[Analytics] Protests, strikes greet Indonesia’s controversial ‘Omnibus Bill’

Workers have taken to the streets across Indonesia to protest the parliament’s passage of a contentious job creation law, which trade unions and other civil society organizations claim will erode labor and environmental protections. Sebastian Strangio specially for The Diplomat.

On October 5, lawmakers overwhelmingly voted to pass the 905-page stimulus bill, which includes sweeping revisions to 79 laws in key sectors including labor and taxation. Seven political parties supported the bill, while just two – the Democratic Party of ex-president Susilo Bambang Yudhoyono and the Islamist Prosperous Justice Party – voted against the legislation.

Widely known as the Omnibus Bill, the new legislation aims to attract investment by slashing regulations and other red tape. The bill is the centerpiece of the second administration of President Joko Widodo (commonly nicknamed Jokowi), which has defended the bill as a necessary spur to economic growth and attract global supply chains that are relocating from China.

“This bill is meant to create jobs and attract investments, from within the country and abroad, that are expected to increase the prosperity of the people,” Heri Gunawan, a member of Parliament who supports the measure, said during a debate on the law.

But the law has been widely condemned for its likely impacts on labor rights and environmental protections. Parliament voted on the bill earlier than planned, after labor unions called for a three-day national strike to protest the impending legislation.

Unions say that the laws will harm workers, who are already reeling from the economic aftershocks of the ongoing COVID-19 pandemic. In particular, they have taken aim at provisions that will allow employers to cut mandatory leave and slash severance pay. Reuters reported that the bill will cut mandatory severance benefits paid by employers from 32 times monthly wages to just 19 times. The law will also permit the hiring of contract and part-time workers in place of full-time employees.

One blistering critique published in August by Lausan, a left-wing publication based in Hong Kong, said that the primary purpose of the job creation bill and other upcoming Omnibus Bills was “to subordinate the working class to Jokowi’s developmentalist infrastructure programs, not to help the millions who are now struggling with the destruction of their livelihoods and a growing number of COVID-19 infections.”

After the parliamentary vote, Said Iqbal, the president of the Indonesian Trade Union Confederation, vowed to go ahead with a national strike from October 6-8. Around 2 million workers at 5,000 factories are expected to participate.

The Omnibus Bill has also stoked the concerns of environmentalists. Under the new rules, environmental studies are only required for investments considered “high risk,” raising the prospect that the new legislation will speed the destruction of what remains of Indonesia’s primary rainforests.

Global investors seem to agree. In a letter sent to the Indonesian government just hours before the passage of the bill, 35 leading investment firms managing some $4.1 trillion in assets warned the Jokowi administration that the Omnibus Bill could pose new risks to the country’s tropical forests. The new law risks “contravening international best practice standards intended to prevent unintended harmful consequences from business activities that could deter investors from Indonesian markets,” the letter said.

While there is a strong case to be made that Indonesia needs to take measures to cut red tape and improve its economic competitiveness, the current package of neoliberal reforms carries serious risks, especially in the present circumstances. COVID-19 continues to tighten its grip on Indonesia. For more than two weeks, the country has averaged 4,000 new cases a day. As of October 5, it had confirmed a total of 307,120 cases and 11,253 deaths, the highest death toll in Southeast Asia and the third-highest in Asia.

And according to the International Monetary Fund (IMF), the economic burden of public health crises usually falls overwhelmingly on the poor. The IMF noted recently that in five recent epidemics, income inequality increased steadily in the aftermath. “If past pandemics are any guide, the toll on poorer and vulnerable segments of society will be several times worse,” the IMF argued.

Cutting back on worker protections is only likely to increase the precarity of a large swath of the Indonesian public, with possible unintended political consequences.

In particular, economic pain could well inflame Indonesia’s worrying recent trend of rising nationalism and Islamic exclusivism, forces that surged to the fore in the political campaign against Basuki Tjahaja Purnama, the ethnic Chinese former governor of Jakarta. In 2017, Basuki (known commonly by his Hokkien nickname Ahok), was sentenced to two years’ prison on bogus charges of blasphemy, following an intense street campaign by Islamist pressure groups, who accused him of profaning the Quran.

While the campaign against Ahok was marked overwhelmingly by ethnic and sectarian grievances, the movement gained a considerable degree of support from poor communities in Jakarta that had been negatively affected by forced evictions and slum clearance initiatives pushed by Ahok’s municipal administration. The episode demonstrated how economic insecurity can be fuel for right-wing populism. In pushing a new package of economic deregulation in the midst of a global pandemic, Jokowi’s government is courting political upheaval.

Sebastian Strangio is Southeast Asia Editor at The Diplomat.