By Ratih Darmayanti
The government’s commitment to strengthening the protection of workers’ rights has received new momentum through President Prabowo Subianto’s firm statement in support of abolishing the outsourcing system. This move marks a turning point in national labor policy, which has long been criticized for not fully prioritizing workers’ welfare. The abolition of outsourcing is not just about eliminating subcontracting practices, but also represents a strategic effort by the state to create a fairer, more humane, and sustainable labor environment.
Outsourcing has long been a major issue in Indonesia’s labor sector. In practice, many companies use the system to avoid long-term obligations to workers, such as granting permanent employee status, providing social security, and ensuring protection in cases of termination. As a result, outsourced workers often live in uncertainty, with inadequate wages and minimal social protection. In the long run, this not only harms workers but also contributes to social inequality, disrupts the labor climate, and hampers national productivity.
President Prabowo Subianto reaffirmed his commitment to abolish outsourcing, including through the establishment of a National Labor Welfare Council. This council will play a key role in formulating the transition mechanisms toward the abolition of outsourcing while maintaining a balance between workers’ interests and investment climate. This step reflects the government’s careful approach to labor reform, aiming to avoid disruptions that could harm the national economy.
The President’s statement was positively received by Minister of Manpower, Yassierli, who said that the directive would serve as the basis for drafting new ministerial regulations. This indicates that the President’s commitment is not merely rhetorical but will soon be translated into real policies with a direct impact on millions of workers in Indonesia.
Esther Sri Astuti, Executive Director of the Institute for Development of Economics and Finance (Indef), believes that the abolition of the outsourcing system will provide greater job security for workers. She stated that companies would be compelled to convert outsourced workers into permanent employees, which would ultimately improve their welfare. According to her, permanent employee status will grant workers access to fundamental labor rights, including fair wages, social security, and legal protection in employment relationships.
This move also received full support from labor unions. Ida Idewa Made Rai Budi Darsana, Chair of the Independent Workers’ Union Federation (FSPM) Bali, welcomed the President’s commitment to abolish outsourcing. According to Budi Darsana, outsourcing has often been misused by unscrupulous companies to evade their responsibilities to workers. He revealed that outsourced workers frequently lack full access to employment and health insurance and are vulnerable to arbitrary dismissals. He believes that the abolition of outsourcing will offer a solution to the persistent labor issues affecting workers.
The elimination of outsourcing will prompt companies to adjust their labor structures, including budgeting and human resource management. Nevertheless, transitioning toward a fairer labor system is a long-term investment in social stability and economic productivity. When workers receive job security and improved welfare, their loyalty and productivity increase, ultimately benefiting the companies themselves.
From a macroeconomic perspective, the abolition of outsourcing could also strengthen public purchasing power. With rising incomes and enhanced social protection for workers, household consumption—which is a key driver of Indonesia’s economic growth—will be boosted. This will create a positive domino effect across various sectors, from industry and trade to public services. In other words, prioritizing workers is not only an ethical decision but also a sound economic strategy.
Going forward, the implementation of outsourcing abolition must be carried out with a clear and inclusive roadmap. The government needs to involve all stakeholders, including business associations, labor unions, academics, and civil society organizations. This participatory approach is essential to ensure that the resulting policies truly reflect the collective interest and can be effectively implemented on the ground. Moreover, labor law enforcement and monitoring must be strengthened to prevent legal loopholes or manipulation of employment status by irresponsible parties.
The government should also provide incentives and support to companies willing to transition outsourced workers into permanent employees. This could include tax relief, training assistance, or organizational restructuring support. In doing so, the reform will not merely be a burden for businesses, but also an opportunity to improve overall labor governance.
President Prabowo’s plan to abolish outsourcing is a progressive step worthy of appreciation. This policy not only responds to the aspirations of millions of workers but also reflects the nation’s vision of building a just, prosperous, and dignified labor system. With cooperation and commitment from all stakeholders, Indonesia can move toward a better and more sustainable future in employment.
The writer is a public policy observer.
