The discussions regarding the Labour Bill (RUU Ketenagakerjaan) are\ndeemed to require careful attention to business certainty and the\ninvestment climate in Indonesia. The labour regulations to be\nimplemented must be capable of providing protection for workers while\nsimultaneously creating certainty for the business world, ensuring that\nthey do not add costs and risks to business activities.<\/p>\n
Such certainty is crucial amidst issues of policy inconsistency and\nrule enforcement, which remain a primary concern for investors. In this\ncontext, the design of labour regulations must consider the\neffectiveness of field implementation and the government\u2019s supervisory\ncapacity.<\/p>\n
Muhammad Saleh, Director of Legal Affairs at the Centre of Economic\n& Law Studies (Celios), stated that legal certainty is a key task in\ncreating a conducive business climate. Therefore, the Labour Bill\ncurrently being discussed by the House of Representatives (DPR RI) and\nthe government must be implementable consistently.<\/p>\n
\u201cFrom the perspective of investment and law, economic sentiment and\ninvestor confidence fundamentally depend on the aspect of law\nenforcement. They observe the risk of inconsistent law enforcement and\nperceive uncertainty,\u201d said Saleh.<\/p>\n
According to him, investors have frequently faced regulatory changes,\nparticularly those related to law and licensing. In practice, these\nconditions are seen as a source of uncertainty for business actors.<\/p>\n
\u201cConsequently, investors must incur legal costs for uncertain legal\nmatters,\u201d he added.<\/p>\n
Saleh believes this issue must be considered in the drafting of the\nLabour Bill. New regulations should not add the \u2018cost of uncertainty,\u2019\nwhich could ultimately influence corporate decisions regarding expansion\nor job creation.<\/p>\n
Furthermore, labour supervision capacity remains a challenge. Citing\ndata from the Ministry of Manpower, Saleh noted that there are\napproximately 1,400 labour inspectors tasked with supervising at least\n400,000 medium-to-large companies, not including millions of other\nregistered business entities.<\/p>\n
\u201cEntrepreneurs and investors certainly look for regulatory\nconsistency in field implementation,\u201d said Saleh.<\/p>\n
He added that the challenge of business certainty must also be viewed\nin the context of investment costs in Indonesia. Referring to the\nIncremental Capital-Output Ratio (ICOR), Indonesia remains at 6.5. This\nfigure is higher than the average of major ASEAN nations, which sits\naround 4, indicating ongoing challenges in investment efficiency.<\/p>\n
\u201cFrom the perspective of law enforcement, our legal certainty and law\nenforcement officers are still considered poor,\u201d said Saleh.<\/p>\n
Meanwhile, Fitriana, a lecturer in State Administrative Law Studies\nat the University of Indonesia (FHUI), assessed that the design of\nsanctions in the Labour Bill needs to be drafted proportionally,\nconsidering the character of each type of violation.<\/p>\n
She argued that labour regulations should distinguish between\nviolations of fundamental and serious rights and those that are merely\nadministrative. This distinction is necessary so that enforcement\ninstruments can function effectively.<\/p>\n
\u201cThere needs to be a clear distinction between violations of\nfundamental and serious rights, and administrative violations, which are\nmore appropriately subject to administrative sanctions,\u201d said\nFitriana.<\/p>\n
She emphasised the importance of applying the principle that criminal\nsanctions should be a last resort, or ultimum remedium<\/em>.\nAccording to Fitriana, this approach aligns with the national Criminal\nCode (Law No.\u00a01\/2023), effective from January 2026, as well as the\ndirection of the Job Creation Law and the government\u2019s deregulation\nagenda, which prioritises administrative sanctions.<\/p>\n \u201cCriminal law as ultimum remedium<\/em>,\u201d she stated.<\/p>\n In the Labour Bill, several provisions that previously fell under\nadministrative jurisdiction could potentially face heavier consequences.\nOne such example relates to negligence in social security registration\nand provisions regarding the submission of personal documents between\nemployers and employees.<\/p>\n Fitriana believes these provisions must be designed carefully to\navoid consequences that are counterproductive to the formal business\nsector.<\/p>\n She noted that formal companies possess more complete labour\ndocumentation, have reporting obligations, and are recorded in\nsupervisory systems. Therefore, changes in the sanction mechanism must\nconsider the compliance characteristics of companies and the ultimate\ngoal of enforcement.<\/p>\n This is highly relevant as the formal sector is a pillar of\nemployment absorption. Based on research data, the number of formal\nworkers reaches approximately 60 million, or about 40 per cent of the\ntotal working population.<\/p>\n Fitriana also warned that consequences for corporations must be\ndetermined proportionally. Determining the responsible party must be\nbased on concrete actions, including who performed, ordered, or allowed\nthe violation to occur.<\/p>\n \u201cIn short, the criminal act and the perpetrators must be specifically\nproven. Who performed, ordered, or allowed the violation to happen,\u201d she\nsaid.<\/p>\n She added that for certain types of violations, financial sanctions\ncould be an option, provided they are effective in restoring workers\u2019\nrights and preventing repeated violations.<\/p>\n \u201cBut in my opinion, it must be seen whether the type of violation\nwarrants a sanction that is effective for restorative purposes [to\nrestore rights] or preventive purposes [to prevent recurrence],\u201d\nconcluded Fitriana.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/labour-bill-must-ensure-business-certainty-1790056680",
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