Protecting labor and jobs

Protecting labor and jobs

Jobseekers stand to lose the most in the new labor bill
currently being deliberated at the House of Representatives
because it will further dampen the demand for workers in the
already glutted labor market and the oversupply of almost 40
million fully unemployed and under-employed people.

The House is therefore well advised to realize that stoking
stronger demand for labor through job creation is as important as
establishing rules on worker protection and welfare. Overly
protective regulations could choke off growth in the formal
sector, which is badly needed to absorb the huge number of
jobseekers.

Politicians should strike a good balance between the objective
of protecting workers from excessive exploitation and ensuring
decent living conditions for them and the vital need to maintain
a conducive climate for investment, without which there would be
no job creation to speak of.

The House should act as a wise arbiter of the widely differing
stance between industrial associations (employers), which assert
the bill has swung the pendulum too far away from their
interests, while trade unions reject it, calling it less
protective for workers.

Given the workers' euphoria with their newfound freedom of
expression and association, and their ability to mobilize large
masses to influence public opinion, there is a danger for House
members to fall prey to populist sentiments at the expense of
sustainable economic growth, hence job generation.

We truly need a new law that guarantees minimum standards for
decent working conditions, workers' right to strike and
reasonable severance and compensation payments, and also an
effective mechanism for the fair settlement of disputes.

The government cannot let the market fully determine minimum
standards of human decency for workers in view of the unequal
status of employers and employees. Moreover, in the bread-and-
butter terms of jobs and wages, the interests of employers and
workers often oppose each other.

No one either wants to see the return of the repressive labor
policies under the authoritarian administration of Soeharto,
whereby worker exploitation was legalized and promoted in the
name of industrial competitiveness to fuel economic growth and to
compensate companies for the heavy costs of corruption, bribes
they had to pay to officials, military officers and politicians.

However, enacting too rigid, overly protective laws in favor
of laborers could kill the goose that laid the golden egg,
discouraging new investment in labor-intensive businesses and
prompting existing companies needing expansion to hire temporary
workers to circumvent the law.

This country desperately needs more productive jobs to absorb
the huge pool of unemployed and under-employed labor and an
annual addition of two million new job seekers. Labor analysts
estimate that economic growth of between four percent and five
percent, the likely rate of economic expansion within the next
two to three years, will only generate 1.8 million jobs, barely
enough to absorb the new job seekers, let alone the millions who
have already been out of work for years.

The provisions in the labor bill regarding the overly arduous
procedures for worker dismissal could hold employers hostage to
radical trade unions, and the stipulations on severance payments
seem too punitive to employers. The rulings on severance and
compensation payments for workers, who are fired after being
found guilty of crimes, or those who cannot work while on trial
for criminal charges, do not make sense. The range of
compensation benefits for workers who voluntarily resign is
similarly ludicrous.

The stipulations regarding the range of jail terms and stiff
fines for violations of labor regulations could scarce away
investors due to the public's distrust in the court system in
general and because of the yet untested labor court, which will
be set up under the bill. Such details as court procedures, the
appointment and composition of judges, and the appeal process
also remains nebulous.

A labor court is really needed as another mechanism to resolve
disputes between employers and workers. However the court will be
designed, three principles must be established right from the
outset: The proceedings must be speedy, understandable to the
parties involved and bearable with regard to the costs incurred.

At the end of the day, though, labor legislation is only
written rulings that have to be enforced in a steadily changing
economic situation with its different impacts on the various
sectors in which businesses, the producer of jobs, operate.

The management of peaceful industrial relations will still
depend very much on how capable plant or company trade unions are
in developing effective bargaining relationships and negotiations
with employers. This issue alone is already quite challenging as
there are now almost 60 trade union federations, which in the
euphoria attached to their newfound freedom of expression and
association often show a lack of discipline and are vulnerable to
politicking.

The role of employers is no less vital in preventing labor
disputes. The contentment of workers will depend on how
forthcoming the management is with the conditions of the company
and how willing it is to acknowledge and enhance workers'
collective-bargaining capability and to allow employee
representatives in the decision-making process regarding matters
related to workers' interests.