Employers in Indonesia seek to defend jobs law amid outcry
BUSINESSPEOPLE in Indonesiahavesought to defend the recently passed Job Creation Law days after 11 ministers did so, claiming that the regulation will uphold labour rights and will address high labour costs and productivity issues.
Indonesian Employer Association (Apindo) chair Hariyadi Sukamdani said on Friday that issues preventing businesses from employing more people formed the background of the drafting and deliberation of the omnibus law. He said the legislation aimed to redress a longterm decline in employment.
“In the span of 17 years since Law No 13/2003 on labour was passed, a significant decline in employment has taken place,” he said in a virtual discussion held by the association. “This is in contrast to the growth of our workforce, which has increased by more than two million people every year.”
From February 2019 to February of this year, 1.73 million Indonesians entered the workforce, bringing the nation’s total to 137.91 million. Over the same period, 1.67 million people gained employment, Statistics Indonesia (BPS) data shows.
The country’s unemployment rate was 4.99 per cent in February of this year, slightly lower than the 5.01 per cent unemployment rate in the same month the year before.
Indonesia’s unemployment rate steadily declined from 5.94 per cent in August 2014 – a few months before President Joko “Jokowi” Widodo took office – to the figure in February of this year.
On Thursday, 11 ministers defended the controversial law as public protests raged over provisions that labour unions said could jeopardise labour rights and encourage easy hiring and firing.
The ministers also sought to defend the deliberation of the law, which experts and activists say lacked transparency and public debate.
The government hopes the omnibus law, which has altered more than 79 previous laws and eliminated thousands of provisions, will boost investment and create jobs in the country.
The law regulates a variety of processes and institutions, from labour and business licensing to education and sovereign wealth funds.
Indonesia’s gross domestic product (GDP) contracted 5.32 per cent in the second quarter of this year and is expected to shrink annually for the first time since the 1998 Asian financial crisis amid falling household consumption, which typically accounts for more than half the nation’s economy, and business investment.
Aloysius Budi Santoso, the Apindo representative on the jobs law drafting team, said the law would uphold workers’ rights, such as maternity and menstrual leave.
“If there is any article that is not included in the Job Creation Law, then it still refers to Law No 13/2003 on labour,” said Aloysius, who also serves as chief of corporate human capital development at diversified conglomerate PT Astra International.
“The [jobs law] covers only the most important parts. The details will be derived in several [implementing] regulations, such as presidential regulations, presidential decrees or anything else,” he added.
Last week, the House announced that the draft agreed upon in the plenary session on October 5 and circulated among journalists was not, in fact, the final draft of the law, further obfuscating the already opaque legislative process. As of the time of writing, the final draft has not been made available to the public.
Center of Reform on Economics (Core) Indonesia executive director Mohammad
Faisal said high labour costs and low productivity should be solved by improving worker productivity rather than passing the far-reaching law.
“Improving productivity is what should be done, not pressuring workers’ welfare,” he said on Friday. Companies, he added, could train workers to improve their productivity and the government could offer subsidies to those that did.
Bahana Sekuritas wrote in a research note on October 5 that Indonesia’s rigid labour laws helped cushion the economic blow caused by the unfolding Covid-19 pandemic, evinced by Indonesia’s low unemployment rate compared to countries with fewer labour protections, such as the US.
The government said in June that it expected the unemployment rate to rise to between 8.1 and 9.2 per cent this year and that some 5.5 million people would lose their jobs during the pandemic-induced economic downturn. THE JAKARTA POST/ASIA NEWS NETWORK