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Labor, businesses tense up over minimum wages, court ruling
Aft ermath of Constitutional Court ruling brings to fore uneasy industrial relations
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ithin hours of a shock Constitutional Court (MK) ruling on the Job Creation Law on Thursday, business groups and a labor association gave press conferences to offer starkly contrasting views on what the case means for employment regulations in the country.
The Indonesian Employers Association (Apindo) insisted labor provisions in the Job Creation Law remain unchanged, along with the new formula for determining minimum wages, arguing that the court ruling pertained merely to the process of the omnibus law’s creation, not to its substance.
Meanwhile, the Confederation of Indonesian Trade Unions (KSPI) and other labor groups contend that a flawed deliberation renders unconstitutional the entire law with all of its stipulations – including provisions used as the basis for determining 2022 minimum wages.
The labor groups have warned that further strike action was imminent should their demands be ignored.
“In the field, we are worried that there will be movements by workers saying that [labor provisions] must be reverted [to the preceding regulations], which is not in line with the Constitutional Court’s decision. In our view, this is very worrying,” Apindo chairman Hariyadi Sukamdani told reporters on Friday.
The Job Creation Law is a cornerstone of the government's declared agenda to make Indonesia more attractive for investment and spur GDP growth.
The law has been generally welcomed by business associations, which were also involved in its deliberation, but vehemently criticized by labor groups and activists, who see it as rolling back many provisions to the detriment of workers and the environment.
Read also: Business uncertainty likely result of jobs law ruling
Hariyadi noted that a prolonged strike could disrupt a company’s operations, with negative repercussions for employers and employees alike. He warned workers that businesses could take “the necessary step” should the need arise.
“When [the effect] spreads to the company, firms will take the steps set out in the regulations,” Hariyadi told reporters during a virtual press conference.
“Don’t let the company’s [operations] get disrupted. The company has the right to protection against things that are outside the rules."
APINDO Research Institute director P. Agung Pambudhi said on Thursday that the strike was not legitimate according to Manpower Ministerial Regulation No. 232/2003 and the 2003 Manpower Law. Therefore, those who joined the strikes could be classified as absent, which could result in them losing their jobs.
“We could assume they resigned,” Agung said.
As feared by businesses, workers walked out again on Monday, with protests concentrating in Jakarta. The Congress of Indonesia Unions Alliance (KASBI) and National Union Confederation (KSN) were among the groups involved in the strike.
The KSPI and the All-Indonesia Workers Union Confederation (KSPSI) are among labor groups planning a strike for Tuesday in front of the Gedung Sate gubernatorial office in Bandung, West Java.
“One hundred thousand workers will partake in the strike on Nov. 30,” KSPI chairman Said Iqbal vowed on Thursday. More strikes have been announced for Dec. 6 to 8.
He went on to say that the activists demanded that the government and businesses reinstate manpower regulations to what they had been before being amended by the Job Creation Law and its derivative regulations.
They also urged all governors and regents to retract any decrees on 2022 minimum wages that were based on a Manpower Ministry circular from Nov. 9, which stipulates that wages be determined according to a formula based on the Job Creation Law.
While calculations based on the new formula resulted in a mere 1.1 percent increase of minimum wages, the labor groups demanded a 4 to 5 percent raise.
Mirah Sumirat, chairman of the Indonesian trade unions association (Aspek) said the government should not forcefully implement the Job Creation Law, along with its disputed derivative regulations, notably those on wages, work contracts, foreign workers and jobless insurance, arguing that such a move would hurt workers.
“The law could facilitate layoffs, increase unemployment and weaken workers’ purchasing power,” she said in a statement on Monday. “Don’t let the government’s reckless forcing of regulations hurt the general public."
The government so far appears unfazed by the threats from labor groups, with Coordinating Economic Affairs Minister Airlangga Hartarto saying on Monday that the government would stick with the law, which had contributed greatly to the economy.
In response, Said, who also heads the Labor Party, told reporters on Monday that “the Labor Party supports the unions in voicing their objection so that the government — in this case, the President — complies with the Constitutional Court’s decision”.
Read also: Apindo lobbies for limited increase in minimum wage
Institute for Development of Economics and Finance (Indef) executive director Tauhid Ahmad said on Monday that the new formula used to determine minimum wages for 2022 had upset labor groups, as it only gave them a roughly 1 percent raise, which they argued would not meet their daily needs.
The Constitutional Court ruling has further emboldened workers to protest the regulation while souring industrial relations.
“If this tension lasts, industries will be in turmoil and disrupted,” Tauhid told The Jakarta Post.
“The government must intervene so that both parties can have a dialogue to ease the tensions. A revision of the regulation on the wage formula could also help,” he added.
Payaman Simanjuntak, a labor expert and former expert staffer at the Manpower Ministry, said the government had to amend the Job Creation Law as soon as possible to ease tensions between labor and business groups.
“This has to be done quickly; this situation could raise doubts among businesses and investors,” Payaman told the Post on Monday.
While mending the Job Creation Law, he suggested that the government pay attention to provisions that had raised concerns among workers. He also encouraged business and labor groups to negotiate the actual 2022 wage they would get rather than focusing on raising the minimum wage per se, which actually only affected a small portion of workers, as it only applied to fresh recruits.
