Indonesia Court Orders Labor Law Changes After Fiery Union Petition

Indonesia’s Constitutional Court on Thursday ruled that changes must be made to some labor rules including ordering the establishment of sectoral minimum wages, in response to a petition by several workers unions.

Unions had petitioned the court about a controversial Job Creation law they said went against workers’ rights to decent conditions. The court accepted the petition partially and rejected several requests, including an increase in severance benefits.

The law was signature legislation of former President Joko Widodo, who left office earlier this month, and was intended to streamline business regulations, cut red tape and improve the investment climate in Southeast Asia’s largest economy.

But its passage in 2020 triggered protests by students, workers and activists who argued it eroded labor and environmental protections.

As part of a livestreamed 20-point ruling, the court ordered local leaders to set sectoral minimum wages, as sought by unions, but rejected a request to change the formula to set the annual rise in minimum wages.

Hundreds of workers had gathered near the court earlier on Thursday, seeking to pressure justices to agree with their petition.

The court decided that in the event that a layoff is disputed, an individual would still be considered an employee if their case has been brought to an industrial court, reversing a passage of the law that made any layoff immediately enforceable.

It also ordered the manpower ministry to specify what kind of jobs can be outsourced, in order to reduce potential conflict between an employer and employees. The decision was in response to unions’ complaints there were no limitations on the types of jobs that can be outsourced.

The court also ordered legislators to within two years issue a new, comprehensive manpower law, putting together all existing rules scattered across various legislation, and ensure it reflected the changes ordered in Thursday’s ruling.

The manpower ministry, Indonesia’s Employers Association and the Labour Party, a major union and political party that was among the petitioners, did not immediately respond to requests for comment on the ruling.

(Reporting by Ananda Teresia; Writing by Gayatri Suroyo; Editing by Martin Petty)