Covid-19 impact and responses: Indonesia

Updated on: 23 April, 2021

What is the current situation?

General information

By 23 April 2021, there were 1,632,248 confirmed cases of Covid-19 of which 44,346 fatalities and 1,487,369 persons recovered in Indonesia.

The National Development Planning Agency (Bappenas) issued the data on the impact of COVID-19 on employment in Indonesia. The data revealed that the garment industry is the industry that got hit the worst by the pandemic; it has laid off and dismissed 351,380 workers. The second and third sectors are leather/footwear and textile industry, which laid off and dismissed 212,009 and 183,300 workers respectively.

Following the Circular Letter by COVID-19 Handling Acceleration Taskforce Number 5 and 6 of 2021 in overcoming the COVID-19 pandemic, effective from 9 February 2021 until further notice, the Indonesian government temporarily closes foreign citizens’ entry (WNA) from all countries to Indonesia. There are exceptions for foreigners who meet certain criteria. See the travel restrictions here.

On 15 February 2021, the Ministry of Manpower issued Minister Regulation Number 2/2021 on the Implementation of Specific Labour-Intensive Industry Wages during the COVID-19 Pandemic. This regulation allows the employer and workers to come to an agreement on wages, even though it might under the minimum wage. This regulation is applied to a few industries, including garment and footwear, with some conditions E.g if the employers employ at least 200 workers, and the percentage of labour cost is a minimum of 15% of the total production cost.

Following the Instruction by the Ministry of Home Affair Number 3/2021, the Large-Scale Social Restriction (PSBB), which is currently named Impose Restriction on Community Activities (PPKM) in Jakarta has been extended from 20 April to 3 May 2021. The regulation can be seen in the Governor Decision DKI Jakarta Number 478/2021. Offices and restaurants can operate with a maximum of 50% capacity. Schools are still closed. Malls can open with limited capacity and hours (they must close by 21.00).

The Implementation Regulation of Job Creation Bill (Omnibus Law) has been opened for public consultation. There are four Government Regulations (GR) under the Employment Cluster:

GR Number 34/2021 on the use of foreigners as workers;
GR Number 35/2021 on certain time working agreement, sub-contracting, working hours and rest time, also dismissal;
GR Number 36/2021 on wages, as revision partly from GR number 78/2015
GR Number 37/2021 on the implementation of unemployment benefit or JKP.

It is recommended to also look at GR number 5/2021 on the implementation of risk-based business licensing which provides details of permits and administration requirements, including on health and safety management.

On 20 April 2021, Fair Wear organized online discussions on the Gender Network Platform. The Ministry of Manpower explained there that the Job Creation Bill aims to adapt to the current employment situation, which needs more flexibility in terms of the contract and salary. The business association API revealed that the bill has created additional burden on the employers, since they should pay compensation for the workers who have a finished contract. This means that the compensation is applied not only for permanent workers, but also for contract workers. The law expert said that the Job Creation Bill is a setback for fulfillment of women workers’ rights, since there is no progress towards the protection of women workers in the bill. The garment trade unions stated that garment sector has always been the target to implement lower wages, which in many cases means below the minimum wages.

The fasting month of Ramadhan celebrated by Muslims started on 13 April 2021, which means that there will be more activities in the mosques. Mosques are opened with a maximum of 50% of the capacity and inside all people should wear masks.

Normally Eid Al-Fitr, which will be celebrated in the midst of May 2021, is the time when people go back to their hometowns. However, due to the pandemic, the government prohibited people from doing this. On 21 April 2021, the COVID-19 Task Force issued an Addendum of Circular Letter Number 13/2021 on the “Elimination of Homecoming in the Eid Al-Fitr Festive and the Effort to Control the Corona Virus Disease 2019 (COVID-19) Transmission during Holy Month of Ramadhan 1442 Hijriah”. This regulation stipulated the prohibition of people to go back to their hometown for the period of 22 April – 24 May 2021. A PCR Swab or Antigen test, and filling in the e-HAC application, for a maximum of 1 x 24 hours before departure, remains mandatory if people use public transportation such as airplane, ferry, bus and train.

On 12 April 2021, the Ministry of Manpower issued the Circulation Letter Number M/6/HK.04/IV/2021 on the “Implementation of Giving the Festive Bonus in year of 2021 for the Workers in Companies”. The employers shall provide a festive bonus for Eid Al-Fitr at least seven days before Eid. The amount of the festive bonus is one month salary, or prorate if the workers have worked for less than a year. For the companies that have no or limited capacity to pay the festive bonus, they can negotiate with the workers and report the agreement to the Local Manpower Office. The Ministry of Manpower instructed the governors to establish a “Festive Bonus (THR) Command Posts” as an information and consultation center, as well as a place to submit complaints to on the festive bonus.

The situation with factory production

Orders have started to increase even the situation has not returned to that of before the pandemic. The factories only use some parts of their production capacity. In our discussions with suppliers in early January 2021, we heard that the current situation has made them very uncertain, including about how to respond to the government regulations that keep changing over time and are issued by various government levels (central, provincial and district). The orders are available until March 2021.

What are the government policies to support local businesses?

SMEs that have no bank loans can apply for cash assistance for productive business (Banpres PUM) at their nearest SME Office. After the verification process, the government will transfer IDR 2.4 million (EUR 141) to SME bank accounts with Bank Rakyat Indonesia (BRI). SMEs can also get interest subsidies of 3-6% for 6 months, depending on the amount of the loan. Kindly check here for more information: https://eform.bri.co.id/bpum

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

Pre-Working Card (Kartu Pra Kerja)

In 2021, the government will continue the Pre-Working Card programme that will provide free training for 4 months and IDR 1.15 million for workers as an incentive to participate in the training and a survey. The workers who 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 IT capacity limitation among garment workers, it is suggested that the workers get assistance from trade unions or supervisors for the application process.

Wage Subsidy Assistance (WSA)

One of the government programmes to help formal workers is the Direct Cash Transfer (DCT) also known as Wage Subsidy Assistance (WSA) that has began in August 2020. DCT applies to all formal workers in any sector whose salary is below IDR 5 million (EUR 300), who have been active in the social security scheme, BPJS Employment (BPJS Ketenagakerjaan) and have an active bank account. However, workers who have applied for the Pre-Working Card programme are ineligible for DCT, which is approved using ID card number. To obtain DCT, the employers shall register the workers to the BPJS Employment office or via SIPP Online BPJS. The government transfers assistance once every two months, which has been happening since late August to pay September-October 2020. The amount of the DCT is IDR 600 thousand (EUR 35) per month. DCT was transferred twice in 2020 and supported more than 12 million workers in September-December 2020. Unfortunately, the DCT programme is discontinued in 2021.

What are local stakeholders doing to lobby their government?

Trade unions are working advocate against the Job Creation Bill/Omnibus Law, particularly after all the government regulations that have recently been inssued.

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. Kindly note that pandemic has increased the rates of domestic violence and divorce in Indonesia.

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

Business associations needs capital support, tax exemption, reduced the electrical and gas bills and other operation cost reductions ib order to keep their members (companies) afloat.

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.

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