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January 22, 2020

Indonesia labour law reform plans prompt protests

Plans by the Indonesian government to overhaul the country’s nearly two-decades old labour law have led to a spate of nationwide worker protests and criticism from unions.

Plans by the Indonesian government to overhaul the country’s nearly two-decades old labour law have led to a spate of nationwide worker protests and criticism from unions. 

The changes – so-called “omnibus” bills on job creation and taxation – are part of government reforms aimed at boosting jobs and investment in Southeast Asia’s largest economy. 

They would replace dozens of overlapping laws that have been in place since 2003, as well as make it easier for companies to secure permits and relax foreign ownership rules. 

But the IndustriAll global union is calling on Indonesian government to scrap the draft labour law, which it says is “pandering to the needs of corporations in an effort to attract foreign investment but at the expense of workers’ wellbeing and safety.”

At stake is some of the most generous severance and compensation pay in the world, which investors have cited as a hindrance to hiring staff. 

IndustriAll continues: “This legislation, purportedly aimed at job creation, would impact severely on working conditions, including recruitment process, termination of employment, working hours and remuneration, increase of outsourcing, and weakening of the social safety net such as the pension system.”

However, streamlining investment rules would help bolster capital inflows and exports and help strengthen the global competitiveness of sectors such as textiles and clothing. The textile industry was one of Indonesia’s largest earners of foreign exchange, with exports valued at $13bn and a further increase to $15bn seen in 2019.

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