By: Andi Ramadhan
President Prabowo Subianto’s commitment to eliminating the outsourcing system marks a new chapter in the development of Indonesia’s labor sector. On the occasion of Labor Day, May 1, 2025, the President expressed his determination to establish the National Labor Welfare Council, which will serve as a strategic advisor to the government in formulating labor policies. This move is not merely a political response but a genuine representation of the state’s awareness of the importance of creating fairness and job security for all Indonesian workers.
For over two decades, outsourcing has been a part of the modern labor landscape. Initially, this system was expected to offer flexibility for businesses to adapt to market dynamics. However, in practice, outsourcing has often led to job insecurity, stagnant wages, and limited career advancement opportunities. Many workers have found themselves trapped in short-term contracts for years, without prospects for permanent employment and long-term welfare guarantees.
Minister of Manpower, Yassierli, revealed that outsourcing practices have created numerous problems in the field. One such issue is workers over the age of 40 who are still classified as outsourced labor, earning the equivalent of the provincial minimum wage (UMP), with no clear career path. This situation indicates a structural imbalance in labor protection. Therefore, the elimination of this system can no longer be postponed.
The process of eliminating outsourcing cannot be done haphazardly. As emphasized by President Prabowo Subianto, this will be a well-planned and carefully executed step. In the midst of a dynamic investment climate, this policy requires strategic planning to maintain business trust while protecting workers’ rights. In this context, the role of the National Labor Welfare Council is crucial as a bridge between workers’ aspirations and industrial needs.
Eliminating outsourcing does not mean closing the door on work flexibility. On the contrary, it marks the beginning of creating a fairer, more transparent, and productive work system. A balance between workers’ interests and business needs can be achieved if regulations are designed inclusively, involving all stakeholders, and strengthening labor oversight functions. The government plays a central role in ensuring that this transition proceeds without introducing new uncertainties in the labor sector.
This step also demonstrates the government’s strong commitment to the principle of decent work as outlined in the Sustainable Development Goals (SDGs). Indonesia has a moral and constitutional responsibility to ensure that all workers receive protection, development opportunities, and equal recognition for their contributions to the national economy. By eliminating outsourcing, opportunities to empower the domestic workforce will be wider and more meaningful.
This policy also has the potential to enhance the competitiveness of the national workforce. In the era of industrial transformation and digitalization, Indonesian workers need job security to participate in training, vocational education, and continuous capacity building. Outsourcing has, in many cases, hindered workers from advancing. With the elimination of this system, vertical mobility in the workforce will be more open and promising.
From the business perspective, eliminating outsourcing can actually promote workforce stability and loyalty. Workers who feel valued and have career prospects are more likely to show higher productivity. In the long run, this will positively impact operational efficiency. Businesses will also find it easier to design human resource development strategies because job security creates a more harmonious industrial relationship.
On the other hand, strengthening labor oversight systems is a critical prerequisite for ensuring that this policy does not stall at the rhetorical level. The government must ensure that the elimination of outsourcing is not replaced by other forms of exploitative labor practices, such as perpetual short-term contracts without a clear end date. Reform in the labor oversight system and the enforcement of labor laws is essential for ensuring that every policy is carried out in line with its intended objectives.
Minister Yassierli also emphasized that the presence of the state must be felt by workers, not just in the form of policies but also through concrete protection measures such as social security, fair wages, and career opportunities. In its implementation, the National Labor Welfare Council will oversee these aspects comprehensively, including addressing any technical and legal challenges that may arise during the transition from outsourcing to permanent, dignified employment.
Undoubtedly, challenges in implementing this policy will arise, whether from regulatory issues, intersectoral coordination, or business dynamics. However, with strong commitment and collaboration from all parties, this policy has the potential to become one of the historic milestones in Indonesia’s labor reform. This moment must not be wasted.
The plan to eliminate outsourcing is a reflection of a commitment to social justice. It is an important moment when the state takes an active role in improving the labor ecosystem to be healthier, more humane, and sustainable. This decision should be welcomed as a new foundation in strengthening a more inclusive and resilient national economic structure.
*) The author is a Strategic Issues Observer.
