By Ricky Rinaldi
The government’s plan to abolish the outsourcing system in Indonesia has received broad support from economists, labor unions, and labor observers. This policy is seen as a bold and progressive step in favor of workers’ interests, particularly in addressing the imbalance in labor relations, which has long been dominated by the interests of employers. Amid global challenges and national economic dynamics, the government has shown that prioritizing workers remains a non-negotiable commitment.
On International Workers’ Day, held at the National Monument in Jakarta on May 1, 2025, President Prabowo Subianto firmly stated that the government would establish the National Labor Welfare Council. Its task will be to provide strategic recommendations to the president in formulating labor policies, including recommending regulations that are fair and supportive of workers. The president emphasized that the abolition of the outsourcing system is part of efforts to create fairness and balance between economic interests and social welfare. However, he also reminded that this change should not be rushed to avoid disrupting the investment climate and the business world.
The President’s initiative is seen as a clear demonstration of the state’s support for workers who have long been in a weak position within the labor system. Outsourcing practices that have been widespread in various sectors have caused social unrest, ranging from job security uncertainties, minimal social protection, to low welfare. Outsourced workers often do not receive basic rights such as health insurance, retirement benefits, or fair wages because this system allows companies to shift responsibility to third parties that may not guarantee workers’ rights.
Support for the plan to abolish outsourcing also comes from economists. Nailul Huda, Director of the Center for Economic and Law Studies (Celios), stated that the abolition of outsourcing is a step that should have been taken long ago. This system has long been used by companies to cut labor costs, especially by hiring daily contract workers who do not receive social protection. Huda believes that abolishing outsourcing will improve the national labor structure and also increase public purchasing power as workers will receive their full and rightful benefits.
In line with Huda, Minister of Manpower Yassierli also welcomed President Prabowo’s direction. His team is preparing an in-depth study on the gradual implementation of outsourcing abolition. This study will not only consider worker protection aspects but also assess the impact on industrial sustainability and labor market stability. According to Yassierli, the government does not want to implement a policy that would harm workers in the long run. Therefore, the approach taken will be comprehensive, data-driven, and involve input from various parties, including labor unions and the business sector.
Labor unions have also shown a collaborative spirit in welcoming this plan. Jumisih, Chair of the Indonesian Workers Union Federation (FSPMI), revealed that they are ready to engage in open dialogue with the government. She emphasized the importance of involving workers in the policy-making process, as they are the ones directly affected by the outsourcing system, which has failed to provide job security. According to Jumisih, outsourcing has often been used by companies to avoid their normative obligations, although not all businesses engage in such practices. Therefore, she hopes the government will not just abolish this system symbolically but replace it with a new, more just system that guarantees comprehensive protection for all workers.
On the ground, the spirit of change is already visible. Several state-owned enterprises (SOEs) have already reduced outsourcing practices and switched to direct recruitment systems with long-term contracts. This practice is seen as a way to ensure productivity while fostering worker loyalty. Labor analysts have noted that companies adopting direct employment systems have seen improvements in performance and efficiency, as they are not burdened by labor conflicts and can build a healthy work culture.
Meanwhile, foreign investors are starting to view this approach as a long-term opportunity. Although there were initial concerns that abolishing outsourcing might increase production costs, the government has guaranteed a stable transition and open communication with business players. In many cases, outsourcing practices have actually been a source of industrial conflict, leading to strikes, decreased productivity, and damage to a company’s reputation. Therefore, investors with a long-term vision welcome this policy, especially if the government also guarantees flexibility and incentives that support labor transformation.
The government is also drafting revisions to the Labor Law and other related regulations to align with the abolition of outsourcing. In the House of Representatives (DPR), several factions have expressed their readiness to expedite discussions on the revision of the law to adjust regulations to contemporary needs. This legislative process is expected not only to symbolize a commitment to workers but also to strengthen the legal foundation for worker protection in the future.
Thus, the plan to abolish outsourcing is not merely a response to workers’ demands but is part of the broader vision of the Prabowo-Gibran administration to build a labor system that is just, dignified, and sustainable. The support from various sectors proves that this policy direction is in line with the spirit of the times, where social justice and the protection of human rights are the core pillars of economic development. If this initiative is successfully implemented, Indonesia will not only become a country with high economic growth but also a nation that upholds the dignity of its workers.
The writer is a strategic issues observer.
