New labor law

Both workers and employers won some and lost some in the labor law that was approved by the House of Representatives on Tuesday after more than five years' delay that was marred by intermittent labor demonstrations.

The law on the development and protection of workers' rights, called the Manpower Law, will annul more than a dozen previous laws, notably the controversial Manpower Law No. 25/1997 enacted during Soeharto's authoritarian rule, and the so-called time-bomb Labor Regulation No. 150 that was issued by then manpower minister Bomer Pasaribu in June 2000.

Law No. 25, which has never been enforced, fully reflected Soeharto's repressive labor policies that legalized and promoted the exploitation of workers in the name of industrial competitiveness to fuel high growth and to compensate companies for the heavy costs of corruption.

However, Labor Regulation No. 150 swung the pendulum too far in favor of workers, stifling new investment and prompting expanding companies to hire temporary workers to circumvent the rigid rules. The regulation reflected the euphoria of the workers' newfound freedom of expression and association that tended to drive trade unions into radicalism to advance their interests.

The new law seeks a middle ground, striking a good balance between the objectives of spurring new investment to create jobs and of protecting basic workers' rights, as well as ensuring the best welfare possible for workers within the context of the Indonesian condition.

Obviously, neither party could be accorded their complete demands.

Workers stood to lose the most if the legislation had been too punitive toward companies, as this would have further dampened the demand for workers in the already glutted labor market, with almost 40 million unemployed and underemployed people and an annual supply of 2.5 million new job seekers.

On the other hand, companies that inhumanly exploit their employees never last, and cannot maintain their competitiveness for long, not only because such a practice creates violent industrial relations and disrupts operations.

Besides, such inhuman treatment of workers in the formal economy is rather improbable under the current democratic era that guarantees freedom of expressions and association, as the international market has been shunning companies that do not treat their workers properly.

The law guarantees minimum standards for decent working conditions, the workers' right to strike, and severance and compensation payments. It goes a long way toward providing what workers badly needed -- stronger bargaining power -- through regulations that protect the labor market from the rigors of the demand-supply mechanism.

A freewheeling labor market would never work in the interest of workers, given the unequal status of employers and employees, and because in the bread-and-butter terms of jobs and wages, the interests of employers and workers often oppose each other.

The law stipulates clear-cut, elaborate provisions on the recruitment and rights of temporary workers and the outsourcing of services to other companies, which all boil down to more severe restrictions on such practices. For example, companies are banned from outsourcing services that are part of their permanent production process or core business. Likewise, temporary workers cannot be hired for jobs that are an integrated part of the production process.

However, the law also annuls current rigid rules, such as those that ridiculously required employers to provide severance pay and service benefits to workers who have voluntarily resigned to seek greener pastures, and to those who have been found to have commuted crimes.

The new law seems to be the best trade-off between the interests of workers and employers that could be achieved by the government and the House, out of a realization that an overly protective legislation could kill the industrial goose that lays the golden egg -- discouraging new investment in labor-intensive businesses and prompting existing companies needing expansion to hire temporary workers.

However, the new legislation should still be supplemented with another law which will govern the settlement of labor disputes. A bill on the step-by-step process of resolving disputes between employees and employers through the labor court is still pending at the House.

It is most urgent for the House to speed up deliberations on the bill, as it will provide the legal basis for the establishment of a labor court in every district court and will also govern fund-raising by trade unions to support members on strike, the instrument of last resort for workers to exert their bargaining power.

However the labor court is to be designed, the trial procedures and proceedings should be unambiguous, more expedient, understandable to the parties involved, and bearable with regards to costs incurred, than the arduous procedures currently applied by the regional and central labor tribunals.

At the end of the day, though, the labor law is merely written rulings that have yet to be translated into individual company regulations and collective labor agreements. It has also yet to be enforced in a steadily changing economic condition, which has different impacts on the various industry sectors in which businesses operate -- and provide jobs.

The management of peaceful industrial relations will still depend very much on how capable company or factory trade unions are in developing effective bargaining relationships with employers; and how transparent and honest are employers with regards to the condition of their businesses, and how willing they are in allowing employee participation in the decision- making process in matters related to workers' interests.