Employers can no longer “easily” lay off workers on the grounds of cost efficiency
[JAKARTA] Indonesia’s parliament passed a bill aimed at strengthening worker protections into law on Tuesday (Oct 6), providing higher severance benefits for terminated employees and unwinding some of the pro-business reforms introduced by the previous government.
The bill was passed by a parliament overwhelmingly controlled by President Prabowo Subianto’s coalition. Prabowo, approaching his second anniversary in office this month, has seen his approval rating plummet due to public perceptions of a deteriorating economy.
While economic growth has held at above 5 per cent, Indonesia’s financial markets have been affected by capital outflows, with investors concerned about the country’s fiscal health as fuel subsidies surge and the government pushes ahead with costly programmes.
The full text of the law has yet to be made public, but Manpower Minister Yassierli confirmed that severance allowances have been revised to the benefit of terminated workers and that employers could no longer “easily” lay off workers on the grounds of cost efficiency.
“This bill reflects a balance between the protection of workers’ fundamental rights and the sustainability of the business sector,” the minister told parliament after lawmakers voted to pass the bill.
The minister also said the new law called for the creation of a severance security programme, which would ensure that a company has the funds to pay...
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