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Indonesian President Joko Widodo has backed a controversial new blanket law that has sparked mass protests across the country by those who see it as an erosion of labor rights and a weakening of environmental protection.
The Employment Creation Law, which spans 1,187 pages, was passed in Parliament on October 5 and signed by the president on Monday (November 2). Even if he hadn’t signed it, the bill would have automatically gone into effect in 30 days.
However, the approval of the law showed the president’s commitment to fulfill his reform agenda during his second term.
The law is poised to simplify more than 70 overlapping regulations, cut red tape, standardize permitting procedures to attract foreign investment, create jobs and boost the economy, which has been hit hard by the coronavirus pandemic.
The largest economy in Southeast Asia is expected to contract for the first time this year since the 1998 Asian financial crisis, according to government estimates.
Joko painted a grim economic picture on Monday, telling her cabinet that gross domestic product is expected to contract by more than 3% annually in the third quarter, urging them to accelerate spending.
The law has received support from the business community, which has long lamented the unclear and conflicting regulations and excessive red tape that make doing business in the country difficult.
In a statement on October 16, the World Bank hailed the new legislation as “a major reform effort to make Indonesia more competitive and support the country’s long-term aspiration to become a prosperous society.”
“By removing strong restrictions on investment and signaling that Indonesia is open for business, it can help attract investors, create jobs and help Indonesia fight poverty,” the statement added.
At home, unions, environmental groups, workers, students and even Muslim organizations had opposed the law, taking to the streets to demand that Joko repeal it through a Perppu, or a regulation instead of the law.
They said the new regulations would hurt workers by cutting severance pay, hitting minimum wages and making it possible for people to be employed by contract indefinitely.
Environmentalists also objected, noting the removal of a strict liability clause that provides a legal basis for suing corporations for causing environmental damage, as in the case of wildfires.
The protests are unlikely to subside.
Hours before Joko passed the law on Monday, thousands of people demonstrated peacefully in the capital, Jakarta, as well as in other cities such as Yogyakarta, Banda Aceh, Medan and Makassar.
On Tuesday (November 3), two unions, the Indonesian Trade Union Confederation (KSPI) and the Indonesian Workers’ Trade Union Confederation (KSPSI AGN), submitted a judicial review of the law to the Constitutional Court.
In a statement, the president of the KSPI, Said Iqbal, said: “After we studied the content of the law, especially in labor matters, almost everything is unfavorable for the workers.”
He added: “KSPI will also continue to carry out actions and strikes in line with the constitutional rights of workers and that are non-violent in nature.”
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