Covid-19 impact and responses: Indonesia

Updated on: 15 July, 2020

What is the current situation?

General information

As of 15 July 2020, there were 78,572 confirmed cases of Covid-19 in Indonesia, of which 3,710 were fatalities and 37,636 persons recovered.

Economic growth for the second quarter of 2020 is between -3.1%-5.1%. The main sectors that have been hit by the pandemic are trade, manufacturing, mining, recreation and transportation. The median of -4.3% means that growth has been lower than predictions by the government and independent institutions such as Bloomberg and Moody’s, which predicted in the level of -3.1%.

Certain areas including Jakarta are already in the transition period, meaning that restrictions have been relaxed for the activities in educational institutions, religious affairs, working, public areas, social gatherings and cultural purposes. Malls are open, but with strict safety measures and limited operation time. However, the reopening of schools that was planned for 13 July 2020 did not go ahead. Students are still studying from home. Schools are open only to receive registrations for the new school year, which started early July 2020. Even during the transition period, many people are voluntarily staying home.

The government issued a Government Regulation Number 25/2020 on the Implementation of Public Housing that will deduct 2.5% of workers’ wages, plus a contribution from employers of 0.5%. The trade unions said that the policy was announced at the wrong time, since workers currently have lost their income and jobs. Trade unions are negotiating a lower percentage to be deducted from workers salary.

The situation with factory production

The government has applied a strict policy regarding the finding of a transmission case in garment factories. Once a case has been found, the factory will be temporary closed by the government.

Based on Fair Wear interviews with nine suppliers and trade unions in April and June 2020, suppliers have implemented safety measures such as providing more hand-washing stations, making the wearing of face masks obligatory, body temperature checks, disinfectant spraying and actively raising awareness about Covid-19 among workers.

Most suppliers are still operating with reduced working hours. Based on the survey, in general, since March 2020 garment workers have been working 15.6 hours per week, or 39% compared with normal working hours in Indonesia (40 hours per week). The loss of working hours has led to the loss of income. Most factories do not pay a full salary to workers who have been sent home. A regulation by the Ministry of Health states that factories should have provided additional nutrition or vitamins to workers who are working in rotations or shifts. However, this recommendation has not been implemented by most of factories. (Source: TURC Research Brief, Adaptasi Kebiasaan Baru (New Normal) di Pabrik Garment, July 2020)

What are the government policies to support local businesses?

As an economic stimulus, the government supports small-medium enterprises by reducing their burden in paying taxes and by providing credit instalments from financial and non-financial institutions. An electricity discount is given to customers, with a maximum of 900 VA.

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

The Government also allocated a budget of IDR 20 trillion for a ‘Pre-Working Card’ that gives a dismissed worker training and cash. The priority beneficiaries are informal workers and daily workers who are working in tourism and transportation industry. Workers who have the BPJS card will receive IDR 1 million per month for a maximum of 4 months. For those without a BPJS card, they will get IDR 600,000 per month for a maximum of 4 months. In addition to that, the workers will receive IDR 150,000 in cash for participating in the survey, plus IDR 1 million as an in-kind cost for completing online training. For comparison, the lowest minimum wage in Java and Bali is IDR 1,705,000 per month. However, trade unions say that the Pre-Working Card is difficult to access by the workers who do not have IT capacity and an Android smartphone.

To support workers who have been sent home and dismissed in Jakarta and surrounding areas, the Ministry of Manpower distributed 223,213 packages of staple food. The distribution of the packages is supported by trade unions.

The Ministry of Manpower announced that the regulation for the social security (BPJS) payment waiver has been finished and is currently on the desk of President. The government will apply waiver for the following elements:

  • Discount of up to 90% for accident insurance (JKK) and death insurance (JKm) for the next 3 months
  • Discount up to 70% for pension fund

What are local stakeholders doing to lobby their government?

Trade unions tried to lobby the government to postpone the Job Creation Bill (Omnibus Law) in parliament. From the government’s perspective, the Omnibus Law can cut the bureaucracy and policies that hamper the investment climate. Conversely, the trade unions see the bill as a setback to labour rights (since there is more flexibility in the contract, working hours, etc.).

KSBSI, KSPI and KSPSI (the three biggest trade unions) were invited by the President to have a physical meeting in the Presidential Palace on 22 April to discuss the bill. Furthermore, the coordinator of the Ministry of Politics, Law and Defence invited a bigger group of trade union leaders to provide input. Following protests from the group of trade unions, the government has agreed to involve them in the discussion of the Job Creation Bill.

What are local organisations doing to support and protect workers?

Local organisations have more focus on doing research and capacity-building with the trade unions and workers. Given the pandemic situation, both activities are conducted online. In addition to that, some charities have been initiated to support the most vulnerable groups, such as homeworkers.

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

The Indonesia Textile Association asked the government to provide tax relief, including the postponement of paying tax for 90 days, and to allow employers to postpone electrical and gas bills. The Association added that many employers have not received a loan relaxation from the banks.

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. No suppliers have reported on production-related support from brands.

Relevant links for more information

Indonesia National Board for Disaster Management (BNPB)
Ministry of Health
Government of Jakarta
Government of Yogyakarta
Government of Central Java
Government of West Java
Government of Banten
Government of Bali
Ministry of Manpower
Travel Policy for Indonesia The Coronavirus Effect on Work, Life and Feelings