Uncalled for demonstrations

The Jakarta Post ,  Jakarta   |  Mon, 05/01/2006 11:08 AM  |  Opinion

Trade union leaders who are organizing massive worker demonstrations today on the occasion of the World Labor Day would be well advised to realize that disorder and violence, like that which took place amid labor protests earlier this month, will damage the public's sympathy and support for their movement.

Massive street demonstrations on a weekday will not just worsen public traffic in a capital city that's already notorious for its gridlock, thereby causing suffering to the common people -- school children, workers, street vendors, and public transport drivers. Such protests are also highly vulnerable to being hijacked into acts of violence, destruction and vandalism. Usually the primary victims of such a chaos are, once again, the common people.

True, street demonstrations are often effective in gaining government or public attention for the causes the demonstrators are fighting for. Furthermore, in this particular case, the main purpose of the protests planned for today is to assert workers' opposition to the amendments the government had proposed for the 2003 labor law, a law businesspeople consider inimical to the conduct of business.

But we think, insofar as the 2003 labor law is concerned, the raucous April 5 worker demonstrations effectively conveyed workers' aspirations. Most important, the government has gotten the workers' message loud and clear. President Susilo Bambang Yudhoyono himself has ordered the proposed amendments to the labor law, which workers have seen as too much in favor of the interests of businesspeople, dropped. New amendments will be negotiated by a tripartite team made up of representatives of the government, employers and trade unions.

Instead of organizing a new wave of street demonstrations at the risk of causing public disorder and other public nuisances, it is more productive and more in the interest of workers for trade union leaders to focus their attention on preparing well-argued amendments to the law.

The brutal fact is that the law must be amended to invigorate private investment. Without this, no new jobs will be created to absorb the tens of millions of unemployed people and to lift the majority of the workforce still languishing in the informal sector.

The amendments trade union leaders must fight for are regulations that can deliver high, job-creating economic growth and provide a strong framework for setting wages and fair working conditions. Labor leaders should realize that more than 65 percent of our workforce is still employed in the informal economy, meaning that the majority of our workers are not protected by labor regulations.

The workers in the informal sector will never enjoy formal protection if they cannot move up to the formal sector. This is possible only if the labor regulations are sufficiently conducive to new investment. Hence, the challenge now is to strike a good balance between the objectives of spurring new investment to create jobs, and protecting basic worker rights as well as ensuring the highest possible worker welfare.

Too-rigid labor rules certainly are a great disadvantage to employers, because companies now have to face steadily-changing economic and business conditions with different impacts on the various sectors in which businesses operate. Given Indonesian conditions, where underemployment and full unemployment are estimated to be as high as 40 million, workers stand to lose the most if the new legislation is too rigid.

What is most important for Indonesian workers under the prevailing economic conditions is labor regulations that can guarantee minimum standards for decent working conditions and other basic workers' rights.

On the other hand, the government also must realize that labor regulations are only one, and not the most important, of the vital components that determine the quality of the investment climate. National and international business surveys have found the business regulatory regime in Indonesia among the most cumbersome in Asia. This is due mainly to poor public-sector governance practices such as excessive red tape and inadequate law enforcement.

Arduous business regulations also hinder the growth of small businesses, which are among largest generators of jobs. These small entrepreneurs simply don't have the resources and cannot afford to go through all the cumbersome procedures.

Most business surveys have also found that as a percentage of the total production cost of manufacturing in the country, labor costs are much smaller than invisible costs. Those include illegal levies and the costs related to high business risks caused by uncertainty in the processes of licensing and law enforcement, as well as by other forms of bad governance practices.

Hence, even greatly flexible labor regulations will not be so effective in reinvigorating investment if the high-cost factors that have weakened our economic competitiveness are not removed.

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.