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JAKARTA POST, 01 Mei 2013
Donny Armawan, a 28-year-old contract worker at a footwear
factory in Pasar Kemis in the Banten regency of Tangerang, can support his
family, pay his rent and send his children to elementary school mainly because
his wife also works in another factory in the industrial town.
He has been employed in the factory’s sewing section for six years after renewing his contract three times with a worker supply company hiring and employing him.
During his six years of employment, he has never enjoyed a wage increase because, based on his contract, he is paid according to the regional minimum wage. He has never been promoted to the permanent staff because after his contract was renewed a second time, it could not immediately be renewed again — as stipulated by the 2003 Labor Law. Consequently, Donny was asked to wait two months at home before he was recruited again.
Donny was rehired last January with a monthly salary of Rp 2.3 million (US$238) in accordance with the Banten governor’s decree on the minimum wage for the labor-intensive sector.
Donny is not alone. He is one of around 20 million workers in the formal sector who have been employed under similar schemes, thanks to the 2003 Labor Law, which allows investors to outsource part of their non-core business to other companies.
Many employers have infringed the law and outsourced part of their core business jobs to minimize their labor and production costs.
In a similar way surprisingly, or perhaps unsurprisingly, almost all state-owned enterprises (SOEs) have set up subsidiaries to supply contract-based workers to slash labor costs and produce higher returns to their respective parent companies.
This practice highlights the evils in the outsourcing system that is in place in the country. Outsourcing is merely an unemployment system in the neoliberal economy, which the government does not have to deal with.
The issuance of Ministerial Decree No. 19/2012 should not only focus on the way a company outsources certain jobs to other companies and the types of jobs that can be outsourced, it should, more importantly, focus on labor standards and protection. Investors should be able to freely outsource their core and non-core businesses to other entities, but labor standards must be enforced and workers must be well-protected.
The practice of outsourcing has persistently been rejected by workers and their unions, primarily because it causes job insecurity in the sense that outsourcing companies do not adhere to labor standards in their recruitment and employment.
Cleaning services, driving, security systems and catering are continuous jobs that are allowed to be outsourced but, unfortunately, companies to which those jobs are outsourced have yet to comply with labor standards or implement harmonious industrial relations in reward to the status of workers, promotion, employment and social security protection in accordance with the Labor Law.
Outsourcing has adversely affected both workers and the government because workers have no job security, lack protection and are underpaid, while the government suffers losses from workers’ income tax.
Millions of workers have been employed for decades under the outsourcing system, and if they were given permanent status after two renewals of their work contracts, their monthly wages would be raised annually and would, consequently, be subject to income tax as their wages would be higher than the non-taxable monthly income allowance.
The government should feel ashamed that almost 130 SOEs outsource a proportion of their jobs to subsidiaries without setting a good example to the private sector. The labor and health commission at the House of Representatives recently raided the residence of State-Owned Enterprises Minister Dahlan Iskan after he failed on four occasions to show up for a hearing to settle the issue. Sadly, President Susilo Bambang Yudhoyono has not responded to the matter.
The cheap labor policy and poor remuneration system have also bred a sense of in justice among workers because they remain underpaid despite the robust economy, which has consistently grown by 6 percent over the last few years.
The majority of workers, especially those in the informal sector, are still paid in accordance with the regional minimum wage, hence provoking strikes, demonstrations and sometimes clashes whenever the government, employers and labor unions renegotiate wage levels. Many sides have professed to be under-informed that the minimum wages are set on the basis of 60 outdated components, such as wooden beds, kerosene lights and 6 kilograms of rice per month for a single worker, while the Labor Law regulates better physical needs.
Despite the recent wage hike in several provinces of up to 40 percent, most regional minimum wages are still 89 percent of the decent payments set by the government, and major confederations of workers’ unions have proposed 80 updated wage components to the government and employers to set a fixed and better remuneration system to enable workers to live decent lives.
In the case of small businesses having financial difficulty in paying their workers the regional minimum wages, employers could resolve the matter through bipartite negotiations with reservations that employers are transparent about their spending, unveil financial accountability and treat workers as equal negotiating partners.
Generally, workers will be willing to increase their productivity as required by management, but only if they are paid sufficiently. Neither will they mind if their employers postpone a wage increase if the employers are transparent and disclose their financial reports. ●
He has been employed in the factory’s sewing section for six years after renewing his contract three times with a worker supply company hiring and employing him.
During his six years of employment, he has never enjoyed a wage increase because, based on his contract, he is paid according to the regional minimum wage. He has never been promoted to the permanent staff because after his contract was renewed a second time, it could not immediately be renewed again — as stipulated by the 2003 Labor Law. Consequently, Donny was asked to wait two months at home before he was recruited again.
Donny was rehired last January with a monthly salary of Rp 2.3 million (US$238) in accordance with the Banten governor’s decree on the minimum wage for the labor-intensive sector.
Donny is not alone. He is one of around 20 million workers in the formal sector who have been employed under similar schemes, thanks to the 2003 Labor Law, which allows investors to outsource part of their non-core business to other companies.
Many employers have infringed the law and outsourced part of their core business jobs to minimize their labor and production costs.
In a similar way surprisingly, or perhaps unsurprisingly, almost all state-owned enterprises (SOEs) have set up subsidiaries to supply contract-based workers to slash labor costs and produce higher returns to their respective parent companies.
This practice highlights the evils in the outsourcing system that is in place in the country. Outsourcing is merely an unemployment system in the neoliberal economy, which the government does not have to deal with.
The issuance of Ministerial Decree No. 19/2012 should not only focus on the way a company outsources certain jobs to other companies and the types of jobs that can be outsourced, it should, more importantly, focus on labor standards and protection. Investors should be able to freely outsource their core and non-core businesses to other entities, but labor standards must be enforced and workers must be well-protected.
The practice of outsourcing has persistently been rejected by workers and their unions, primarily because it causes job insecurity in the sense that outsourcing companies do not adhere to labor standards in their recruitment and employment.
Cleaning services, driving, security systems and catering are continuous jobs that are allowed to be outsourced but, unfortunately, companies to which those jobs are outsourced have yet to comply with labor standards or implement harmonious industrial relations in reward to the status of workers, promotion, employment and social security protection in accordance with the Labor Law.
Outsourcing has adversely affected both workers and the government because workers have no job security, lack protection and are underpaid, while the government suffers losses from workers’ income tax.
Millions of workers have been employed for decades under the outsourcing system, and if they were given permanent status after two renewals of their work contracts, their monthly wages would be raised annually and would, consequently, be subject to income tax as their wages would be higher than the non-taxable monthly income allowance.
The government should feel ashamed that almost 130 SOEs outsource a proportion of their jobs to subsidiaries without setting a good example to the private sector. The labor and health commission at the House of Representatives recently raided the residence of State-Owned Enterprises Minister Dahlan Iskan after he failed on four occasions to show up for a hearing to settle the issue. Sadly, President Susilo Bambang Yudhoyono has not responded to the matter.
The cheap labor policy and poor remuneration system have also bred a sense of in justice among workers because they remain underpaid despite the robust economy, which has consistently grown by 6 percent over the last few years.
The majority of workers, especially those in the informal sector, are still paid in accordance with the regional minimum wage, hence provoking strikes, demonstrations and sometimes clashes whenever the government, employers and labor unions renegotiate wage levels. Many sides have professed to be under-informed that the minimum wages are set on the basis of 60 outdated components, such as wooden beds, kerosene lights and 6 kilograms of rice per month for a single worker, while the Labor Law regulates better physical needs.
Despite the recent wage hike in several provinces of up to 40 percent, most regional minimum wages are still 89 percent of the decent payments set by the government, and major confederations of workers’ unions have proposed 80 updated wage components to the government and employers to set a fixed and better remuneration system to enable workers to live decent lives.
In the case of small businesses having financial difficulty in paying their workers the regional minimum wages, employers could resolve the matter through bipartite negotiations with reservations that employers are transparent about their spending, unveil financial accountability and treat workers as equal negotiating partners.
Generally, workers will be willing to increase their productivity as required by management, but only if they are paid sufficiently. Neither will they mind if their employers postpone a wage increase if the employers are transparent and disclose their financial reports. ●
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