Indonesia’s Job Creation omnibus law (Cipta Kerja) and its labour cluster
Law No. 11 of 2020 on Job Creation, an omnibus law of 186 articles in force since 2 November 2020, rewrote dozens of sector laws to attract investment, including the 2003 Manpower Law: a minimum wage set by a formula, contract durations and outsourcing left to government regulations, a fixed severance scale and a new job loss insurance. On 25 November 2021 the Constitutional Court declared its formation conditionally unconstitutional and gave two years to fix it; the government replaced it with Government Regulation in Lieu of Law No. 2 of 2022, enacted as Law No. 6 of 2023. On 31 October 2024 the Court reinterpreted 21 labour provisions and asked for a separate labour law within two years. Law No. 27 of 2026 on Labour Protection, promulgated on 28 October 2026, repealed the labour cluster (Article 81) and the 2003 law; the rest of the omnibus law, including the job loss insurance, stays in force.
Key points
Labour provisions reinterpreted by the Constitutional Court
21
decision of 31 October 2024 · Observed
Constitutional Court, decision 168/PUU-XXI/2023, points 2 to 22 of the operative part[8]
Articles of Law No. 27 of 2026 on Labour Protection
313
promulgated on 28 October 2026 · Observed
Maximum length of a fixed-term contract, extensions included
4 years
since 28 October 2026 · Observed
Law No. 27 of 2026, Article 82(2)[10]
Unemployment rate (ILO)
3.2%
2025
- Status: In force since October 28, 2026. In force, labour part replaced: Law No. 27 of 2026 repeals Article 80 letter a and Article 81 of Law No. 6 of 2023 (the amendments to the 2003 Manpower Law) and the 2003 law itself. The rest of the omnibus law, including the social security amendments that created the job loss insurance, remains in force.[10][9]
- Next milestone: October 28, 2028, Deadline to move provincial labour inspectors to the central Ministry
At a glance
Reference text
Undang-Undang Nomor 6 Tahun 2023 tentang Penetapan Peraturan Pemerintah Pengganti Undang-Undang Nomor 2 Tahun 2022 tentang Cipta Kerja menjadi Undang-Undang (Law No. 6 of 2023 enacting Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation as a law)[1][2]
No. UU Nomor 6 Tahun 2023 (LN 2023 No. 41, TLN No. 6856) · March 31, 2023
Read the text ↗Carried by
- Joko Widodo[3][2]President of the Republic: signed Law No. 11 of 2020, issued Government Regulation in Lieu of Law No. 2 of 2022 and signed Law No. 6 of 2023 · 2020-2023 · Initiator
- Airlangga Hartarto[13](secondary source)Coordinating Minister for Economic Affairs: spoke for the government when Parliament enacted the 2022 regulation as a law · 2023 · Initiator
- Prabowo Subianto[10]President of the Republic: signed Law No. 27 of 2026 on Labour Protection, which repealed the labour cluster · 2026 · Amendment
- Yassierli[11][15]Minister of Manpower: represented the government in the 2026 deliberations on the Labour Protection bill · 2026 · Amendment
Implementation
- Ministry of Manpower (Kementerian Ketenagakerjaan)
- Provincial governors and wage councils (minimum wages)
- BPJS Ketenagakerjaan (employment social security agency, job loss insurance)
- Coordinating Ministry for Economic Affairs (omnibus law as a whole)
Stated objective
Create and expand jobs by making it easier to do business and invest, protecting and empowering cooperatives and micro, small and medium enterprises, and accelerating national strategic projects, while guaranteeing every citizen work and fair treatment in employment relations. The 2022 regulation added the need to respond to global stagflation.[3][2]
Article 3 of Law No. 11 of 2020 and the general explanation of Law No. 6 of 2023 (government)
Unemployed people cited to justify the law
7,050,000
figure cited in 2020 · general explanation of Law No. 11 of 2020 (government)[3]
Part of 45.84 million people in the labour force who were unemployed, underemployed, working part-time or new entrants (34.3% of the labour force), against job creation of up to 2.5 million a year.
Share of employed people working in informal activities
59.97%
February 2022 · general explanation of Law No. 6 of 2023 (government): 81.33 million of 135.61 million employed[2]
Main measures
- Minimum wage set by a formula: provincial minimum wages are compulsory and district ones optional, calculated from economic growth, inflation and a « certain index » defined by government regulation; micro and small enterprises are exempt and agree wages with their workers (Articles 88C, 88D and 90B of the 2003 law as amended).[2]
- Fixed-term contracts: the legal cap (2 years, extendable once by 1 year) was removed and duration and extensions left to a government regulation; employers must pay compensation money when a fixed-term contract ends (Articles 59 and 61A).[2][8]
- Outsourcing: a company may hand part of its work to another under a written outsourcing agreement, the government determining which work; the outsourcing company is responsible for its workers’ protection and wages (Articles 64 and 66).[2]
- Severance: a fixed scale of 1 to 9 months’ wages by length of service, plus long-service pay of 2 to 10 months from 3 years of service (Article 156); the Constitutional Court restored the wording « at least » in 2024.[2][8]
- Job loss insurance (Jaminan Kehilangan Pekerjaan) added as a sixth national social security programme, in the 2004 social security law (Article 82); this part was not repealed in 2026.[2][10]
- Law No. 27 of 2026 (replacing the labour cluster): fixed-term contracts of at most 2 years, extendable twice by at most 1 year each; outsourcing limited to cleaning, workers’ meals, security and workers’ transport; minimum wage based on the higher of the formula (with a « certain index » between 0.5 and 1) and the decent living needs survey, with sectoral minimum wages; severance as a minimum scale.[10]
- Law No. 27 of 2026 also creates a severance reserve fund that employers must provide, managed by a government institution (micro and small enterprises exempt), and requires public employers to hire at least 2% and companies at least 1% of workers with disabilities.[10]
In data
Rules in force at each stage
| Legal basis | Initial term | With extensions |
|---|---|---|
| 2003 Manpower Law, art. 59(4) (Contract based on a fixed period: 2 years, extendable once by 1 year.) | 2 years | 3 years |
| Constitutional Court reading, 2024 (Law No. 6 of 2023 itself set no cap; the Court read it as at most 5 years including extensions.) | – | 5 years |
| Law No. 27 of 2026, art. 82(2) (2 years, extendable twice by at most 1 year each.) | 2 years | 4 years |
Scale starts at 0 years · Contracts for the completion of a specific job follow the same caps in 2024 and 2026.
Unemployment rate (ILO)
3.2%
2025
Employment rate (15-64)
65.8%
2025
Underemployment rate (Indonesia)
7.9%
2025
Youth unemployment (15-24)
13%
2025
Timeline
- Adopted
Parliament approves the Job Creation bill[12](secondary source)
Six factions in favour, PAN with reservations, Demokrat and PKS against; the bill had 15 chapters and 185 articles at that stage, according to the chair of the Legislation Body.
Constitutional Court: formation of the law conditionally unconstitutional (91/PUU-XVIII/2020)[6]
The Court held that the way Law No. 11 of 2020 was made breached the Constitution unless it was corrected within two years; the law stayed in force meanwhile, but strategic, far-reaching measures were suspended and no new implementing regulation could be issued. Without correction within two years, the law would become permanently unconstitutional and the provisions it had amended would apply again.
Law-making rules amended to allow the omnibus method[7]
Law No. 13 of 2022, presented as a follow-up to decision 91/PUU-XVIII/2020, adds the omnibus method to the 2011 law on law-making, regulates the correction of technical errors after joint approval and requires « meaningful participation » (the right to be heard, to be considered and to receive an explanation).
- In force
Government Regulation in Lieu of Law No. 2 of 2022 replaces Law No. 11 of 2020[5][2]
Issued by the President to carry out Constitutional Court decision 91/PUU-XVIII/2020 and citing a compelling emergency (global energy and food prices, inflation); it repeals Law No. 11 of 2020 and takes effect on the day it is promulgated.
Parliament approves the 2022 regulation as a law[13](secondary source)
Seven of the nine factions in favour, Demokrat and PKS against.
Constitutional Court rejects a formal challenge to Law No. 6 of 2023 (40/PUU-XXI/2023)[8]
Decision quoted in the government’s statement to the Court in case 168/PUU-XXI/2023.
Constitutional Court reinterprets 21 labour provisions and calls for a separate labour law (168/PUU-XXI/2023)[8]
On a petition by the Labour Party (Partai Buruh) and trade unions including FSPMI and KSPSI, the Court read 21 provisions of the labour cluster conditionally: fixed-term contracts of at most 5 years including extensions, sectoral minimum wages, a definition of the « certain index » of the wage formula, two days of weekly rest for a five-day week, severance pay as a minimum (« at least »), dismissal only after a final ruling when bipartite talks fail. In its reasoning it found that legislators should pass a new labour law, separate from Law No. 6 of 2023, within at most two years, with the active participation of trade unions.
Parliament and government examine the Labour Protection bill[15][14](secondary source)
A Parliament initiative bill sent to the President on 27 August 2026; the President named the ministers in charge on 1 September. Trade union coalitions said in September that the draft fell short on wages, contracts, outsourcing and platform workers.
Commission IX and the government agree to send the bill to the plenary[11]
23 chapters and 313 articles, including a severance reserve fund; the bill follows decision 168/PUU-XXI/2023, which set the deadline at 31 October 2026.
Parliament adopts the Labour Protection Law in plenary[15](secondary source)
- In force
Labour cluster repealed and replaced by Law No. 27 of 2026 on Labour Protection[10][9]
In force, labour part replaced: Law No. 27 of 2026 repeals Article 80 letter a and Article 81 of Law No. 6 of 2023 (the amendments to the 2003 Manpower Law) and the 2003 law itself. The rest of the omnibus law, including the social security amendments that created the job loss insurance, remains in force.
- Current step
One-year transition for outsourcing and implementing regulations[10]
Companies using outsourced workers must comply with the new law within one year of promulgation (existing outsourcing agreements run until they expire), and the implementing regulations must be issued within the same period.
- Upcoming: the outcome is not known
Deadline to move provincial labour inspectors to the central Ministry[10]
Law No. 27 of 2026 gives at most two years from promulgation to transfer provincial labour inspectors to the Ministry as civil servants.
The debate
Citoyen takes no position: arguments are reported as their authors put them.
According to its supporters
- The government argued that sector laws scattered across many statutes could not meet the need to accelerate job creation, so they had to be changed together in one law by the omnibus method, and that the law was urgent to keep Indonesia attractive to investors amid global stagflation.[2]
- Before the Constitutional Court, the government said the law also protects workers: compensation money at the end of fixed-term contracts, criminal sanctions for unpaid severance or wages, and the job loss insurance.[8]
- When Parliament enacted the 2022 regulation, Coordinating Minister Airlangga Hartarto said the law had to be kept in an uncertain economy and that its implementing rules were speeding up the recovery after the Covid-19 pandemic.[13](secondary source)
- On the 2026 replacement, Manpower Minister Yassierli said it unifies norms that were scattered and often caused uncertainty, and balances workers’ basic rights with the continuity of business.[15](secondary source)
According to its opponents
- The Constitutional Court found in 2021 that the way Law No. 11 of 2020 was made breached the Constitution; the law-making reform passed in 2022 to follow up that ruling added requirements of meaningful public participation.[6][7]
- The Labour Party and trade unions argued before the Court that removing the legal cap on fixed-term contracts could keep workers on fixed-term contracts for very long periods, even for life, and left the duration to direct bargaining between worker and company.[8]
- The Demokrat and PKS factions voted against both the 2020 bill and the 2023 enactment of the regulation.[12][13](secondary source)
- On the 2026 replacement, union coalitions (KSPI, KASBI) said in September that the draft was far from their proposals on wages, contracts, outsourcing and platform workers; the employers’ association Apindo had asked to keep outsourcing contracts up to five years and wider outsourcing than support work.[14][17](secondary source)
Indicators to watch
- Unemployment rate · World BankSee the card →
- Employment rate · World BankSee the card →
- Underemployment rate · BPSSee the card →
- Youth unemployment rate · World BankSee the card →
- Provincial and sectoral minimum wages set by governors · Kementerian Ketenagakerjaanno Citoyen card yet
- Implementing regulations of Law No. 27 of 2026 (due by October 2027) · Kementerian Ketenagakerjaanno Citoyen card yet
- Job loss insurance beneficiaries · BPJS Ketenagakerjaanno Citoyen card yet
Sources
- [1]Undang-Undang Nomor 6 Tahun 2023 tentang Penetapan Peraturan Pemerintah Pengganti Undang-Undang Nomor 2 Tahun 2022 tentang Cipta Kerja menjadi Undang-Undang (detail page) –Kementerian Sekretariat Negara, JDIH, March 31, 2023
- [2]Salinan UU Nomor 6 Tahun 2023 (Lembaran Negara 2023 Nomor 41), with the text of Perppu Nomor 2 Tahun 2022 tentang Cipta Kerja annexed –Kementerian Sekretariat Negara, JDIH, March 31, 2023
- [3]Salinan UU Nomor 11 Tahun 2020 tentang Cipta Kerja (Lembaran Negara 2020 Nomor 245) –Kementerian Sekretariat Negara, JDIH, November 2, 2020
- [4]Undang-Undang Nomor 11 Tahun 2020 tentang Cipta Kerja (detail page) –Kementerian Sekretariat Negara, JDIH, November 2, 2020
- [5]Salinan Peraturan Pemerintah Pengganti Undang-Undang Nomor 2 Tahun 2022 tentang Cipta Kerja (Lembaran Negara 2022 Nomor 238) –Kementerian Sekretariat Negara, JDIH, December 30, 2022
- [6]Salinan Putusan Perkara Nomor 91/PUU-XVIII/2020 (letter of the Registrar to the President, Nomor 43.91/PUU/PAN.MK/SPts/11/2021, with the operative part) –Mahkamah Konstitusi Republik Indonesia, November 25, 2021
- [7]Salinan UU Nomor 13 Tahun 2022 tentang Perubahan Kedua atas Undang-Undang Nomor 12 Tahun 2011 tentang Pembentukan Peraturan Perundang-undangan –Kementerian Sekretariat Negara, JDIH, June 16, 2022
- [8]Putusan Nomor 168/PUU-XXI/2023 (Pengujian Undang-Undang Nomor 6 Tahun 2023 tentang Cipta Kerja) –Mahkamah Konstitusi Republik Indonesia, October 31, 2024
- [9]Undang-Undang Nomor 27 Tahun 2026 tentang Pelindungan Ketenagakerjaan (detail page) –Kementerian Sekretariat Negara, JDIH, October 28, 2026
- [10]Salinan UU Nomor 27 Tahun 2026 tentang Pelindungan Ketenagakerjaan (Lembaran Negara 2026 Nomor 179) –Kementerian Sekretariat Negara, JDIH, October 28, 2026
- [11]Komisi IX dan Pemerintah Sepakati RUU Pelindungan Ketenagakerjaan Dibawa ke Paripurna –Dewan Perwakilan Rakyat Republik Indonesia, October 5, 2026
- [12]Rapat Paripurna DPR RI setujui RUU Ciptaker menjadi UU –ANTARA, October 5, 2020 · secondary source
- [13]DPR setujui Perppu Ciptaker jadi undang-undang dalam rapat paripurna –ANTARA, March 21, 2023 · secondary source
- [14]DPR didesak respons usulan buruh soal RUU Perlindungan Ketenagakerjaan –ANTARA, September 16, 2026 · secondary source
- [15]Menaker sebut RUU Ketenagakerjaan perkuat perlindungan pekerja secara adil –ANTARA, October 6, 2026 · secondary source
- [16]Said Iqbal sebut RUU Ketenagakerjaan atur skema pengupahan yang lebih baik –ANTARA, October 7, 2026 · secondary source
- [17]UU Ketenagakerjaan Pangkas Masa Kontrak Outsourcing, Ini Kata Apindo –Republika (source: ANTARA), October 8, 2026 · secondary source