Indonesia passes contentious job creation Bill amid strike threat

Indonesia's Parliament yesterday passed into law a job creation Bill that is aimed at spurring investment but has drawn flak from unions which have threatened to strike.

Seven of the nine factions in Parliament supported the Bill that allows employers to hire and fire with lower severance pay and benefits as well as recruit workers on flexible working hours.

Coordinating Minister for the Economy Airlangga Hartarto said the new law would help curb unemployment and benefit the Indonesian workforce, employers and the government.

"All this time, the problems that have often impeded growth in investment and job creation included complicated and lengthy business licensing processes, unfriendly conditions to investment and difficulty in land procurement," Mr Airlangga said in a speech after ratification of the legislation.

Spokesman for the Gerindra party Heri Gunawan told the plenary session: "The new law will create jobs, attract more investment and would in turn raise people's welfare. Our Constitution mandates us to achieve such objectives."

Gerindra was among the seven parties, including the Indonesian Democratic Party of Struggle and Golkar, that supported adopting the Bill. The three largest parties control 51 per cent of the seats in Parliament.

Only two parties - the Prosperous Justice Party (PKS) and former president Susilo Bambang Yudhoyono's Democratic Party - rejected the Bill. PKS spokesman Amin Ak said the Bill would disadvantage labourers and workers and benefit only employers and companies.

Parliament was reported to have originally planned to vote on the Bill, a key initiative of President Joko Widodo, on Thursday but brought it forward to head off a new round of street protests by unions which had called for a national strike from today.

"The basic problems of the Bill are it does not recognise minimum wage... cuts severance pay, makes retrenchment so easy," said Mr Said Iqbal, chairman of labour union KSPI.

National Police spokesman, Brigadier-General Awi Setiyono, told reporters yesterday that the police were not prohibiting demonstrations, but would impose curbs to prevent large crowds from gathering to ensure public safety.

"The job of the police is to protect the people and ensure they are safe from Covid-19... if there are crowds, who can guarantee there will be no transmission?" he said.

The government submitted the Bill to Parliament in February for deliberation, but it was set aside for review in April after labour groups stepped up street protests. Parliament revived the measure for deliberation in July.


The basic problems of the Bill are it does not recognise minimum wage... cuts severance pay, makes retrenchment so easy.

MR SAID IQBAL, chairman of labour union KSPI.

The economic slump due to the Covid-19 pandemic has helped the government's push for the new regulations.

More than 3.7 million people have lost their jobs in Indonesia, bringing the estimated total of the unemployed to 10.6 million or nearly 8 per cent of the 133 million workers in the country.

A version of this article appeared in the print edition of The Straits Times on October 06, 2020, with the headline 'Indonesia passes contentious job creation Bill amid strike threat'. Subscribe