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An economic measure that's splitting a nation

Passage of Indonesia's 'omnibus law' to boost economy has millions of workers, environmentalists decidedly worried

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An economic measure that's splitting a nation

Activists throw projectiles at police during clashes in Jakarta on Oct. 8 on the last day of a three-day nationwide strike against a controversial new law which critics fear will favor investors at the expense of labor rights and the environment. (Photo: AFP)

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Violent protests have erupted in the last several days following the recent passing of a job creation bill by Indonesian legislators despite strong opposition from workers, activists and other sectors in society.

The 575-seat parliament passed the Omnibus Bill on Job Creation on Oct. 5, three days ahead of schedule, in what appeared to be an attempt to head off protesting workers who had planned to lay siege to parliament.

The legislation amends more than 70 existing laws and is aimed at making the issuing of business permits, land acquisition and foreign ownership of companies easier.  

Labor unions and other critics say the law puts workers’ rights at risk as it changes how minimum wages are set, increases the risk of arbitrary termination of employment and allows for a reduction in severance pay if they are dismissed.

Only two of nine parties in the lower house voted against the bill, calling it a tool for business-minded parliamentarians to further their own interests at the expense of workers.

According to independent news outlet Tempo.com, 262 or 45.5 percent of legislators are business owners and the passage of the bill threw up conflict of interest questions.

Opposition from the Democratic Party and Prosperous Justice Party and a call from abroad to scrap the law further fueled resistance to it at home.

Widespread protests were organized by workers, activists and students across the country, some of which turned violent.

Rubber bullets were reportedly fired at protesters in West Java on Oct. 7, while some government and public buildings, as well as cars, were damaged during a protest on Oct. 8 in Jakarta.

Opponents say the protests could last for weeks or longer depending on the government's response to their demands. In the meantime, they are looking at a judicial review as a way of overturning it.

Workers claim parliament and the government have betrayed and ostracized them, adding the law poses a huge threat to them.

The government has repeatedly denied such accusations but admitted the law could not please everyone.

Indonesia’s economic minister Airlangga Hartarto says the law aims to take Indonesia’s economy to a higher level, and by no means downgrades the role of workers.

He says adjustments must be made and the law is needed if the country is to be pulled from an economic slump and recession caused by the Covid-19 pandemic.

This law, said Hartarto, simplifies the country’s vast and cumbersome bureaucracy and will attract more investment that eventually will create more jobs.

One of Indonesia’s main problems is the lack of employment opportunities, currently exacerbated by the coronavirus pandemic.

According to the National Development Planning Ministry, about 11 million Indonesians are jobless, with 4-5 million losing their jobs because of the pandemic. Hartarto claims the new law offers the best solution to that problem.

Said Iqbal, president of the Indonesian Trade Union Confederation, begs to differ. According to Iqbal, it hurts workers as it contains clauses that eliminate sectoral minimum wages and allows a cut in severance pay. He said it offers no protection to contract and casual workers who comprise more than 70 percent of the country's 55 million workforce in mainstream employment.

He also claims the law discriminates against female workers with its “no work, no pay" system as it exempts employers from having to pay women on maternity leave.

Democratic Party lawmakers say the law goes against the country’s secular ideology, Pancasila (five principles), particularly the fifth principle — social justice for all Indonesians.

The opposition argues that although boosting investment is an important issue, it should not neglect or marginalize workers. The easing of regulations on investment, labor and other matters as part of bureaucratic reform and increasing government efficiency will not be successful if workers are left out.

Another concern is that the law no longer requires companies to involve local residents in assessing the environmental impacts of a business in their area.

The law categorizes investments as low, medium and high-risk. The new legislation does not require those in the low-risk group to submit an environmental impact analysis, which is a useful weapon for local people or activists wanting to scrutinize companies, such as those in the mining sector.

According to a recent Reuters report, a group of 35 global investors that manage US$4.1 trillion in assets have claimed that the law could endanger the country’s tropical rainforests.

They said that while they recognize the necessity for reforming business laws in Indonesia, they have concerns about the negative impact the law will have on the environment.

Its provisions could hamper efforts to protect Indonesia’s rainforests, which would in turn undermine global action to tackle biodiversity loss and slow climate change.

There is no way to reverse the law, at least for now, unless it is done through a judicial review.

However, if mass protests continue, which raises the fear of creating new Covid-19 clusters, President Joko Widodo might feel the need to take a swift action by issuing a presidential decree in lieu of a new law to replace this controversial one. 

However, this is doubtful considering that Widodo has strived to improve the business climate in Indonesia.

As such, this law has been Widodo’s dream. One can only hope it doesn’t turn into a nightmare for Indonesian workers and ordinary citizens and environmentalists.

The views expressed in this article are those of the author and do not necessarily reflect the official editorial position of UCA News.

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