Apindo Warns Labor Bill Could Stall Investment, Job Creation
Apindo Warns Labor Bill Could Stall Investment, Job Creation
Jakarta. Indonesia’s employers have urged the government and the House of Representatives to review the proposed Labor Protection Bill, warning that overly rigid rules could discourage investment, constrain business expansion and slow formal job creation.
The Indonesian Employers Association (Apindo) said the bill must balance worker protection with the need for businesses to remain viable, invest and hire, as the country seeks to expand formal employment.
“Workers need certainty over their rights and decent incomes. Job seekers need opportunities. To meet both needs, companies must be able to survive, invest and recruit,” Apindo chairwoman Shinta W. Kamdani said.
Apindo and sectoral business associations called for a comprehensive review of proposed additional obligations, restrictions on employment relationships and expanded sanctions. They said the rules should account for differences in sectoral characteristics, production patterns and businesses’ financing capacity.
Data from the Investment Ministry and the Investment Coordinating Board (BKPM), cited by Apindo, showed that Indonesia recorded Rp 1,010.6 trillion ($56.57 billion) in investment realization in the first half of 2026, creating 1,448,862 jobs.
That translates to an average of around 1,434 Indonesian workers employed for every Rp 1 trillion invested, according to Apindo.
The association warned that regulations that are too rigid could discourage investment and delay business expansion, limiting companies’ ability to recruit. Job seekers could face greater difficulty entering the formal sector, while workers laid off from existing positions could remain unemployed longer or be pushed into informal employment.
“Labor policies must not end up holding back investment and business expansion when people need more formal jobs,” Shinta said.
“Risks that could make the situation worse must be addressed before the bill is passed, not after the public bears the consequences,” she added.
Apindo said labor reform should adopt the principle of flexicurity, which seeks to balance worker protection, labor market flexibility and business certainty.
The association also called for labor reform to align with Indonesia’s targets of creating 2 million new formal jobs annually and increasing the share of workers with competency certifications to 30% by 2030.
Given the bill’s potential implications for businesses and workers, Apindo urged the government and lawmakers not to rush its passage before addressing fundamental concerns.
The association called for an assessment of the cumulative impact of the proposed provisions and substantive tripartite dialogue involving the government, employers and workers. It also said the bill should provide clear funding arrangements and adequate transition periods for businesses to comply.
“The success of the law must be reflected in workers’ rights being fulfilled, an increase in formal employment, sustainable businesses and improved welfare. Fix the substance before passing it into law,” Shinta said.
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