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The Job Creation Law Encourages Economic Growth and Expands Job Opportunities


By : Herman Ade Wijaya )*

There are many benefits that the Job Creation Law (UU Ciptaker) can provide. Not only for business actors, workers will also get better benefits and increased protection compared to the Employment Law. The Job Creation Law provides a guarantee of certainty in providing severance pay by implementing the Job Loss Guarantee Program (JKP). JKP is a form of protection for workers affected by Termination of Employment (PHK) in the form of  cash benefits, upskilling  and  upgrading, as well as access to the labor market. With this new program, workers who are victims of layoffs are protected by the state for a certain period of time to find new jobs. Apart from that, with the opening of fixed-term work agreements (PKWT) for all types of work, job opportunities will become more widely open.

For Micro, Small and Medium Enterprises (MSMEs), the benefits obtained from the Job Creation Law are in the form of support in the form of convenience and certainty in the licensing process through OSS ( Online Single Submission ). MSME players are also given convenience in registering Intellectual Property Rights (IPR), establishing an individual Public Company (PT), as well as simplified requirements and low costs. For example, in establishing a PT, a notarial deed of company establishment is not required, but only requires company statements made electronically and ratified by the Ministry of Law and Human Rights. This can certainly encourage certainty of legality for MSME players.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that the issuance of the Job Creation Law would provide great benefits for Indonesia. Quoting a report from the World Bank in December 2022 which stated that after the Job Creation Law was issued, Indonesia became the second largest country receiving  Foreign Direct Investment  (FDI) in Southeast Asia. This shows that investors responded positively to the presence of the Job Creation Law, as well as the Organization for Economic Co-operation and Development (OECD) reported that the implementation of the Job Creation Law could reduce barriers to investment by more than 1/3 and reduce trade and investment by almost 10% in 2021.

The Job Creation Law will provide convenience and certainty to business actors in obtaining business permits by implementing risk-based licensing  and  implementing standards. So far, the approach applied is a license-based approach  which  is multi-layered, both at the administrative office level and at the regulatory level, without considering the size of the complexity of the impact and is calculated equally for all types of business.

Meanwhile, Deputy III Chief of Presidential Staff at the Presidential Staff Office (KSP), Edy Priyono, said that one of the aims of issuing the Job Creation Law was to expand job opportunities, especially for the younger generation. The workforce in Indonesia increases by approximately 2.4 million people every year. So, normatively there should be additional decent jobs for the workforce. Otherwise, it means that there will be people who are unemployed, or forced to work but not properly.

To respond to this, there needs to be investment in creating jobs, both foreign and domestic investment. Including the emergence of young entrepreneurs or entrepreneurs who are able to create jobs. Through the Job Creation Law, the government will facilitate young people to obtain decent jobs. If some young people are interested in becoming entrepreneurs, the regulations will be made easier through the Job Creation Law.

The existence of the Job Creation Law is very important for national interests, considering that various international institutions predict that the global economy will be filled with uncertainty throughout 2023. So the Job Creation Law is an anticipatory step for the government in dealing with this uncertainty and at the same time to guarantee the creation of legal certainty.

Apart from that, Chair of the Working Group (Pokja) on Socialization Strategy Task Force (Satgas) for the Acceleration of Socialization of the Job Creation Law (UU), Dimas Oky Nugroho said, the Job Creation Law is a serious effort by the government to achieve the target of a Golden Indonesia 2045. President Joko Widodo ( Jokowi) wants a strong transformation, especially in the regulatory sector, to push Indonesia out of the middle income  trap category  into a developed country. So the government targets Indonesia to become one of the five countries with the largest economies in the world by 2045.

To achieve this goal, Indonesia also needs  political will  and policies to bring about change, including in terms of strengthening the economy. One way that the government can take to strengthen the country’s economy is to increase the investment sector. With the Job Creation Law, it will facilitate investment routes, both from within and outside the country, including licensing new entrepreneurs within the country. Apart from that, the Job Creation Law will make it easier for the younger generation to set up a business. Considering that to be a developed country, the ratio of entrepreneurs is at least 4 percent of the total population.

The Job Creation Law will also optimize the availability of jobs and employment in Indonesia. Considering that the labor market in Indonesia is quite large. Of the approximately 209 million population of working age, 143 million of them are in the labor force and around 65 million have not yet entered the labor force. Therefore, one of the important indicators in achieving a Golden Indonesia 2045 is optimizing the working age population, and increasing the quality of the working age population can enrich the Indonesian economic sector in the future.

)* The author is a contributor to Editorial Journal Media

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