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Indonesians vent anger over job creation law: Five things to know

Jokowi refuses to backtrack, insisting 'millions can improve their lives'

President Joko Widodo refuses to back down from the new law, saying COVID-19 has created a jobs crisis. (Screen grab from YouTube)

JAKARTA -- Following three days of unrest over what is being called the "Job Creation" law, Indonesia's capital on Friday returned to normal for the first time in four days, with workers cleaning up charred bus stations and removing graffiti from train station walls. But with the government so far refusing to budge on the contentious law, discontent is brewing among workers who believe their rights will be significantly hampered.

What is the "Job Creation" bill?

Foreign businesses often argue that Indonesia's current laws hamper investment. In particular, they say the labor law ensures overly generous severance packages, making it difficult to fire and hire. The new law, otherwise known as the omnibus law, seeks to change this and to make the country more conducive to investment by cutting red tape.

It makes sweeping changes to more than 70 labor, tax and other key laws. President Joko Widodo, who considers the bill cornerstone of his second term, had vowed to improve Indonesia's standing in the World Bank's Ease of Doing Business ranking.

Indonesia currently sits behind regional rival Vietnam in the ranking, a source of concern for Jakarta as countries vie to attract factories relocating from China.

The law was passed by the parliament on Monday, ahead of schedule.

What are the protesters angry about?

The backlash began when the government first came up with a draft bill earlier in the year, with workers and activists claiming it is too pro-business, that it relaxes critical environmental restrictions and that it takes away worker rights. Some labor organizations are calling for it to be retracted.

Amendments made to the 2003 Labor Law are particularly concerning. Under the original law, severance packages could max out to more than 30 months of wages. The new law limits severance pay to 19 months of wages, although the newly introduced Job Loss Security program will cover some of the difference.

The original Labor Law also forbade companies from using workers sent from outsourcing companies at their core businesses. The new law has no such ban. This amounts to "modern slavery," said Said Iqbal, chairman of the Confederation of Indonesian Worker Unions, or KSPI. "When outsourcing is [not restricted], it means that there is no job security for Indonesian workers."

There are also concerns over the disappearance of a clause limiting how long temporary workers can remain on the job; the original bill allowed temp workers to stay with a project for "no longer than three years." It now appears there are no limits as to how long contract workers can stay on the job, which unions say will allow companies to give workers full-time duties but not full-time benefits. Again, workers are decrying their lack of security.

Students protested against the government's omnibus bill on job creation.   © AP

The government did backtrack on some contentious points before passing the law on Monday. The draft bill had removed a clause in the original Labor Law that mandated the payment of compensation for any unfulfilled worker benefits like paid holidays. The clause has been restored.

Similarly, the omnibus law undoes changes the original bill had made to an article on paid leave for women during their menstrual cycles.

Workers are not the only ones concerned with some of the changes. The omnibus law has Investors wary of environmental degradation. The new law gives the central government more power in the conducting of environmental impact analyses. The new law also does away with a clause that stipulated at least 30% of watersheds' and islands' forested areas be maintained.

What other points are causing anger?

The law's passage could not have come at a worse time. With countries in the region engaged in a beauty contest to attract investment from businesses leaving China, Jakarta wanted speedy passage of a law Widodo believes will increase the archipelago's attractiveness. However, COVID-19 has already thrown millions of people out of work, and now Indonesians feel as if they are taking a second blow, one that promises to diminish employees' rights.

Protesters initially planned to hold demonstrations Monday through Wednesday, as all signs pointed toward parliament putting the bill to a vote on Thursday, before lawmakers go into recess. Labor activists had hoped the protests would deter lawmakers from passing the bill and leave the discussion open until the legislature reconvenes later in the year. But the government delivered a sucker punch by passing the bill on Monday.

Labor organizations also say the drafting process was problematic. "Since its inception, the [Job Creation] law was not implemented transparently and did not involve various elements of the people who were directly affected," the Indonesia United Workers Confederation said. The government maintains that the drafting of the law was wholly transparent, with 63 meetings held this year.

What is the government saying?

The government maintains that the law is for the good of the people and the nation. Jakarta believes the law will create 1 million jobs a year and increase worker productivity, which is below average in Southeast Asia.

Without the new law, "employment would move to other more competitive countries," the Office of Coordinating Minister for the Economy said, adding that Indonesian job seekers would find it difficult to compete with their counterparts abroad.

"Investment costs in Indonesia are quite expensive and less competitive than in neighboring countries," the office said. "One of the reasons is the high standard of minimum wages in Indonesia compared to other countries and the high cost of severance pay in the event of termination of employment."

Despite the protests, the government has remained adamant. Ministers have appeared on television throughout the week to defend the contentious law. On Thursday, Mahfud MD, political, legal, and security minister, painted the demonstrators in dark hues. The government, he said, "will take firm action to the anarchistic actions that are conducted to create riots and fear."

What happens to the law now?

In Indonesia, when a new law is passed, it is enacted when the president signs it within 30 days of passage. But even without the president's signature, a law automatically takes effect after 30 days.

Within the 30 days, a law's wording may be changed, and some members of the Baleg, Indonesia's legislative body, have said they are still working on the final version, according to local media.

There is also a way for the law to be repealed. "Currently, the only way to repeal the law is for the president to issue a perppu [a regulation in lieu of a law], saying the law is canceled," said Feri Amsari, state administration lecturer at Andalas University in Padang, West Sumatra.

There have been precedents. In 2014, outgoing President Susilo Bambang Yudhoyono issued a perppu annulling a law passed by parliament that had scrapped direct elections for regional heads.

But it does not appear Widodo will go that route. Speaking in a national address late on Friday, the president outlined the importance of the omnibus law for Indonesia going forward.

"There are 2.9 million people of new working age who enter the workforce [every year]," he said. "New jobs are urgent, especially during the [COVID-19] pandemic. ... This law is to provide as many jobs as possible for job seekers and unemployed people.

"The government believes that through this law, millions of workers can improve their and their families' lives."

The president also urged those opposing the law to go through the proper judicial process rather than venting their anger on the streets. "If there is any dissatisfaction with this law, please apply for a judicial review through the Constitutional Court," he said.

KSPI is preparing to lodge a case against the law in the Constitutional Court, its spokesperson said on Friday. Nahdlatul Ulama, Indonesia's largest Muslim group, will also challenge the law in the court, it said on its official Twitter account.

Additional reporting by Ismi Damayanti.

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