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The Job Creation Law Accelerates National Economic Recovery

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By: Wahyu Pratama )*

The government targets the Indonesian economy to grow in the range of 4.5 percent to 5.3 percent in 2021. Through the implementation of the Job Creation Law and its various derivative regulations, the government is also optimistic that it can accelerate the national economic recovery. The decline in the number of Covid-19 cases has raised public optimism regarding Indonesia’s economic recovery, this economic improvement has been reflected since the third quarter of 2020.

Although in general, the Indonesian economy has improved amidst the Covid-19 pandemic, the realization of Indonesia’s economic growth in 2021 is still below the normal level of 5% (yoy), thus requiring a strong effort to restore the momentum of economic growth.

To encourage the acceleration of economic growth to its normal level of 5% per year, the Government of Indonesia under the leadership of President Joko Widodo has issued Law Number 11 of 2020 concerning Job Creation on 2 November 2020. The regulation aims to create jobs and increase foreign investment and domestically by reducing regulatory requirements for business permits and land acquisition.

Chairman of the Committee for Handling Covid-19 and National Economic Recovery (KPCPEN) Airlangga Hartarto said, the decline in the number of Covid-19 cases has raised public optimism regarding Indonesia’s economic recovery, this economic improvement has been reflected since the third quarter of 2020. Going forward, Indonesia faces challenges to be able to get out of the middle income trap and achieve the ideals of Advanced Indonesia.

Economic Development Law expert, Indonesian Christian University (UKI), Dhaniswara K Harjono said the Job Creation Act is a new legal product that can encourage business growth and investment, through ease of business licensing and investment. This legal product can certainly increase the acceleration of national economic growth in the midst of the Covid-19 pandemic which has a very wide impact.

Seeing Indonesia’s economic condition in the midst of the Covid-19 Pandemic, Member of the Indonesian House of Representatives (DPR-RI) from the Golkar Faction, Mukhtarudin said the Job Creation Act has a very strategic role, as an effort to transform the economy in the national economic recovery amid the Covid-19 pandemic. 19.

The Copyright Act, which was ratified and signed by President Joko Widodo on November 2, 2020, aims to provide job opportunities for job seekers so that they can reduce unemployment through ease of business licensing and regulatory reform. In addition, the application of the Employment Creation Law can increase the empowerment of MSME actors which can improve the community’s economy.

Meanwhile, the Head of the Center for Strategic and International Studies (CSIS) Economics Department, Yose Rizal Damuri, said that the Job Creation Law could be the answer to economic problems, especially employment faced by Indonesia. The job creation law is able to trigger the demand for labor in Indonesia through investment with serious economic reforms.

To return economic growth to a normal level of 5% per year, regulations or legal products are needed to facilitate business licensing. Thus, it can create new business fields that absorb new workers and encourage the national economy. The increase in business activity accompanied by the absorption of a productive workforce will certainly increase the acceleration of economic growth which can accelerate the progress of the National Economic Recovery. The Job Creation Law is still present to guarantee workers’ rights through worker protection. The implementation of the Job Creation Law is to reform business licensing regulations by applying norms, standard procedures, and risk-based criteria.

)* The author is a Public Policy Observer

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