As President Joko “Jokowi” Widodo presented his state of the nation address on the great future that lies ahead for the country’s human resources in front of lawmakers and policymakers at the House of Representatives on Friday, events outside the legislative complex were not so encouraging.

A few minutes’ walk from where President Jokowi, dressed in royal Sasak attire, spoke of the government’s commitment to human capital development — a key priority of the proposed 2020 state budget — thousands of workers took to the streets in protest over a planned revision of Indonesia’s 2003 Labor Law.

A document showing key points of the proposed revision went viral on messenger and social media platforms recently, including a reduction in severance pay, an extension of working hours, more flexible outsourcing and a reinforcement of employers’ rights to lay off staff for serious faults.

The Jakarta Post’s analysis found that the document is not a draft of the revision but instead a 2018 analysis and evaluation by the Law and Human Rights Ministry’s National Law Development Agency (BPHN).

“The government is still waiting for all input from stakeholders such as labor unions, businesspeople and the public. So, as of today, we are still studying [labor conditions] while waiting for input from stakeholders,” Manpower Minister Hanif Dhakiri told the Post when asked about progress regarding the Labor Law revision.

Many consider the Labor Law to be one of the factors dragging down the country’s competitiveness, as high severance pay requirements and high wage requirements have discouraged labor-intensive, smaller enterprises from investing in the country.

President Jokowi has been quoted in many interviews calling for labor reform to boost Indonesia’s competitiveness as he looks to boost investment and domestic consumption to address sluggish economic growth, which at 5.05 percent is at its lowest level in two years.

Emphasizing the word “stakeholders” when talking about the planned law revision, Hanif highlighted the difficulties finding the right balance between improving Indonesia’s competitiveness and accommodating investors’ interests while not leaving workers less protected.

“Businesspeople are obliged to pay workers in return for their labor. Meanwhile, workers have the right to be paid and receive entitlements for their work,” said University of Indonesia’s labor expert Aloysius Uwiyono, acknowledging the catch-22 situation the government faced in revising the Labor Law.

Comprehensive policy discussions involving industry groups and labor unions were, therefore, necessary, and the government should consider the relationship between businesspeople and the workforce, particularly regarding income, said Aloysius.

“If the revision is biased, it will create a problem for either workers or businesspeople,” he added.

It is not the first time the government has attempted to reform Indonesia’s labor market. The issue dominated the minds of policymakers between 2006 and 2011, when a revision plan was rejected.

Sofjan Wanandi, a prominent businessman who chairs the Indonesian Employers Association (Apindo) advisory council, said it was time the labor market of Southeast Asia’s largest economy was reformed, after the current law had been in place for 16 years.

“After having had this law in place for years, if we do not make reforms, we will lose to Vietnam, Bangladesh, Cambodia. It doesn’t require much change, four to five articles will suffice,” said Sofjan.

Indonesia’s severance pay requirement, equal 32 to 36 months of an employee’s salary, is among the highest in the region, while the rigid minimum wage places a heavy burden on micro and small businesses, which may want to hire more staff but are unable to do so as they are treated the same as medium or large scale enterprises, Sofjan explained.

Apindo chairman Hariyadi Sukamdani said in June the Labor Law needed to be revised to better reflect the current labor market conditions so as to attract investment into the country’s labor-intensive industries, create jobs and increase Indonesia’s competitiveness against its neighbors Vietnam, Myanmar and Cambodia.

However, Apindo appears to have softened its stance, with head of public policy Soetrisno Iwantono declining to issue an official statement and provide input with regards to the revision. “Apindo is still in the discussion process. So nothing is finalized yet,” Iwan said.

Labor unions will not make it easy for the government to push for reforms of the country’s labor market. Although a draft law revision has yet to be issued, the Confederation of Indonesian Workers Unions (KSPI) has already taken a strong stance, stating it would oppose attempts to revise the law.

“We will reject any amendment to the Labor Law that is intended to make Indonesia’s labor market flexible at the expense of worker protections,” KSPI deputy president Muhamad Rusdi said.

Like the KSPI, the Congress of Indonesia Unions Alliance (KASBI) has demanded transparency in the policy formulation process, pointing out that even with the existing law, full compliance was rare.

“Violations of labor rights happen every day as law enforcement agencies are not committed to resolving the situation,” said KASBI chairwoman Nining Elitos.

The Labor Law revision has been included in the 2015-2019 National Legislation Program (Prolegnas), the website shows. However, Commission IX, which oversees manpower affairs and is in charge of the revision, had yet to start discussions, commission member Irma Suryani Chaniago of the NasDem Party said when contacted separately. (awa)

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