Law of the Republic of Indonesia No. 6 of 2023 on the Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation marks a new era in the conduct of national life in Indonesia. The Job Creation Law is hoped to absorb Indonesian labor as broadly as possible amid increasingly competitive conditions and the demands of economic globalization, as well as the challenges and global economic crises that could disrupt the national economy. The Job Creation Law is regarded as capable of balancing the three general categories of regulation: first, economic regulation, intended to ensure market efficiency, partly through the promotion of adequate competition among business actors. Second, social regulation, intended to promote the internalization of all relevant costs by economic actors. Third, administrative regulation, which aims to ensure the proper functioning of public and private sector operations.
The existence of the Job Creation Law has been followed up by a number of implementing Government Regulations, including Government Regulation No. 34 of 2021 on the Use of Foreign Workers, Government Regulation No. 35 of 2021 on Fixed-Term Employment Agreements, Outsourcing, Working Hours, Rest Periods, and Termination of Employment, Government Regulation No. 36 of 2021 on Wages, and Government Regulation No. 37 on Job Loss Insurance. To varying degrees, all of these provisions will affect the implementation of employment regulation, particularly at the regional level.
The City of Yogyakarta is one region that has its own regional regulation governing the administration of employment affairs -- namely, Yogyakarta City Regional Regulation No. 13 of 2009 on the Administration of Employment. This regional regulation needs to be promptly updated to align with the latest legislative provisions. While regional governments are not specifically mandated to regulate employment matters within their respective regions in further detail, Article 14 of Law No. 12 of 2011 on the Formation of Legislation and its amendments provides that the substantive content of Provincial and City/Regency Regional Regulations may include matters relating to the implementation of regional autonomy and specific assistance duties, as well as matters that accommodate the particular conditions of a region or elaborate further on higher-level legislation - meaning the City Government of Yogyakarta has the authority to draft the relevant regional regulation.
The drafting of this new regulation was carried out to bring the regulation into alignment with current legislative provisions. On this basis, a number of adjustments have been made, including facilitating the use of formal and informal worker terminology -- given the relatively large proportion of informal workers in the City of Yogyakarta -- facilitating provisions that encourage the formation of company regulations or collective labor agreements, clarifying the employment relationship between workers/laborers and employers in employment agreements, particularly with regard to outsourcing arrangements, affirming employment opportunities for persons with disabilities in the public sector, BPJS (social security) guarantees for female workers who are often presumed to be unmarried, BPJS guarantees for workers in small and micro enterprises, and provisions on the importance of cross-agency and cross-sectoral coordination.
This regulation is being implemented beginning with the drafting of an academic paper, in accordance with applicable legislative provisions. The completed academic paper will serve as the foundation for drafting the regional regulation. This drafting process also takes into account the importance of public involvement. Public involvement is carried out by the government by opening the broadest possible channels for input from groups that will be affected by these provisions. It is hoped that, through this approach, the resulting regional regulation will be both effective and beneficial.
