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Explained | Indonesia’s controversial jobs law and fresh debate over it

File photo of protest against the Job Creation Bill in Jakarta, Indonesia.

File photo of protest against the Job Creation Bill in Jakarta, Indonesia. | Photo Credit: AP File Photo

The story so far: In October 2020, Indonesia passed the ‘Job Creation Bill’ intending to boost the country’s Covid-battered economy and improve its investment ecosystem. The ‘omnibus’ law — legislation that includes diverse and unrelated issues — sparked massive protests with thousands taking to the streets in various parts of the country. Protesters complained that the law was pro-business, undermined labour rights and was harmful to the environment. 

Around two years later, Indonesia’s parliament is set to revisit the contentious law as it opens a fresh debate in compliance with a court order that ruled that the legislation was passed improperly. The latest development comes amid renewed pressure from unions and environmental groups to overturn the legislation. Led by Labour Party, thousands protested outside the House of Representatives in Jakarta on June 15, alleging attempts by the Government to re-introduce the controversial Act.

Understanding the Job Creation law

The Job Creation Bill was the flagship legislation of Indonesia’s President Joko Widodo that amended 79 existing laws and regulations to “create jobs, remove red tape and boost investments” in Southeast Asia’s largest economy. The law covered tax rules, labour rights, environmental permissions, permits for mining & plantations and the formation of Indonesia’s sovereign wealth fund.

The law brought in , labour reforms including a cut in mandatory severance benefits paid by employers, new minimum wage limits, the removal of some mandatory paid leave and increased allowable overtime work. It, however, was met with criticism. Student groups, labour unions and environmentalists said the law was passed without proper consultations. Some called it pro-business and one that failed to secure rights for workers and the environment.

Workers claimed that the law was harmful not just for labour protection, but also affected farmers and indigenous communities. Environmentalists also voiced their concern over a clause which stated that an environmental impact study would be required for high-risk investments only, unlike previous laws. Extending support, the International Trade Union Confederation (IUTC) opposed the new legislation which it said would “lower workers’ welfare significantly”.

“The ITUC-Asia Pacific urges the Indonesian government to immediately withdraw the proposed Omnibus Law and calls for open and constructive consultations with the social partners, in particular trade unions, while drafting the proposed Bill,” a statement read.

Meanwhile, the Indonesian government argued that the law was needed to streamline complicated regulations that were hampering business and discouraging investment, and to revive the economy hit hard by COVID. Environmental protection was not forfeited, it said. Critics, however, remained unconvinced and hit the streets to protest against the law.  

Members of Indonesian trade unions hold placards during a protest against the government’s labour reforms.

Members of Indonesian trade unions hold placards during a protest against the government’s labour reforms. | Photo Credit: Reuters File

Challenging the law 

In the same year, trade unions and civil society groups approached the Constitutional Court and filed for a judicial review of the law. In 2021, the Court ruled that the legislation was procedurally flawed and even unconstitutional in certain sections, such as changes that were made after the Bill had already received approval from the parliament. 

While the Court acknowledged the rationale behind some of the government’s actions, the ruling noted that proper processes should have been followed. “It doesn’t mean that reaching those goals then could set aside the ways or formal procedures that are in effect,” it said. The court ordered the Government to revisit the law and make changes within two years. 

The Government responded that it respected the ruling and would follow up the court’s ruling immediately by preparing for the revision of the law. Notably, the ruling of the court cannot be challenged and if the Government fails to make changes within the stipulated timeframe, the law can be deemed unconstitutional.

What is happening now?

On June 15, thousands of workers got together for a massive protest in Jakarta and several other locations across the country against policy decisions pushed by the Government. Along with the jobs law, these decisions included amendments to a law that governs the process of passing bills. The revision specified what constitutes public consultations and set a new legal basis for ‘omnibus’ bills.

Analysts see this revision a move to make it simple for the government to re-introduce the jobs law so that there are no procedural flaws. The ruling that had ordered the Government to revise the law had noted that proper processes should have been followed to pass the Bill.

(With inputs from agencies)


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Printable version | Jun 25, 2022 12:22:33 pm | https://www.thehindu.com/news/international/explained-indonesias-controversial-jobs-law-and-fresh-debate-over-it/article65526548.ece