Indonesia’s parliament on Monday passed a job creation bill into law designed to attract investment, despite opposition from activists and labor rights groups who said it curtails workers’ rights.
The bill was to be voted on later this week but the lawmakers moved up its passage after unions threatened to hold street protests Tuesday through Thursday to voice concerns about their rights not being protected under the legislation.
“The bill is needed to change or amend several laws that are hindering our efforts to create jobs. It also serves as an instrument to simplify the bureaucracy and make it efficient,” Coordinating Minister for Economic Affairs Airlangga Hartarto told MPs after the House of Representatives (DPR) passed the bill.
“As for the protection of workers, the law … advances tripartite relations between the government, workers and employers by providing the job termination insurance program,” he said.
Members of President Joko “Jokowi” Widodo’s administration and MPs spent the weekend in a hotel finishing work on the bill to bring it up for a vote on Monday. Two of nine factions in the parliament – the Democratic Party and the Prosperous Justice Party – rejected the bill.
More than 3.7 million Indonesians have lost their jobs because of the coronavirus, bringing the number of unemployed in Southeast Asia’s biggest economy to 10.6 million, according to the Manpower Ministry. A World Bank report released late last month warned that Indonesia’s economy could shrink by 2.0 percent this year as its struggles to contain the pandemic.
Union members who managed to reach the parliament complex in Jakarta to protest the action were forced to disband by riot police.
“Why did they decide the agenda abruptly? Are they trying to avoid our protests from Oct. 6 to 8?” asked Arif Minardi, the head of the Metal and Electronics Workers’ Union.
Parliament announced that it would be in recess beginning Tuesday through Nov. 8.
National police spokesman Awi Setiyono said police took action to curb the spread of COVID-19.
“The police have an important role to manage the situation to prevent untoward events,” Awi told reporters.
Labor rights groups said the law would benefit employers at the expense of workers. Among its provisions, the law cuts maximum severance payments by employers from 32 months to 25.
“They take advantage of the pandemic to pass the law so that they have a pretext to ban street protests,” Asfinawati, the chairwoman of the Indonesian Legal Aid Foundation, told BenarNews.
On Sept. 14, the Jakarta governor re-imposed large-scale social restrictions to curb the spread of COVID-19 after new cases soared more than two months after the country gradually reopened the economy.
The law removes a requirement for companies to involve the local population in assessing the environmental impacts of their operations, leaving the tasks only to certified organizations and government agencies, according to officials. Investments considered to be low risk can proceed without having to submit an environmental impact analysis report first.
Government officials said the law was needed to attract investment by making it easier for foreign investors to do business in the country. Despite that claim, a group of 35 global investors managing $4.1 trillion in assets told the government that it could pose new risks to the nation’s tropical forest, Reuters news service reported.
The investors include Aviva Investors, Legal & General Investment Management, the Church of England Pensions Board, Netherlands-based asset manager Robeco and Japan’s largest asset manager, Sumitomo Mitsui Trust Asset Management, according to Reuters
“While we recognize the necessity for reform of business law in Indonesia we have concerns about the negative impact of certain environmental protection measures affected by the omnibus bill on job creation,” Peter van der Werf, senior engagement specialist at Robeco, said in a statement.
The investors said they feared the legislation could hamper efforts to protect Indonesia’s forests, which would in turn undermine global action to tackle biodiversity loss and slow climate change, according to Reuters.