Indonesian companies and unions in a waiting game after labor law ruling | labor rights

Medan, Indonesia – For the past week, the phone of commercial attorney Christopher Banal Lumbane Jules has been ringing.

Legal Eagle, who is also a lecturer in business law at Santo Tomas Catholic University in Medan, North Sumatra, has been inundated with inquiries about the details and implications of a baffling ruling by Indonesia’s Constitutional Court on the country’s controversial job creation law. .

While the government has promoted the legislation as a way to attract foreign investment and create jobs, unions and labor activists have criticized its reforms for undermining job security, wages, and workers’ rights.

“Of course, there is a lot of confusion about how a law can be considered ‘unconstitutional’ as it continues to be applied over the next two years,” Gul told Al Jazeera.

In its ruling last month, the Constitutional Court found a number of procedural errors that rendered the legislation “unconstitutional” after Indonesian trade unions challenged the law. The government was given two years to fix the defects, otherwise the legislation would be deemed permanently invalid.

In the wake of the November 25 ruling, unions and business owners are left wondering what the future might hold given the murky outcome.

“We appreciate the ruling, but we had hoped that the law would be considered completely unconstitutional and repealed. The Constitutional Court has now added to our workload,” Jemisa, the vice president of the UWU, told Al Jazeera.

“The next two years will be very complicated,” said Gomesh, who represented many Indonesians. “People have heard that the law will continue to be used and they have also heard the word ‘unconstitutional’, which is meaningless. We need to step up our efforts in the future to defend our rights.”

Anis Hedaya, co-founder of Migrant CARE, a Jakarta-based NGO and one of the plaintiffs in the legal challenge, told Al Jazeera that the ruling showed the government “can and will be held accountable”.

“It’s an important lesson for the government, that you can’t just enforce regulations for your own good,” Hedaya said. “The law affects practically all sectors of society: women, minorities, fishermen, farmers, factory workers, and we were worried that the court would not support the public.”

Hedaya added that the law was not transparent, hasty, and was not subject to consultation with a wide range of stakeholders.

Indonesian President Joko Widodo has sought to attract foreign investment by cutting red tape
[File: Willy Kurniawan/ Reuters]

The law, passed in October 2020, was meant to be a boon to President Joko “Jokowi” Widodo administration, promising to entice foreign investors with more flexible business rules, elegant online systems, easy permit applications, and fewer bureaucratic hurdles in a country notorious for bureaucracy. Insane.

“The Job Creation Act is designed to be a good compromise between workers and businesses,” said Gaul, the commercial attorney. There are a lot of investors in Southeast Asia and few investments in Indonesia.

He added, “Investors do not need a specific country at the present time.” “We are in competition to see which country could become a business haven in the region, particularly in terms of factories moving from China, many of which are choosing to relocate to Vietnam rather than Indonesia.”

In July, the Indonesian Ministry of Investment said investment, both domestic and foreign, in the January-June period amounted to IDR442.8 trillion ($30 billion).

Total investment rose 16.2 percent in the second quarter of 2021 compared to the same period last year, to IDR 223 trillion ($15.4 billion), with foreign direct investment rising by nearly 20 percent.

In a statement on its website, the ministry praised the legislation, which created “positive feelings among investors to maintain the continuation of their investment activities.”

But despite its supporters, the legislation has been controversial from the start Thousands of protesters took to the streets after it passed last year. Unions have long viewed the law as exploitative, incompatible with human rights and harmful to the environment.

Gemish, the union’s president, said the legislation exacerbated workers’ problems such as highly flexible contracts that failed to provide job security, inadequate wages and a lack of maternity leave.

“The government has abused the workers all over Indonesia with this law,” she said.

“more jobs”

On Monday, the Indonesian United Workers Union marched to the presidential palace in Jakarta with other unions in a show of solidarity in the wake of the ruling.

“We can’t do it alone, we need to work with other unions,” Gemayseh said of future plans. We want everyone to know the ruling of the Constitutional Court. If the law is unconstitutional, it should no longer be used.”

However, Gul said that since the ruling was based on procedural rather than material issues, the law will continue to evolve in the future and will be implemented by companies during the two-year review period.

“In its simplest form, the law is a positive development for Indonesia to expand into business,” he said. We need investment and we need to create more jobs. People should think about that. We need to see how law flourishes. Law is dynamic, not static. If so, we would be a dictatorship.”

Gul said real unions that were able to file a legal challenge should be seen as a positive endorsement of Indonesia’s rule of law and an indication that the legislation was not deliberately stacked in favor of business interests – an allegation often made by workers and unions.

Seeking to reassure potential investors, Coordinating Minister for Political, Legal and Security Affairs Mahfouz MD indicated that the government will carry out the necessary reviews as soon as possible.

“It will be faster than two years,” Mahfouz said in a statement on Monday. The Constitutional Court spent two years. We will try to go faster so that it can be completed quickly and easily.”

According to Gaol, any delay could be detrimental to Indonesia’s ability to attract investment.

“Of course investors will be nervous and will likely take a wait-and-see approach over the next two years,” he said.

“Or they will take their business elsewhere, which will eventually cost Indonesia.”

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Andrew Naughtie

News reporter and author at @websalespromo