Indonesia's Draft Labor Bill Faces Calls to Address AI-Driven Workforce Changes

STUPA ■ JAKARTA — Indonesia's proposed Labor Bill is drawing renewed attention as lawmakers and the government accelerate deliberations following a Constitutional Court ruling requiring a more comprehensive labor law, with labor experts urging policymakers to address the growing impact of artificial intelligence (AI) on the workforce.

The draft legislation is expected to revisit long-standing issues, including severance pay, layoffs, contract employment, outsourcing, and protections for gig economy workers. Labor unions have called for stronger worker protections, while business groups have argued for maintaining labor market flexibility to support investment and job creation.

Labor analyst Dani Satria said the rapid adoption of AI has fundamentally reshaped labor markets worldwide, automating a growing number of administrative, customer service, data processing, and even creative tasks.

"The impact of AI is no longer a future prediction but a reality that is already being felt across various industries in Indonesia," Dani said on Thursday in Kendal, Central Java.

He said AI is also creating new employment opportunities that require digital literacy, data analytics, system development, and critical thinking skills, making workforce adaptation a central challenge for policymakers.

According to Dani, the new labor law should extend beyond regulating industrial relations and become a framework for developing a future-ready workforce. He said the legislation should strengthen support for upskilling and reskilling programs through collaboration between the government, businesses, universities, and vocational training institutions.

He also called on companies to complement technological adoption with continuous workforce development, arguing that AI should be viewed as a tool to improve productivity rather than simply replace workers.

Dani said international experience shows that countries adapting successfully to technological disruption have generally invested in lifelong learning systems that enable workers to continually update their skills as industry demands evolve.

He added that the success of the Labor Bill should not be measured solely by its ability to balance the interests of workers and employers, but also by whether it prepares Indonesia's workforce for an economy increasingly shaped by digital technologies and artificial intelligence.(gusti)