Mon, 24 Mar 2008
The Jakarta Post, Jakarta

The country's messy labor regulations and bureaucracies have not only discouraged foreign investors from setting up much needed labor-intensive businesses here but have also undermined efforts to send more local workers overseas.

The Jakarta Post's Rendi Akhmad Witular and Novia D. Rulistia recently interviewed Manpower and Transmigration Minister Erman Suparno to discuss the government's efforts to untangle protracted problems. Here are excerpts of the interview:

Question: The Indonesian Employers Association (Apindo) is set to reach a deal with labor unions over issues of severance payments and insurance, which have halted the labor law amendment. Will you regulate the deal and proceed with the amendment?

Answer: Problems in developing the labor system are primarily related to efforts in improving industrial relations between employers and employees. The government has encouraged them to negotiate and settle their problems through a bipartite mechanism (consisting only Apindo and labor unions).

After they come up with a settlement, the government will then follow up by drafting a legal product based on the existing regulation frame.

So there is no problem on our part. We are ready to put the settlement from the bipartite forum into a legal frame. We will discuss the settlement with related ministries before bringing it to the House of Representatives for discussion and proceed with the labor law amendment.

Business people are concerned about overlapping regulations, such as insurance, severance payments and employee social security regulations. This has created inefficiency as well as confusion among businesses. How do you resolve this?

Those regulations need to be synchronized. There are several separate regulations that work independently of each other and they sometimes overlap. In the future, however, there will only be one regulation responsible for all that.

The umbrella regulation will be the National Social Security System (SJSN) law. We are now planning to revise laws on workers' social security through Jamsostek (a state-owned workers' insurance firm), and pension funds so they reflect the SJSN law.

In the future, all issues related to workers' insurance and severance payments will be arranged under the SJSN system. There will be a new agency to implement the system and Jamsostek will remain one of the agency's tools.

When will the agency be formed?

According to the SJSN law, the agency should be established by October 2009, but because of the general election, we expect to see the agency set up sooner.

In the meantime, will you issue any new regulations on severance payments or insurance?

There will be no new regulations unless we are sure the labor law will be amended. At present, we are still basing our legal frame on the current labor laws, as well as on regulations made below it.

There seems to be a dispute between you and Jumhur Hidayat (chairman for the National Agency for the Placement and Protection of Overseas Workers) over the management of migrant workers. Do you agree?


Well, that is a matter of misunderstanding. There should not be any overlapping between the ministry and the new agency if the agency complies with existing law.

Based on the law, it is clear the ministry is still the sole manager of migrant workers and is responsible for their placement and protection as well. The agency's task is mainly for managing migrant workers based on government-to-government agreements or government-to-business agreements. Anything outside that is the responsibility of the ministry.

The agency has no authority to issue any regulations. The ministry makes the regulations for the agency to implement. It's as simple as that.

The agency creates problems when it tries to regulate outside its authority. There are several cases where it has tried to do that. It has conducted inspections at clinics for migrant worker applicants and has threatened to shut them down for violating their regulations.

The agency has also acted inappropriately by auditing recruitment companies and threatening to close them down as well. It has no authority to do that. If they find any violations, they should inform them to us for further measures.

There are concerns our labor system does not invite foreign investment because of high costs as well as frequent labor union demonstrations. Do you agree?

Who said that? Which investors? Our labor system is investor friendly. There are a lot of investors that have operated here for more than 50 years and they have no complaints.

I think labor unions protest because of management's lack of transparency in running companies or because there is sometimes a violation of the labor law.

When workers have full rights, I don't think there are any protests.



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