On Labour Day 2025, KSPI shared six demands with the President, including ending outsourcing and changing the Manpower Law. These points have once again brought up the ongoing debate about outsourcing in Indonesia.
As someone who works closely with both companies and employment law, I believe it’s important to understand that outsourcing is not always harmful, but it does come with risks if not properly managed.
The Job Creation Law (2023) was created to make it easier for businesses to use outsourcing, especially after the economic impact of COVID-19. But until now, detailed rules have not been released, which makes things unclear, especially about what types of jobs can be outsourced.
Some important points to highlight:
- The law says outsourced workers must be hired under permanent or fixed-term contracts, and they must receive all basic rights under the law.
- However, in real life, many outsourced workers still face lower pay, less job security, and fewer chances to raise complaints.
- There is also confusion between outsourcing business processes (under the Civil Code) and outsourcing workers (under the Manpower Law), which can cause misunderstandings.
For companies, outsourcing helps reduce costs and focus on their main business. That’s why completely banning it migh create new problems, like more informal workers or even layoffs.
So what’s the solution? Not banning it—but making it clearer and fairer:
- Clearly list what jobs can be outsourced
- Make sure workers keep their rights when outsourcing contracts change
- Strengthen inspections and checks by the government
- Encourage companies to work only with responsible outsourcing partners
Outsourcing can still be a good system, but only if it’s done in a fair, clear, and legal way. It’s not just about protecting workers or helping businesses; it’s about finding the right balance so both can grow.
Read my full article on Business Asia here: https://businessasia.co.id/labour-day-better-outsourcing-governance/
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