Indonesia's
trade minister has called for the country's labour laws to be reformed, saying
that increasingly-aggressive unions and mass protests are posing a major
stumbling block to economic development.
In a warning that echoed the concerns of many
businessmen and investors, Gita Wirjawan said that the laws sometimes favour
workers at the expense of employers, and risk putting off investors just as
Indonesia is on the path to economic growth.
His warning, delivered at a forum this week,
comes amid a recent wave of workers' protests, legal battles and strikes that
have prompted investors to consider pulling out of areas stricken by labour
unrest.
One protest is planned for next Thursday,
while another scheduled for today in Tangerang was averted only after labour
unions and the Indonesian Employers Association (Apindo) settled their dispute,
following a six-hour negotiating session mediated by the Manpower Ministry.
Companies and investors have long criticised
Indonesia's labour laws for not being business-friendly, saying they are tilted
too much in workers' favour, such as giving them huge severance payouts.
But others argue that workers are not given
adequate protection, such as proper unemployment benefits. They also say wage
growth has not kept up with inflation, which is why many workers have taken to
the streets in protest.
Labour activist Odie Hudiyanto said many blame
the government for not doing enough to protect their rights.
"Trust between the labour and employer
groups has broken down, so workers are willing to put their jobs on the line,
seeing how other groups have demonstrated and successfully won higher
pay," he said.
Tensions between labour unions and employers
have been mounting in recent months, not just in the courts but also
increasingly on the streets.
Last Friday, thousands of workers in the
industrial town of Bekasi, 20km east of Jakarta, caused a 30km tailback of
traffic and forced shops to shut down after they blocked a major toll road.
The workers eventually scored a crucial
victory, after a court ruling favouring Apindo was overturned and a minimum
wage increase was upheld.
Previous months also saw violent strikes in
Batam, Riau, and long-running riots in Papua.
Observers say the workers' victories are
likely to encourage labour unions to continue with their protests - raising
fears that 'street justice' could hurt an otherwise good investment climate and
dent Indonesia's economic trajectory.
Southeast Asia's largest economy has managed
to restore investor confidence with strong economic figures, netting record
investment last year and scoring upgrades in credit ratings.
But economists say that apart from labour
issues, the government also has to improve infrastructure, governance and
transparency. Some also back worker demands for higher wages.
"Wage increases have not kept up with
inflation, especially food prices," said economist Kazutoshi Chatani at
the International Labour Organisation. "This means that most of the
workers are actually struggling to pay for basic needs."
According to the Central Statistics Agency,
food prices rose by nearly 16 per cent in 2010, while the wages of factory
workers grew by less than 7 per cent.
Experts also say there are too many
Indonesians working in informal sectors, earning below minimum wage without
social security coverage and training.
The Manpower Ministry is working on ensuring
that outsourced workers get the same benefits as permanent ones. President
Susilo Bambang Yudhoyono on Wednesday also called for minimum wages to be
revised in tandem with the growing economy.
Zubaidah Nazeer
The Straits Times
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