Labor 'terror' a blow to investor confidence

Labor 'terror' a blow to investor confidence

JAKARTA (JP): The government's decision to shelve the
implementation of labor decrees will only deepen foreign
investors' negative perception of the country's legal certainty,
a noted foreign analyst said here on Saturday.

The president of PT Harvest International Indonesia, Harvey
Goldstein, said the decision indicated that the government's
policy could be dictated by "terror" from a rioting mob.

The eruption of street violence also made clear to foreign
investors that Indonesia was unsafe and that political interests
remain on top of economic ones.

"It's a double jeopardy, a double danger to attracting foreign
investment," he told The Jakarta Post over the weekend.

Last week several cities across the country were hit by a wave
of labor protests, which in some cases turned violent as police
lost control over rioting mobs.

Workers demanded the government revoke revisions made to a
ministerial decree on severance payment on the grounds that the
revised versions violated their rights.

The protests have been going on for several weeks, but have
only recently grown out of control as more workers joined the
protests.

Following a meeting with the military last Friday, Minister of
Manpower and Transmigration Al-Hilal Hamdi decided to postpone
the implementation of the new decrees.

Goldstein said that apparently fears of more unrest had
prompted the government to override its earlier policy. This,
however, smacked of inconsistency, he warned.

In the same week, the government decided to delay the new
decrees, it delayed plans to hike fuel prices, citing security
concerns.

But as the fuel price hike came into effect on Saturday,
thousands of protesters took to the streets again demanding the
decision be canceled.

The mass anti-government riots signal the eroding public
confidence in the administration of President Abdurrahman Wahid.

Loosing public support may spell disaster for the embattled
President, who is facing the threat of impeachment in August.

"The government is taking decisions based on politics,"
Goldstein said.

Ministerial Decree No 78 and No 111 were issued as revisions
to Decree No 150, which required employers to provide severance
payment to workers leaving their place of employment, even if
they were dismissed.

Local and foreign investors have decried the old decree as
overprotecting workers' rights.

With the delay of the two ministerial decrees, a tripartite
forum comprising employers, trade unions and government
representatives will deliberate the issue next month.

Chairman of the Indonesian Textile Association (API) Lili
Asdjudiredja said Ministerial Decree No 150 dealt another blow to
the labor intensive textile industry.

He said the textile industry, with its high turnover rate,
would be hit the most by the old decree.

Low-skilled workers, he said, can easily move from one textile
company to another, forcing employers to fork out huge amounts in
severance payments.

Earlier, he also warned that this year's rise in fuel and
electricity prices would send many textile companies to
bankruptcy, leaving thousands of workers jobless.

Elsewhere, secretary general of the Indonesian Employers
Association, Djimanto expressed his disappointment over the
delay.

"There is no consistency in the government's regulations and
its actions; it will be very difficult for companies to plan
their business," he said.

According to him, it was very clear that workers'
representatives had used intimidation to force the government
into accepting their demands.

The threat is that if the government ignored workers' demands,
they would continue to rally and prolong the street violence.

Chairman of the Indonesian Prosperity Trade Union Muchtar
Pakpahan welcomed the government's decision, but added that a
delay is unsatisfactory.

"We will continue to struggle to have the new decrees
revoked," he said.

He said if he had his way, the government should reinstate
Law No 12/1964 on manpower, which bans companies from firing
workers other than due to criminal acts.

"If the law causes a company to go bankrupt, so be it. In a
case of bankruptcy workers' rights must be prioritized," he said.

Confirming Djimanto's fear, he warned that workers would
return to the streets to protest if the government fails to heed
their demands.

"We have allowed workers to be abused for far too long," he
said. (bkm)