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.