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Omnibus job bill divides unions, faces criticism
The government is set to reform the country’s labor regulations through a sweeping omnibus bill on job creation, in the face of workers’ objections and criticism from economists and businesspeople over several of the proposed bill’s provisions
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The government is set to reform the country’s labor regulations through a sweeping omnibus bill on job creation, in the face of workers’ objections and criticism from economists and businesspeople over several of the proposed bill’s provisions.
According to a draft obtained by The Jakarta Post on Wednesday, the government-initiated bill will ease foreign-worker recruitment, cap redundancy payments for laid-off workers and provide a bonus, described by some as a “sweetener”, for employees.
The government will also relax outsourcing requirements and open the possibility for outsourcing agencies to hire workers for various jobs, which can be for freelance or full-time work.
It also introduces a new regional minimum wage that takes into account a region’s economic growth and allows labor-intensive industries to have a separate minimum-wage calculation determined by the governor of the respective provinces.
Micro and small businesses, however, are exempted from the minimum-wage stipulations but are required to pay their workers a salary higher than the poverty-line level.
“This will result in lower wages because several regions recorded negative growth and thus it will further weaken purchasing power,” National Welfare Movement (Gekanas) head of advocacy, Saeful Anwar, said. “A minimum wage based on regional economic growth could widen inequality.”
The government expects the bill, submitted to the House of Representatives for deliberation on Wednesday, to improve the country’s ease-of-doing-business ranking, attract investment and eventually boost the country’s sluggish economic growth. Indonesia’s economic growth slowed to 4.97 percent in last year’s fourth quarter, the lowest in three years, as investment and exports cooled.
“This is purely to create jobs amid the global uncertainty and the coronavirus crisis, by transforming the country’s economy through the omnibus bill,” Coordinating Economic Minister Airlangga Hartarto said after submitting the bill.
However, several labor unions have voiced their opposition to the bill, saying it will undermine labor rights.
As President Joko “Jokowi” Widodo wants the deliberations to conclude within 100 working days after the bill’s submission, government officials have scrambled to reach out to all related stakeholders. They formed a coordination team consisting of labor, business and government representatives on Feb. 7 and held the first meeting on Thursday.
The meeting saw divisions within the ranks of the labor unions as the Confederation of Indonesian Trade Unions (KSPI) and the Congress of Indonesia Unions Alliance (KASBI) refused to join the team while Gekanas and the All-Indonesia Workers Union Confederation (KSPSI), the largest labor union in the country, agreed to join.
KASBI chairwoman Nining Elitos said during the meeting that the lack of transparency in the bill’s drafting process was not democratic and the bill was unfair to workers.
“It is flawed. If the government is serious, we should have been invited from the beginning,” she said before walking out of the meeting.
Economists have also raised eyebrows regarding several provisions in the bill, particularly those related to labor regulations.
“Relaxing procedures for foreigners to work in Indonesian start-ups is an odd idea since the government has said it wants to empower local talent,” Institute for Development of Economics and Finance economist Bhima Yudhistira Adinegara said.
The bill says the government will relax foreign-worker recruitment, exempting members of boards of directors and commissioners, diplomatic and consular staff, and foreign workers in start-ups, among other professions, from needing to get written work permits.
A 2018 study by the McKinsey Global Institute and the World Bank projected a shortage of 9 million skilled and semiskilled workers in the digital sector in Indonesia between 2015 and 2030.
The bill will also cap redundancy payments for laid-off workers to eight months’ salary for 21 or more years of service, from the 10 months’ salary for 24 or more years of service stipulated in the Labor Law. It, however, maintains the maximum severance payment of nine months’ salary for eight or more years of service.
It also stipulates that medium and large businesses pay a one-off bonus for employees ranging from one to five months’ salary depending on length of service.
The bill will also expand the scope of workers’ social security by adding a social security program for laid-off workers that will provide cash benefits, training and certification programs.
“This is merely a trade-off. The redundancy payout will be reduced but there are cash benefits for laid-off workers,” said Manpower Minister Ida Fauziyah on Wednesday.
Bhima, however, questioned the government’s plan. “We do not know whether the state budget and BPJS Ketenagakerjaan will be ready to provide workers with expensive social security programs.”
Indonesian Employers Association (Apindo) chairman Hariyadi Sukamdani, separately, welcomed the labor regulation reform, saying it would help the government to create better jobs for more than 100 million economically insecure Indonesians.
“The omnibus bill has a simple goal namely to create jobs,” he told reporters. “However, there are several proposed regulations that are burdensome for businesses.”
Hariyadi said that the government’s suggested “sweetener” would burden employers.
“We hope that the government protects normative workers’ rights but at the same time is not too populist,” said the Apindo head.
