IPB University Expert: Outsourcing Reform is More Urgent than Abolition
IPB University Labor Economics Expert, Dr Syamsul H Pasaribu, said that the outsourcing system in Indonesia should not be abolished suddenly.
Instead, he suggests that the outsourcing system be reformed to provide protection equal to that of permanent workers. This is so that the efficiency of the business world is maintained without sacrificing the rights of workers.
The outsourcing system has been an efficiency solution for various companies in Indonesia. However, the discourse on the abolition of this system has recently surfaced again.
As a lecturer at the Faculty of Economics and Management at IPB University, Dr Syamsul believes that the reform of the outsourcing system is more urgent than its outright abolition.
“The outsourcing system is clearly regulated in our regulations,” said Dr Syamsul. He referred to Law Number 13 of 2003 on Manpower, which was updated through the Job Creation Law Number 11 of 2020 and its derivative, Government Regulation Number 35 of 2021.
In the regulation, he said, outsourcing work is allowed as long as it is supporting and not directly related to the main production process.
Furthermore, he added that outsourced workers are entitled to equal protection with permanent workers. “Their wages and rights should be the same. For example, security guards who are directly employed by the company and those who are outsourced should receive the same treatment,” he explained.
However, Dr Syamsul said, in practice there are often imbalances. He highlighted the fact that outsourcing companies and labor-using companies often do not carry out their obligations as they should. As a result, outsourced workers are vulnerable to rights violations, especially in terms of social security, living wages, and job security.
“Actually, the problem is not with the outsourcing system, but with its implementation and the protection of workers’ rights,” he added.
Dr Syamsul also reminded that the outsourcing sector is not a small one. Based on data from the Indonesian Outsourcing Business Association Forum in 2018, there are at least 3.000 outsourcing companies employing around three million workers. The estimated number of outsourced workers even reaches 12-15 million people, or around 45-50 percent of Indonesia’s total formal workforce.
“If this system is abruptly abolished without a clear alternative, then tens of millions of workers could lose their jobs and unemployment would rise dramatically,” he said.
He also explained that the outsourcing sector in Indonesia is not limited to security and cleaning, but includes customer service, marketing, information technology development, and health services.
In a global context, developed countries such as Japan, Korea, and European countries have made outsourcing part of the formal sector.
“The informal sector there is small, maybe even below 10 percent. What we should encourage is the formalization of our informal sector, which is still around 59 percent of the total workforce nationally,” he said.
This informal workforce needs to have its work eligibility level improved when compared to outsourced labor.
According to him, the reform of the outsourcing system needs to focus on strengthening regulations and supervision. One of them is to ensure that there is a clear work contract between outsourced workers and outsourcing companies as well as companies that utilize outsourcing. Thus, workers’ rights are protected, including decent wages and social security.
“If there is a clear contract and strict supervision, then the outsourcing system can continue to run, efficiency can be maintained, and workers’ rights are also protected,” he said. (IAAS/RWA)
