Mass Layoff Narrative Deemed Misleading, KSPI Explains Impact of Abolishing Outsourcing

JAKARTA, KOMPAS.com – The Indonesian Confederation of Trade Unions (KSPI) has denied the notion that abolishing the outsourcing system would trigger mass layoffs (PHK).

KSPI President Said Iqbal deemed such a narrative inaccurate, as workforce requirements are determined by the company’s business plans.

“Do not fall into the mindset that if outsourcing is abolished as demanded by KSPI and the Labour Party, there will be layoffs everywhere. No,” Iqbal stated during a press conference via Zoom on Monday (4/5/2026).

If the outsourcing system is abolished, companies can still meet their labour needs through other schemes, such as contract workers.

“If the company’s needs remain, because they have what is called a business plan. For example, producing 1,000 units requires 100 people; there are 20 permanent employees, so 80 are outsourced,” he explained.

Iqbal assessed that the outsourcing practice to date has often been used by companies to avoid responsibilities towards workers.

In such conditions, workers frequently do not receive their rights because the employment relationship is with the labour provider company.

“Employers use outsourced or alih daya workers to shift responsibility to a third party,” he said.

Previously, KSPI demanded the revision of Ministerial Regulation on Employment (Permenaker) No. 7 of 2026 on outsourced workers, deeming it contrary to the Constitutional Court (MK) decision.

This was conveyed by Said Iqbal in the same press conference.

“Permenaker No. 7 of 2026 on outsourced workers must be revised. Because its content contradicts the order in Constitutional Court Decision No. 168 of 2024, the lawsuit for which was won by the Labour Party, KSPI, KSPSI Andi Gani, and FSPMI,” he stated.

KSPI also assessed that the regulation does not yet address field issues related to outsourcing practices that harm workers.