Shifts in ASEAN Labour Laws

Labour laws in Southeast Asia are evolving, but gaps remain in protection and adherence

ASEAN has the third largest labour force globally, amounting to 326 million in 2015, and that number is likely to reach 385 million by 2030. However, the pandemic accentuated high informality in labour across Southeast Asia and the lacunae of social protections in the region. In 2020, the unemployment rate rose to 3.1 percent, compared with 2.5 percent in 2019.  

With the Covid-19 shock came job losses and reductions in working hours, and it forced a vast majority of workers to exit the labour force. When they returned to work after restrictions were lifted, it was mostly as informal employees. While most nations extended subsidies to informal workers, with not enough protections, they remain vulnerable.  

Economic recovery and labour 

Following the devastating pandemic, ASEAN nations have been making policy changes to promote ease of business and speed up economic recovery. So far, their approach to inclusive and sustainable growth has been uneven, and efforts are needed to formalise employment and widen the fiscal scope for protection.

In November 2020, Indonesia introduced the Omnibus Law to drive investment and create jobs. However, the law will be revisited to correct procedural flaws, as unions protested against including a cut in mandatory severance benefits, new minimum wage limits and removal of some mandatory paid leave.

To boost output, from 2022, Vietnam raised the number of overtime hours for employees from 40 per month, as stated in the Labour Code 2019, to 60 per month. So, employers—who demonstrate business demand and have their employees’ consent—can make workers operate overtime for over 200 hours but not exceeding 300 hours a year.

Gaps in adherence 

So far, businesses have not uniformly offered social protections. Ride-hailing and food delivery platforms are major employment generators. Yet, in the Philippines, a study said there was no evidence that platform riders get the minimum wage through gig labour. Classified as individual contractors, rather than employees, they do not enjoy social protections under the Philippine’s labour laws. Similarly, in Indonesia, which has a large informal economy, Fairwork reported an absence of labour protections and poor working conditions.   

Countries will be looking at filling gaps in social protection by investing in human capital, improving access to education and skilling, and closing the digital divide.

About the Author

Kavita Panda
Chief Operating Officer | Profile

Kavita Panda is our Chief Operating Officer and Country Manager for India. Kavita was Executive Director of The Walt Disney Company India, wherein, she spent a decade and half in various business roles across Content Syndication, Licensing and Merchandising, Solution Sales and Advertising Sales.