Jakarta. The controversial US trade deal actually has “hidden gems” as it protects Indonesian labor rights, a senior economist pointed out, as tariff uncertainties continue to linger.

The Indonesian government had drawn flak for signing US trade deal that heavily tilts in Washington’s favor. However, the 45-page document actually includes provisions that can bring good news for Indonesia’s workforce. Riandy Laksono, an analyst at the economic think-tank CSIS, told a press briefing that the document had clauses related to restricting outsourcing — a business practice that involves hiring external workers to perform tasks, often cheaper than the full-time employees.

“This might come as a surprise. The US trade agreement actually protects our workers. It [requires] Indonesia to end exemptions for minimum wages. We can’t conduct outsourcing as freely as the way it is now,” Riandy said in Jakarta on Friday.

“These are the hidden gems in this one-sided deal.” 

Under Article 2.32, the US demanded that Indonesia amend its labor law to "prohibit the outsourcing of core business sanctions". The Job Creation Law frees Indonesian small-sized enterprises from having to pay their staff the minimum wage. The Donald Trump government wants this special treatment removed. Washington called on Jakarta to also cap fixed-term employment “only for non-permanent tasks and for up to one year total”. Fixed-term employees, colloquially known as PKWT, can extend their contracts up to five years.

These clauses might be answering workers’ prayers. On last year’s May Day rally, labor groups had called the government to put an end to outsourcing — a demand that President Prabowo Subianto accepted. The retired army general even instructed the so-called National Labor Welfare Council “to assess whether it is possible to get rid of outsourcing as soon as possible”. This proposed council is expected to give input to the president on labor issues. In a January protest, Said Iqbal — who chairs the major labor union KSPI — demanded the government fulfill its promise.

The Jakarta Globe has reached out to Said for comments on the US tariff deal’s pro-labor clauses.

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