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Perppu on Job Creation for Long-Term Economic Interests


By: Tyas Permata Wiyana )*

Looking at the condition of the Indonesian economy in the near future, it might be said that Indonesia is a country that is safe from the world economic slowdown. However, in the long term, mitigation is certainly needed so that the Indonesian economy can remain stable, one of which is by issuing a Government Regulation in lieu of a Job Creation Law (Perppu).

Economist from LPEM FEB UI, Teuku Riefky said, the existence of the Job Creation Perppu is needed when macroeconomic conditions are in the medium and long term.

The issue of employment, for example, is relatively uncompetitive both in terms of skills, wage levels and bureaucracy. So that the Job Creation Perppu was issued because it aims to facilitate the process and make the labor market in Indonesia more competitive, this also aims to create jobs and attract investment can also get more support.

The Coordinating Minister for the Economy, Airlangga Hartarto said that the world monetary institution, the IMF, said that Indonesia was a bright spot amidst the black clouds of the world economy. Even the managing director of the IMF also said that Indonesia is the bright side in the dark.

It is estimated that the Indonesian economy will continue to grow in 2023, in the 2023 State Budget (APBN), the government targets next year’s economic growth at the level of 5.3%.

Airlangga also said that the Job Creation Perppu was issued to anticipate global conditions. This regulation is important to fill legal certainty, where business actors are still waiting for the continuation of the Job Creation Law.

He revealed that the government is setting a budget deficit for 2023 of less than 3% by relying on investment which is targeted to reach Rp. 1.400 Trillion in 2023.

Economist from Mercu Buana University, Sugiyono Madelan Ibrahim, assessed that the issuance of the Perppu was indeed based on a compelling urgency and as a follow-up to the decision of the constitutional court (MK) as written in the Perppu.

Sugiyono admitted that he took part in the process of discussing the Job Creation Law. The regulation is indeed designed to assist the government in improving performance in the economic sector.     

Sugiyono also believes that the government really needs the Perppu to move the wheels of the economy in the midst of many unfavorable economic conditions for national development. Even though the open unemployment rate continues to decline, the government considers that Indonesia still needs quality job creation.

Moreover, the Covid-19 pandemic has affected 11.53 million people or 5.53 percent of the working age population. In detail, 0.96 million people are unemployed, 0.55 million people are not in the labor force, 0.58 million people are not working and the working population has experienced reduced working hours of 9.44 million people.

In addition, the government also feels the need for an increase in wages whose growth is in line with economic growth and increased worker productivity. In the era of stagflation, the government admits that policy coordination has become much more complex because it has to simultaneously support economic growth and contain inflation.

On a different occasion, an Economics Academic from Diponegoro University (UNDIP), Jaka Aminata considered that the issuance of the Job Creation Perppu has the essence of improving worker welfare. Previously, the workers had also questioned their right to leave as stipulated in the Job Creation Perppu which was thought to take away allotted leave.

Responding to this, Jaka said that the Job Creation Perppu had regulated proportional employee leave allowances. The provision of leave allowance is intended so that workers can enjoy life and rest and this has been accommodated by the government in the Job Creation Perppu.

According to him, the leave allowance for workers who have worked for one year is 12 days. This is proof that the government also pays attention to aspects of well-being  for workers.

Apart from that, he also reminded the public to continue to oversee the implementation process of the Job Creation Perppu when it is running in the future. All that remains is the translation and implementation in the field which must be monitored.

On a different occasion, the Minister of Manpower, Ida Fauziyah also stated that the Job Creation Perppu is proof of the government’s commitment to providing labor protection and business continuity to answer the challenges of developing labor dynamics.

One of the crucial points in the Job Creation Perppu is that companies cannot do layoffs unilaterally. If there are problems in layoffs, this of course must be resolved through the settlement of industrial relations disputes.

Meanwhile, improvements and adjustments to the calculation of the minimum wage will be calculated taking into account economic growth, inflation and certain indices. The formula for calculating the minimum wage, including this particular index, will be regulated in the PP.

It is in this Perppu that the governor is required to set the Provincial Minimum Wage (UMP). The governor can also set the UMK if the UMK calculation result is higher than the UMP.

In the long term the Job Creation Perppu accommodates a variety of long-term economic interests, including in terms of wages and leave rights for workers, so that it is hoped that workers will be prosperous and employers are not arbitrary in setting policies.

)* The author is a contributor to Persada Institute

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