It follows a Constitutional Court Decision No. 91/PUU-XVIII/2020, which found that the Job Creation Law was conditionally unconstitutional and gave the government two years, until November 2023, to amend the law.

We examine the main changes below:

Outsourcing: While the Job Creation Law did not limit activities that can be outsourced, the new law establishes that companies can outsource part of the implementation of work to another company by entering into a written outsourcing agreement. The government will determine, in a government regulation, which parts of the implementation of work can be outsourced. Therefore, the impact of the legislative change is not yet clear, but it will be necessary to wait for government forecasts and see how stringent the limits will be.

Minimum wage: The governor of each province is still required to determine the provincial minimum wage, and employers are required to comply with the minimum wage requirements. However, governors may only determine a city minimum wage if the result of the minimum wage calculation for that particular city is higher than the provincial minimum wage. Perppu n. 2 also introduced a new formula for calculating the minimum wage, which considers the variables of economic growth, inflation, and certain indices.

In a press briefing, Indonesian Employers Association (Apindo) chairperson, Hariyadi Sukamdani, said that businesses were surprised by the sudden announcement of this regulation, as he said that his association was not involved in its discussion, highlighting that the government should have consulted all parties involved.