Businesspeople urge govt not to meddle with outsourcing

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.