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

Workers and the Opposition protested on June 15 to pressurise lawmakers to follow court orders and retract labour rules.

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.

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.