Amendment of Indonesia Labour Act (Act No. 13/2003 and Chapter IV Act No.11/2020)

Article 80 (a) Part One Chapter IV of Job Creation Act No. 11 of 2020 (Omnibus Law) indicates it does not repeal the Labour Act No. 13 of 2003, but instead it changes, removes or sets new provisions stipulated in the Labout Act No. 13 of 2003. This means that those provisions of Labour Act 13 of 2002 that were not amended, removed or reset (and its derivative regulations) are still applicable as long as they are not in conflict with provisions stipulated in the Omnibus Law.

Thus, we synchronized, and compiled both Labour Act Part One Chapter IV of Job Creation Act No. 11 of 2020 (Omnibus Law) and Labour Act No. 13 of 2003 in order to provide an alternative update view of the Act/s. We also include in the Compilation Labour Act document below, information about its derivative regulations and the relations between relevant Constitutional Court Decision and the amendment of the Labour Act.

Below we enclosed the Bahasa Indonesia and English translation of the Amendment.

2021 City/District Minimum Wage of All Provinces and Special Regions in Jawa

Jawa is an island of Indonesia and the site of its capital city, DKI Jakarta. Jawa consists of two Special Regions (DKI Jakarta and DIY) and four Provinces (Jawa Barat, Banten, Jawa Tengah and Jawa Timur).

Since the Dutch colonialism, Jawa is the centre of economic life in Indonesia. The bulk of the top country’s industry sectors and manufacturing mainly concentrate in the Island with approximately 60% of manufacturing operates in the Western Part of the Island (DKI Jakarta, Banten and Jawa Barat).

The heavy concentration of country’s industry sectors and manufacturing is shown by its City/District minimum wage trend. In 2021, at least 7 municipalities in the Province of Jawa Barat (West Java), five (5) municipalities in the Province of Banten and taken into account the Provincial Minimum Wage of the Special Region of Jakarta; all have minimum wage more than 4million Rupiahs per month (equivalent to USD 283). In comparison, only the Province of Jawa Timur (East Java) has 5 municipalities with minimum wage more than 4million Rupiahs. All other Province and Special Region: the Province of Jawa Tengah (Central Java) and Special Region of Yogyakarta (DIY), have no municipality with minimum wage reaching 4million Rupiahs.  

2021 Provincial Minimum Wage

All the provinces and special regions in the Indonesia have issued the 2021 provincial minimum wage on 1 November 2020 (see below).

Whilst, the Minister of Manpower Circular Letter issued on 26 October 2020 addressed to all of the Governors in Indonesia direct them to maintain the same amount of figure as per the 2020 provincial minimum wage; five provinces and special regions decide differently with with the Circular Letter directive. This likely a micro reflection of the Central Government policy efficacy at the regional level and mismatch of labor politics between Central and Regional Governments.

Omnibus Law in Indonesia

The President of Republic of Indonesia has finally signed the contentious Omnibus Bill into Law on 2 November 2020, despite marathon protests and rallies by trade unions and civil societies since early October 2020. The 1.187 pages Law (consists of 769 pages on Articles of Law and 418 pages of Explanation) is registered in the State Gazette as Law No. 11 of 2020 concerning Job Creation (full version and Chapter IV of the Law can be downloaded below).

Interestingly, at least on the Employment Chapter, the Legislative did not actually repeal Labour Act No. 13 of 2003 but instead change, remove or set new provisions stipulated in Labout Act No. 13 of 2003, as stated in Article 80 (a) Part One Chapter IV of the Omnibus Law. This means that those provisions of Labour Act 13 of 2002 that were not amended, removed or reset (and its derivative regulations) are still applicable as long as they are not in conflict with provisions stipulated in the Omnibus Law. Thus, at the face value, there are two Laws governing the subject matter. As such, compilation and comparison are needed to capture all of the valid Employment related Law provisions.

The 2021 Minimum Wage Setting

In one of our posts from August 10, 2020 we had proposed a point of thought to postpone increment of the minimum wage for at least one year and have the 2020 minimum wage applied until 31 December 2021. The primary reasoning for this point of though is the unfavorable economic picture as a result of the Covid-19 pandemic will likely last for at least two years. Also that pushing an increased minimum wage likely exacerbate non-conformance of minimum wage anywise as businesses are struggling to keep their operations going.

Similar reasoning seemed to be used by the Government of Indonesia when issuing the recent Ministry of Manpower Circular Letter No. M/11/HK/04/X/2020 signed on 26 October 2020. Point C of the Circular Letter in question read the following:

C. Determination of the 2021 Minimum Wage
Taking into account Indonesia’s economic conditions during the COVID-19 pandemic and the need for national economic recovery, the Governor is requested to:

  1. make adjustments to the determination of the 2021 minimum wage to be the same as the 2020 minimum wage;
  2. to determine the minimum wage after 2021 in accordance with statutory provisions;
  3. set and announce the 2021 provincial minimum wage on 31 October 2020.

Although the above seems to be the most logical administrative decision on the subject matter considering the current situation, major trade unions in Indonesia will not accept the 2021 minimum wage decision/s lightly. One of the major trade unions, Konfederasi Serikat Pekerja Indonesia (KSPI), has condemned this circular letter, stating that increase in the minimum wage next year will in fact encourage economic growth due to increase in the purchasing power of workers. Also, that the Minister of Manpower only takes into account the interests of employers alone. Further, KSPI threatens to conduct large-scale demonstrations and warn the Government of exacerbation of union activism against unpopular administrative decisions and labour regulations which include the circular letter in question and the contentious Omnibus Law.

It appears the last two months of the year 2020 is going to be a bumpy road for Indonesia Industrial Relations, with potential escalation of conflict between the relevant stakeholders.