Why the Omnibus Law is not only an assault on workers’ rights but also on Indonesia’s SDG progress

The government claims that the controversial law, which entered into force on 5 November and is officially known as the Job Creation Law, will help provide legal certainty for investors by streamlining more than 70 existing legal provisions into a single piece of legislation. Relaxing labour laws, cutting bureaucratic red tape and making the procurement process easier (especially when it comes to land), will boost investment, the government claims – a vital requirement as Indonesia attempts to wrench itself out of a pandemic-driven recession.

However, a coalition of labour, environmental and civil society groups have vehemently opposed the law, saying that it would impede Indonesia’s ability to achieve the United Nations’ Sustainable Development Goals (SDGs) by 2030, particularly in relation to Goal 8 on decent work and sustainable economic growth, as well as Goals 13 to 15 concerning climate action and environmental protection. Days after the law was ratified on 5 October 2020, civil society held massive protests and rallies in opposition to the bill, resulting in thousands of arrests.

As well as removing certain protections against outsourcing, the law cuts leave entitlements and social security provisions for many workers. It weakens minimum wage provisions, extends maximum overtime hours and allows employers to keep workers on temporary contracts for an indefinite period of time, amongst other contentious measures.

Campaigners also say that by scrapping existing environmental protections, the new law poses a serious threat to Indonesia’s carbon emissions reduction targets. For example, over 60 per cent of Indonesia’s carbon emissions are said to come from the land use change, forest and peat fires. The rollback of protections laid out by the new law could open the door to unrestrained logging and an upsurge in coal mining. Indonesia is a major coal exporter and coal powers around 60 per cent of the country’s electricity. Indonesia is also one of the few countries in the world to have new coal plants under construction in 2020. Anything that facilitates increased deforestation and more coal mining does not bode well for Indonesia’s pledge to cut carbon emissions by 29-41 per cent by 2030 as part of its commitment to the Paris Agreement, and to phase-out coal completely by 2040.

The government is also under fire for the drafting process, which took less than six months. The government says that it expedited the bill to help increase employment during the Covid pandemic. But legal experts have deemed the process as “flawed” for rushing through wide-reaching legal changes with minimal social dialogue or public participation.

Following the Chinese model of development

While deregulation may increase the number of jobs, the new law will also increase the informalisation of workers, leading to longer working hours while making it easier for employers to sack workers. “Job opportunities might be increased in MSMEs [micro-, small- and medium-sized enterprises], but the wages and protection will not be sufficient,” says International NGO Forum on Indonesian Development (INFID) chairperson Dian Kartika Sari.

Raynaldo G. Sembiring, executive director of the Jakarta-based Indonesian Center for Environmental Law (ICEL), says that “there will definitely be an impact on our ability to achieve the SDGs”. He tells Equal Times that the academic paper that formed the basis of the Omnibus Law only briefly mentions the environment and fails to mention anything relating to sustainable development, let alone the SDGs.

What the law does, according to some analysts, is follow much of the blueprint set out by the Chinese model of development. “Indonesia’s policymakers view that there is much to learn from the Chinese model of strong state control and export-oriented industrialisation,” wrote Jefferson Ng, senior analyst at the Indonesia Programme of S. Rajaratnam School of International Studies in Singapore, in his opinion piece for The Jakarta Post in March this year. “The Chinese model is highly effective, however, it was also marked by environmental damage, weak labour protections and the pitfalls of over-centralisation,” he added.

Alarmed by the Omnibus Law proposals, in October 36 global investors managing approximately US$4.1 trillion in assets published an open letter to the Indonesian authorities, expressing concern over the proposed deregulation of environmental protections.

In response to this letter, Indonesia’s environment and forestry minister Siti Nurbaya Bakar defended the law, saying it was “designed to encourage investment whilst safeguarding the environment”. She wrote that a permanent moratorium on the development of primary forests and peatlands “means that no new permits will be issued for the areas included in the moratorium map, spanning more than 66 million hectares”.

But Sembiring of the ICEL remains unconvinced. He says the simplification and acceleration of business licenses will have “a lot of impact” on the environment, as well as people’s access to public information, participation and justice in environmental and land disputes. “We can already see there will be many problems, not only in terms of pollution damage, but perhaps also future problems that have the potential to trigger a conflict with the community,” he said, referring to possible evictions due to development projects. He also warns that the current requirement that every region in Indonesia should have a minimum threshold of 30 per cent forest coverage will be eliminated by the new law.

Possible revocation?

Indonesia’s Coordinating Ministry for Economic Affairs said in a press statement issued on 2 October that foreign investments into the country that are labour-intensive in nature have been “more constrained by labour problems”, citing Indonesia’s “large standards of minimum wages” and “high cost of severance pay in case of termination of employment”.

The ministry highlighted that, on average, Indonesia’s monthly wage is around US$170, while in Vietnam workers typically earn around US$150 a month. It also suggested that severance pay in Indonesia covers an average of 52 weeks of work, compared to 32 weeks in neighbouring Thailand and just 17 weeks in Malaysia.

He also said that if outsourcing was freely implemented, “there would be no job security” for Indonesian labourers, who could find themselves being “outsourced for life”.

In October, President Widodo said that those who are opposed to the Job Creation Law were welcome to file a judicial review to the Constitutional Court, which could result in a revocation of the law. However, this outcome is highly unlikely given how much political capital President Widodo has spent on the project. This hasn’t stopped KSPI and KSBSI from filing a judicial review, for which they are currently awaiting the outcome.

The discovery of various typos in final draft of the Job Creation Law and changes made even after the law was ratified in October caused an uproar on Indonesian social media and has even led some activists to question the validity of the law. In a statement released on 3 November, the Jakarta-based Indonesian Center for Law and Policy Studies (PSHK) said that the law “still contains formulation errors that have an impact on the substance of the articles”, which “needs to be interpreted as the fruit of a forced regulatory formation process that sacrifices the principles of transparency, participation and accountability”.

It continues: “Editorial errors and bad practices in the process of its formation are clear evidence for the Constitutional Court to state that the Job Creation Law is formally flawed so that it must be declared not legally binding in its entirety.” While a decision on this still needs to be made, Indonesia’s workers – and its environment – will continue to face a less secure and sustainable future.

Photo: In Tangerang, Indonesia on 7 October 2020, thousands of students and workers protested against a new law that they say will cripple labour rights and harm the environment. (AP/Dita Alangkara)

This article originally appreared in Equal Times