Implications of the Omnibus Law on Employment and Socio-Economic Structures of Form Socio-Economic Structure

Abstract

Regulatory reform through Law No. 6 of 2023 on Job Creation introduces substantial changes to Indonesia’s business environment and labor governance. This study employs a normative juridical approach to examine the effectiveness of key provisions within the omnibus law and the main challenges that arise in its implementation, particularly regarding socio-economic structures. The findings indicate that although the law enhances licensing efficiency and labor-market flexibility, its effectiveness is constrained by uneven institutional capacity and inconsistent implementation across regions. Two major challenges identified over the last five years are the growing uncertainty in employment relations and the weak enforcement of labor regulations. While flexibility is intended to strengthen competitiveness, it simultaneously increases worker vulnerability, especially in labor-intensive industries. Furthermore, limited supervisory capacity and misalignment between national and local policies produce inconsistent protection standards. This study concludes that achieving a balance between economic flexibility and worker protection is essential for ensuring that the omnibus law contributes to inclusive and sustainable development