Covid-19 impact and responses: Indonesia

Updated on: 14 January 2021

What is the current situation?

General information

Omicron infection cases have been increasing significantly. As of 20th February 2022, the active cases are at 536,358. The total number of cases in Indonesia are 5,197,505 which 4,514,782 of them have been recovered.[1] The government has a target to get 208.265.720 people vaccinated. As of 20th February 2022, 91.06 % of the population (or 189,64 million people) have received their first shot. While 67.36% or 140,3 million people have completed the second shot. The government has started to provide a third vaccine that targeted senior citizens, this has reached 8.45 million people.

Domestic travelling requires, at the minimum, a negative antigen test and first doses of vaccine. The antigen test is only valid for 1×24 hours and shall be taken in the registered health facility. All travellers must download “Peduli Lindungi” application, fill out the data in Electronic Health Alert Card (eHAC) and scan it at the departure and arrival airport. The App also has the function to keep the vaccine certificate, PCR and antigen test, also for tracking the mobility.

Since Indonesia is the host of the G20 presidency, the restriction to visit Bali has been relaxed. Anyone who arrives from abroad and is vaccinated must take 5 days of paid quarantine in hotels endorsed by the government. See the update of travelling restrictions here.

Shopping centres can be opened until 9 PM, dine-in is allowed for a maximum of 60% of capacity. Schools have been opened with a maximum of 50% of students gathered at the same time. Non-essential office work can be operated with a maximum of 50% of capacity. Factories can operate normally with health protocol.

New Policy on Old-age Saving (JHT)

On 2nd February 2022, the Ministry of Manpower issued Regulation Number 2/2022 on Old-age Saving (JHT). This regulation only allows the workers to take the saving at the age of 56 years old.

JHT is one of five areas under the Social Security – Employment Scheme (BPJS Ketenagakerjaan), next to the Working Accident Protection, Death Insurance, Pension Insurance (JP) and Health Insurance.

JHT needs a 2% contribution of the salary plus a fixed allowance from workers and 3.7% from the employers. Previously, JHT can be claimed if the workers experience dismissal or resign at any age. With the new regulation, the workers can only take the saving maximum of 10% or 30% for the house down payment after 10 years of saving.

The government stated that for the dismissed workers, they can take Unemployment Benefit (JKP). JKP is stipulated in the Job Creation Law Number 11/2020. JKP consists of three benefits:

1. Cash benefit;

2. Access to the labour market information; and

3. Job training.

However, since JKP has specific requirements and a maximum amount of claims, trade unions are strictly against the policy that has advocated to influence the government to revise the regulation. Please visit this page to read the full version of the regulation.

[1] Indonesian National Board for Disaster Management (BNPB), www.bnpb.go.id

The Minimum Wage for 2022 has been announced

Following the Omnibus Law or Job Creation Bill Number 11/2021 that was issued by the government last year, the minimum wage calculation for 2022 has used the new formula based on Government Regulation (PP) Number 36/2021. If we use the previous Labour Law, the wage increase for next year will be around 5.2 – 6% considering the economic growth plus inflation in 2021. However, with a new formula, the average increase of Provincial Minimum Wage (UMP) is much less. Please be reminded that there was no minimum wage increase for 2021 except in a few provinces. In addition to UMP, there is also District Minimum Wage (UMK) that is applied in certain areas. If the UMK is available, suppliers shall follow UMK, rather than UMP.

The Provincial Government has announced the UMP, here are the minimum wage for 2022 for the areas and Fair Wear brands active:

DKI Jakarta, increase from IDR 4,416,186 (EUR 273.8) to IDR 4,453,935 (276.14)
Banten, increase 1.63% from IDR 2.460.996 (EUR 152.58) to IDR 2,501,203 (EUR 155.07 )
West Java, increase 1.72% from IDR 1,810,351 (EUR 112.24) to IDR 1,841,487 (EUR 114.17)
Central Java, increase 0.78% from IDR 1,798,979 (EUR 111.54 ) to IDR 1.812.935 (EUR 112.4)
East Java, increase 1.22% from IDR 1,868,777 (EUR 115.86) to IDR 1,891,567 (EUR 117.28)
Yogyakarta, increase 4.3% from IDR 1,765,000 (EUR 109.43) to IDR 1,840,951 (EUR 114.14)

[1] https://covid19.go.id/

The situation with factory production

The orders have started to increase even though it is not yet back to the situation before the pandemic. The factory only uses some parts of its production capacity. However, due to emergency restrictions, the factory shall manage the working hours to avoid more than 50% of crowd, particularly the crowd on the main gate while workers come to work and at the end of working hours. The crowd also happens during lunchtime in the canteen and mosque. Some factories use “shift method”, some others apply gradual working hours.

For the factory use shift method, the working time is divided into 2-3 shifts, which means there are groups of workers, including women workers who work at night or early morning shift. The gradual working hours divides the working hours and rest time into different 2-3 groups. During the emergency restriction, not all factories pay for the extra food and transportation cost for the workers who work at night shift. While the wage use normal wage rather than overtime.

According to the trade unions, the risk of the above practice has caused a higher rate of work accidents due to work fatigue, also more risk to get sexual harassment and any criminal action at night or early morning. Trade unions also have a concern with the high cost of transportation paid by workers since the public transportations are not available at night or early morning.

What are the government policies to support local businesses?

The business incentives consist of government-borne income tax, income tax exemption on imports, tax deduction, VAT return, corporate income tax rate reduction. While for micro, small and medium-sized enterprises, the government provided interest subsidy, fund placement, guarantee fee, working capital guarantee, government-borne income tax, investment financing for cooperatives and productive social assistance.

What are the government policies and regulations to protect employees – the workers?

Pre-Working Card (Kartu Pra Kerja)

In 2021, the Government continue the Pre-Working Card program that will provide free training for 4 months and IDR 1.15 million for workers as an incentive to join in the training and survey. The workers who have received a Pre-Working Card in 2020 cannot join in 2021. To apply for the Pre-Working Card, workers shall follow the steps on https://www.prakerja.go.id/

Due to the limitation of IT capacity among garment workers, it is suggested that the workers get assistance from trade unions or supervisors in the application process. Until 8 August 2021, the Pre-Working Cars has been implemented in 18^th phase.

Wage Subsidy Assistance (WSA)

One of the Government programs to help formal workers is the Direct Cash Transfer (DCT) or known as Wage Subsidy Assistance (WSA) that started in August 2020. DCT applies for all formal workers in any sector whose below salary below IDR 3.5 million (EUR 205), have been active in social security scheme, BPJS Employment (BPJS Ketenagakerjaan) and work in the areas with a high level of Covid-19 cases (Level 3 and Level 4). It is preferable to the workers to work in the sector of consumer goods, transportation, various industry property, real estate, trade and service. The workers in education and health service are not eligible. For the workers within are with the minimum wage above IDR 3.5 million, the eligibility will follow the amount of minimum wage.

To obtain DCT, the employers shall register the workers to the BPJS Employment office or via “Membership BPJS”. The Government transfers once in August 2021 with a total amount of IDR 1 million (EUR 58). DCT has been transferred twice in 2020, supported more than 12 million workers in September-December 2020 via state-owned banks: BRI, BNI, BTN and Mandiri.

What are local stakeholders doing to lobby their government?

Trade unions are working to advocate against the Job Creation Bill/Omnibus Law, particularly after all the government regulations that have recently been issued. They also push the private sector to provide vaccines for all workers.

What are local organisations doing to support and protect workers?

Local organisations have more focus on doing research, lobby and advocacy. NGO activists have developed the independent complaint platform LAPORCOVID where people can submit complaints related to COVID-19, including if their employers are not following the health protocols. This platform will refer the complaints to the authorities. Meanwhile, Jakarta Activist has just launched Cari Layanan, where people can get information about gender-based violence including helpline numbers, safe houses and counselling. It is also important to note that there has been an increase in rates of domestic violence and divorce in Indonesia.

What have been the responses and requests of business associations to support the industry?

The garment companies have challenges with the increasing logistical costs due to a shortage of containers. In another hand, local companies should compete with the illegally imported garments. Business associations have requested the government to issue a safeguarding policy. The government is in the process of discussing the policy.

What are international brands doing to support the suppliers and protect the workers?

Brands have shared best practices from other production countries on how to deal with safety measures. Long-term contracts with suppliers are needed to increase business certainty. No suppliers have reported on production-related support from brands.