Indonesia permits contract adjustments in key sectors

Indonesia’s Minister of Manpower has a new level of flexibility to working contracts in some specific export-oriented industries.

The new regulation aims to address work and business continuity challenges arising from weakening global demand.

Companies must meet a specific set of criteria, and then also reach a mutual agreement with their labor union to qualify.

Once registered at the local manpower office, the new agreements are valid for up to six months.

To be eligible, companies must have at least 200 employees, labour costs must comprise a minimum of 15% of total production costs, and they should also rely on orders from the US and Europe.

Industries covered by the new regulation include the textile and apparel, footwear, leather and leather goods, and furniture manufacturing sectors.


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Chief of Staff Asia