Ida Fauziyah: Job Creation Law Will Overcome Investment Barriers

Kompas/Wawan H Prabowo

Manpower Minister Ida Fauziyah

In the midst of the COVID-19 pandemic, the government and the House of Representatives have accelerated deliberation of the Job Creation Law. After a week of confusion, on Thursday (15/10/2020), the final draft of the bill, which consists of 812 pages, was finally submitted to President Joko “Jokowi” Widodo.

Despite criticism and rejection from various parts of society, the government believes that the Job Creation Law will be able to effectively reform the Indonesian economy. Investment is projected to increase 6.6 to 7 percent and create 2.7 million to 3 million new jobs a year. Currently, about 2 million jobs are created each year.

Manpower Minister Ida Fauziyah is of the opinion that a number of labor regulations need to be changed so that they will be more flexible and meet the trends and dynamics of the labor market. Below are excerpts from Kompas\' interview with Ida Fauziyah on Thursday.

During the last five years, investment has continued to increase but the employment rate has decreased. What is the government strategy in the future to increase employment?

This bill was made to resolve various investment barriers that have hindered job creation. Moreover, during this pandemic, labor problems have increased.

This year\'s unemployment rate should have declined. However, due to COVID-19, the estimated number of unemployed people has reached 12 million to 13 million people. There are 3.5 million people who have been laid off and sent home; 6.9 million people are unemployed and 2.4 million to 3 million are new job seekers in the job market.

This bill is expected to make the national economy more conducive to the expansion of employment opportunities. In the 15 special economic zones that we have developed, at least 1.2 million people can be employed. Currently, there are also many investment relocations from China, Japan and South Korea to Indonesia. This is an opportunity.

Do those potential Investments plan to enter labor-intensive or capital-intensive industrial sectors?

Actually, we prioritize labor-intensive industries on the hope that they can employ more people in a short time. We also need labor-intensive industries because the level of education and skills of the workforce is still low. We need an industry that does not require too high a skill set.

Kompas/Wawan H Prabowo

Coordinating Minister for the Economy Airlangga Hartarto handed over the government\'s response on the discussion of the Omnibus Law on the Work Creation Bill (RUU) to the Chairman of the Indonesian Parliament Puan Maharani at the DPR RI plenary meeting at the Parliament Complex, Senayan, Jakarta, on Monday (5/10/2020).

Some companies that will relocate are mostly engaged in labor-intensive industries. Our hope is that through the job creation bill, they can see that the investment climate will be improved such as through the simplification of licensing procedures and, at the same time, we are also trying to improve the competence of our workforce.

In the job creation bill, there have not been any affirmative efforts to prepare the competitiveness and competence of the workforce. How can this challenge be answered?

We do want to facilitate investment, but on the other hand, we have to improve the capacity of the workforce, which still mostly consists of low-skilled [workers], such as through vocational training. Actually, if there was no COVID-19, we had planned to improve worker capacity through the pre-employment card program.

This issue is not regulated in the job creation bill because it is general in nature. Law No. 13/2003 on manpower is still in effect. In this law, employers are responsible for improving and developing the competence of their workers through training. Meanwhile, in this bill, there is a new unemployment benefit (JKP) scheme. The severance pay amounts to a maximum of 25 times the monthly wage (from previously a maximum of 32 times, depending on the working period); of which, six times the monthly salary will be paid by the government through the JKP scheme.

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The philosophy of severance pay is that workers have the provisions to survive while looking for new jobs. Don\'t presume that the benefit isn\'t cash and there\'s no protection. In fact, the value of protection lies in vocational training to improve skills and acquire new skills. That is part of the JKP benefits.

One of the issues that has been highlighted is the provision related to contract workers or non-permanent workers. Why does the government not firmly put a time limit on the contract in this bill as in the Manpower Law?

We have learned from several countries. If it is regulated in law, there will be no regulatory flexibility. This problem is not simple as the labor dynamics are high. We have agreed with our friends in the tripartite forum (government, employers and workers) that this will be discussed in government regulations (PPs) that will be issued to support the implementation of the new law. So, the government will not do it alone.

In the PPs, will the time limit be strictly regulated?

It could be more than five years, or less. The dynamics are very complex. If it is regulated directly in the law, we are afraid that we will not be able to follow the dynamics.

If you really want to create a more flexible labor market, there should be protection and justice for contract and outsourced workers. In fact, many of our contract workers, outsourced workers, even permanent workers, are still not protected.

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Don’t contradict job creation with labor protection. Don’t presume that if we try all out to create jobs, it will reduce protection. It is equally important that both workers and the unemployed are protected.

The existing Manpower Law provides great protection. Is this protection stipulated in the job creation bill?

For example, in the Manpower Law, there is no protection for PKWT (contract workers). In this bill, social protection will still be provided for both PKWT workers and PKWTT (permanent) workers. So, they have the same basic rights as permanent workers to get social security, rules for overtime pay, and the same working hours.

KOMPAS/RONY ARIYANTO NUGROHO

A reflection of a banner is seen in a pair of sunglasses during a protest against the Job Creation Law held by students from Pakuan University on Wednesday (14/10/2020) at Kujang Monument in Bogor municipality, West Java. The student protesters said that the Job Creation Law, or omnibus law, betrayed and harmed the people. They also said that the manner in which the House of Representatives (DPR) deliberated and passed the law showed that lawmakers were unconcerned about the people during the Covid-19 health emergency.

Is the guarantee of rights and protection regulated explicitly in the bill?

Oh, it is. In the past, there was no compensation for PKWT workers when the working contract ends. Now, when the contract ends, they will receive compensation. The entrepreneur will have to be aware that if they want to keep contract workers, they still have to pay severance pay. This is actually a form of protection that we did not regulate in the previous law.

In principle, this bill wants to protect all workers – existing workers, job seekers or those in the micro, small and medium enterprises.