Indonesia drops plan to reform labour laws: report
Posted: 13 September 2006
JAKARTA : Indonesia has dropped a bid to reform employment laws as a result of opposition from trade unions, a move likely to disappoint foreign investors, a report said Wednesday.
Southeast Asia's largest economy has been seeking to improve its lacklustre business climate to attract vital foreign investment.
Among the efforts had been a proposal to amend a 2003 labour law which would have made it easier for employers to hire workers on flexible contracts and cut the amount of severance pay due to employees.
Business leaders have said revisions are crucial if Indonesia is to increase its competitiveness and keep investment flowing in,although workers have argued a serious reduction in corruption would be more effective.
Vice President Jusuf Kalla told the Financial Times that Jakarta would try to find other ways of addressing business concerns about labour.
"No. Not this time," he said when asked whether the government would continue seeking the planned revisions.
"It's not so easy. This is the same in France. This is the same in America. (Labour laws are) very sensitive."
The move follows demonstrations by tens of thousands of Indonesian workers in May, including one where police fired tear gas and water cannon to disperse rowdy crowds.
The report said that proposed revisions to a draft tax law which had also been sought by the business community were withdrawn last month because of parliamentary opposition.
Kalla added that the government faced challenges in implementing reforms due to teething problems with democracy.
"Democracy is a system. Its not our objective. Our objective is how to (ensure) peoples welfare," he was quoted as saying.
"To know the success of a system you have to know the result. We have not achieved the result. But we are a democracy, maybe a too-open democracy." - AFP/ch