LABOUR JUSTICE AND SOCIAL PROTECTION POLICY: FLEXIBILITY, WAGE SETTING AND THE INFORMAL MAJORITY

Abstract

Indonesian labour policy has been reorganised around flexibility, while the majority of the workforce remains in informal employment beyond the reach of both the reformed protections and the social insurance system, which raises the question of whom labour law is for. This study aims to analyse the distributive consequences of the flexibility turn, to assess the constitutional and Islamic legal foundations of wage justice, and to formulate criteria for a social protection policy that reaches the informal majority. The research applies normative juridical research with statutory, conceptual, case and comparative approaches, supported by a reading of the contract of hire and the classical rules on wage determination and prompt payment, drawing on Indonesian labour and social security legislation, constitutional decisions, international labour standards, and comparative social protection models. The findings show that the reform expanded permissible fixed-term and outsourced work while narrowing wage-setting discretion through a formula-based mechanism, that the constitutional review of the reform addressed the process and parts of the substance without restoring the earlier protective architecture, and that eligibility for contributory social insurance remains structurally tied to formal employment. Islamic doctrine requires wage certainty, prompt payment and prohibition of exploitation of necessity. The study recommends non-contributory floors, portable entitlements and enforceable wage criteria.