Why Businesses Will Not Stop Outsourcing

The government’s plan to accede to demands by labor unions to eliminate outsourcing is opposed by the business sector. The government regulation that limits outsourcing to five work areas is considered disproportionate.

“Outsourcing is common and prevalent in the business world,” said Hariyadi Sukamdani, Chairman of the Remuneration and Social Security at Indonesian Employers Association (Apindo), on Nov. 15. “The demand by the workers is unwarranted.”

imagesUnder Law No. 13/2003 on Manpower, outsourcing is limited to non-core work, in five work areas, namely security, cleaning, mining, catering and transport services. Manpower Minister Muhaimin Iskandar has made promises to enforce the regulation.

Although the regulation is still being developed, Hariyadi can confirm now that businesses will reject it. There is a large number of outsourced workers in Indonesia, whereas those working in the five areas constitute less than 10 percent of the total. “If the outsourcing companies [for the remaining 90 percent] are shut down, a massive number of people will be left unemployed,” Hariyadi said. “Are there that many job opportunities in this country?”

To address the poor conditions of outsourced workers, Hariyadi suggested that the goverment increase its oversight of the outsourcing companies. “So far, that is seriously lacking.” That is why many outsourcing contracts do not benefit workers. As for hiring outsourced workers on a permanent basis, Hariyadi said that the demand was misplaced. Workers should address it to their employers, the outsourcing service providers, not the companies where they perform their duties as outsourced workers.

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