Why Does Distinction between Working Children and Child Labor May Put More Children at Risk?

About 160 million children ages 5 to 17 worldwide are engaged in work. In general, although it is difficult to pinpoint one single cause, poverty is one of the key drivers that pushes children to the world of work, paid or unpaid. By comparing the global poverty rate of 9.2% in 2021 with 8.6% in 2018, it is safe to assume that more children will be pushed to work as many families face financial challenges or uncertainty due to the COVID-19 pandemic. The International Labor Organization and UNICEF forecast that by 2022 the increase in poverty associated with the global pandemic will likely increase child labor by 8.9 million. In 2021, it was estimated that approximately 4.05 million children work in Indonesia. Of this figure, 1.76 million are deemed to be child labor.

Not all working children are considered child labor. According to the International Labor Organization, child labor is often defined as work depriving children of their childhood, potential, and dignity, harming their physical and mental development. Whether or not particular forms of work can be called child labor depends on the child’s age, the type and hours of work performed, the conditions under which it is performed and the objectives pursued by individual countries. Thus the distinction between child labor and working children is that child labor refers to work that is harmful to children. It is work that is mentally or physically dangerous and interferes with their ability to go to school, which can affect their income-earning potential as adults.

The distinction might stop in the theoretical or regulatory terminology only. Unlike household chores, which many experts assert are beneficial for children because it helps children learn responsibility and self-reliance, any structured and scheduled paid work is likely harmful physically and mentally to children. Typical workplace and/or work tools are designed for adults without reasonable accommodation for children. Some employers likely undervalue the children’s contribution to the workplace. As children have the lowest bargaining position in the world of work, if not non-existence, a person under 15 (or 18 in Indonesia) would not receive suitable payment and benefits for their effort. Over time, working children may put more interest in the material side of work, which can deter them from studying at school.

Moreover, it is safe to assume that working children constantly socialize with non-family-member adults in supervisory-subordinate relationships or as co-workers. Children’s interactions with adults are vertical interactions or interactions with more powerful others. Vertical interactions are likely to lead to a heteronomous morality, a morality oriented by the ideas of fear, obedience, and unilateral respect. Continuous vertical interaction may be detrimental to children’s development as they likely grow into adults deprived of equality, cooperation, and mutual respect, which ideas are usually obtained in horizontal interactions with their peers.

To conclude, children are somewhat at risk of harm from their workplace, although the type of work they perform falls into non-hazardous light work. Tacking the root causes that drive children to enter the paid work sphere without being tied to different definitions is crucial in deterring children from performing paid work. A comprehensive government policy to increase awareness, eradicate poverty, and provide quality public education that includes vocational/skills training may dissuade children from entering the workforce. Engaging many stakeholders may also help to make a sustainable change over time.

Why do trade union/s oppose Act No. 13 of 2022 concerning the Second Amendment of the Establishment of Legislation Act No. 12 of 2011?

The President of the Republic of Indonesia has officially signed Act No. 13 of 2022 concerning the Second Amendment to Act No. 12 of 2011 concerning the Establishment of Legislations. The Act, signed on Thursday, June 16, 2022, regulates the formation of rules through the universal method or omnibus. This revision was published in response to the Decision of the Constitutional Court (MK) No. 91/PUU-XVIII/2020, which annulled the Job Creation Act due to formality as the omnibus law method was not regulated in the Indonesia Establishment of Regulations system.

Amendments are made by adding a new article and article paragraph, namely Article 42A and paragraph 1 points a and b of Article 64.

Article 42A of the Act No. 13 of 2022 states:

“The use of the omnibus method in the preparation of a Draft Legislation must be specified in the planning document.”

Further, Article 64, paragraph 1 a and b explains:

“(1a) The preparation of the Draft Legislation, as referred to in paragraph (1), may use the omnibus method.

(1b) The omnibus method, as referred to in paragraph (1a), is a method of preparing laws and regulations by:

a. addibg new content material;

b. changing the content material that has relevance and/or legal requirements regulated in various laws and regulations of the same type and hierarchy; and/or

c. revoking laws and regulations of the same type and hierarchy by combining them into one legislation to achieve specific goals.”

Aside from deciding that the establishment of Act No. 11 of 2020 concerning Job Creation does not meet the formal requirements of the establishment of laws, the Constitutional Court, in the Decision No. 91/PUU-XVIII/2020 Paragraph 5, orders the legislators to improve (of Act No. 11 of 2020) within a maximum period of 2 (two) years since the Decision is pronounced (November 25, 2021), and if within that time limit no corrections are made, as consequence Act No. 11 of 2020 concerning Job Creation becomes permanently unconstitutional.

Legislators (House of Representatives and Government) interpreted the Constitutional Court’s Decision as an order to revise the formal requirements for the formation of laws and regulations instead of amending the materiality of Law no. 11 of 2020 or revoking Law no. 11 of 2020, in particular the Employment Chapter. 

Meanwhile, trade unions construe the Constitutional Decision as not merely covering a formality defect but also a materiality defect (thus, the Court orders a time-bound revision). Trade unions view the amendment effort as a formality justification for the omnibus law (method) to be regulated in the Indonesian legislative system. The main objective of the revision is that the contents of the Job Creation Act would remain effective without material content amended as per the Court order. Thus, trade union/s claimed that they would submit a formal and material judicial review of Act No. 13 of 2022 concerning the Second Amendment to Law Number 12 of 2011 concerning the Establishment of Legislations to the Constitutional Court. 

What needs to be considered is whether the amendment contains the principle of non-retroactive. The right not to be prosecuted based on retroactive law is a human right that cannot be reduced under any circumstances, as stipulated in Article 28I paragraph (1) of the 1945 Constitution (“UUD 1945”). This principle is known as the non-retroactive principle, which prohibits the retroactive application of laws.

Number 155 of the Annex to Act No. 12 of 2011 states that the entry into force of laws and regulations cannot be determined earlier than the time when they are promulgated.

If there is a strong rationale for enacting laws and regulations earlier than when they were promulgated (retroactive), the following should be noted (number 156 of the Annex to Act No. 12 of 2011):

a. new provisions relating to criminal matters, whether their type, weight, nature, or classification, shall not be applied retroactively;
b. details regarding the effect of the retroactive provisions on legal actions, legal relations, and inevitable legal consequences that already exist are contained in the transitional provisions;
c. the beginning of the entry into force of the Laws and Regulations is determined not earlier than when the draft Laws and Regulations become known to the public, for example, when the draft Laws and Regulations are listed in Prolegnas, Prolegda, and other draft Laws and Regulations.

Perhaps non-recroactive principle would be one the subject matters that the Constitutional Court would consider further when conducting a judicial review of trade union submission in question. Until the Constitutional Court makes its Decision, there is a lot of uncertainty regarding employment law reform and its implementation. What is almost certain is that the Job Creation Act saga continues.

2022 Provincial and District/City Minimum Wage of All Provinces and Special Regions in Jawa

All Governors in Jawa, Indonesia have set the provincial minimum wage (UMP) and district/city minimum wage (UMK) in 2022. DKI Jakarta is still the province with the highest UMP, which amount to IDR 4,452,724, in Indonesia and Java. This figure is up 0.85% from the 2021 UMP. Central Java has the lowest UMP in Jawa, amount to IDR 1,812, 935 or up 0.78% from the 2021 UMP. Of the 2022 district/city minimum wage (UMK), District of Bekasi in Jawa Barat Provice has the higest UMK amount to IDR 4,816, 921,17. Whilst, District of Banjarnegara in Jawa Tengah Province has the lowest UMK amount to IDR 1,819,835,17.

There are 4 provinces and 2 special regions in the Island of Jawa, namely DKI Jakarta, DI Yogyakarta, Banten, Jawa Barat, Jawa Tengah, and Jawa Timur.

UMP and UMK in Indonesia are monthly based and applies for workers having less than one year period of employment.

On 16 December 2021. the Governor of DKI Jakarta issued Keputusan Gubernur DKI Jakarta Nomor 1517 Tahun 2021 , amending the previous set Rp. 4.453.935,536 per month of 2022 provincial minimum wage to Rp. 4641854 per month. The new minimum wage is effective starting from 1 January 2022.

On 31 December 2021, the Governor of Jawa Barat issued Keputusan Gubernur Jawa Barat NOMOR 561/Kep.874-Kesra/2021 that sets wages increament percentage for workers having 1 or more year of employment period.

The Constitutional Court Decision the Job Creation Act No. 11 of 2020 Judicial Review- Could it Create a Precendent of Conditionality in Future Judicial Review Decisions?

On November 25, 2021, the Constitutional Court decided the case before the Court concerning the Job Creation Act No. 11 of 2021, in particular of the Employment cluster. This decision was pronounced at 13.17 WIB, by nine Constitutional Justices namely Anwar Usman as Chairman and Member, Aswanto, Wahiduddin Adams, Suhartoyo, Enny Nurbaningsih, Saldi Isra, Arief Hidayat, Manahan M.P. Sitompul, and Daniel Yusmic P. Foekh, respectively as Members. The Constitutional Court’s decision was taken based on the concuring opinions of five judges with four dissenting opinions from Constitutional Justice Arief Hidayat, Constitutional Justice Anwar Usman, Constitutional Justice Manahan M.P. Sitompul, and Constitutional Justice Daniel Yusmic P. Foekh.

In the Principal Application, the Constitutional Court decided:

  1. To declare that the applications of Petitioner I and Petitioner II cannot be accepted;
  2. Granting the application of Petitioner III, Petitioner IV, Petitioner V, and Petitioner VI in part;
  3. To declare that the establishment of Act No. 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia of 2020 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6573) is contrary to the 1945 Constitution of the Republic of Indonesia and has no legally binding force. Conditional as long as it is not interpreted as “no correction is made within 2 (two) years since this decision is pronounced”;
  4. To declare that Act No. 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia of 2020 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6573) is still valid until corrections are made to the establishment per the grace period as determined in this decision;
  5. Order the legislators to make improvements within a maximum period of 2 (two) years since this decision is pronounced, and if within that time limit no corrections are made, then Act No. 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia Year 2020 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6573) becomes permanently unconstitutional;
  6. To state that if within 2 (two) years the legislators cannot complete the revision of Act No. 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia of 2020 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6573) then the Act – Laws or articles or material content of regulations that have been revoked or amended by Act No. 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia of 2020 Number 245, Supplement to the State Gazette of the Republic of Indonesia Number 6573) are declared to be re-applicable;
  7. Declare to suspend all strategic and broad-impact actions/policies, and it is also not permissible to issue new implementing regulations relating to Act No. 11 of 2020 concerning Job Creation (State Gazette of the Republic of Indonesia of 2020 Number 245, Supplement to the State Gazette Republic of Indonesia Number 6573);
  8. Ordering this decision to be published in the State Gazette of the Republic of Indonesia as appropriate;
  9. Reject the petition of the Petitioners for other than and the rest.

In short, the Constitutional Court ordered that Act No. 11 of 2020 remains in effect until improvements are made to the formation in accordance with the grace period as determined in this decision (maximum 2 years from the date of the Decision). The Constitutional Court also ordered the prohibition of issuing new implementing regulations or derivative regulations of Act No. 11 of 2020.

The Decision in question was eagerly awaited by numerous labor civil societies, trade unions, and scholars that asserted procedural and material injustice at the beginning of the formation of the Job Creation Act. The Decision, however, is widely critized as it puts a conditional order for a product of law of which the Court found contrary to the 1945 Constitution of the Republic of Indonesia and as such has no legally binding force. Further, administratively, for the Employment cluster, Act No. 13 of 2003 concerning Employement is still in effect – The Employment Cluster of Act No. 11 of 2020 only amend or omit some Articles of Act No. 13 of 2003. Judicisouly, the Court should not consider the time and efforts necessitate the Legislative Body (i.e the Goverment) to revise the Act No. 11 of 2020 in their Decision.

In criminal and contract laws, conditionality is not uncommon. Indonesia’s Criminal Code, for instance, recognizes conditional punishments, a system where judges impose criminal sentences that depend on specific situations or conditions. The conditionality principle is also not uncommon in judicial review decisions. However, the application of conditionality is typically used to narrow the construction of material decisions. In this recent Decision, however, conditionality is places on the applicability of Law in its entirety, although the Court found it non-binding.

The Constitutional Court reiterates enforcement of Law that the Court declared defective because it was asserted to be contrary to the 1945 Constitution of the Republic of Indonesia and thus unenforceable, merely on time-bound conditions. The Decision likely creates a precedent of operation of defective laws and regulations under the pretense of procedural challenges instead of the constitutionality of material laws. It also creates a legal pause or grace period where enforcement of unenforceable laws is acceptable in the eye of the Court with conditions that the Court sees fit. The principles of the material laws in this Decision appeared to take the second place.

Whether or not the recent Decision creates a precendent, the answer would be debatable in the realm of civil law system that does not recognize case law principle of precedent. The dissenting opinion of Judge Arief Hidayat and Judge Anwar Usman may provide a glimpse on what could happen in the future of judicial review in Indonesia:

Law does not only undergo evolutionary changes but, in its development, requires revolutionary changes, jumping from one method to another method that is more capable of adapting to the needs of society; such legal changes are often referred to as paradigmatic legal changes (paradigm-shift). The evolution eliminates changes in a logical and coherent order because it suddenly takes a new starting point and point of view that is different from what was previously used. Such a change is called rule-breaking, or it can also be known as a leap from the adoption of normal law to unusual law, which then returns to normal law with a new paradigm….

When a Minimum is not the Minimum: Wage Regulatory Exemption for Indonesian MSMEs

The International Labor Organization defines minimum wage as the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract. In contrast, in the recent contentious labor law reform, the Government of Indonesia allows micro and small businesses (MSMEs) to pay workers below the provincial minimum wage (UMP) and the city/district minimum wage (UMK) per the Government Regulation (PP) Number 36 of 2021 concerning Wages, a derivative of Law (UU) Number 11 concerning Job Creation. The regulatory relief may support market flexibility as well as increase MSMEs’ business opportunities. However, whether or not the regulatory exemption follows the principle of minimum wage remains to be seen. The ramification of the respective relief on decent work is also still unclear.

Per the Government Regulation No. 36 of 2021 concerning Wages, a derivative of Law (UU) Number 11 concerning Job Creation, the minimum wage provisions in Article 23 to Article 35 are exempted for micro and small businesses. However, the exception to the application of MSMEs for micro and small enterprises is enforced with several provisions. Wages in the MSMEs are determined based on an agreement between the employer and worker under two conditions: at least 50 percent of the average public consumption at the provincial level, and the agreed wage value is at least 25 percent above the provincial poverty line. In addition, Article 36 paragraph (3) of the Government Regulation No. 36 of 2021 stipulates that the average public consumption and the poverty line as referred to in paragraph (2) letters a and b shall use data sourced from authorized institutions in the field of statistics.

Micro and small enterprises exempt from the minimum wage requirement shall rely on traditional resources and not on high-tech and capital-intensive enterprises. Per Law Number 20 of 2008 concerning Micro, Small, and Medium Enterprises, micro-enterprises are businesses with a maximum net worth of Rp 50 million, excluding buildings and land for business premises with an annual turnover of a maximum of Rp 300 million per year. Meanwhile, a small business is a business that has a net worth of IDR 50 million with a maximum of IDR 500 million. The results of business sales are between Rp. 300 million to Rp. 2.5 billion per year.

The rationale behind the affirmative regulatory action to exempt a minimum to some economic groups may bring about more questions than answers. Nonetheless, the decision likely stems from a macro-financial perspective as well as the founding principle and political will that built the minimum wage setting in the first place.

Similarly, with other statutory matters regulated by the National Labor Laws, the minimum wage point of view is somewhat distorted by the manufacturing-based economy frame of reference. As such, the existing minimum wage setting relies heavily on the economic stability of labor and technology-intensive production processes, which does not always ring true in the MSMEs environment. Indonesia’s agriculture sector, for instance, is populated by approximately 70% smallholders. The industry itself depends on its continuity on how nature works. In other words, at some point, processes in a farm could not be persistently predicted due to natural distruption. This affects the ability of smallholders (MSMEs) to pay their workers at the same rate as thriving manufacture.

Varying from the eco-centric perspective above, the human-centered approach to minimum wage asserts that basic human necessities would not be contracted too far between each indicator of decent work despite the economic activity typology. A worker still needs to eat at almost the same level of quality, for instance. Paying workers working in the MSMEs lower than the minimum wage, albeit higher than the poverty line, means sacrificing the quality of food they consume to get by, which could compromise their productivity and health over time.

The question remains. How should the Government approach such a delicate matter? To find the sweet spot of balance interests is arduously challenging. Even if the balance reached, it would not be risk-free. Nonetheless, the principle is clear, affirmative action such as regulatory relief should not relinquish basic human necessity or put it in the back burner. A reform in the minimum wage setting in Indonesia should also consider a human-center approach to building the nation as a whole. After all, to put it in a very simple terms, humans build the economy instead of the other way around.