Labor Issues in Indonesia

The labor climate in Indonesia is experiencing a period of considerable trials due to the COVID-19 pandemic and is more or less affected by changes in the global situation due to the war crisis in Ukraine due to the Russian invasion. In the midst of the Constitutional Court (MK) ruling regarding the unconstitutionality of the Job Creation Law issued by the Joko Widodo administration in 2020. Various reactions, especially from workers or laborers, continue to occur, saying that the law and the Government Regulation in Lieu of Law (Perppu) issued in 2023 are still not in favor of the fate of workers.

In general, Indonesia's labor conditions have changed long before the global crisis occurred. In 2022, the total Indonesian labor force amounted to 80.24 million people out of 275.77 total Indonesian population (BPS, 2022). In terms of education alone, the number of workers with diplomas, academies, and universities comprised 70.01 percent with ages ranging from 30-59 years, followed by 26.15 percent aged 15-29, and 3.84 percent aged over 60 years (BPS, 2022). Inequality occurs when looking at the composition of the labor force in urban areas, 73.76 percent, compared to those living in rural areas, 26.24 percent. The composition of the highly educated labor force in terms of gender does not differ too much, namely 51.37 percent of men versus 48.63 percent of women.

Data on the number of workers before and after the pandemic shows a trend towards movement from the formal sector to the informal sector (Ministry of Manpower 2021). Based on data from the Central Statistics Agency (2022), the percentage of informal workers in Indonesia covers more than 50 percent (59.31%) of the total Indonesian workforce, which is around 80.24 million people. Although this figure decreased from the previous one in 2021 of 59.45% or 78.14 million people, the number increased from 2020.

Important factors affecting labor conditions globally are: First, there is a technological revolution accompanied by digitalization, increased usage of Artificial Intelligence (AI) or artificial intelligence, optimization of biometrics replacing conventional identification, automation processes replacing human labor to mechanics, transformation of conventional technological equipment towards robots, and the use of technology. big data in decision-making has an impact on public welfare. Secondly, there is a skills revolution where technological changes occur that lead to the emergence of gaps or mismatch between workforce needs and existing competencies.

Third, cultural changes, one of which is caused by the rapid exchange of information through social media channels, have changed the lifestyles of workers and prospective workers who have responsibilities, perceptions of the balance between life and work, views on social propriety values, and assessments of future organizational needs to be very different. Fourth, demographic changes along with the increasing quality of human life, lifestyles that tend to postpone the age of marriage, the declining population in developed countries and the increasing population in developing countries encourage the increase in the number of workers in the future. ageing population or aging population, population movements in the form of migration and urbanization, leading to huge pressure on the job market and high demand for social protection. Finally, climate change has threatened the agricultural employment sector and natural resource-based industries to immediately address the adverse impacts of increasing global temperatures by transitioning to a green economy, low-carbon industrial policies, and the use of alternative energy as an environmentally friendly mode of production (Ministry of Manpower 2022).

Global challenges megatrend This is an urgent issue for the Indonesian government to address, especially if the welfare of the entire Indonesian population is a common goal. The spirit of inclusion, especially for workers with disabilities, women and young people, needs to be addressed. Demographic bonus or demography dividen Indonesia's labor force, which is expected to occur in 2045, will contribute around 203.97 million productive-age workers. If the Indonesian government does not take meaningful action, Indonesia will certainly experience a socio-economic shock that can threaten the quality of Indonesian labor to compete in the global arena.

Populi Center through a national survey from March 27 to April 3, 2023 tried to capture public interest, one of which was related to the issue of Indonesian employment. Apart from the polemics over the Job Creation Law, from the overall opinion of respondents, the level of satisfaction with the performance of the Joko Widodo - K.H. Ma'ruf Amin administration in job creation still occupies a fairly high average satisfaction level, namely a total of 65.8 percent, showing very satisfied (6.7 percent) and satisfied (59.1 percent).


Figure 1. Indonesia's pressing labor issues


From the results of the survey, 18.9 percent of respondents viewed that the urgent issue of Indonesian employment was the problem of protecting Indonesian workers. Another 17.2 percent said that the provision of health insurance is an urgent issue that the government needs to pay attention to.

Considering that such challenges threaten workers in the formal sector, Indonesia's G20 Presidency in the labor group encourages the discussion of important labor issues, including the need for training to encourage entrepreneurial spirit by increasing labor competence through vocational training centers. (vocational training) In addition, the survey also found that the majority of respondents were interested in entrepreneurship training at the Vocational Training Center (BLK) and protection and job security, especially for marginalized women.  From the survey results, the average respondent (77.1 percent) said that they were interested in participating in entrepreneurial training at the Job Training Center (BLK) around their neighborhood. Meanwhile, respondents' satisfaction with the policy of providing protection and guarantees for the rights of women workers, such as menstrual leave, maternity leave, and others, showed an average satisfaction of 67.7 percent.

Thus, after the Supreme Court's decision on Law Number 22 of 2022 on the Job Creation Law which was declared formally flawed, the government responded by issuing a Government Regulation in Lieu of Law (Perppu) on Job Creation to fill the legal vacuum during the process in the House of Representatives. Survey data, in fact, shows that the level of respondents' satisfaction with policies such as the provision of employment is still quite high. However, the government certainly needs to continue to improve their performance, especially in responding to the urgent needs of labor in terms of providing labor protection, health insurance, and attention to the fate of honorary workers.