JAKARTA, Indonesia -- Indonesia’s top court ruled Thursday that the country’s widely criticized Job Creation Law is unconstitutional and ordered the government to amend it within two years.
The act amended 77 previous laws and was intended to improve bureaucratic efficiency as part of efforts by President Joko Widodo’s administration to attract more investment.
The Constitutional Court voted 5 to 4 in favor of the petitioners — a private company employee, four students and the Confederation of Indonesian Workers’ Unions, known as KSPI — who argued that the way the legislation was handled was procedurally flawed.
The court agreed, saying the process was not fully transparent and it was unclear whether the merging of the previous laws constituted a revision or the creation of a new law.
The court said the law will remain in effect until the revisions are made within two years and ordered the suspension of any broad strategic actions or issuance of new regulations linked to the law.
Chief Justice Anwar Usman said if the amendments are not made within two years, the legislation will be deemed “permanently unconstitutional” and “laws or articles that were already revoked or changed by the Job Creation Law must be revived.”
KSPI’s president, Said Iqbal, welcomed the ruling and said his party is ready to participate in the revision of the law to ensure it does not reduce the basic rights of workers.
He said the current law hurts workers by reducing severance pay, removing restrictions on manual labor by foreign workers, increasing the use of outsourcing and converting monthly salaries to hourly wages.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the government respects the Constitutional Court’s decision.
“The government will immediately follow up on the court’s ruling by preparing for the law's amendment and carrying out other court orders the best we can,” he told a news conference.
Indonesia, Southeast Asia’s largest economy, is eagerly courting foreign investment as a key driver of economic growth in a nation where nearly half the population of 270 million is younger than 30.