Jakarta – President Prabowo’s plan to abolish the outsourcing system is seen as a progressive step in providing job certainty for outsourced workers in Indonesia.
Executive Director of the Institute for Development of Economics and Finance (Indef), Esther Sri Astuti, said that the policy has the potential to encourage companies to appoint outsourced workers as permanent employees.
“So they get certainty about becoming employees and there is an increase in welfare,” said Esther.
However, Esther reminded that the company’s financial readiness is a challenge in itself. The appointment of outsourced workers as permanent employees requires companies to comply with employment regulations, including the provision of wages according to the UMR, health insurance, and work accident insurance.
“This is considered to increase the company’s production costs and result in higher selling prices for its products,” he explained.
President Prabowo previously conveyed his commitment during the May Day celebration on May 1, 2025 in Jakarta. He emphasized that the government will soon form a National Workers Welfare Council as part of efforts to eliminate the outsourcing system. This council is expected to be an advisor to the President in formulating the direction of employment policy, while maintaining the balance of the national investment climate.
Following up on the President’s directive, Minister of Manpower Yassierli revealed that his party is currently drafting a Ministerial Regulation regarding the outsourcing system.
“The President’s policy conveyed at the May Day 2025 celebration regarding outsourcing will certainly be the basic policy in the preparation of the Ministerial Regulation on outsourcing which is currently being prepared,” he said.
Meanwhile, the President of the Labor Party and Chairman of the Confederation of Indonesian Trade Unions (KSPI), Said Iqbal, expressed his belief that President Prabowo is on the side of the common people, including farmers, teachers and workers.
“But we believe that President Prabowo is on the side of the little people, teachers, farmers, and other working classes as conveyed in his speech on May 1, 2025,” said Said Iqbal.
Said emphasized that the main problem was the outsourcing system through employment agencies, not outsourcing of work between companies.
“If outsourcing the work is okay, for example a TV factory outsources the work of making remotes to a remote factory, that is allowed. What is not allowed is labor through an agent,” he explained.
He also highlighted other forms that were considered outsourcing smuggling, such as apprenticeships and partnership systems.
“What is not allowed is an intern but actually outsourcing under the guise of an internship, what is not allowed is a partner system,” he stressed.
The government is currently ensuring that the transition from an outsourcing system to an employment system that better guarantees workers’ rights can take place smoothly, without disrupting national economic stability and industrial competitiveness.
