[Kabar-indonesia] BT: Jakarta unions must change mindset

[Joyo at aol.com]

Business Times Singapore 
Tuesday, July 4, 2006

Editorial

Jakarta unions must change mindset

FOR a country that desperately needs foreign
investment, Indonesia has a habit of scaring away
investors with some onerous regulations and laws. For
example, investors have for some time now cited
existing labour regulations - which compel companies
to compensate workers who resign on their own or are
dismissed for disciplinary reasons - as a key reason
for not setting up operations in Indonesia.

The Labour Law, which was passed during President
Megawati Sukarnoputri's term, was meant to protect
worker rights and strengthen their bargaining position
vis-a-vis employers. In fact, it is now clear that
these laws have hurt workers more than protecting
them.

Many companies end up hiring workers on short-term
contracts to circumvent the laws and avoid the
financial burden. Even President Susilo Bambang
Yudhoyono's government is attempting to bypass the
legislation in the recently established Special
Economic Zones (SEZs) in Batam, Bintan and Karimun so
as to facilitate foreign investment.

Jakarta announced last week that it will relax the
implementation of the law within the SEZs.

While investors will no doubt be cheered by this news,
more comprehensive changes need to be undertaken. And
the starting point should not be the government but
the labour movement itself. Rather than focusing on
protecting a shrinking membership, the unions should
instead be looking at how they can facilitate the
creation of new jobs. More than 40 million Indonesians
are currently underemployed or unemployed; about two
million enter the workforce each year. To create
enough jobs to absorb these workers, the trade unions
must work with the government to improve the country's
investment climate. They can only do so if they change
their mindset.

While they should continue to fight for worker rights
in areas such as healthcare and training, they must
also be cognizant of the fact that competition for
labour is the surest way to improve wages and
conditions.

The establishment of the SEZs is a great opportunity
for Indonesia to reverse the recent downward trend in
foreign direct investment. The government has shown
its desire to improve the country's investment climate
by moving quickly on the idea, which was first mooted
in February. Batam, which was set up in the early
1990s to attract multinational companies that found
Singapore too costly for manufacturing operations, was
one of Indonesia's great economic success stories
until recent times. Over the past few years, however,
investors have been relocating to other countries. The
government has stated that if the SEZ concept works in
Batam, Bintan and Karimun, similar zones will be
established in other parts of the country.

Hopefully, this will create hundreds of thousands of
new, better-paying jobs.

If Indonesia's labour leaders truly care about the
welfare of the workers, they should not object to the
government's intention to apply different labour
regulations for the SEZs. Indeed, they should also
work towards changing the Labour Law altogether so as
to bring it closer into line with international norms
and practices.

------------------------------------------ 
Joyo Indonesia News Service
------------------------------------------