The Indonesian Constitutional Court Decisions as a Social Engineer

in Improving People’s Welfare

Pan Mohamad Faiz

and Oly Viana Agustine

Center for Research and Case Analysis, The Constitutional Court of Indonesia Jakarta, Indonesia

Keywords: Constitutional Court, People’s Welfare, Social Engineering, Socio-Economic Rights

Abstract: One of the national goals of the establishment of the Indonesian state is to improve the people’s welfare. To

support this achievement, the law comes to bring its functions as a social engineer. It means the law plays a

role in influencing the occurrence of a social change in a planned manner to achieve prosperity. The

Constitutional Court decision is one of the sources of law that is expected to improve people’s welfare. This

article aims to analyze the Constitutional Court decisions that have significant implications for maintaining

and improving the people’s welfare in Indonesia. The methodology used in this research is a normative

juridical with library research and case study approaches on decisions declared by the Constitutional Court in

the last five years (2013-2018). This study found that there are socio-economic rights of citizens that have

been protected and restored by the Constitutional Court. These erga omnes decisions indirectly contributed to

the improvement of the people’s welfare, in particular regarding the rights of a pension fund, a minimum

wage and severance pay. This article concludes that an effort to maintain and improve the people’s welfare in

Indonesia can also be enforced effectively through a social engineering based on the Constitutional Court

decisions.

1 INTRODUCTION

In its Preamble, the Indonesian Constitution clearly

mentions that one of the general goals of the state as

a national ideal is to improve the people’s welfare

based on the five principles (Pancasila), namely: (1)

Belief in the One and Only God; (2) A just and

civilized humanity; (3) A unified Indonesia; (4)

Democracy led by the wisdom of the representatives

of the people; and (5) Social justice for

all Indonesians. The people’s welfare discussed in

this article is referred to the welfare economic

conception that is concerned explicitly with the

distribution of income (Kaplow 2011), while

improving people’s welfare mostly refers to the

efforts of the government to improve the living

standards of every citizen and family. The

improvement of people’s welfare can be achieved

through government programs in education, health,

housing, culture, old age and unemployment

insurance, the environment and others (Coatsworth

1996).

Therefore, the role of the state is significant in

shaping policies that can improve people’s welfare.

This role can be expressed through laws and

regulations. The law acts as a means to achieve

common idealized goals that can be intended to

improve public welfare. Thus, the welfare

improvement policy needs to be based on the rule of

law reflected not only in the law and regulations but

also on the court decisions.

In the Indonesian legal system, the judicial power is

not only carried out by the Supreme Court but also the

Constitutional Court that has an authority to examine

the constitutionality of the law. With this authority,

the Constitutional Court can form and exercise social

control over social policies contained in the law. If the

policy is contrary to the Constitution because it does

not guarantee the realization of social welfare, the

Constitutional Court can annul the law or make a

constitutional interpretation towards its

implementation. Thus, this article discusses the role

of the Indonesian Constitutional Court as a social

engineer in improving the people’s welfare. Given

that the parameters of people’s welfare are very

much, this article will limit its discussion on a pension

fund, a minimum wage and severance pay for retirees

and workers.

Faiz, P. and Agustine, O.

The Indonesian Constitutional Court Decisions as a Social Engineer in Improving People’s Welfare.

DOI: 10.5220/0009920401650170

In Proceedings of the 1st International Conference on Recent Innovations (ICRI 2018), pages 165-170

ISBN: 978-989-758-458-9

165

2 THEORETICAL FRAMEWORK

2.1 Law as a Social Engineer

The government has a constitutional duty to

determine the form and type of law that shall be used

in maintaining the ideals of the state. In other words,

the law is a means for the state in preserving its

national ideals. Since the state is necessarily a

political order of a society, the legal ideals of a nation

are ideally the further result of political ideals.

Therefore, the applicable law created by the

government indeed contains political ideals from

influential people or groups in the country concerned

(Merton 1957).

Law through its fair enforcement plays a vital role in

creating public welfare (bonum commune

communitatis) or for the public good (pro bono

publico). Jeremy Bentham and John Stuart Mill, as

cited by Harris, formulated it with the phrase “the

greatest happiness of the greatest number.” It means

the purpose of the law is to provide as much happiness

as possible to many people because the law

essentially aims to create prosperity in the life of

society (Harris 1989).

Through his theory, Roscoe Pound argues that law

functions as a tool of social engineering. He interprets

the law as a type of social engineering or social

control in a political society of the state. According to

him, as explored by Huijbers, the purpose of the law

is to compensate for the social and individual needs

of one another (Huijbers 1999). Roscoe Pound also

discussed the use of decisions as a tool of social

engineering. He even criticized the ‘old-fashioned

view’ of the law which emphasized the maintenance

function of the order in a static sense and the

conservative nature of the law. The United States’s

experience, for instance, proves that court decisions

become essential instruments in social change in the

country (Ali 2011).

Pound is a prominent legal thinker whose thoughts

are discussed and taken into account in various issues

(Pound 1940). He is also one of the supporters of

sociological jurisprudence and pragmatic legal

realism (Wacks 2005). Pound has changed the

concept of ‘law in books’ into ‘law in action’. He

argues that the real law is the law that is carried out.

It means the law is not only written in statute, but also

what is done by legal officers and law enforcers or

anyone who carries out the law enforcement functions

based on the concept of law as a tool of social

engineering (Pound 1940).

Roscoe Pound’s theory was later developed by

Mochtar Kusumaatmadja by introducing a legal

development theory by combining the thoughts of

Myres. S. McDougal and Harold D. Lasswell.

Kusumaatmadja transformed the notion of law as a

tool into law as an instrument to develop society. The

main idea underlying the theory of legal development

is the need for an order in the development and reform

efforts. Law in the sense of norms is expected to

direct human activities towards the desired

development and reform. In addition, the concept of

law as a means of reform is the law in the sense of the

rule or regulation functioning as a regulator or means

of development in the sense of channeling the

direction of human activities in the direction desired

by development and reform (Kusumaatmadja 1995).

With respect to legal development, Rahardjo argues

that the most effective way to adjust legal

development to social change is through the court

because the court is considered relatively more

dynamic and flexible in keeping up with the times

(Rahardjo 2009). Therefore, the best way to interpret

the law is by exploring the lawmakers’ intention

when the law is formed through the words, the

context, the subject, the effects, and consequences, or

the spirit and the legal reasons that can be examined

through a court decision (Wolfe 1994). However,

when the lawmakers and judges are anti-social, the

social engineering theory will lose its function

(Grossman 1935).

2.2 Constitutional Court Decisions as

Sources of Law

Sources of law are a crucial matter in legal science. It

refers to the origin of a specific value or norm. The

sources of law can be generally divided into two

senses, namely informal sense (formele zin) and in

material sense (materiele zin). Sources of law in a

formal sense can be defined as formal places in

written form where a legal rule is taken, while sources

of law in material sense is the place where the norm

comes from both written and unwritten meanings.

Thus, the formal sources of law must have one form,

among others: (1) the form of legislative products or

certain regulations (regels); (2) certain types of

agreements that are binding between the parties

(contract or treaty); (3) Form of a judge’s decision

(vonnis); or (4) certain forms of administrative

decisions (beschikking) from the holder of the

authority of the state administration (Asshiddiqie

2014).

The judge’s decision as a formal source of law is a

statement from the judge as a state official authorized

to do so. This decision is pronounced at a court

hearing and aimed to resolve a case or problem

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between parties. It also refers to the statement stated

in written form. A written decision concept has no

power as a decision before it is pronounced in a court

hearing by a judge (Mertokusumo 2006). The judge’s

decision is important since the other written sources

of law are inadequate for keeping the law up to date

(Watson 1983).

English law, for instance, also has a system of binding

precedent. The element in a decision that is binding is

the ratio decidendi. It is the propositions of law that

the court appeared to consider necessary for its

judgment. The court usually will not declare what is

the ratio decidendi, and judges in subsequent cases

are therefore forced to find it themselves. This task

may often prove to be quite tricky mainly because

there is no theoretical method for uncovering the

ratio. This reliance on precedent may create persistent

ambiguity. Naturally, it does not necessarily result in

improved quality in the law, because the subsequent

court may, as the first could also have done, give an

unfortunate ratio.

Referring to the hierarchy of laws and regulations in

Indonesia, the legal status of the Constitutional Court

decision in judicial review cases is equivalent to the

law. The decision is also final and binding. It means

that the Constitutional Court decision binds not only

to the parties, but also to state institutions, public

officials, and all citizens. This principle is known as

erga omnes. Thus, an independent judiciary,

particularly the Constitutional Court, plays a pivotal

role in interpreting and enforcing citizens’ rights

enshrined in the Constitution (Steytler 2017).

3 METHODOLOGY

The research method used in this article is a juridical

normative using library research and cases study

approach on the Indonesian Constitutional Court

decisions declared in the last five years (2013-2018)

that have impacts on the improvement of the people’s

welfare. The decisions examined in this article are

related to the rights to pension fund, minimum wage

and severance pay.

4 RESULT AND DISCUSSION

4.1 Constitutional Court Decisions on

People’s Welfare

As discussed earlier, Roscoe Pound approved a law-

free development of the activities of judges as long as

they pay attention to a legitimate objective that is the

public interest (Huijbers 1999). This perspective is

called recht ist was dem volke nützt in Germany. It

means the law is whatever is useful to the nation

because the law is a supporter of happiness (Tanya

2006). However, this vital role has not become a

reality in many countries, especially in developing

countries, including in Indonesia. The law is

considered not to provide a sense of justice that plays

a role in realizing the welfare and happiness of the

people.

By using Pound’s theory, the law can be used as a

type of social engineering or social control in a

political society. The aim is to balance the needs of

social and individual between one another (Huijbers

1999). Using the concept of social engineering, legal

experts and judges must abandon their rigid attitude

in understanding the law. They must also

accommodate changes that occur in the society so that

the law can be a bridge for the creation of satisfaction

in meeting the interests and aspirations of the people

and minimizing the occurrence of social friction. In

this context, Pound defines the interests as claims,

wants and desires as well as expectations of the

people. With this concept, a legal expert or judge

must be able to balance the conflict of interests in

society into balanced happiness (Pound 1940).

Based on this theory, the Constitutional Court as the

guardian and the protector of citizens’ constitutional

rights has an authority to examine the

constitutionality of the law. This authority has been

widely used by citizens both individually and

collectively in groups to obtain and defend their

rights. Some of the decisions made by the

Constitutional Judges are related to efforts to

safeguard the people’s welfare in the form of a

pension fund, a minimum wage and severance pay for

retirees and workers. These decisions are separately

discussed as follows.

4.1.1 Pension Fund Case

Burhan Manurung, a retired civil servant from the

Ministry of Trade, filed a petition on judicial review

case related to the right to a pension fund under

Article 40 paragraph (1) of Law Number 1 of 2014 on

the State Treasury Law. According to Manurung, the

article that regulates the pension fund will expire after

five years is contrary to the Constitution.

The Constitutional Court through Decision Number

15/PUU-XIV/2016 on September 28, 2018 granted

his petition. The Court is of the opinion that the

pension fund is a right that must be guaranteed by the

state. Therefore, the state must seriously pay attention

The Indonesian Constitutional Court Decisions as a Social Engineer in Improving People’s Welfare

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to and carry out the mandate. It means that those who

have the right to a pension fund should not be reduced

based on the time limit to receive it. Moreover, the

pension fund is not merely a right, but it is also an

appreciation from the state for the service given by

the civil servant concerned.

The Court reaffirmed its opinion through Decision

Number 18/PUU-XV/2017 on September 28, 2018

concerning a similar case submitted by Sri Bintang

Pamungkas, a former lecturer and socio-political

activist. The Constitutional Court decision is in line

with Article 28D paragraph (2) of the Indonesian

Constitution that stipulates every person has the right

to receive fair and reasonable compensation and

treatment in an employment relationship.

4.1.2 Minimum Wage Case

Several Trade Union’s leaders filed a petition to the

Constitutional Court because of the provisions in the

Law Number 13 of 2003 on Manpower that give

permission for companies to suspend the payment of

minimum wages to workers or laborers. As a result,

many workers and laborers cannot meet the needs of

a decent standard of living. In its application, the

petitioners submitted a judicial review case of Article

90 paragraph (2) of the Manpower Law and its

explanation. Article 90 paragraph (2) states, “For

businessperson who is unable to pay the minimum

wage as referred to Article 89, a suspension can be

done.”

The explanation clause of Article 90 paragraph (2) of

the Manpower Law states:

“Suspension of the implementation of the minimum

wage for companies is intended to free the company

concerned from implementing the minimum wage that

applies within a certain period. If the suspension is over

then the company concerned must implement the

minimum wage that applies at that time but is not

obliged to pay the fulfillment of the minimum wage

provisions that apply when the suspension is given.”

Based on the Decision Number 72/PUU-XIII/2015 on

September 29, 2016, the Court stated that the

provision is contrary to Article 28D paragraph (1) of

the Indonesia Constitution which says that everyone

has the right to a just recognition, guarantee,

protection and legal certainty as well as equal

treatment before the law. The Court is of the opinion

that the payment of minimum wages by employers to

workers or laborers is a necessity and cannot be

reduced. The difference between the minimum wage

and payments made by the employer during the

suspension period is the employer’s debt that must be

paid to the workers or laborers. The decision provides

legal protection and legal certainty for workers or

laborers to be able to receive income that is

appropriate for humanity while giving responsibility

to employers to fulfill their obligations.

The Court also held that the payment below the

minimum wage by the employer based on a decision

of the authorized officials at the request from the

employer is very vulnerable to abuse of power.

4.1.3 Severance Pay Case

Marten Boiliu, a security guard who received a

termination of employment, submitted a petition to

the Constitutional Court. He asked the Court to

examine the constitutionality of Article 96 of the

Manpower Law that gives a time limit of two years

for the demand for payment of wages and all

payments arising from the employment relationship.

As a result of this provision, Boiliu was unable to

obtain severance pay because he filed a payment

claim in the third year after being dismissed.

Based on Decision Number 100/PUU-X/2012 on

September 19, 2013, the Constitutional Court

overturned the provision because it was contrary to

Article 28D paragraph (1) of the Indonesian

Constitution. The Court is of the opinion that wages

and all payments arising from the employment

relationship are workers’ rights that must be protected

as long as the workers do not commit acts that are

detrimental to the employer. Therefore, wages and all

payments arising from employment relationships

cannot be eliminated because of a specified period.

The Court affirmed that wages and all payments

arising from employment relationships are private

property and may not be taken arbitrarily by anyone,

either by individuals or through statutory provisions.

4.2 Implications of the Constitutional

Court Decisions towards People’s

Welfare

Law, justice and people’s welfare are three keywords

for the realization of a just and prosperous society.

This notion can be traced from the Preamble of the

Indonesian Constitution. The existence of the rule of

law or rechtsstaat as implied in the Preamble leads to

human happiness in casu the Indonesian people. The

second paragraph of the Preamble of the Indonesia

Constitution states:

“And the struggle of the movement towards the

independence of Indonesia has now reached the

moment of rejoicing to guide the people of Indonesia

safely and soundly to the threshold of the independence

of the State of Indonesia, which is independent, united,

sovereign, just and prosperous.”

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Furthermore, the fourth paragraph of the Preamble

states:

“Subsequent thereto, to form a Government of the State

of Indonesia which shall protect the whole Indonesian

nation and the entire native land of Indonesia and to

improve the public welfare…”

In addition, Article 27 paragraph (2) and Article 28D

paragraph (2) of the Indonesia Constitution stipulate

that every citizen has the right to work and to earn a

humane livelihood as well as to receive proper

remuneration in employment. These conditions can

be fulfilled if they receive fair and decent

compensation and treatment in the employment

relationship. Thus, it is the responsibility of the state

to carry out its duties to fulfill people’s welfare as a

mandate of the Indonesian Constitution to the

government in implementing the concept of the

welfare state.

In addition, the right to work that provides a decent

living is also recognized in the International Covenant

on Economic, Social and Cultural Rights (ECOSOC)

adopted by the United Nations General Assembly on

December 16, 1966 after the International Covenant

on Civil and Political Rights (ICCPR). Indonesia is a

state party to these two International Conventions.

Therefore, in implementing the mandate of the

Constitution and international conventions contained

in various legal products that aim to improve the

welfare and happiness of the people, the

Constitutional Court examines the constitutionality of

law so that harmony and realization of the people’s

welfare can be achieved. The decision of the

Constitutional Court has indirect implications for

maintaining and improving the people’s welfare

because some of the Constitutional Court decisions

still require implementing rules or follow-up from the

parties concerned, particularly the government and

the parliament.

The Constitutional Court decisions as analyzed above

are a form of protection for the people that the right

to welfare is constitutionally guaranteed by the

Constitution. In accordance with the Roscoe Pound’s

theory, the decisions have become a tool of social

engineering in maintaining and improving the

people’s welfare as well as in realizing the concept of

a welfare state (welvaartstaat) in Indonesia.

In order to implement the general aims of the state in

promoting prosperity, the Constitutional Court has

the primary function as the guardian of the

Constitution. The Court carries out its role through

decisions in exercising social engineering to improve

the people’s welfare, as follows:

First, revoking provisions regarding the expiration to

receive pension fund for retirees. In the previous

provisions, there was a limitation of time for five

years to take the right of a pension fund. After the

Constitutional Court declared a relevant decision, the

restriction is no longer valid. Thus, if there is a delay

in taking pension fund, it shall not reduce the right to

fulfill a decent and fair livelihood for retired civil

servants. Second, there is a legal certainty for workers

or laborers in obtaining salary in accordance with the

minimum wage to meet the needs of a decent life.

Payment of the minimum wage can also not be

suspended anymore by the company. Thus, workers

and labours will get a minimum wage on time to

finance their living needs. Third, a new legal policy

has occurred that the payment of severance pay does

not have an expiration date. It means that workers and

labours who have been laid off can apply for and

receive severance payments over two years after

being dismissed.

With those Constitutional Court decisions, it is

expected to improve the standard of living of workers

and laborers as well as to ensure the welfare of

retirees. With the revocation of the time limit for

receiving the payments, it will provide more

guarantees on the fulfillment of basic needs for

workers and retirees. The decisions are also in line

with the International Covenant on Economic, Social

and Cultural Rights that has been ratified by the

Indonesian government. Article 6, Article 7 and

Article 11 of the Convention state that the state

recognizes the right to work and the right to enjoy and

favorable conditions of work, as well as further

recognize rights to an adequate standard of living.

With the attainment of legal certainty for workers or

labours in obtaining minimum wages, it can directly

improve their welfare in meeting basic needs that

include food, health, housing and education. These

needs are also in line with the mandate of the

International Labor Organization (ILO) Conference

in Geneva 1976, which revealed that the concept of

basic needs covers two things, namely: (1) minimum

consumption for families, such as food, clothing,

housing, education and health; and (2) public services

for the general public, such as clean water, and

transportation (Tjokrowinoto 1987).

5 CONCLUSION

This article has analyzed several decisions of the

Constitutional Court which have implications for the

people’s welfare in Indonesia, particularly in terms of

fulfilling the right to a pension fund, a minimum wage,

and severance pay for retirees and workers. Therefore,

workers and labours can meet the needs of a decent

The Indonesian Constitutional Court Decisions as a Social Engineer in Improving People’s Welfare

169

standard of living. Unlike the ordinary court, the

Constitutional Court has the characteristics of a

binding decision for all state institutions, state

officials, and citizens known as erga omnes.

Therefore, every decision of the Constitutional Court

that protects and restores the rights of the applicants

will also have a direct effect on the protection of every

Indonesian citizen. Thus, the Constitutional Court

through its decisions has an important and effective

role as a social engineer in maintaining and improving

the people’s welfare in Indonesia.

ACKNOWLEDGMENT

The authors would like to thank the Center for

Research and Case Analysis of the Constitutional

Court of Indonesia for facilitating the participation of

authors in presenting the first draft of this article at the

International Conference on Law and Justice (ICLJ)

2018. The views and opinions expressed in this article

are those of the authors and do not reflect the official

stance of the Constitutional Court of Indonesia.

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