Challenges and Problems in Labour Law From the Perspectives of Indonesia and Malaysia

Abstract

This study provides a critical comparative study of the labour laws of Indonesia and Malaysia, two of the most prosperous economies in Southeast Asia, but with different legal systems due to their respective political, socio-economic and colonial legacies. A wide range of topics were discussed, covering almost all major issues related to the laws affecting practise, namely historical development and legal reforms, current challenges related to wage inequality, migrant workers and enforcement of labour protection. A qualitative comparative analysis was conducted based on primary legal documents, including the Indonesian Omnibus Law on Job Creation and the Malaysian Employment Act 1955 as amended, supplemented by secondary sources such as policy papers and academic articles. The findings suggest that decentralisation in Indonesia leads to uneven enforcement across regions, while Malaysia's centralised administration falls short in protecting migrant workers. In both countries, economic growth clashes with labour rights, with Indonesia struggling with a largely informal sector and Malaysia with a very high dependence on migrant workers. The discussion emphasises the fact that while recent legislative reforms have taken place, weak enforcement and problematic dispute resolution reflect the persistent problems. The study concludes by outlining policy implications that support strengthening enforcement mechanisms, formalising the informal sector and adhering to international labour standards to promote good employment practises. The results obtained with such a methodology contribute to the discourse on labour law and provide insights for policy makers, academics and other stakeholders concerned with the dynamics of the labour market in Southeast Asia.