Sun, 23 Mar 2008
From: Antara News
By Novia D. Rulistia, The Jakarta Post
The government is intensifying supervision of outsourced contract labor in response to indications that companies are misusing contract labor to avoid rigid labor regulations, an official says.

Manpower and Transmigration Minister Erman Suparno told The Jakarta Post recently the government would set up a joint supervision group with related agencies to help expand the supervision of the outsourcing system.

"Yes, there are violations in the contract labor outsourcing system. This is why we are trying to improve the supervision mechanism by involving other agencies," said Erman.

"The outsourcing mechanism is regulated by the 2003 law on labor. In fact, there is already a directorate at our office with the task of supervising the system. Both the quality and the quantity of supervision are not adequate," he said.

According to Erman, the current supervision was ineffective because the authority for inspecting the system was placed at the local administration level through the autonomy law.

The central government only functions as a regulator.

However, by forming the joint group, Erman expects the central government to regain control of supervision.

Aside from local administration, the supervision group will also include state insurance firm PT Jamsostek.

Labor-intensive companies, including footwear, garment and textile companies, now prefer to outsource contract labor from third-party firms to save on severance payments and insurance.

Under existing labor regulations, companies are required to insure their workers, to provide workers with a severance payment should they become redundant and provide other benefits above the basic salary.

Companies argue recruiting permanent labor is risky because labor regulations allow workers to set up labor unions as small as seven members.

There have been a number of cases where a company has more than two labor unions, often disturbing the company's operation.

By using contract labor a labor-intensive company has no obligation to pay any of these expenses, is able to easily discharge workers and is able to stop the emergence of labor unions.

According to Erman, wage payments under the minimum regional standard and the recruitment of contract labor to fill core jobs indicated a misuse of the contract labor outsourcing system.

Under the labor law, companies are not allowed to outsource labor for core jobs. Only jobs that are not related to production can be outsourced. This includes cleaning services, janitors and internal security personnel.

According to the law, outsourced workers have the right to similar wages and benefits as permanent workers.



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