Indonesia passes contentious job bill
THE Indonesian government and House of Representatives on Monday passed the controversial omnibus bill on job creation into law, which is expected to bring a radical change in the country’s labour system and natural resources management.
The final draft of the bill is 905 pages long and amends 79 prevailing laws, including the Labour Law, the Spatial Planning Law and Environmental Management Law.
The Job Creation Law, which is one of President Joko “Jokowi” Widodo’s key priorities in his second and final term, is expected to improve bureaucratic efficiency and cut red tape, particularly regarding business permits and investment.
The government’s expectation has pushed the law to make significant adjustments to labour rules and business licensing processes, all of which have been criticised, as they are considered to infringe on labour rights and put the environment at risk.
Until the moment of its passage, the law met mounting resistance from labour unions and environmentalists as well as rejection from House factions of the Democratic Party and the Prosperous Justice Party (PKS).
In a plenary session on Monday led by Deputy House Speaker Azis Syamsuddin of the Golkar Party, House Legislation Body (Baleg) chairman Supratman Andi Agtas said the deliberation of the bill had taken place from April 20 to October 3, adding that lawmakers and the government had been holding meetings, even on weekends, to expedite the deliberation.
“The deliberation was careful enough until the end. All factions paid attention to workers’ rights in the decisionmaking process,” the Gerindra Party politician said.
The law is also seen as necessary by the government since the country’s economy shrank 5.32 per cent in the second quarter of this year, and is widely expected to record the first economic contraction since the 1998 Asian financial crisis this year.
Civil society organisations, grouped in a coalition calling itself the Indonesian People’s Faction (FRI), have voiced their disappointment, saying the state has turned a blind eye to popular opposition to the controversial bill, which the FRI believes only accommodates business interests.
“We’ve [issued] a vote of no confidence. The people demand an end to the deliberation and a cancellation of the job creation bill. The government and House have betrayed the people and the 1945 Constitution,” the coalition said in a written statement on Monday.
As companies have fallen into financial difficulties during the pandemic, the unions have expressed concerns that the law would make it easier for businesses to lay off workers. Among the points that have been agreed is abolishing the sectoral minimum wage (UMSK) by only recognising the provincial minimum wage (UMP) and regency or municipality minimum wages (UMK).
According to the law’s Article 88C, governors can set their region’s minimum wage at provincial and regency or city level in line with the area’s inflation and economic growth rate.
The government and lawmakers have also agreed to lower maximum severance pay for laid-off workers and introduce a new unemployment fund ( JKP), which effectively means the government will shoulder part of the company’s cost when they lay off their workers.
According to the law, employers could pay a maximum of 19 times the monthly salary, and an additional six times the monthly salary will be paid by the government through the JKP scheme.