to the scrapping of the UMSK, Elen said the government would ensure that
companies whose workers had been receiving wages based on the UMSK would not cut the
amount.

“Companies that have given UMSK-based wages should keep on doing it.”

The KSPI expressed concern that with the removal of the UMSK, workers in the industrial sector
would experience a pay cut of up to 30 percent. It is estimated that tens of millions of workers
are receiving UMSK wages.

There is also no guarantee that the government would pay out the JKP scheme in the proposed
severance payment.

“Our state budget will soar. Can the government pay it when there’s an economic crisis and
many people are losing jobs?”
Earlier, seven out of nine factions planned to drop the labor cluster from the bill due to the labor
protests. They were the ruling Indonesian Democratic Party of Struggle (PDI-P), the NasDem
Party, the Gerindra Party, the Democratic Party, the National Mandate Party (PAN), the United
Development Party (PPP) and the Prosperous Justice Party (PKS).

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