Omnibus Jobs Bill

[Dave70]

Implementation is always the problem. I know a few people who buy/sell/produce commodity goods and say there is now way that they can afford to follow government regulations... unless their competition does the same. When margins are tight and you have higher labour costs that all your competition... you feel like you are losing (even if you do end up making a profit). Nobody wants to feel like a chump.

Obviously, it is the workers who are truly losing out in this deal, as full implementation would have all the producers raising their prices by a similar amount ( to cover higher labour cost).

For exporters, their competition is Sellers from another country e.g. Vietnam. Exporters from Indonesia cannot just raise their price due to higher labor costs, their Buyers will buy from Vietnam instead. So it's not so simple. Making a profit is necessary, otherwise, how can you pay your worker's severance when the time comes?

 

[Dave70]

How would you have Manpower handle implementation? I was thinking they could make registering the number of employees your business employs mandatory and then do random spot checks at businesses to count heads. Have a registration for 150 workers but 300 people in your factory? Great, here's your fine.
That would at least give you a way to get BPJS to work a bit better. I know it sounds difficult, but they manage to have registration for every motorized vehicle. They check cars one by one. Seems simpler to go to an office and count heads.

BPJS is already MANDATORY, but for permanent workers only. With the new Omnibus Law, more companies will hire temporary workers which are exempted from BPJS. How can you cover them with their 1 month or 3 months contracts anyway? The problem with BPJS is once a company registers, it is obliged to take all of the available insurances including accident 1.74%, death 0.3%, old age 5.7%, pension 8%, health 4.5%, and housing 3%. Total that, 23.24%* is paid for each employee (*shared between employer and employee). The most ridiculous is housing, 1. What if most of my employees already have their own houses? 2. How many can actually get the house? Most will not get it, or too old to qualify.

 

[HappyMan]

For exporters, their competition is Sellers from another country e.g. Vietnam. Exporters from Indonesia cannot just raise their price due to higher labor costs, their Buyers will buy from Vietnam instead. So it's not so simple. Making a profit is necessary, otherwise, how can you pay your worker's severance when the time comes?

I hadn't really thought on the international trade scale. It seems you are right that exporters would suffer. Even my own previous business, in the retail sector, found it very difficult to cope with the yearly salary increases in Jakarta. Labour was one of our major costs, and with gross income sharing to "partners", the price increases we were forced to hand on to consumers were... problematic. As our products were very much discretionary, there was a point where consumers would simply stop purchasing.

But, if my middle/upper-class customers were not seeing an increase to their income that matched the increase in my costs (which were very much tied to UMK), then perhaps that means the system was doing what it was meant to. Perhaps some of the money was flowing downhill for once.

I guess the obvious response to export problems with higher wage costs is to build the local markets. Build your own middle class consumer rather than exporting to your neighbors'.

 

[Zavia]

For exporters, their competition is Sellers from another country e.g. Vietnam. Exporters from Indonesia cannot just raise their price due to higher labor costs, their Buyers will buy from Vietnam instead. So it's not so simple. Making a profit is necessary, otherwise, how can you pay your worker's severance when the time comes?

I hadn't really thought on the international trade scale. It seems you are right that exporters would suffer. Even my own previous business, in the retail sector, found it very difficult to cope with the yearly salary increases in Jakarta. Labour was one of our major costs, and with gross income sharing to "partners", the price increases we were forced to hand on to consumers were... problematic. As our products were very much discretionary, there was a point where consumers would simply stop purchasing.

But, if my middle/upper-class customers were not seeing an increase to their income that matched the increase in my costs (which were very much tied to UMK), then perhaps that means the system was doing what it was meant to. Perhaps some of the money was flowing downhill for once.

I guess the obvious response to export problems with higher wage costs is to build the local markets. Build your own middle class consumer rather than exporting to your neighbors'.

I too faced this issue when I was in Indonesia. We traded chemicals for both Automotive and Construction. Mostly B2B and abit of B2C.
Fact is, domestic pricing in Indonesia is also if not more sensitive then neighboring Singapore/Malaysia/Thailand.

As Dave pointed out, everyone either contracts staff that expires before the deadline to hire them, or outsources it to another company so they can fire em on short notice with little cost. All my 3 of my core staff told me I was the first company to give them full permanent employment. None of them was below 35 years of age.

Coming back to export. If exporters cannot export, they will either sell locally increasing the supply or reduce production and reducing the money in the economy(demand).

I feel the increases to minimum wage is too steep and isnt enforced to everyone. If a more gradual (say 4-6%) increase with no exception (maids, cashiers, OB) I think it would have really transformed the marketplace. Better employee financial situations, a surge in money going downwards, lots of happy government officials (lol) and companies can plan their budgeting and pricing better.
As it is, if i wanted to invest in indonesia the UMR graph alone would put me off.