Indonesia looks to boost job creation with new Bill

The job creation Bill will make it more attractive for foreign companies to create jobs in the country which has seen record unemployment rate.
By: | August 12, 2020

The government of Indonesia is looking to push through a job creation Bill at the end of the month which aims to make the country more investor-friendly.

The job creation Bill will make it more appealing for foreign companies to create jobs with stipulations such as allowing employers to hire and fire with lower severance pay and benefits compared with current labour laws.

It also allows companies to recruit workers on flexible working hours, thus giving employers the ability to avoid paying full-time wages.

READ: Indonesia set for first recession in over two decades

3.7 million people are estimated to have lost their jobs due to the COVID-19 pandemic. And the unemployment rate in Southeast Asia’s largest economy has hit a record high of nearly 8%, with the total number of unemployed Indonesians standing at 10.6 million out of its 133 million workers.

The government is confident of the Bill being passed, with six out of the country’s eight major labour unions having agreed to support the Bill. However, there remain concerns from some labour groups.

“The basic problems of the Bill are it does not recognise minimum wage… cuts severance pay, makes retrenchment so easy,” Said Iqbal, chairman of labour union KSPI, said in a statement on August 3.

Under the current labour laws, workers are guaranteed an annual pay increase and at least twice the amount of severance pay compared with most regional countries. These would be adjusted under the Bill.