Wokers’ rights are once again undermined with a reason ‘to sustain work and companies.’ A new Minister regulation on Working Hour Adjustment and Wages of Companies in Labour Intensive Industries with Export Orientation was issued. The government's rationale is to respond to lower demand in labour-intensive industries with export orientation amidst the uncertainty of the global economy. Want to know more about this? Check the FAQ below!
- What are the rationales behind the Minister’s regulation or Permenaker 5/2023?
- What does it mean by the companies in labour-intensive industries with export orientation?
- How is the adjustment of working hours in the Minister's regulation?
- How is the adjustment of wages in the Minister’s regulation?
- If the global economy improved, would those companies still implement the regulation?
- Do workers or trade unions have a chance to refuse the regulation in their company?
- Why is the regulation disapproved by workers or trade unions?
What are the rationales behind the Minister’s regulation or Permenaker 5/2023?
The Manpower Minister stated, in the preamble of Permenaker 5/2023, that there are two reasons behind the Law. First, changes in the global economy brought lower demand in the labour-intensive industry with export orientation. Second, to maintain the sustainability of work and companies.
What does it mean by the companies in labour-intensive industries with export orientation in the Law?
Such companies in labour-intensive industries with export orientation mentioned in the Law should have these requirements:
- Companies that employ at least 200 workers
- Companies whose percentage of their labour cost is a minimum of 15% of the total cost, and
- Companies whose production depends on orders from the USA and European countries are verified through their invoices.
The Minister's Law mentioned five industries: textile and garment, footwear, leather, furniture, and toys. The Manpower Minister’s Law also aligns with the Industrial Minister’s Law on the definition and classification of labour-intensive industries. The former also includes other industries: food & beverage and tobacco.
How is the adjustment of working hours in the Minister's regulation?
The Minister's Law's core substance is to allow companies to reduce working hours and deduct wages. It enables working hours to be lower than 40 hours/week. In article 5, point 3, the Law explains, “The adjustment of working hours could be done with seven hours/day and forty hours/weeks for six working days per week or eight hours/day and forty hours/week for five working days per week.
How is the adjustment of wages in the Minister’s regulation?
Article 8, point 1 of the Minister’s Law, regulates that wage reduction can be up to 25% of total wages. It also brings other crucial issues regarding the calculation of social security benefits, layoff severance, and other rights of workers. Therefore, those calculations must be based on the last wages before wage reduction.
If the global economy improved, would those companies still implement the regulation?
No. The Minister’s Law was issued to respond to the global economic recession. Thus, it is only temporary, precisely six months, since the Law was enacted on September 7th, 2023.
Do workers or trade unions have a chance to refuse the regulation in their company?
Yes. The adjustment could only be implemented if only both parties (employees and employer) agreed with the requirements below:
- The agreement has to be based on three principles: transparency, goodwill, and kinship
- The agreement should be written in writing and contains a. working hour adjustment; b. wages; and c. period of the agreement, which is not more than six months after the Law is issued.
- The employer announces the agreement to workers and trade unions and the Local Manpower Agency and forwards it to the Provincial Manpower Office and the Manpower Ministry, with the attachment of evidence as the companies in labour-intensive industries with export orientation
- The Local Manpower Office records the agreement and provides a record of evidence to employers
- The labour inspections will monitor the agreement implementation under the General Director of Development of Industrial Relations and Worker’s Social Security, Ministry of Manpower.
Why is the regulation disapproved by workers or trade unions?
A lot of people believe the Minister’s regulation number 5 of 2023 is a violation of the labour law. The Minister’s regulation contradicts the higher Law, the job creation law. The job creation law states employers cannot pay workers below minimum wages. In practice, minimum wages for workers under one year of employment and above one year.
The Minister’s Law is also discriminative to workers in the five industries mentioned. The economic recession could not be justified because it has also impacted every industry. For instance, the 'tech winter’ phenomenon has affected hundreds of industry workers.
Discrimination has very much affected women workers in labour-intensive industries. It is the only accessible sector for women workers in Indonesia. In other words, women workers will be the ones most affected by the Minister’s Law.