Are Indonesian Employers Readying for Post-COVID Biz Push?

Photo credit: iStockphoto/AlfinTofler

Indonesia's workforce of 133.56 million employees are facing a dim future with COVID-19.

Employers are using a combination of dismissals and slow recruitment to slash their operational costs and survive. An ILO survey noted that 2 out of 3 companies in Indonesia have stopped operations, leading to massive dismissals. The Indonesia Chamber of Commerce said that the dismissals could reach 15 million people across all sectors, while the Minister of Manpower notes that 3 million workers have been sent home and dismissed.

Indonesia does not recognize the concept of notice of termination, and requires a mutual termination agreement (MTA). 

While this data may look grim, it may only be the tip of the iceberg as it is based on the single identity numbers (NIK) from Indonesian identity cards (KTP). As the ministry analysts dig deeper and verifies other data sources, the figure is expected to increase drastically.

Mekari, a SaaS-based HRIS & Payroll player, also found that many Indonesian employers postponed recruitment before the work from home (WFH) policy came into place. The data from enterprises using Talenta, the company’s SaaS HR offering, shows recruitment numbers plummeting before the WFH policy was created and after the government enforced it.

WFH is part of the Large Scale Social Restriction (PSBB) policy, which the Jakarta government enacted on April 10, 2020. According to the Letter of Republic of Indonesia Ministry of Manpower No. M/3/HK.04/III/2020 on Worker/Labor Protection and Business Continuity for the Prevention and Control of COVID-19, employers must continue paying the full wages of employees observing EFH unless an agreement between the two parties says otherwise. 

After WFH came into force, recruitment continued but at a very slow pace. Talenta’s internal data showed that of the 558 enterprises that use the offering, only 420 enterprises actively sought new recruits after WFH came into force. An interesting sidenote is that 25% of Talenta-using enterprises recruited more employees before WFH enforced and 11% still recruited the same number of employees even after the policy was enforced. Overall, recruitment saw a 26.5% reduction. 

But there are signs that it is not all bad news. Mekari data showed that recruitment may have slowed, but it has not stopped. Before the enforcement of the WFH policy, the median for all companies with new recruits was 7 per month. WFH reduced it to 2 employees per month. But the fact that companies are still recruiting shows that they may be preparing for a post-COVID push. 

“The data that we have provided reveals that during this crisis, although plenty of enterprises are trying to adapt the business, they are still recruiting — though not in significant numbers. We see this as a strategic move [taken to ready their] products and services, so that when the pandemic is over, the enterprises will be able to operate and recover their business faster,” says Standie Nagadi, vice president of marketing at Mekari.

Photo credit: iStockphoto/AlfinTofler