In accordance with the Constitutional Court’s ruling, a new Manpower Law must be in place no later than October 31, 2026.
By: Rekson Silaban (**)
The Manpower Bill initiated by the House of Representatives has been released to the public. In accordance with the Constitutional Court’s mandate, a new Manpower Law must be enacted no later than October 31, 2026.
Although the drafting of this law follows Constitutional Court Ruling Number 168 of 2023, the timing is particularly opportune given the shifting landscape of the world of work, which is currently facing two major transitions: technological transformation and climate change. Both transitions have the potential to eliminate certain conventional jobs while giving rise to new types of employment not yet covered by Indonesian labor regulations.
Most current labor regulations are legacies of the 20th-century industrial era. We are now navigating a fundamentally different 21st-century landscape characterized by artificial intelligence (AI), digital platforms, automation, flexible work arrangements, and a data- and knowledge-based economy. Therefore, the new Manpower Law must be capable of addressing the challenges facing the workforce of the future.
The author proposes nine key points to be incorporated into the Manpower Law. First, the law must be grounded in the constitutional paradigm mandated by Article 27, Paragraph (2) of the 1945 Constitution, which states that “Every citizen shall have the right to work and to a living that befits human dignity.” Consequently, the regulation’s primary orientation should not merely be the governance of industrial relations, but also the guarantee of every citizen’s constitutional right to decent work. Thus, there is no need to aim for regulations that are specifically “business-friendly” or “labor-friendly.”
Second, the law must embrace the principle of inclusivity. This means that labor protections must extend to everyone who works to earn an income, not just those with formal employment relationships. This paradigm is crucial given that previous laws focused primarily on formal-sector workers, whereas a significant portion of the Indonesian workforce consists of informal workers engaged in non-standard work arrangements.
Third, the law needs to accommodate the interests of the “future of work,” including digital platform workers and those affected by the climate transition toward low emissions. The new regulation must be flexible enough to protect forms of employment emerging from these two transitions, as well as other types of work that do not yet exist today.
Fourth, the successful implementation of the Manpower Law hinges heavily on a comprehensive overhaul of the economic ecosystem—addressing issues such as high economic costs, corruption, and industrial policy, while reforming related regulations, particularly the social security system. The paradigm of protection has shifted from a model based on physical workplaces—such as factories or offices—to one grounded in cloud technology.
Fifth, a multi-layered regulatory framework for protection should be introduced. This approach adapts to the nature of Indonesia’s labor market, which is dominated by informal workers and micro- and small-scale enterprises. Labor protections cannot be applied uniformly to all workers; instead, they must be tailored to the specific characteristics of different groups—including formal and informal workers, migrant workers, domestic workers, digital platform workers, self-employed individuals, and profit-sharing-based workers.
The priority is ensuring that all workers receive a minimum level of protection while improvements are made progressively. After all, there are inherent differences in working conditions—and thus protection needs—between, for instance, an international restaurant and a local warung (small stall), or between a five-star hotel and a budget hotel. Imposing identical protection standards across the board would hinder the growth of small businesses and make it difficult for them to scale up. Such a “one-size-fits-all” approach often leaves small business owners unable to afford provincial minimum wages (UMP), social security contributions, and mandatory holiday allowances (THR) as stipulated by regulation.
Sixth, the law must be capable of preventing rising unemployment by offering greater business incentives to the manufacturing sector. This is because manufacturing contributes more significantly to providing decent employment compared to the service sector, where—with the exception of banking—the workforce is largely vulnerable. Consequently, Indonesia can avoid “premature deindustrialization”—a phenomenon where the manufacturing sector’s contribution to labor absorption declines before reaching an optimal level. Appropriate policies must be implemented to prevent a shift of the workforce toward a service sector dominated by low-productivity, informal jobs that offer minimal protection.
Seventh, a balance in labor protection is required. This represents a crucial aspect of the upcoming legislation: striking a balance between formal workers and those operating outside traditional employment relationships (balancing “labor-relation-based protection” with “labor-based protection”), as well as balancing the needs of current workers against those of future workers.
Nine key proposals
Based on the aforementioned paradigm, the following are key proposals that should be adopted in the new Manpower Law.
First, the redefinition of employment relationships and employers. In line with current employment trends, the law needs to redefine the concept of an employment relationship. The definition should be broadened to expand its scope, as the current legal definition excludes millions of workers from being recognized as part of an employment relationship simply because they do not receive a wage. Current legislation restricts employment relationships to workers whose roles involve three specific elements: work, wages, and orders. If a worker receives remuneration but does not meet these specific criteria, they are not considered to have an employment relationship.
The definition of “employer” also needs to be expanded to include any individual, entrepreneur, legal entity, or other body that provides work—whether directly or indirectly—in exchange for wages or other forms of remuneration. This change is crucial so that digital platform companies are no longer viewed merely as technology providers, but also as parties that establish employment relationships.
Second, protection for remuneration-based workers. The growth of the digital economy shows that remuneration-based work arrangements are increasingly replacing fixed monthly wage systems. Therefore, a legal definition for remuneration-based workers is required. This ensures that all workers paid via remuneration are entitled to the full scope of statutory protections. Employment agreements based on profit-sharing systems must be executed in writing, and employers are obligated to register these workers in social security programs in accordance with prevailing laws and regulations. Under Manpower Law No. 13/2003, protections for remuneration-based workers are virtually non-existent.
Third, protection for digital platform workers. The status of digital platform workers requires legal certainty through specific provisions within the Manpower Law. Definitions regarding digital platform workers and platform companies should align with International Labour Organization (ILO) standards, thereby ensuring that millions of platform workers receive labor protections. Indonesia should also consider ratifying the ILO Convention concerning digital platform workers to further strengthen legal certainty.
Fourth, the protection of workers affected by climate change. The transition to a low-carbon economy will have consequences for employment, particularly in the mining and fossil fuel energy sectors. Therefore, legislation must mandate protections for workers affected by climate change through measures such as climate-risk-based job loss insurance schemes, expanded social security coverage, social dialogue prior to business closures, retraining, and priority job placement within the green economy.
Fifth, the establishment of a Skill Development Fund. Technological changes, automation, digitalization, artificial intelligence, and the green transition are causing skill requirements to evolve far more rapidly than educational systems can adapt.
Indonesia needs to establish a Skill Development Fund, a model already implemented in various other countries. This fund would be used to finance reskilling, upskilling, and competency certification, as well as training for informal workers, MSMEs, job seekers, and workers affected by technological transformation or climate change.
Sixth, reforming the wage system through two concepts: the minimum wage and the decent living wage. Industrial relations conflicts have frequently been triggered by wage-related issues. The new law needs to introduce the concept of a decent living wage to implement Article 27, Paragraph (2) of the 1945 Constitution.
The minimum wage serves as a safety net for micro and small enterprises. Meanwhile, the decent living wage applies to medium and large enterprises, determined through negotiations between employers and labor unions based on wage structures and scales established by the government.
Seventh, reforming the labor inspection system. Weaknesses in labor inspection stem from an insufficient number of inspectors, low corporate compliance, the emergence of new forms of employment relationships, and persistent legal violations.
To strengthen oversight, a Tripartite Supervisory Board should be established at the national, provincial, and regency/city levels—involving the government, labor unions, and employer organizations—to enhance the effectiveness, accountability, and transparency of labor inspection activities.
Eighth, protecting workers affected by automation and artificial intelligence. The law needs to regulate the implementation of new technologies based on a people-centered principle. Companies intending to implement robotics, automation, or artificial intelligence that result in workforce reductions are required to provide notice to labor unions and the government at least 24 months in advance.
Workers who lose their jobs due to automation must also receive income support while participating in retraining programs for a period of six to twelve months.
Ninth, establish a maximum threshold for the proportion of vulnerable workers. To fulfill the constitutional mandate regarding a decent livelihood, the time has come to realize this objective within a new Manpower Law. The legislation needs to set a national target for the maximum proportion of vulnerable workers.
Since Indonesia’s independence, vulnerable workers have consistently constituted a dominant share of the workforce. This category includes informal workers, farmers, fishermen, street vendors, motorcycle taxi drivers, casual daily laborers, and the working poor. By comparison, OECD member countries typically have a vulnerable worker proportion ranging from 5% to 15%. Establishing such a threshold would serve as a benchmark for the success of national manpower policies in creating decent work.
The Manpower Bill must not merely be a revision of existing regulations; rather, it should act as an instrument of transformation toward an Indonesian labor market that is inclusive, adaptive, productive, and equitable. The nine proposals outlined above are intended to contribute to the development of a manpower system capable of protecting today’s workforce while anticipating future changes in the world of work. (**)
Rekson Silaban served as President of KSBSI from 2003 to 2011 and currently holds the position of Chair of the KSBSI Organizational Advisory Board (MPO) for the 2023–2027 term. He earned his doctorate from the School of Strategic and Global Studies (SKSG) at the University of Indonesia (UI), graduating cum laude with a dissertation titled “Labor Protection Policies for Transport Platform Workers.” During the Labour Twenty (L20) event in Bali, he was appointed by the government—specifically by Coordinating Minister for Economic Affairs Airlangga Hartarto—to serve as the Alternate Chair of Labour 20 within the Employment Working Group of Indonesia’s 2022 G20 Presidency.
Rekson also served on the Supervisory Board of BPJS Ketenagakerjaan (Social Security Agency for Employment) from 2016 to 2021. On the international stage, he served as a Vice President of the International Trade Union Confederation (ITUC) and as a member of the Governing Body of the International Labour Organization (ILO) in Geneva, Switzerland, from 2005 to 2014.
