RI does nothing to address precarious work

The employment world has changed significantly, thanks to globalization putting on more pressure and requiring enterprises to adapt swiftly in order for businesses to survive.

Most countries place greater emphasis than ever on creating attractive conditions for investment and job creation and foster dynamic labor markets in anticipation of market flexibility.

With the rise of precarious forms of employment, such as fixed-term employment, partial employment, informal employment and disguised employment relationships, together with the various types of industrial ties, labor agencies and contractors, traditional employment contracts are increasingly being sidelined. This has caused prolonged pressure on workers since multinational corporations (MNCs) influence labor policies in developing countries with a desperate need to solve unemployment problems.

Supposedly, this neoliberal economic policy follows the logic of efficiency; however, economic efficiency is not an absolute concept because there are other needs to be considered outside of the austerity-measures approach, such as decent work conditions and labor sustainability.

For a decade, labor conditions in Indonesia have been marked by a continuous decline in the number of permanent workers and an increase in fixed-term contract and seasonal workers. Out of 33 million workers in the formal sector, only 9 million have a permanent status while the rest deal with precarious work. This condition has led to a wide wage gap and economic inequality and could plunge the country into political instability as has happened in North African countries.

Despite the government’s claim of a decline in the unemployment rate, which has surprised many other countries, Indonesia cannot turn a blind eye to worsening labor conditions as a result of the enactment of the 2003 Labor Law. The law has institutionalized labor-rights abuses under the labor-market arrangements.

Yet, we have to acknowledge that the rigidity of the labor law to some extent has benefited investors when it comes to new recruitment. Labor unions and employers have been involved in a tug of war over whether to revise the contentious labor law. The current government tends to take sides with investors and employers and has no political will to encourage the two conflicting sides to seek a win-win solution.

The government and companies along the entire production-chain have to bear in mind their responsibilities to generate job opportunities and provide decent pay. International experience has taught Indonesia a good lesson; countries that develop social dialogue and provide a better social security system have managed to absorb the shock of crises more effectively than those that ignore these fundamental factors.

While waiting for a review of the labor law, Indonesia must discourage investors from using cheap labor as a comparative economic advantage.

There are at least four important principles that should be adopted in dealing with labor-market flexibility. First, employers and workers must be transparent in identifying precarious jobs. Second, whenever flexibility is inevitable, the list of precarious jobs should be decided by a tripartite agreement representing employers, workers and relevant authorities. Third, the government should regularly report on employment in hazardous jobs and take firm measures against unfair and unilateral labor dismissals. Fourth, the government should also report to labor unions on planned mass-dismissals to give a chance for employers and their workers to conduct negotiations to settle their own problems.

The common practice in Indonesia is, however, that employers report to the government only after they dismiss their workers, shutting off any opportunity for both sides to seek alternative solutions and settle the root problems. With the labor court less effective in settling industrial disputes, the government should promote bipartite negotiation to avoid labor-dispute settlements from stalling

In Australia, approximately 100,000 dismissals occur almost every year but only between 2 and 3 percent have been settled through arbitration and labor court. Most of the cases have been settled through negotiations and mediation.

The writer is chief advisor of the Confederation of Indonesian Prosperous Labor Union (KSBSI) and member of the ILO’s governing body.