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BRIN Expert: Job Creation Law is the Way Out for Economic Recovery


Jakarta — The Constitutional Court rejected the lawsuit regarding the Job Creation Law on October 2 2023, indicating that the law is officially in accordance with applicable statutory provisions. Following this decision, many members of the public, especially experts, have provided a positive view of the Job Creation Law, and its impact on Indonesia’s economic recovery.

A Socio-Employment Demography Expert from the National Research and Innovation Agency (BRIN), Nawawi, MA, Ph.D., provided an in-depth view that since 2003, when Law 13/2003 was adopted, industrial relations in Indonesia have been full of conflict. Law 13/2003 is considered detrimental to both workers and employers, and is often requested to be revised, but these efforts are always hampered by various conflicting interests.

“For 17 years Law 13/2003 has been in place, finally in the second year of President Joko Widodo’s administration, Indonesia found a way out through the Job Creation Law because we don’t want to stay in industrial conflict for too long, especially related to the chaos of labor law,” he said. .

Nawawi emphasized that Indonesia is currently faced with major challenges in terms of employment, with 2 million job seekers entering the labor market every year and a shortage of qualified workers with education below the average junior high school level.

“Indonesia’s current challenges are very big when it comes to employment. Every year there are 2 million job seekers entering the job market. Not to mention the challenge of the quality of our workforce, which still has an average education of less than junior high school. “So, if it is not maintained, a good investment climate is not created, this will automatically absorb workers,” he continued.

Nawawi also explained that job market flexibility is needed to keep up with changes in the highly competitive global economy. With the Job Creation Law, the government is trying to increase bureaucratic efficiency, simplify the licensing process, and reduce obstacles to doing business.

“We can no longer maintain a very rigid production system. “We must be strong in the economic context and ensure that labor regulations support economic activities and protect workers,” stressed Nawawi.

Labor market flexibility, which has been implemented in many developed countries, helps workers with skills and experience to find new jobs when they are laid off by companies. This should provide benefits to workers, which can contribute positively to economic growth.

Economic recovery, according to Nawawi, requires economic stability and support from the Job Creation Law, which will create a conducive investment climate. The World Bank has highlighted the need for stable labor regulations, and it is hoped that the Job Creation Law will support this.

Also giving his views, Co-founder of the Young Intellectual Forum, Muhammad Sutisna, M.Si, also spoke about the importance of the Job Creation Law. He noted that the Constitutional Court decision had confirmed that this law had binding legal force. The Job Creation Law is an important step in Indonesia’s economic reform to avoid the trap of a middle-income country in the future.

“It should be noted that the issuance of the Job Creation Law is part of the structural reform of the Indonesian economy to avoid the middle-income trap in the future. “This step is the key to increasing the ability to master technology, encouraging innovation, strengthening business certainty, and creating a more conducive investment climate by improving the quality of the rules and regulations under it,” said Muhammad.

In the context of bureaucratic efficiency, the Job Creation Law seeks to reduce the obstacles faced by entrepreneurs due to complex bureaucracy. This is expected to increase business efficiency and reduce costs previously required to comply with complex regulations.

The labor reforms proposed by the Job Creation Law are also a concern. Although controversial, this reform provides employers with flexibility in arranging employment contracts and working hours, so that they can adapt operations to changing economic conditions.

“Supporting the Job Creation Law is an important step to encourage Indonesia’s economic transformation because in the future the implementation of this legal product has the potential to increase investment, improve the business climate and create jobs. “It is ensured that its implementation goes hand in hand with the interests of the community, environmental preservation and workers’ rights,” added Muhammad.

To ensure continued benefits from the Job Creation Law, Nawawi and Sutisna agree that transparency, public participation and strict oversight are needed. All parties, including government, civil society and business, must play an active role in ensuring that the implementation of the Job Creation Law is in line with community interests, environmental preservation and workers’ rights. Thus, it is hoped that the Job Creation Law can become one of the pillars of Indonesia’s successful economic recovery.


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