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On April 26^th 2019, the current President of Republic of Indonesia, Mr. Joko Widodo, invited a number of leaders from the country’s largest Labor Organizations to discuss revision materials regarding Government Regulation Number 78 of Year 2015 regarding Wage (hereinafter shall be referred to as “PP 78/2015”).

Among the attendees of the meeting were: 

1. The Confederation of All-Indonesian Workers Union
2. Indonesian Workers Union Confederation
3. The Confederation of Indonesia Prosperity Trade Union
4. The Indonesian Muslim Trade Union
5. Confederation of United Indonesian Workers
6. National Union Confederation

(hereinafter collectively shall be refererd to as “Labor Organizations”).

Both the government and the Labor Organizations concluded the meeting and agreed to revise PP 78/2015, on the basis of fairness for both employeesand employers, as well as to promise a peaceful International Worker’s Day rally or majorly known as “May Day”. Further discussion is expected to begin again after the final results of the Presidential election is announced on May 22^nd 2019. Several points for revision materials suggested by the Labor Organizations include a change in formula to determine provincial minimum wages (hereinafter shall be referred to as “UMP”).

It is worth noting that the amount of UMP was decided unilaterally by the government considering a number of indicators such as current year’s UMP, inflation, and economic growth. Then, the Labor Organizations also demand that the government to implement sectoral minimum wages in all areas within Indonesia, where the industry sector is available. However, their last suggested idea of re-inclusion of the right to negotiate between employers and employees for a minimum wage clause may pose a greater risk to the whole investment climate in Indonesia.

This particular right somehow encourages possible re-emergence of tripartite mechanism, an annual process conducted by governors along with employers and labor unions prior to determining next year’s UMP. In the past few years, many regional leaders have used this wage issue to increase their popularity often at the expense of businesses which bore the unpredictable and unjustifiable increases in wages. The apparent politicization of UMP results in business uncertainty which ultimately leads to investors’ reluctance to invest in the country.

Subsequent to the meeting between Indonesian President and leaders of labor organizations, on May 1^st 2019, the Indonesian National Police inaugurated and officially commenced the help desk for workers at its 16 Regional Police of the Republic of Indonesia offices. Greater Jakarta Metropolitan Regional Police has been handling several employment issues specifically in the past few years. The reports include union busting, unpaid social security, and UMP paid less than the amount set.

The aim of this newly established help desk is to facilitate workers in order to file complaints in regards to their employment and simultaneously assisting The Ministry of Manpower in regards to law enforcement concerning criminal matters in employment issue. The help desk provides counseling room to determine whether or not an alleged criminal act occurs. Should the evidence of criminal activity cannot be found, the desk will coordinate with the Municipal Representative of the Manpower Ministry to settle the issues. However, the help desk limits its offering to only reports concerning violations of laws. Meanwhile, employment issues pertaining to policy-making and industrial relations disputes are encouraged through other channels provided by the government.

There had been reports that some workers are reluctant to file a complaint and use the official command post provided by the Ministry of Manpower. The perceived lack of trust is mainly due to the tendency of supervisory officers at the Municipal Representative of the Manpower Ministry that advises workers to settle the dispute not as expected. For instance, unpaid religious allowances typically advised to be settled on the basis of Law Number 2 of Year 2004 regarding Industrial Relations Disputes Settlement Mechanism. 

Creating good industrial relations is a key component to produce a positive impact on the business environment. In this case, it can be done by ensuring that employees’ rights are protected and work terms between employers and employees are exercised in a proper manner.