Indonesia street protests reignite over disputed labour law

About 5,000 student protesters took to the streets throughout the country on Oct 20. PHOTO: REUTERS

JAKARTA (BLOOMBERG) - Student groups across Indonesia resumed protests against a landmark labour law passed earlier this month that opponents say will erode workers' rights and dismantle environmental protections.

About 5,000 student protesters took to the streets throughout the country on Tuesday (Oct 20). In Jakarta, thousands of police were dispatched, using barbed wire to block traffic, according to a police spokesman. Demonstrators burned tires and demanded the authorities revise the jobs Bill, but the day ended without incident. Protests are set to continue Oct 28.

Labour unions plan to challenge the constitutionality of the legislation they say was hurried into law under opaque circumstances. Passed by Parliament on Oct 5, the sweeping reforms are aimed at addressing systemic red tape that has long deterred foreign investors. Once enacted, President Joko Widodo's administration hopes it will bolster local businesses and stimulate job growth while bringing billions of dollars into an economy hit hard by the pandemic.

For Jokowi, as Widodo is known, the law's passage without the support of powerful unions shows a determination to hasten key reforms at the heart of his economy-focused policy agenda, even if it risks stoking already simmering discontent.

"Since his re-election, Jokowi has been in a rush to pursue reforms that he thinks will boost growth, but the backlash against the omnibus law shows the risks of this approach," said Ben Bland, director of Lowy Institute's Southeast Asia programme.

"Governance reform is a complex, long term process."

Public backlash

When Jokowi set out to deliver the job creation Bill following his re-election last year, his administration sought to develop a draft that would appeal to businesses and labour unions.

Businesses have long complained they are hamstrung by a complex minimum wage system and restrictions on hiring and firing, making it difficult to expand operations. Yet, with staunch opposition and worsening public backlash to changes to the 2003 labour code, Jokowi earlier this year struggled to get the Bill in front of lawmakers.

Said Iqbal, president of Indonesian Trade Union Confederation, recalled stakeholders stressing the need to reach a compromise when unions joined the government-led negotiations in Jakarta in July. But the talks quickly soured.

"Unfortunately, in that first meeting, business associations arrogantly refused our draft," Iqbal said by phone. By the second meeting, he said the government omnibus task force withdrew the need to reach a consensus, saying the talks were purely consultative. "We decided to walk out from the discussion," he said.

A day after the Bill was passed, the Minister of Manpower Ida Fauziyah said its "essence" reflected input from experts and stakeholders including trade groups.

Protections removed

Labour unions argue the law removes protections for workers by allowing employers to terminate contracts of less than one year without paying for unemployment support. Civil society and students have also taken issue with provisions they said will weaken environmental laws and legal protections for indigenous groups, raising concerns about land grabbing, according to an Oct 15 statement from Human Rights Watch.

Protests erupted across the country last September against a number of controversial laws, including one that weakened the authority of the country's Corruption Eradication Commission.

The following month, Jokowi said changes to the labour market regime would be his "first priority" and insisted at the time that protests would not derail his efforts.

"The majority of people demonstrating are university students or high school students, which is similar to what happened last September with the anti corruption law," said Maxwell Lane, a visiting senior fellow at the Iseas-Yusof Ishak Institute.

"There's basically a generational conflict starting to develop. Young people are being alienated."

Transparency questioned

Although the government insists the process has been transparent, the Labour Alliance Confederation questioned why lawmakers held discussions during a holiday in a hotel outside of Jakarta, and not in open session of Parliament.

"Parliament completed the job creation Bill through intensive discussions carried out openly, carefully, and while prioritising national interests, both in the short and long term," House Speaker Puan Maharani said in a statement on Oct 11.

"We hope it can build a better business ecosystem in Indonesia and can accelerate the realisation of Indonesia's progress."

The World Bank said the removal of heavy restrictions on investment could help attract investors, create jobs and fight poverty, it said in a Friday statement. It also noted that consistent implementation of the law will be critical, something Jokowi said could be done within three months.

Others are less sure, given Indonesia's largely decentralised and complex bureaucratic government.

"The law in Indonesia is a moving target," said Bland of the Lowy Institute. "If it's well executed, the omnibus law could be a step in the right direction. But it won't solve Indonesia's short-term economic crisis or eradicate regulatory uncertainty in one go."

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