Technological Advancements and Employment: Anticipating and Adapting to Rapid Change

Overview

Technological advancements, including AI and automation, are transforming workplaces globally, presenting opportunities and challenges. This article explores how these changes impact employment, emphasizing the rapid pace of technological evolution and its potential to render many jobs obsolete. It examines how Indonesia’s Employment Law, particularly provisions related to job training and compensation during terminations, helps protect workers in this evolving landscape. Additionally, it suggests regulatory adaptations to better prepare for and manage technology integration in the workplace. The piece highlights the need for ongoing adaptation to safeguard employee rights and enhance workplace efficiency.

Throughout human history, technological advancements have profoundly impacted the daily lives of employees, particularly in the workplace. The Industrial Revolution of the 19th century, spearheaded by the invention of the steam engine, marked a major shift from reliance on human and animal labor to the utilization of machine power. This period introduced technological advancements in the industrial process and fundamentally transformed how work was conducted.

Similarly, the recent emergence of artificial intelligence, machine learning, and cloud-based computing has had a profound impact on the workforce globally. The pace of technological evolution and automation has been staggering, even surpassing that of the Industrial Revolution. These advancements have ignited discussions and heightened concerns about the future of employment, with many worried that a significant number of jobs will become redundant as they are replaced by machines.

This article takes an in-depth look at the impact of recent technological advancements on employment by exploring how several provisions in Law Number 13 of 2003 concerning employment, as partially amended by Government Regulation in Lieu of Law Number 2 of 2022 and subsequently ratified through Law Number 6 of 2023 (“Employment Law) and Government Regulation Number 35 of 2021 on Temporary Employment Agreement, Outsourcing, Working Hours and Breaks, and Termination of Employment Relationships (“GR 35/2021“) protects the rights of Indonesian employees in the face of rapid technological changes, and outlining the changes needed in Indonesian employment law to accommodate these advancements.

Technology Employment

A. Impact of Technological Advancements on Employment

Rapid technological advancements, particularly in Artificial Intelligence (“AI“), have taken the world by storm, evoking both enthusiasm and concern. These technological advancements are a double-edged sword, bringing both benefits and challenges.

On the one hand, technological advancements and AI in particular have raised concerns about job insecurity as automation rapidly replaces tasks previously performed by humans. Technology and AI are now widely used in many routine jobs, such as data entry, assembly line work, and even customer service in some cases. A study by Goldman Sachs even elaborated on the possibility of 300 million full-time jobs worldwide to be replaced by machines in the future. Secondly, rapid technological advancements and AI has made it challenging for employees to keep their skills and knowledge up-to-date. Many employees are finding it difficult to adapt to technological changes and are unable to meet the demands of certain job roles. New positions are appearing in the job market but only a few employees have the necessary skills to fill these roles. Consequently, employers are increasingly turning to technology or AI to address the shortage of adaptable employees

On the other hand, technological advancements have also paved the way for new industries and opportunities to emerge. Due to these advancements, society has shifted its focus toward jobs that require specialists with specific skills and responsibilities, such as social media managers, software developers, data analysts, cybersecurity experts, and more.

Additionally, the evolution of technology has undoubtedly enabled employees to significantly improve their efficiency, resulting in increased income and wages within shorter timeframes, while also fostering a more comfortable working environment through flexible working hours. Moreover, the integration of technology and AI in healthcare, biotech, finance, and other industries has also enhanced society’s quality of life.

Technology Employment

B. Employee Rights Protection in Indonesia’s Employment Law

As previously mentioned, employees face several challenges due to the impact of technological advancements on employment, including the possibility of employment termination in affected roles. However, the Employment Law includes several provisions that can help employees and employers navigate this rapidly changing employment landscape. Among these provisions are those related to the following matters:

Employee Right to Receive Job Training
Pursuant to Article 11 of the Employment Law, employees are entitled to receive job training (pelatihan kerja) to acquire, improve and/or develop their job competence in alignment with their talents, interests, and abilities. Additionally, Article 10 of the Employment Law stipulates that job training should be conducted in accordance with developments in the job market and business community, whether within or outside the scope of the employment relationship.

Given the current employment challenges posed by technological advancements and the growing role of AI in the workplace, it is important for employers to provide job training for their employees in accordance with provisions in the Employment Law. This training can be specifically designed to help employees develop the necessary skills to adapt to technological changes, such as automation and AI, and help employees stay competitive and capable in their roles. Furthermore, employers may also provide job training so that their employees can effectively use AI to fulfil their new responsibilities and improve work efficiency.
Compensation in the Event of Employment Termination
It is undeniable that rapid technological advancements and the rise of AI may lead to automation resulting in the replacement of certain job roles traditionally performed by employees. This could result in workers being displaced because their roles become obsolete, potentially leading to job losses.Despite this challenging reality, Employment Law provides protection for employees in such situations. Under Employment Law and GR 35/2021, employers are required to provide compensation in the form of a severance package in the event of employment termination. It is widely believed that termination of employees due to their role being automated can arguably be classified as termination due to efficiency. In such cases, the employee is entitled to a severance package that includes packages, as detailed in Article 40 jo. Article 43 of GR 35/2021. These provisions act as a safety net for employees, ensuring they receive financial support should their roles become obsolete due to technological advancements.

Technology Employment

c. Adapting Indonesia’s Employment Law Regulations to Technological Advancements

While the debate continues on whether or not technological advancements have an overall positive impact on the workplace, there is no doubt that they have far-reaching effects on society, including economic, legal, political, and regulatory implications. Consequently, our employment regulatory landscape must adapt to these advancements particularly because an increasing number of companies recognize and embrace the benefits of utilizing AI to enhance workplace efficiency. One approach to adapting to these advancements is through implementing regulations that govern the use of AI, technology and/or automation in the workplace, specifically addressing the following issues:

Regulations to Prepare for Technology Integration in the Workplace
The Indonesian government may consider enacting regulations that require companies to conduct assessments related to the potential impacts of AI on employment and job roles before integrating technology and/or AI into their workplace. Additionally, the government could introduce regulations requiring employers to invest in job training (pelatihan kerja) programs for employees affected by automation. By introducing such regulations, employees affected by AI and increased automation would have an easier transition to new roles and responsibilities, thereby reducing the risk of job displacement and enhancing workforce adaptability.
Regulation for the Implementation of Technology in the Workplace
As we have mentioned before, the introduction of automation and/or AI to the workplace may significantly enhance employee productivity and offer significant benefits in sectors like finance, transportation, and healthcare. However, there have also been concerns regarding the safety aspect of the use of automation and AI, particularly relating to data protection. Therefore, it is imperative that the Indonesian government implement regulations to address potential risks associated with AI and automation. Indonesia could draw inspiration from the European Union’s AI Act, which was proposed in 2021 and came into effect in early August 2024. This Act requires AI systems to be assessed and to meet obligations based on their risk factors, and aims to ensure that AI systems in the EU are safe, transparent, traceable, non-discriminatory, and environmentally friendly.Whilst the Indonesian government prepares to implement the aforementioned provisions, employers can still adopt these practices within their workplaces through the implementation of internal policies or regulations to create a workplace that is well-prepared for the rapid advancements in technology and AI.

For comprehensive insight and expert guidance in navigating the employment provisions in Indonesia, ADCO Law stands ready to provide the necessary assistance. Stay well-informed and maintain compliance to ensure equitable treatment and support for your workforce in Indonesia.

For further details on the implementation of maternity leave and the protection of employee rights in Indonesia’s employment landscape, feel free to reach out to our firm.

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