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Balance facilitating investment with efforts for decent work
The power of union: People gather outside the legislative complex in Jakarta to protest the House of Representative’s plan to deliberate an omnibus bill on job creation
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he power of union: People gather outside the legislative complex in Jakarta to protest the House of Representative’s plan to deliberate an omnibus bill on job creation. Labor unions deem the bill a new instrument to weaken workers’ bargaining power vis-à-vis employers. (JP/Seto Wardhana)
President Joko “Jokowi” Widodo has stressed the importance of foreign investment to improve the economy since assuming office. Like his predecessors, the President strongly believes investment will improve people’s welfare.
In Jokowi’s first term, his administration prepared 16 economic policy packages to facilitate investment. Then-vice president Jusuf Kalla also supported the policy to reduce labor costs; while for decades tripartite negotiations between the government, business sector and unions had determined the annual minimum wage, a formula was determined to set minimum wages, thereby abandoning the lengthy negotiations.
However, those steps failed to adequately increase investment inflow. Therefore, at the beginning of his second term, the President took a giant step, introducing a planned omnibus bill that would summarize over 70 acts in one bill called the draft bill on employment creation.
The underlying spirit of the bill is to create an investment ecosystem that essentially simplifies licensing and investment requirements, reduces labor costs, improves ease of doing business, eliminates criminal penalties in cases of labor rights violations, simplifies land procurement and eases procedures for government projects such as ending the requirement of an Environmental Impact Analysis (Amdal) for projects perceived to be low risk.
The substance of the draft bill clearly shows the government’s main interest: winning over investors and employers as reflected by Jokowi’s many public statements.
Ironically, the statements on his social media platforms and speeches are delivered amid reports of land conflicts, environmental damage and industrial conflicts.
For the sake of investment, there have been unequal struggles for land ownership and land tenure between capital owners and landowners. Throughout the year 2018, the Foundation of the Indonesian Legal Aid Institute (YLBHI) handled 300 agrarian conflicts between people and corporations, while the Consortium for Agrarian Reform (KPA) advocacy group recorded 279 agrarian conflicts during 2019.
The Indonesian Forum for the Environment (Walhi) and other environmental organizations recorded environmental damage primarily due to mining activities and the monopoly of natural resource ownership leading to loss of public access to livelihood sources.
The Manpower Ministry records that up to mid-2017, there were 9,413 labor rights violations. What is happening is that profitable investment is coming in at the expense of the exploitation of people.
This condition must be corrected. According to the International Labor Organization, of which Indonesia is also a member, decent work involves opportunities for work that is productive and delivers a fair income, workplace security and social protection for families, better prospects for personal development, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equal opportunity and treatment for all women and men.
Indonesia also signed up to the global Sustainable Development Goals, which also proclaims decent work for sustainable economic growth.
These global agendas were attempts to respond to the increasingly exploitative nature of global capitalism that benefit comparatively few people.
As the scholar Nicki Lisa Cole wrote in 2018, all aspects of the global capitalist system, including production, accumulation, class relations and governance, have been disembedded from the nation and reorganized in a globally integrated way that increases freedom and flexibility with which corporations and financial institutions operate.
The system can also use the threat of exit to persuade national governments to downgrade workers’ standards and regulations in their favor. This is exactly what is happening in Indonesia, particularly in the garment and electronics industries. It is no coincidence that it is within these two industries that most industrial conflicts occur.
The government must be balanced in facilitating investment by providing regulations to protect workers, farmers and other commoners, and provide equal access and benefits in economic development.
Merely facilitating investment and ignoring the protection and welfare of people will only bear resistance, which eventually creates backlash: investors will be reluctant to come.
In the end, inviting investment that was not only growth-oriented but prioritized equality would be President’ Jokowi’s invaluable legacy.
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Lecturer in the Management Department of the School of Economics, Parahyangan Catholic University in Bandung, West Java
