Logistics Entrepreneurs Urge Retention of Outsourcing, Citing Operational Needs

Entrepreneurs in the transport and logistics sector are requesting that outsourcing schemes remain available in the Draft Labour Protection Bill. This work model is considered appropriate for the character of the logistics business, which faces rapid changes in labour requirements.

The warehousing sector, for instance, faces surges in activity during major shopping moments such as National Online Shopping Day (Harbolnas) or specific periods throughout the year. The need for labour during such conditions does not always persist in the long term.

These requirements arise because the volume of work in warehouses and distribution can change drastically in a short period. Business operators need additional manpower without having to maintain the same number of workers once activity returns to normal.

“The nature of work in the transport and logistics sector requires outsourcing. In warehousing, for example, related to e-commerce, there are ‘Double Day’ events and Harbolnas, so needs surge intermittently and flexibility in managing manpower is required. Without outsourcing, it will be difficult for us to manage needs that rise from time to time,” said the Chairman of the Land Transport Compartment of the Indonesian Logistics and Forwarders Association (ALFI), Ivan Kamadjaja, at the Apindo office on Wednesday night.

The seasonal nature of the work forces companies to recalculate labour costs when demand drops. Companies also face additional costs when they must recruit and train new workers every time there is a surge in demand.

“Seasonal, festive, or peak season needs like Harbolnas may only last three or four days. If we do not perform other tasks for a month, it will certainly be very costly and logistics costs will increase. We actually do not want to constantly change workers because every new person must be trained and productivity will inevitably drop,” he added.

Amidst the demand for logistics cost efficiency, labour flexibility is considered a vital factor. Entrepreneurs believe that the nature of field work cannot be equated with jobs where labour requirements remain relatively stable throughout the year.

“If everything becomes permanent, it will be very costly. We have tried to manage these needs through outsourcing, but the nature of the work simply does not allow for it to be done consistently,” he said.

Entrepreneurs also see a link between labour flexibility and the ability of companies to meet customer demands. Surges in workload that only occur during certain periods require a mechanism that can adjust the number of workers quickly.

“So, if outsourcing is abolished, we will find it difficult to manage needs that rise unexpectedly. There are permanent orders, and then there are those that suddenly surge, and to meet those needs, we require flexibility,” said Ivan.

Previously, the Minister of Manpower, Yassierli, had signalled that the issue of outsourcing would still be regulated within the Draft Labour Protection Bill. However, he added that a lengthy discussion process would still be required.

He stated this after submitting the List of Identified Problems (DIM) for the Draft Labour Protection Bill to Commission IX of the House of Representatives (DPR RI) on Monday. The submission of the DIM is a stage prior to discussions on the Bill with the DPR and stakeholders.

“It is still a long way to go. This is not yet… it is just a draft, then there was the government’s submission of the DIM, after this there will be a working committee, and then… there is still a process to obtain input from stakeholders,” explained Yassierli.

The Draft Labour Protection Bill is a follow-up to the Constitutional Court Decision Number 168/PUU-XXI/2023. Several issues included in the discussion include fixed-term employment contracts (PKWT), outsourcing, wages, industrial relations, and termination of employment.

The government, he added, hopes the discussion process can be completed promptly, targeting the Labour Bill to be finalised and enacted into law by October 2026.

“Our initial spirit is that we hope the target is finished by October. That is our target. To become law. The spirit is two years after the Constitutional Court decision, which is this October,” said Yassierli.