The same two issues are always discussed during May Day celebrations in Indonesia: the prevalence of contract workers and the lack of rights granted to workers hired through outsourcing agencies. Both of these issues are considered to be contributing factors to workers’ unstable and insecure working conditions, especially in the country’s manufacturing sector. There are hundreds of cases and reports that confirm that workers are routinely taken advantage of by employers under the country’s current laws that address these issues.
In January 2012 the Indonesian Constitutional Court issued a decision that marked a new milestone in this struggle. The Court ruled that from now on working agreements between outsourcing agencies and workers must include a clause addressing worker rights in case of sudden staffing changes at facilities. Previously, a common practice in facilities had been to hire workers from one agency, and then abruptly fire these workers and re-hire workers from another agency in order to avoid providing benefits to worker. Under the Indonesian Labor Code contract workers from outsourcing agencies are not treated as permanent workers; as such, they are not protected from discrimination and are not entitled to benefits such as severance payments.
Given this omission in the Labor Code, this decision is important in that it provides outsourced workers the access to rights they had not previously been entitled to. Three days after the Court announced this important decision the Ministry of Manpower issued a circular to ensure the implementation of the Court’s decision.
The Indonesian Employer Association (APINDO) considers this decision as a positive impact for worker’s rights; however it also cautioned that the decision will trigger a systematic reduction of workers in outsourcing companies, because facilities will shift outsourced contract workers to permanent workers, which means higher cost and budget restructuring. Meanwhile, workers and unions appreciated this decision; they see it as a positive step towards a better future for workers.
However, not everything is positive. For one, this decision is not retroactive; therefore existing working agreements with outsourcing companies remain valid under their current terms until expiration. Additionally, the All Indonesia Workers Union (OPSI) criticized the Decision because it sees it as legalizing the use of outsourcing agencies, which it believes are not beneficial for workers. OPSI also stated that although the decision is expected to minimize discrimination practices between outsourced workers and permanent workers, it will continue to be hard for outsourced workers to be hired as permanent workers. Lastly, OPSI believes that the decision does nothing to improve the bargaining position for workers to establish unions.
Looking ahead, the Ministry of Manpower is still in the process of formulating new regulations to help in the implementation of the Court decision.