The rigidity of the 2003 Labor Act, particularly its severance provisions, has forced entrepreneurs to use outsourcing, a panelist told a seminar on Tuesday.<\/p>\n
Chairman of the Indonesian Employers Association (Apindo) Sofjan Wanandi said the hefty severance payments stipulated by the law burdened employers, making them turn to outsourcing.<\/p>\n
"In fact, outsourcing isn't good for either employer or employee -- but employers have no alternative."<\/p>\n
A three-part severance package applies when a permanent employee is terminated, giving the former employee a right to a service payment and so-called rights replacement payment, in addition to the severance payment itself.<\/p>\n
The minimum severance payment for an employee who has been working eight years, for example, is the equivalent of nine months of salary.<\/p>\n
"In practice", however, according to Apindo head of industrial relations and advocacy Hasanuddin Rachman, that minimum is usually multiplied by a factor of at least two; and this is just one of the three severance payments the law requires.<\/p>\n
"This is considered too much by employers," Hasanuddin told The Jakarta Post.<\/p>\n
Unlike the other two payout components, the rights replacement payment is calculated primarily on the basis of transportation costs and holidays.<\/p>\n
Sofjan said many businesses faced with this burden have to turn to outsourcing, even though this brings "side effects".<\/p>\n
With the outsourcing system, for instance, companies have to train new employees when an outsourced employee's contract expires, which has time and productivity costs, he said.<\/p>\n
Meanwhile, outsourced employees don't enjoy the same rights and benefits as permanent ones.<\/p>\n
To help strike a balance, Sofyan said more and more companies were using outsourced workers only in areas not involving production.<\/p>\n
Under the law, outsourcing is an agreement where one company provides services to another for business functions that usually are or could be provided in-house.<\/p>\n
Also speaking at the seminar, the president of the Indonesia Welfare Labor Association, Rekson Silaban, said outsourcing decisions shouldn't be based on the core versus non-core distinction, but instead on vulnerability associated with the job.<\/p>\n
For example, outsourcing wasn't appropriate in the case of minimum wage employees whose positions were still non-permanent or contract-based, he said.<\/p>\n
He also said that wages for outsourced employees should be higher -- by at least five percent -- than for permanent employees -- to compensate for the lack of severance protection.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/labor-law-mostly-to-blame-for-outsourcing-says-apindo-1203490168", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }