Hoo haa of the Labour Law

Last month, when the government discussed about revising the Labor Law, many workers came to street and protest against it. They believed that the Law would be extremely unfavorable to them as the severance pay is significantly reduced and it will be easier for companies to fire workers. Another issue that is critical but not debated is the wages policy.

On one hand, the workers are clamoring for their rights, fighting for greater benefits and urging the government to offer them greater protection against unfair labor practices by the firms. On the other hand, the business community prefers a cheap labor and less stringent labor law which will offer them greater competitive advantage over foreign firms. The government, as the referee of the game stands at the center and its voice seemed to be divided.

President Yudhoyono mentioned that the business community should not merely consider workers as a mere factor of production. Business owners should be concern about the welfare of the workers. Perhaps what Mr President wanted is a business that treat the workers as integral part of the company, in short one big family akin to the old corporate America style. Old Corporate America, as championed by Hendry Ford, Rockefeller, Sam Walton, Andrew Carnegie and others adopted a paternalistic approach towards the workers. They believed that they have the obligation to take care of the workers. There was no strict Labor Law then but the Old American Fathers guided by their ethical values voluntarily provided benefits to their workers.

Vice President Yusuf Kalla is defending the need for the revision of the Labor Law. He believed that the world today is changing fast and faced with harsh competition from cheap labor countries, businesses in Indonesia is powerless to pose any competitions. Indonesia’s core competence in the past was the cheap labor cost and favorable labor law. Taking these elements away mean that there is no reason for the capitalists to invest in Indonesia.

I believe that it is rather myopic when Vice President would try to make the business environment more attractive through a more flexible Labor Law. The cost of doing business is not solely affected by wages, but also the electricity, the frequency of blackouts, petrol prices, transportation, red tape and other illegal fees that are required by corrupt officials. I feel these are the issues that need to be tackled at the same time.

There is once incident where the business community protested the rise in the price of electricity. They believed that the increase would cost them their competitiveness and hence, went to the Chamber of Commerce to write a petition to the government. At that point in time, Minister Fahmi Idris said that the rise in the electricity price and the burden upon the business sectors was not the problem of the government but rather, the business itself and that the business should think themselves of ways to minimize the impact. Does this statement portray a concern for conducive business environment?

Despite all of that, I agree that this is a delicate issue. There is no silver bullet for immediate solutions to all of the problems. But on the other hand, I think that there is no need to sacrifice the well being of our own people under the name of development.