Elimination of Outsourcing Considered, a Permanent Solution to Overcome Minimum Wages
By: Ira Lailatul )*
The Indonesian government has once again shown its commitment to workers’ welfare through a strategic policy that is currently being formulated: the elimination of the outsourcing system. Under the leadership of President Prabowo Subianto, this step not only represents the political determination to improve workers’ welfare, but also becomes the answer to the latent problems that have been attached to the national employment system for years, one of which is related to the issue of minimum wages that have not achieved justice.
President Prabowo in commemorating International Labor Day conveyed his commitment to immediately form a National Workers’ Welfare Council. The formation of this council is not just a symbol, but an important instrument to encourage systemic change in the protection of workers’ rights. The presence of labor figures on the council is a real representation that the state is opening up space for broad participation in formulating more pro-worker employment policies.
One of the main agendas of the council is to review the transition mechanism towards the elimination of the outsourcing system. This step is considered the right and long-term way out in overcoming stagnant minimum wage practices. With the elimination of outsourcing, companies are required to appoint outsourced workers as permanent employees, which automatically opens up opportunities for increased welfare. In the status of permanent employees, workers have better access to appropriate wages, social security, and stronger legal protection.
This is also supported by assessments from economic observers. The Executive Director of the Institute for Development of Economics and Finance (Indef), Esther Sri Astuti, views that this policy will encourage companies to provide greater job certainty for outsourced workers. According to her, when the employment status changes to permanent, the company is obliged to comply with all provisions related to employment, including providing wages in accordance with the Regional Minimum Wage (UMR) as well as health and work accident insurance. This situation will certainly have a significant impact on the standard of living of workers, who have so far been under the shadow of an uncertain outsourcing system.
It is undeniable that the elimination of the outsourcing system will directly affect the company’s cost structure. However, in the context of state policy, the choice to side with the welfare of the people is a constitutional necessity, not just a mere economic calculation. The government has openly stated that every step will be taken while still paying attention to the sustainability of the investment climate. However, this is not a reason to allow unfair labor practices to continue.
Minister of Manpower Yassierli also emphasized that outsourcing practices have caused many problems in the field. He said that many workers who have entered the end of their productive age are still in outsourcing status, without a clear career path and with wages that never move from the minimum limit. In some cases, the salary realization is actually lower than the stated contract. This situation shows that the outsourcing system has become a source of systemic injustice.
With the elimination of outsourcing, workers are no longer positioned as flexible elements in the production process that can be installed and removed as needed. Instead, they will be viewed as long-term assets of the company, who are entitled to decent compensation, social security, and adequate job stability. This will create healthier industrial relations, where productivity is no longer built on the sacrifice of labor welfare.
The government has not only stopped at the narrative, but has formulated concrete steps to support this transformation. In addition to the formation of the Workers’ Welfare Council, President Prabowo also announced the formation of a Termination of Employment (PHK) Task Force as an anticipatory measure against the possible impacts of the transition of the employment system. This task force will ensure that there are no unilateral layoffs that are detrimental to workers in the transition process.
Minister of Manpower Yassierli said that all policies related to the elimination of outsourcing will be based on the constitution. He stated that Article 27 paragraph (2) and Article 28D paragraph (2) of the 1945 Constitution of the Republic of Indonesia guarantee the right of every citizen to obtain decent work and fair treatment in employment relations. Therefore, the government is obliged to ensure that every employment policy is in line with this spirit.
