Apindo Concerns The Need For Sustainable Manpower As A Result Of The Job Creation Perppu Wage Rules

Apindo Chairman Hariyadi B Sukamdani. (Photo: Savic Rabos, DI: Raga VOI)

JAKARTA - Chairman of the Indonesian Employers' Association (Apindo) Hariyadi Sukamdani admitted that he was worried about the shrinking need for labor supply due to changes to the rules regarding the minimum wage in Government Regulations in Lieu of Law (Perppu) Number 2 of 2022 concerning Job Creation or Employment Creation Perppu.

Hariyadi said that the formula for calculating the minimum wage (UM) in Perppu which considers economic growth, inflation, and certain indexes will burden the business world.

The reason is, the Job Creation Law only includes one variable, namely related to economic growth or inflation alone.

The formula is even almost the same as the determination of the UMP based on Permenaker Number 18 of 2022, which the minimum wage value is an addition between inflation and the multiplication of economic growth and certain index variables.

"Actually, if UM follows Permenaker 18/2022, it will shrink the workforce even more. So, between job creation and the number of new workforces that come in and those that already exist are no longer proportional," he said at a press conference in Jakarta, Tuesday, January 3.

According to Hariyadi, ideally one job should be available to one worker.

However, he continued, currently the formal sector only absorbs 35 million people out of a total of 144 million existing workforces.

"As a result, (the workforce) will shrink if this continues. The trend will continue," he said.

Based on data from the Ministry of Investment/BKPM, Hariyadi said that for the past eight years or the 2013-2021 period, employment decreased to 70 percent, even though investment realization increased.

In this data, it was recorded that in 2013 there was a job creation of up to 1.8 million people with a total investment of IDR 398.3 trillion. However, employment decreased drastically to 1.2 million people in 2021 with a total investment realization of IDR 901 trillion.

From this data, it is known that labor absorption per IDR 1 trillion investment shrank to 70 percent from 4,500 people in 2013 to 1,300 people in 2021.

"We as employers and investors, it's not good for us, because if that happens, a demographic bonus won't happen. What's there is even a burden and it's already happening," he said.

The burden in question is the increasing number of people who must be subsidized by the government.

Regarding this subsidy, government data noted that in 2019 there were 36.3 percent of the population receiving social assistance (bansos). This figure rose to 58.8 percent in 2022.

On the same occasion, Apindo's Head of Manpower and Social Security Anton J. Supit said that his party fully supports the government to encourage the creation of quality workers in Indonesia.

Anton said Apindo did not oppose the increase in the minimum wage at all.

Changes in the rules regarding the minimum wage, said Anton, will have a very significant impact on potential investors who will invest in Indonesia, especially investors in the labor-intensive sector.

"The most important thing for potential investors who will enter, he will predict how the wages will be in the next five years. Say that if it increases by 10 percent every year, it means that in five years it will increase by 50 percent," he said.

Anton said, the minimum wage is a social safety net that applies only to workers who have just started work or have never worked.

"We are fighting not only for us or entrepreneurs, but also for the government to achieve human development requirements. Our job is to create as many jobs as possible and if we can't, don't let it disappear," he concluded.