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Govt, House agree on jobs bill as workers set to protest
The government and the lawmakers also agreed to change the maximum severance pay scheme in which the government also covers the payment under a newly established unemployment insurance (JKP), which will reduce the amount paid by companies.
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t least 5 million workers have planned a national strike as the House of Representatives and the government concluded the deliberation of the labor issues in the omnibus bill on job creation on Sunday, abandoning an earlier plan to drop the articles.
The strike is planned to take place from Oct. 6 to 8, when the House is expected to hold plenary sessions to pass the bill into law.
The deliberation on the cluster containing revisions to the 2003 Labor Law has been the most difficult part in passing the bill since it has been marred by protests from labor unions. There had been plans to leave the cluster out of the bill deliberation process due to the strong resistance from the unions.
During a session held from Friday to Sunday, lawmakers and the government agreed upon at least nine points of the revisions.
Among the points that have been agreed is abolishing the sectoral minimum wage system (UMSK) by only recognizing the provincial minimum wage (UMP) and regency or municipality minimum wages (UMK), the formulas for which are based on economic growth and the inflation rate.
"Workers are still calling for the UMSK to remain in the law, and we want there to be a limit on how long workers can be employed on a contract basis or outsourced, as well as on the type of work allowed,” Indonesian Worker Union Confederation (KSPI) president Said Iqbal told The Jakarta Post on Monday.
The government and the lawmakers also agreed to change the maximum severance pay scheme in which the government also covers the payment under a newly established unemployment insurance (JKP). The insurance, which at the moment does not exist in the country’s current social security system, will reduce companies’ obligation from paying 32 times an employee's monthly salary to only 23. The government will make up the nine-times salary payment for the severance pay under the JKP.
It is, however, still unclear whether workers who lose their jobs after the passage of the bill will receive the JKP.
Elen Setiadi, an expert staff member at the Coordinating Economic Ministry, said during a hearing on Sunday that the current maximum severance pay scheme of 32 times was too burdensome for businesses and could reduce their interest in investing in Indonesia.
"Therefore, we are reducing it and adding our JKP program,” he said.
Responding to the scrapping of the UMSK, Elen said the government would ensure that companies whose workers had been receiving wages based on the UMSK would not cut the amount.
“Companies that have given UMSK-based wages should keep on doing it.”
The KSPI worried that with the removal of the UMSK, workers in the industrial sector would experience a pay cut of up to 30 percent. It is estimated that tens of millions of workers are receiving UMSK wages.
There is also no guarantee that the government would pay out the JKP scheme in the proposed severance payment.
"Our state budget will soar. Can the government pay it when there’s an economic crisis and many people are losing jobs?”
Earlier, seven out of nine factions planned to drop the labor cluster from the bill due to the labor protests. They were the ruling Indonesian Democratic Party of Struggle (PDI-P), the NasDem Party, the Gerindra Party, the Democratic Party, the National Mandate Party (PAN), the United Development Party (PPP) and the Prosperous Justice Party (PKS).
However, as the deliberation went on last weekend, no factions rejected the labor provisions.
The PDI-P, which has been reluctant to pursue the bill since the beginning as its constituents are generally working class, apologized to the workers, noting that they had tried their best.
"Hopefully they will see that we’ve done our best even though the results are not as expected," Arteria Dahlan of the PDI-P told the Post.
The NasDem Party, which has insisted that the labor provisions in the bill should instead be included in revisions to other laws, also voiced disappointment.
“Our arguments were based on the wishes of the labor unions. We were trying to ensure that no changes would harm them,” Taufik Basari of the NasDem Party said.
Members of President Joko "Jokowi" Widodo's Cabinet have stated that the government expects the bill to be passed in early October. The government has also begun preparing regulations so the bill can be implemented within a month after being passed.
In addition to the national strike, workers will also hold a series of massive rallies from Oct. 1 to 8 in front of the Presidential Palace, the Coordinating Economic Ministry building, the Manpower Ministry building and the House compound.
