Informal workers need more attention from the government to create policies that can ensure their well-being. — The Jakarta Post
THE rapid development of the world with digitalisation and automation in all aspects has led to a shift in human activities.
Coupled with the unprecedented health and economic issues brought about by the pandemic, this situation has become a catalyst for the massive use of information technology.
This presents both challenges and opportunities, especially in Indonesia’s labour sector. According to “The Future of Jobs Report 2023” released by the World Economic Forum, the labour market is undergoing significant structural changes, with an expected churn of 23% over the next five years.
This includes the creation of new roles and the elimination of existing ones, driven largely by technology, digitalisation and sustainability trends.
Jobs in fields such as artificial intelligence and machine learning, sustainability, business intelligence and information security are projected to grow rapidly.
However, the slower-than-anticipated adoption of automation means that only 34% of tasks are currently automated, with expectations to reach 42% by 2027.
This shift brings about both job creation and job displacement, particularly affecting clerical and secretarial roles. Indonesia is required to adapt to these trends by integrating technology adoption in the labour sector, leading to a transformation of work patterns.
Labour sector shift
This transformation in the labour sector will also inevitably affect the Social Security Employment process.
Indonesia’s social security employment system needs to be updated in terms of both its system and implementation to face the new era. The system and policies need updating due to several existing issues.
First, there is the sub-optimal social protection system provided by the state to assist informal workers, such as those working under a partnership concept.
“The reason for the low level of social security protection in developing countries is that many workers outside the formal sector cannot or do not want to contribute a relatively high percentage of their income to finance social security benefits that do not meet their priority needs,” as stated in a 1994 study.
Additionally, informal workers may not be familiar with or trust formal social insurance schemes. There are also numerous factors that limit access to formal social insurance schemes, such as legal restrictions and administrative barriers like regulatory provisions in the country.
In addressing the various risks that may arise, including labour risks such as job loss, illness, workplace accidents and old age, informal workers need more attention from the government to create policies that can ensure their well-being.
Especially as it is predicted that informal workers will increase along with the growth of Indonesia’s economy.
The latest data from Statistics Indonesia recorded the number of informal workers at 77.68 million in February 2023, and this is predicted to continue to rise due to the growth of startups and the partnership concept. This partnership creates a grey area in defining the employment relationship between platform providers and partners.
Second, there is still a lack of interpretation of labour laws that define informal employment relationships, preventing workers from obtaining their social security employment rights.
So far, an employment relationship is defined as a relationship between an employer and a worker/employee based on a work agreement, which includes elements of work, wages and orders.
Work, wages and orders
From this definition, three elements of an employment relationship are evident: work, wages and orders. The work element is fulfilled if the worker only performs the tasks assigned by the company.
The concept of informal workers is considered not to have the element of work assignment from the company. Here, platform providers only claim to provide services.
According to the law, wages are compensation received by workers in the form of a certain amount of money that is fixed over a certain period. It is not based on commission/percentage. In practice, many workers receive commissions from the results they achieve when completing tasks.
Lastly, the element of orders is fulfilled if the order giver is the company, not the initiative of the worker. In practice, the distinction between orders and initiative is still a grey area.
Referring back to the data on the increase in informal workers under the partnership concept, these partners do not receive salaries from platform companies. Instead, they must share a certain percentage of their earnings with the platform providers.
In this situation, it is clear that there is no employment relationship between the partners and the platform application providers. Since there is no employment relationship as stated in labour laws or the Job Creation Law, informal workers in a partnership do not have the right to receive what is typically granted to regular workers, such as severance pay.
Automation trend
To address the emerging issues, the government plays a role in improving and adding regulations to protect the rights of all workers whose rights are not yet facilitated. The potential for development and improvement still exists in line with the trends of work filled by automation and transformation.
The development that becomes the focus in this case is the obligation to provide social security employment rights to informal workers. Informal workers deserve protection, whether it is through self-funding by the workers themselves or the imposition of responsibility on the platform application providers to provide social security employment.
Social labour risks do not only consider whether the worker has a partnership or not. All workers still face risks.
Furthermore, policies in labour laws or the Job Creation Law still have the potential to be expanded regarding the certainty of rights for informal workers.
Stakeholders in social security are expected to formulate social security programmes for informal workers, especially for low-income workers, to ensure a decent living. — The Jakarta Post/ANN
Pinto Buana Putra is an associate researcher at the Institute for Democracy and Welfarism. The views expressed here are the writer’s own.
