Indonesia’s new regulation in lieu of law on job creation (locally known as Perpu Cipta Kerja) is basically an improvement of the previous regulation, namely Law Number 11 of 2020 concerning job creation.

Jakarta (Indonesia Window) – The Indonesian government has issued a regulation in lieu of law on job creation (locally known as Perpu Cipta Kerja), the Minister of Manpower, Ida Fauziyah, said in an official written statement on Friday (Jan. 6).

The government regulation in lieu of Law Number 2 of 2022 concerning job creation is a roof of the government's commitment to providing labor protection and business continuity in the face of labor dynamics, the minister said.

She pointed out that the labor substance stipulated in the regulation in lieu of law on job creation is basically an improvement of the previous regulation, namely Law Number 11 of 2020 concerning job creation.

"The improvement of the substance of labor contained in the Law Number 2/2022 is actually the government's endeavor to provide adaptive protection for workers/laborers in facing increasingly dynamic labor challenges," Ida said.

The substance of labor that is improved in the regulation in lieu of law includes, first, that concerns outsourcing rules.

The previous job creation law did not stipulate restrictions on the types of work that can be outsourced, while in the new regulation in lieu of law the types of outsourced jobs are limited.

“With the regulation, not all types of jobs can be handed over to outsourcing companies. Later, the types or forms of jobs that can be outsourced shall be regulated through a government regulation," Ida explained.

The second is regarding improvements and adjustments to the calculation of minimum wages. The minimum wages are calculated by considering the economic growth, inflation and certain indexes. The formula for calculating the minimum wages, including certain indexes, shall be regulated in a government regulation.

The new regulation in lieu of law emphasizes that governors are required to set provincial minimum wages (locally known as UMP) and can set district/city minimum wages (locally known as UMK) if the results of calculating the UMK are higher than the provincial minimum wages (UMP).

"The word 'can' referred to in the Perpu must be interpreted that a governor has the authority to set the UMK if the calculated value is higher than the UMP," the minister noted.

The third regards the affirmation of the obligation to apply the structure and scale of wages by employers for workers/laborers who have worked for one year or more.

The fourth is related to the use of disability terminology which is adapted to Law Number 8 of 2016 concerning persons with disabilities.

The fifth concerns the improvement of references in the article governing the use of the right to rest for which the wages are still paid in full, and regards the benefits of the job loss guarantee program.

Reporting by Indonesia Window