Businesspeople urge govt not to meddle with outsourcing

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Employers have urged the government not to further complicate the contract-based and outsourcing employment systems widely practiced in the mining and banking sectors because the country would be less attractive to foreign investors as a result.

Indonesian Employers' Association (Apindo) head Sofyan Wanandi said on Friday it would be more efficient if the government to entrust the regulation to employers since many companies hit by the economic crisis in 1997 had not yet recovered.

"If the government has to issue regulations on the two forms of employment they should be flexible because the current labor law is already complicated," he told a seminar on the country's employment system here.

Sofyan was responding to Minister of Manpower and Transmigration Jacob Nuwa Wea's plan to issue two ministerial decrees on the two forms of employment in May.

He said Apindo had asked its members to provide input to the minister in order to protect employers from possible problems resulting from the enforcement of the decrees.

The government has planned to regulate the contract-based and outsourcing employment systems because they do not provide legal protection for workers. Relevant Labor Law No. 13/2003 makes little mention of the practices.

Many companies in the mining and banking sectors have employed workers on annual contract basis or have subcontracted a part of their core businesses to other, sometimes foreign, companies.

For the sake of efficiency, many companies have given administrative jobs to contact-based workers. Efficiency has also led many companies to subcontract some of their main jobs, including auditing, raw-material and equipment supplies.

Hong Kong Bank and Bank Nasional Indonesia have been involved in disputes with workers employed by outsourced companies because their wages or conditions were worse than non-outsourced employees.

Apindo deputy head Hasanuddin Rachman suggested the government regulate the legal responsibility of companies employing contract-based workers and those subcontracting their manufacturing work to outside companies.

"These companies have limits of legal responsibility, including their obligations in labor dismissals. The amount of severance pay for dismissed workers should be made in accordance with their monthly salaries and the financial capability of their employers or outsourcing companies," he said.

Yanuar Nugroho of the Business Watch Indonesia said outsourcing had weakened industrial relations in companies deploying the two forms of employment.

"Workers' status remains uncertain and they have no bargaining power". Outsourced workers rarely met their real employers in the workplace, he said.

Manpower and Transmigration Ministry director general of industrial relations Muzni Tambusai said both the labor law and the criminal code did not mention outsourcing but the practice was regulated by Articles 64-66 of Law No. 13/2003, which stipulated that all work subcontracted to other companies must be set out in written contracts.

"Subcontracting companies are required to have legal permits and comply with labor laws and can be brought to court if their operation breaks the law," he said.