Is Indonesia's Regulation Ready for The Gig-Economy?

31 October 2019 01:14

Is Indonesia's Regulation Ready for The Gig-Economy?

Online ‘gig’ platforms has made it easier for people to look for freelancing opportunities. With more than 8 million workers depend on gig platforms (3 million ride-hailing drivers, 5 million fintech agents, and 30 thousand freelancers listed in various freelancing platforms) it is necessary for the government to provide legal certainty for employment in the gig-economy.

The need for employment regulation to be more accommodating towards gig economy was the topic of the ISD Public Dialogue (Thu, 24/10) that was held in partnership with Indonesia Employer’s Association (APINDO) titled “Online Labour Market: Defining Employment Relations in the Digital Age” featuring representatives from gig-platform (Helpster), regulator (Coordinating Ministry of Economic Affairs/CMEA and Ministry of Manpower), and academia (Lembaga Demografi FEB UI) as speakers.

Haiyani Rumondang (Ministry of Manpower) stressed the dire need for current employment regulation (Law no. 13 of 2003) to be updated – despite the controversies that surrounds the revision draft. The current law defined an employment by the presence of three elements: contract, remuneration, and command that are agreed upon between employers and workers. However, the advent of gig-platforms that mediates clients and independent contractors (workers) has altered the relationship between employers and workers.

As an example, Helpster is a platform that connects workers and businesses that need additional human resources for short-term basis. Priskila Rumondor (Helpster’s VP of Human Resources) explained that Helpster’s role as a platform extends from matching clients with human resources to the deliverance of remuneration to workers and ensuring both parties to comply with the contract of employment. The lack of regulation that accommodates this new kind of employment scheme has made her company in legal limbo. However, she also highlights that Helpster always ensure the contract being made complies to existing regulation (i.e. must fall under the category of short-term freelancing that cannot exceed 21 days/month for 3 months in a row).

Academician Dewa Wisana of Lembaga Demografi FEB UI discussed the possible way to regulate the online labour market. He argued that the regulation cannot be one-size-fits all as some workers treat gig-employment as their primary source of income (therefore they need more protection and welfare rights) and the other treat it as secondary employment. However, it is imperative that the regulation must not interfere with worker’s flexibility as it may hinder the efficiency entailed in the online labour market (i.e. lower hiring cost, lower information asymmetry through rating system, and transparency of remuneration).

To sum up, Sarah Kessler in her book titled ‘Gigged: The End of the Job and the Future of Work’ says that “the gig economy could create opportunity for some people, but it could also amplify the made the world of work terrifying in the first place; insecurity, increased risk, lack of stability, and diminishing workers' rights”. The presence of regulator is needed to provide protection for workers and certainty for businesses. With the right regulation, freelancing jobs can be formalised through gig-platforms.

 

(Robert Adhi Ruddyanto)