Indonesian Constitutional Court orders removal of controversial manpower cluster from Omnibus Law

The Indonesian Constitutional Court has mandated the removal of the Manpower Cluster from the Omnibus Law on Job Creation, a landmark decision announced during a trial in Jakarta on 31 October 2024. This ruling followed a judicial review initiated by several labour union confederations and federations, which argued that the Manpower Cluster violated the Indonesian Constitution. The Building and Wood Workers’ International (BWI) Indonesian affiliates, their respective National Centres, and the Indonesian Labour Party were among those petitioning the Constitutional Court for this judicial review.

The review addressed seven critical areas of the Omnibus Law, including provisions related to foreign workers, fixed-term work agreements, outsourcing, leave policies, wages, layoffs, and severance pay. Of the 30 clauses examined within these provisions, the court granted 21 requests, including the removal of the Job Creation Law from the Omnibus framework. The Constitutional Court has directed the Indonesian government and Parliament to implement this decision within two years by drafting new legislation.

Enacted in 2020 under President Joko Widodo's administration during the COVID-19 pandemic, the Omnibus Law on Job Creation has faced intense opposition from labour unions since its inception. Following the filing of a case by these unions in November 2021, the Constitutional Court previously ruled that the Omnibus Law was conditionally unconstitutional and required amendments within two years. In defiance of this ruling, President Widodo issued a Government Regulation instead of a law to reinstate elements of the Omnibus Law.

Labour unions are now hopeful that the new government under President Prabowo Subianto will honour the Constitutional Court's decision and work with all labour unions in Indonesia to develop a more worker-friendly Manpower Law. This anticipated cooperation is seen as essential for ensuring that labour rights are thoroughly protected and that any new legislation aligns with constitutional principles.

The Omnibus Law itself was designed to streamline regulations across nine clusters—including business licensing and manpower—with the goal of enhancing investment and economic growth in Indonesia. However, many of its provisions have been criticised for undermining worker protections and favouring employer interests, contributing to what some analysts describe as a decline in democratic principles within Indonesia’s labour relations.