d Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

The World Bank

August 31st 2018
PERCEPTION SURVEY 2016
LABOR MARKET STAKEHOLDERS’

1
 Indonesia needs labor policy reform, …

Job opportunities are still Workers are not fully protected and equipped only Employment is dominated by
lacking. with low skill level. low-productivity sectors.

Unemployment Youth unemployment

25%

20% 58% 38% 30%

15% Workers Companies see Jobs still in
have no low worker skill agriculture
10%
written work level as a
sector
5% contract burden
0%
2013 2014 2015 2016 2017

Youth unemployment rate is relatively
high compared to overall
unemployment rate (Sakernas 2013-
2017).
Source: Sakernas, World Bank, ILO
58% of workers with employee or
freelance worker status have no
work contract, thus they are
unprotected and vulnerable
(Sakernas 2017).
38% of companies said that
worker skill is a burden in
searching for technical
worker, skilled worker and
worker in managerial level
(Global Competitiveness
Index).
30% of jobs came from
agricultural sector (Sakernas
2017) where output per worker is
only 1/3 of processing industry
and 1/2 of service sector (World
Bank, 2016; Sakernas, 2016)
2
…, which involves stakeholders with different expectations.

There is a need to develop a Jobs Strategy that ensures ”Win-Win Solution”

Win-Win Solution

EMPLOYER WORKER & LABOR UNION GOVERNMENT

• Labor marketflexibility • More jobs opportunities • High productivity

• Low production input cost • Productive and decent jobs • Attractive investmentclimate for
• Skilled workers • Protection: social security, health investors
• High workerproductivity insurance, contract, etc. • Lower poverty and inequality

3
Labor Market Stakeholders’ Perception Survey can help to better understand perception and
expectation of each actor in labor market

01 TOPICS
Collective Labor Agreement, Minimum
02 RESPONDENTS
All employment actors: management,
Wage, Wage Structure and Scale, BPJS workers, corporate labor union, labor
Kesehatan, BPJS Ketenagakerjaan, union district, APINDO and Manpower
Outsourcing, Severance Pay, Training Office (Disnaker)
and Education, Occupational Health
and Safety (K3)

03 LOCATION
04 REPRESENTATION
797 manufacturing companies: 79
medium companies (10%), 315 Labor
LEVEL
Intensive large companies (40%), 402 Representative for medium and large
non-Labor Intensive large companies companies at national level
(50%) across 57 districs in 19
provinces

4
Stakeholders agree that it is important and urgent for Indonesia to have a national job
strategy.

94% 100%
LABOR UNION 88% LABOR UNION 91%
DISTRICT
82% MANPOWER APINDO
77% WORKERS OFFICE
MANAGEMENT (DISNAKER)

All stakeholders believed that it is important and urgent for Indonesia to prepare a Job Strategy to create more and better job
opportunities.

5
Although stakeholders have different views on the importance and urgency of each policy topic,…

85% 84% 87% 90% 83% 81%

79% 76% 78% 79% 80% 76% 80%
67% 67% 64% 67% 67% 68% 68% 68% 72%
60% 58% 61% 62%
51% 50% 53%
40%
50% 50% 50%

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Workers Labor union Labor union district

82%
69% 65% 69%
59% 64%
54% 55% 58% 59% 60% 56% 57%
48% 52% 52% 50%
43% 46% 47% 46%
34% 32% 35% 50% 41% 37% 50% 34% 37%
43% 50%
24%

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3 4of 5this6photo/Project
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Management APINDO Disnaker

Is it important and urgent to improve the policy on…

1. Collective Labor Agreement 2. Wage Structure and Scale 3. Minimum Wage 4. BPJS Kesehatan 5. BPJS Ketenagakerjaan 6. Severance Pay
7. Occupational Health and Safety 8. Training and Education 9. Workers Productivity 10. Outsourcing

6
…, the stakeholders eventually agree on the similar priority policy topics.

The top three policies Not the top three prioritized policies

66% 67%
62%
58% 56%
51% 51%49%
46% 47%
44%
40% 39%41%
38% 38% 38%
30% 31% 31%
24% 24%
21%23% 20%
18%
14%15%14% 12%
11%11%
8% 7% 8% 8%

Minimum Wage BPJS Severance Pay Outsourcing Workers

Wage Structure and Kesehatan Only a few labor union district Productivity
Minimum Wage is Scale BPJS Kesehatan is
stakeholders has different opinion
Employers, APINDO
selected Severance from other
priority policy for Wage Structure an important issue and Disnaker see
Pay as the top three stakeholders. labor
all stakeholders. and Scale is for all stakeholders. workers productivity as
priority policies. union district sees
priority policy for a priority issue, but
outsourcing as a
all stakeholders, workers and labor
priority issue.
except for the union see otherwise.
management.
7
However, it is important to look into each of the policy topics.

01 Collective Labor Agreement 06 Outsourcing

02 Minimum Wage 07 Severance Pay

03 Wage Structure and Scale 08 Training and Education

04 BPJS Kesehatan 09 Occupational Health and Safety

05 BPJS Ketenagakerjaan

8
Collective Labor Agreement

1. Labor Union and Collective Labor Agreement’s coverage is still low.

2. Ongoing social dialogues are not optimal yet.
3. Collective Labor Agreement (PKB) can help to achieve agreement and provides benefits for
management and workers.

9
Collective Labor Agreement (PKB) is not considered as a priority policy, but still an important issue.

Is it important and urgent? Is it included in the top three prioritized policies?

76%
67%
60%

42%
35% 34% 33%
34% 34% 32%

19%
13%

Management Workers Labor Union Disnaker Labor Union APINDO Management Workers Labor Union Disnaker Labor Union APINDO
District District

PKB is considered to be important. Although not considered as a priority policy.

PKB is an important issue particularly for labor union district, The employment actors see that PKB is not a priority policy compared
corporate labor union and workers. to other employment topics.

10
 The Labor Law guarantees freedom to form union and to hold social dialogue.

Manpower Law No. 13/2003

Labor union (SP) Collective Labor LKS Bipartite Company Regulation

Agreement (PP)
Article 104 Article 116 Article 106 Article 109
DE JURE Every worker has the right SP with the right to Company with >50 Company with >10
to form SP and become a represent is SP which has workers SHALL workers SHALL
member more than 50% workers form a LKS bipartite form a PP
membership

Only 53% of Only 75% of

Only 30% of 79% of companies companies have companies have
companies have SP with SP already held LKS Bipartite, most written regulations
DE FACTO a discussion on are large companies (PKB/PP/other)
PKB

*) LKS Bipartite serves as a forum for communication and consultation on employment matters in the company
**) Company Regulation is prepared by taking into account the advice and consideration of the workers’ representatives in the company 11
 Labor Union and PKB still have low coverage in Indonesia.

Labor union LKS Bipartite Collective Labor Agreement (PKB)

Only 30% of companies have labor …, and only 14% of companies without SP, Only 79% of companies with labor
union and most of them are large have LKS Bipartite and most of them are union have PKB. Without discussion
companies, … large companies. media

42%
Companies with
Companies without
Companies with SP LKS bipartite
any form of
30% 14% discussion.
Companies
with PKB
Population: 55% Medium
Population:
Companies without Companies with 79% 18% Large – Labor Intensive
SP SP 10% Large – non-Labor
Intensive
42% of companies have
no PKB discussion, other
form of discussion nor
14% Medium 7% Medium 12% Medium
LKS Bipartite.
54% Large – Labor Intensive 36% Large – Labor Intensive 40% Large – Labor Intensive
76% Large – Non-Labor 55% Large – Non-Labor 58% Large – Non-Labor
Intensive Intensive Intensive

12
Workers’ lack of negotiation skills leads to less than ideal results of PKB.

Lack of negotiation skill among workers*) Normative PKB contents Difficulties to reach agreement

Management Workers SP Management Workers SP

37% 28% 42% 20% 44% 55%
A study by ILO on 109 PKB
documents in 5 provinces
discovered that the contents of
most PKB are generally the
same as the minimum
conditions as set by the
government regulations.
Excessive workers Lack of Lack of Feels that it is difficult to reach
demand negotiation skill negotiation skill
from workers from workers
agreement in PKB discussion
representative representative

*) From unsatisfied stakeholders of PKB results.

Management sample: 15, workers sample: 134, labor union
sample: 55 13
However, almost all PKB discussions eventually reached agreements. Workers and companies also
benefit from the result.

PKB helps to reach agreement Workers have better welfare and higher productivity

98% 91% 91% Training Minimum wage compliance Provide safety equipment
Management Workers Labor union Provide SJSN Increasing workers' productivity
More than 90% of
PKB discussion 100%
reached 80%
agreements 60%
between
40%
management and
workers. 20%
0%
Stakeholders are satisfied with the result PKB Have other form of No discussion Have discussion No discussion
discussion
Have SP No SP
98% 92% 89%
Management Workers Labor union
Around 90% Medium Large Labor Intensive Large non-Labor Intensive
stakeholders are 100% 100% 100%
satisfied with PKB 80% 80% 80%
results. 60% 60% 60%
40% 40% 40%
20% 20% 20%
0% 0% 0%
Punya PKB Tidak Punya PKB Punya PKB Tidak Punya PKB Punya PKB Tidak Punya PKB

14
Minimum Wage
1. Minimum Wage is seen as a priority policy.
2. Minimum Wage compliance increased although there are still disobedient companies.
3. Not all stakeholders fully understand about PP 78/2015.
4. Workers in obedient companies are more productive and motivated in general.

15
Minimum Wage is considered as a top priority issue.

Is it important and urgent? Is it included in the top three prioritized policies?

90%
85%
79% 66% 67%
58%
64%
59% 56% 46%
41%
38%

Management Workers Labor Union Disnaker APINDO Labor Union Management Workers Labor Union Disnaker APINDO Labor Union
District District

Minimum Wage is considered to be very important. Minimum Wage is a priority policy.

Minimum Wage is an important issue for all stakeholders, Minimum Wage is a priority policy for all stakeholders, particularly
particularly labor union district, corporate labor union and workers labor union district, corporate labor union and workers

16
Stakeholders agree that minimum wage monitoring is the main issue.

Management Workers Labor union

56%

42% 72%
59% 60%
24% 42% 39%
23% 32%
22% 28%

Compensation Appropriate Improve Providing Compensation Appropriate Improve Providing Compensation Appropriate Improve Providing
for obedient penalty for monitoring of Complaint for obedient penalty for monitoring of Complaint for obedient penalty for monitoring of Complaint
companies disobedient minimum wage Service to companies disobedient minimum wage Service to companies disobedient minimum wage Service to
companies implementation receive companies implementation receive companies implementation receive
anonymous anonymous anonymous
complaints complaints complaints

17
PP No. 78/2015 is established to introduce simple, certain and fair wage setting system. Unfortunately,
only a few stakeholders fully understood the contents.

PP 78/2015 improves the wage setting system Only a few who really understood

PP 78/2015 49% 41% 90%

69%

1.64%
Simple
Transparent, easy to calculate,
28%
replicable, based on public data 14%
0.31%

Certain 0.18%
Clear, reduce risks from economic
instability
Know Understand Understand Know Understand Understand Know Understand Understand
after tested after tested after tested

Fair Management Workers Labor union

Incentive to seek formal jobs, can be
anticipated by employers
Questions to test the understanding of employment actors:
1) What factors are included in the Minimum Wage calculation?
2) Every how many years are the KHL components and types reviewed?

18
After a brief clarification, stakeholders agree that PP No. 78/2015 actually bring positive impacts.

Positive impact Negative impact

01 Use simple formula Reduce negotiation

room
01
80% Management Management 26%
75% Workers Workers 40%
44% Labor union Labor union 67%
PP
78/2015
02 Provide certainty in the
amount of Minimum
Reduce authority of
local government
02
Wage increase
78% Management Management 23%
73% Workers Workers 33%
47% Labor union Labor union 59%

19
Minimum Wage compliance is increasing, although not all companies comply to the regulation yet.

Rising Minimum Wage compliance Not all companies comply

80%
PP No.78/2015 67% Sakernas February 2017
70%
(October 2015) 62% of manufacturing workers
60% 58% received wage at or above
48% 62% Minimum Wage in the selected
50%
40% 45% 74% companies districts in this survey.

comply
30% IFLS 2014/2015
20% 35% of manufacturing
workers received wage at or
10% 65% Medium
35% above Minimum Wage in the
96% Large – Labor Intensive selected district in this
0% survey.
2015 2017 55% Large – Non-Labor
Intensive
All workers Manufacturing workers
Source: Sakernas February 2015 and 2017

20
In addition to better welfare, workers in obedient companies are also more productive and motivated.

Higher workers productivity and motivation Better workers welfare

Increasing workers productivity

Provide training Provide SJSN Provide safety equipment Have Labor Union
Workers are motivated 100%
90%
100% 80%
70%
90%
60%
80% 50%
40%
70% 30%
20%
60% 10%
0%
50%
Comply Not comply
40%
30% Medium Large Labor Intensive Large non-Labor Intensive
100% 100% 100%
20% 80% 80% 80%
10% 60% 60% 60%
40% 40% 40%
0% 20% 20% 20%
Comply Not comply 0% 0% 0%
Comply Not Comply Comply Not Comply Comply Not Comply

21
Wage Structure and Scale

1. Less than 50 percent of manufacturing companies set Wage Structure and Scale.
2. Regulation of Ministry of Manpower 1/2017 was introduced after this survey, thus the impacts are not
measured yet.
3. Workers in companies with Wage Structure and Scale are more productive and have higher welfare.

22
Wage Structure and Scale is considered to be the second most important policy after Minimum
Wage.

Is it important and urgent? Is it included in the top three prioritized policies?

88% 67%
82% 66%
79%
58%
67%
46%
41%
48% 38%
43%

Management Workers Labor Union Disnaker APINDO Labor union Management Workers Labor union Disnaker APINDO Labor union
district district

Wage Structure and Scale is considered to be very It is a priority policy.

important. Wage Structure and Scale is a priority policy for all stakeholders,
Wage Structure and Scale is an important issue for all stakeholders, particularly labor union district, corporate labor union and workers
particularly labor union district, Disnaker, corporate labor union and workers

23
In 2016, less than 50 percent companies have Wage Structure and Scale. Regulation of Ministry of
Manpower (Permenaker) 1/2017 was established to increase companies’ compliance.

DE JURE 2017
42% of companies have Wage Only 57% of companies informed the
Structure and Scale, most of them Wage Structure and Scale to workers
are large companies. Permenaker 1/2017
57% 35% Medium
Article 2
51% Large – Labor Intensive
61% Large – Non-Labor
Wage Structure and Scale
Intensive must be prepared by
No wage Wage
structure nor structure Elements to calculate Wage Structure and Scale calculation
Employer by considering
scale, 26% and organizational structure,
scale, position, tenure,
42% 60%
Most companies education and
Only 50% have not yet competency.
wage Only wage implemented Wage
40%
scale, structure, Structure and Scale
10% 21% 30% Article 8
based on the
stipulated Wage Structure and Scale
20%
provisions. must be informed to all
10% workers.
30% Medium 0%
72% Large – Labor Intensive Struktur Jabatan
Organizational Position Masa kerja Pendidikan
Tenure Education
70% Large – Non-Labor organisasi pekerja
structure pekerja
Intensive
24
Workers in companies with Wage Structure and Scale are better-off.

Slightly higher workers productivity Higher workers welfare

100% Comply with Minimum wage Provide training Provide SJSN Provide safety equipment
90% 100%

80% 80%
60%
70%
40%
60% 20%
50% 0%
Have Wage Structure and Scale No Wage Structure and Scale
40%
30% Medium Large Labor Intensive Large non-Labor Intensive
20% 44% 41% 100% 100% 100%
80% 80% 80%
10% 60% 60% 60%
40% 40% 40%
0% 20% 20% 20%
0% 0%
Memiliki
HaveStruktur
Wage dan Tidak Memiliki
No Wage Struktur
Structure 0%
Have Wage No Wage Have Wage No Wage Have Wage No Wage
Skalaand
Structure UpahScale dan Skala Upah
and Scale
Structure and Structure and Structure and Structure and
Structure and Structure and
Scale Scale Scale Scale Scale Scale

25
BPJS Kesehatan and health benefits
1. Many companies have not yet provide BPJS Kesehatan benefits to their workers.
2. Workers are not satisfied with benefits and services of BPJS Kesehatan.
3. Most workers felt worse-off: health benefits from BPJS are considered to be worse compared to
the previous health benefits.

26
BPJS Kesehatan is seen as one of the top priority policies.

Is it important and urgent? Is it included in the top three prioritized policies?

84%
76%
69% 72%
68%

54%
47%
40% 41% 38% 40%
29%

Management Workers Labor Union Disnaker Labor Union APINDO Management Workers Labor Union Disnaker Labor Union APINDO
District District

BPJS Kesehatan is considered to be very important. It is a priority policy.

BPJS Kesehatan is considered as an important issue by all BPJS Kesehatan is considered to be a priority policy, particularly
employment actors. by corporate labor union.

27
Not all companies provide BPJS Kesehatan benefits to workers, especially in medium-sized
companies.

DE JURE DE FACTO IFLS 5 (2015):

PP No 86 of 2013 Only 66% of companies provided BPJS Kesehatan

benefits 40%
Article 3
Employers other than the
State Organizer must
register himself and the
employees to BPJS
40% of workers received health
Article 5 insurance from employers
Administrative penalties 66%
for breaching employers:
warning, fine, deny to 8% Medium companies
certain public services

14% Medium
46% Large companies
54% Large – Labor Intensive
Onlyinmanufacturingcompaniesinselecteddistrict
76% Large – Non-Labor Sample:36manufacturingcompanies,6medium,30large
28
Intensive
Some workers are not satisfied with benefits and services from BPJS Kesehatan.

30% of workers are NOT SATISFIED 53% of workers are NOT SATISFIED
with benefits from BPJS Kesehatan with services from BPJS Kesehatan

30% 53%

23% Medium 47% Medium

28% Large – Labor Intensive 47% Large – Labor Intensive
36% Large – Non-Labor 60% Large – Non-Labor
Intensive Intensive
Some workers feel worse-off if they compare BPJS Kesehatan and their previous health benefit.

DE JURE DE FACTO
Additional benefits Additional benefits

30% of workers feel WORSE-OFF

Presidential Regulation No
BPJS Kesehatan benefit are considered lower than prior health benefit
111/2013
BPJS Regulation No 47/2016
BPJS Kesehatan can be top-up
with additional health insurance
or other underwriters for the
30%
coordination of benefits,
socialization, and information
systems

BPJS Kesehatan is cooperating

with 23 private health insurance 16% Medium
firms to implement the benefits
coordination mechanism 29% Large Labor Intensive

34% Large Non-Labor Intensive

This is due to the loss of health benefits after the implementation of BPJS Kesehatan.

23% of workers lost private health 41% of workers lost health 12% of workers lost health benefits as
insurance reimbursement pay provided by workplace

23% 12%
41%

11% Medium 27% Medium 17% Medium

32% Large – Labor Intensive 51% Large – Labor Intensive 22% Large – Labor Intensive
21% Large – Non-Labor 37% Large – Non-Labor 24% Large – Non-Labor
Intensive Intensive Intensive
BPJS Ketenagakerjaan and Pension Fund

1. Most companies have not provided BPJS Ketenagakerjaan benefits.

2. Workers are satisfied with benefits and services from BPJS Ketenagakerjaan.
3. BPJS Ketenagakerjaan does not crowd-out ownership of pension fund.

32
BPJS Ketenagakerjaan is considered as an important issue although not as priority policy.

Is it important and urgent? Is it included in the top three prioritized policies?

67% 67%
62%
55%
48%
37%

26%
22% 21%
16% 16% 17%

Management Workers Labor Union Disnaker Labor Union APINDO Management Workers Labor Union Disnaker Labor Union APINDO
District District

BPJS Ketenagakerjaan is considered as very important. It is not a priority policy.

BPJS Ketenagakerjaan is considered as an important issue BPJS Ketenagakerjaan is not considered as a priority policy
particularly by workers, corporate labor union, labor union district and compared to other employment policy topics.
APINDO.

33
 Not all companies provide of BPJS Ketenagakerjaan to workers, especially medium-sized companies.

DE JURE DE FACTO IFLS 5 (2015):

70% of 65% of of manufacturing

PP No 86 of 2013 22%
companies companies workers received
give give
40%
pension benefits
Article 3 Old age
Work Accident security
Employers other than the State Insurance
Organizer must register Sakernas 2017:
themselves and their employees
Large 58% Medium
97% Large 52% Medium
95% 19%
to BPJS. 30%
companies 95% Large Labor Intensive companies 91% Large Labor Intensive
Medium companies
99% Large Non-Labor 66%
Medium companies98% Large Non-Labor
Intensive Intensive
Manufacturingworkers Manufacturingworkers
Presidential Regulation No receivedaccidentbenefits receivedoldagebenefits
109 of 2013 50% of 62% of
Employers can register their companies
companies Life 17% 23%
workers in stages: Pension give
give insurance
JKK & JKM no later than 1 July
2015
Manufacturingworkers Manufacturingworkers
JHT & JP no later than 2029 receivedlifeinsurance
receivedpensionbenefits
67%
43% Medium 48% Medium benefits
55% Large Labor Intensive 92% Large Labor Intensive
*)Onlymanufacturingcompaniesinselecteddistricts
76% Large Non-Labor 95% Large Non-Labor
Intensive Intensive 34
Workers tend to be satisfied with benefits and services from BPJS Ketenagakerjaan

Only a few workers lost their private

79% pension fund benefits after the
86%
implementation of BPJS Ketenagakerjaan
of workers are of workers are
SATISFIED with SATISFIED with
benefits from BPJS services from BPJS
Ketenagakerjaan Ketenagakerjaan 80% of 35% workers still have the
DPLK/DPPK Pension Fund

79% Medium 68% Medium 80% Medium

90% Large – Labor Intensive 82% Large – Labor Intensive 70% Large – Labor Intensive

86% Large – Non-Labor 79% Large – Non-Labor 85% Large – Non-Labor

Intensive Intensive Intensive

35
Severance Pay

1. Indonesia’s severance payment system is complex and rigid.

2. Not all companies provided Severance Pay to their workers.
3. Companies are burdened with the current Severance Pay system.

36
Severance Pay is considered as an important issue although not seen as a priority policy.

Is it important and urgent? Is it included in the top three prioritized policies?

73%
64%

48% 49%
43%
32%
21%
14% 15% 14% 14%
5%

Management Workers Labor Union Disnaker APINDO Labor Union Management Workers Labor Union Disnaker APINDO Labor Union
District District

Severance Pay is considered to be important. It is not considered a priority policy.

Severance Pay is considered to be important particularly by labor Severance Pay is not yet considered as an important issue by the
union district and workers. employment actors compared to other employment policy topics.

37
Severance Pay regulation is complicated.

Source:
Employment Report in
Indonesia, World
38 Bank 2010
Not all companies provided Severance Pay benefits to their workers.

Management Workers

Sakernas August 2016

64% 67% 36% of manufacturing
Companies Workers will workers received Severance
provided receive 36% Pay benefits.
Severance Severance
Pay benefits Pay benefits

IFLS 2014/2015
35% of manufacturing
54% Medium 48% Medium workers received Severance
84% Large – Labor Intensive 35% Pay benefits.
65% Large – Labor Intensive
90% Large – Non-Labor Intensive 76% Large – Non-Labor Intensive

39
Companies feel burdened with the current Severance Pay system, thus in most cases, Severance Pay is not
fully paid.

Most of the corporate management felt that Companies, however, felt that the amount of Severance Pay is a burden.
Severance Pay is not a burden to recruitment. Workers, on the other hand, felt at disadvantages due to low compliance rate
of companies paying full Severance Pay amount.

Management Workers Labor Union

80% 74%
85%
Management felt 70% 64%
that Severance 60% 57%
Pay is not
burdening 50% 47% 45% 46%
recruitment
40%
31%
30% 27%

54% Medium
84% Large – Labor Intensive
90% Large – Non-Labor Intensive
20%
12%
10%
0%
Amount is too large thus Most companies did not pay Most companies did not fully
burdening company severance pay at all paid severance pay

40
Outsourcing

Government has established regulation on outsourcing, yet in practice, wellbeing of outsourcing

workers is not fully protected.

41
Outsourcing is considered as an important issue although not seen as a priority policy.

Is it important and urgent? Is it included in the top three prioritized policies?

81%

61% 62%
51%
46%

34%
24% 23%
21%
18%
13%
8%

Management Workers Labor Union Disnaker Labor Union APINDO Management Workers Labor Union Disnaker Labor Union APINDO
District District

Outsourcing is considered to be important. It is not considered a priority policy.

Outsourcing is considered to be important particularly by labor Outsourcing is not yet considered as an important issue by the
union district, corporate labor union and workers. employment actors, except by labor union district.

42
The current regulations require outsourcing companies to guarantee the rights of outsourced
workers, …

De Jure
Regulation of Ministry of Manpower No.
19 of 2012
“Outsourcing workers can only be assigned for
“Each outsourcing company shall make a supporting functions vities or those not directly
written employment contract with the related to the production process.”
workers.”
To be included in the contract: Jobs that can be outsourced
Employment continuity guarantee, guarantees of the Cleaning services, food supply, safety personnel, support
fulfillment of labor rights under labor regulations, paid services in mining and oil, transport providers for workers.
leave, social security, holiday, rest days, compensation if
the employment relationship terminated by the service
provider before the specified time, wage adjustment
rights.

43
…, but the well-being of outsourced workers remains an issue.

The lack of welfare and protection for outsourced workers A study by AKATIGA* (2010) found that outsourced workers
is the main issue according to the employment actors. are more vulnerable than permanent employees.

Management Workers Labor Union Disnaker SP District APINDO 1. Wage Discrimination 2. Breach to regulations
100%

90%

80%
Outsourced workers
wage is
70%-90%
of outsourced
70% 26% workers worked
60% lower than permanent on production
employees section
50%

40%

30%
3. Opportunity discrimination
20%

10% Outsourced workers cannot join labor union, thus their

0%
rights are not protected.
Lack of protection for Outsourcing companies No guarantee on
outsourcing workers stipulate large fee workers quality

*) AKATIGA held survey and FGD on 600 labor respondents in 3 provinces and 7 districts.
44
Training and Education

1. Companies see no benefits from trainings.

2. Workers choose not to attend training.
3. Trainings provide positive impact to workers and companies.

45
Training and Education is not considered as a priority issue.

Is it important and urgent? Is it included in the top three prioritized policies?

56% 58%
53% 46%
50%
45%
35%

15% 16% 14%

8% 7%

Management Workers Labor Union Disnaker APINDO Labor Union Management Workers Labor Union Disnaker APINDO Labor Union
District District

Training and Education is considered to be important. It is not considered a priority issue.

Work Training and Education is considered to be important Only APINDO is in the opinion that the Training and Education
particularly by APINDO, Disnaker and labor union district. policy topic required immediate improvements.

46
Companies do not see the need of trainings yet.

Only about 40% of companies provided training Companies see no need for trainings

Why companies did not hold trainings?

Medium

44% No impacts from prior

trainings
Large Labor Intensive
Large Non Labor Intensive
of companies
provide 60%
trainings to Workers too busy 50%
workers
40%

Does not see the need 30%

20%
10%
Limited funds
33% Medium 0%
Limited funds Does not see
62% Large – Labor Intensive 0% 20% 40% 60% the needs
76% Large – Non-Labor
Intensive

47
As a result, most workers did not receive any training in the past one year.

Over 60 percent of workers did not receive training Due to no appropriate training
Yes, on
regular
basis, 100%
13% 90%
80%
70%
Yes, but
not 60%
routine, 50%
Not attend 23% 40%
training, 64% 30%
20%
10%
0%
No relevant Too busy Company did not Others
17% Medium training topic enroll workers to
provided by training
35% Large – Labor Intensive company
46% Large – Non-Labor
Intensive

48
Although trainings provide positive impact to workers and companies.

Trainings give value added to companies Companies benefit the most from trainings Workers have higher productivity

Benefits from trainings Productivity growth

70%
Management Workers Labor Union
70%
60% 100% 60%
90% 60%
50%
80% 50%
40% 70%
60% 40%
30% 50% 28%
30%
40%
20% 30% 20%
20%
10% 10%
10%
0% 0% 0%
Give a lot Give enough Give a few Does not Improve Workers can Higher quality Workers can Received training No training
value added value added value added give any workers' skill finish tasks of work work together
value added faster in team

49
Occupational Health and Safety (K3)

Not all companies provide appropriate and standardized Personal Protective Equipment
(Alat Pelindung Diri, APD).

50
Occupational Health and Safety is considered as an important issue but not seen as a priority.

Is it important and urgent? Is it included in the top three prioritized policies?

78% 80% 80%

55% 57%
50%

24%
20%
11% 13%
6% 5%

Management Workers Labor Union Disnaker Labor Union APINDO Management Workers Labor Union Disnaker Labor Union APINDO
District District

K3 is considered to be very important. It is not considered a priority issue.

K3 is considered to be important by all employment actors, K3 is not yet considered as an important issue compared to other
particularly by labor union district and company, and workers. policy topics.

51
 Despite regulatory requirements, not all companies have provided personal protective equipment
(APD) for their workers
DE JURE
DE FACTO

Manpower Minister
Regulation No 8/2010
Article 2 68%
Employers should provide APD
of companies 40%
for workers following the of companies have
prevailing standards provided APD
according to P2K3
Manpower Minister standards
Regulation No 4/1987
Article 2
Workplace with over 100
workers or high-risk
workplace should establish 58% Medium 25% Medium
P2K3
85% Large – Labor Intensive 63% Large – Labor Intensive

89% Large – Non-Labor 76% Large – Non-Labor

Intensive Intensive
52
P2K3: Advisory committee to ensure healthy and safe workplace
Obedient companies are mostly large companies with P2K3.

68% of companies 8% of companies have

have provided APD provided APD but not yet
25% of companies
according to standards have not provided APD
according to standards

Companies that complied

1. Large companies 2. Companies with P2K3

Large –Non-Labor Intensive 89% 56% of companies that

complied have P2K3
Large –Labor Intensive 85%
Only 22% of the complied
Medium 60% companies have P2K3
53
Win-Win Solutions?

54
 Top three
“Workers and prioritized policies

labor union put

concerns on • Minimum Wage
• Wage Structure & Scale
policy that • BPJS Kesehatan
affects their •
•
K3
Outsourcing
short-term Short-term Long-term
benefits benefits
wellbeing.“
• Collective Labor
Agreement
• Severance Pay
• Training and Education
• BPJS Ketenagakerjaan

Not top three prioritized

policies
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“Find a win-win WORKERS/LABOR UNION
solution for all
GAIN COMPROMISE
stakeholders.“
• Encourage Collective Labor Agreement • Accept Minimum Wage according PP No.
(GoI). 78/2015.
• Increase and improve BLK (GoI). • Severance pay to be more funded,
• Improve BPJS Kesehatan service quality affordable and linked to new SJSN

GAIN
(GoI). unemployment benefit.
• Support job searching process (GoI). • Greater role for outsourcing and fixed
• Skills development program (GoI). term.
COMPANIES • Increase certainty of income protection
(GoI).

• Increase compliance of Minimum Wage

and Wage Structure and Scale.
COMPROMISE
• Improve BPJS Kesehatan benefits top-up
mechanism.
• Increase SJSN compliance.
• Greater firm investment on worker skill.
• Increase Severance Payment compliance.
• Greater accountability on temporary
staffing agency to provide protection of
outsourced workers.

56