KSPI highlights loopholes in Indonesia's new Labor Protection Law

The Indonesian Confederation of Trade Unions (KSPI) and the Labor Party have expressed critical observations regarding the newly passed Labor Protection Law. While Said Iqbal, President of both KSPI and the Labor Party, noted that the new regulations show improvement over the employment clusters in the Job Creation Law, he identified several substantial loopholes that require clarification.

Key concerns include the definition of wage suspension for companies claiming inability to pay. KSPI is calling for objective indicators, such as two consecutive years of reported losses, to prevent exploitation. Additionally, there are concerns regarding apprenticeship regulations, specifically the risk that companies might use apprentices to bypass outsourcing restrictions and exploit cheap labor.

On a more positive note, the organization noted improvements in termination of employment (PHK) procedures, which now require mandatory notification and bipartite negotiations. The law also strengthens severance pay mechanisms by establishing a minimum payment of at least one time the standard provision, potentially ending previous practices of paying only 0.5 times the provision. Minimum wage formulas are also expected to consider decent living standards, inflation, and economic growth.