The pros and cons of manpower bill

The pros and cons of manpower bill

By Teten Masduki

JAKARTA (JP): It seems that the manpower bill will smoothly
pass through the House of Representatives as all House factions
have reached a consensus to complete the discussion in three
months, that is before the tenure of the present legislative
assembly expires.

Unless something is in the way, the plenary session of the
House will pass the manpower bill into a law on Sept. 10, 1997.

Many NGOs as well as labor activists and intellectuals have
suggested postponing the discussion of the bill until the next
House begins. They argue that the manpower bill contains some
basic weaknesses which cannot be put right in a relatively short
time.

The manpower bill consists of 18 chapters and 159 articles and
is expected to replace 6 ordinances and 9 laws on labor affairs
issued between 1887 and 1969.

The bill will regulate industrial relations and manpower
planning involving workers from the formal sector, profit-seeking
or otherwise, workers from the informal sector, alien workers and
migrant workers. The bill will later serve as an umbrella law for
all legislation in manpower affairs.

Compared with the ordinances and laws it is expected to
replace, the bill shows a substantial setback in terms of rights
protection of workers.

To sum it up, the manpower bill is aimed at (a) revoking laws
which so far have relatively protected the basic rights of
workers and (b) legalizing unfair labor practices into law.

It seems that such a legal reform is indeed oriented toward
ensuring that doing business in Indonesia is more comfortable,
which in the context of global competition means winning more
investment and enhancing the competitive edge in trade.

Under these conditions, the first thing to do is prepare the
flexibility of the labor market to facilitate business companies
to apply a subcontract system or that of a short-term work
contract in manpower recruitment in line with production
fluctuations.

The second is preparation of a precondition for facilities
conducive to industrial growth in the form of cheap, skilled and
politically obedient labor.

This policy is, in fact, not a new thing, but rather a sort of
legalization of the policy that has already been in effect since
the mid-1980s, when Indonesia began to adopt an export-oriented
industrial strategy.

In this case, the orientation of reform is established through
a strategy of corporatism, namely (a) legalization of the system
of individual work contracts; (b) recognition of the right to
engage in an organization in a limited manner under the control
of the government; (c) reduction of the right to go on strike;
(d) placement of a dispute arbitration institution under the
state's administration institute; (e) leaving national bipartite
and tripartite institutions to find solutions to industrial
conflicts and (f) handing over the power to set the rates of
wages from monopolies to the government.

However, in the long run, the manpower bill is likely to harm
business interests. The bill would very likely create a condition
conducive to accelerating labor turmoil on a wider scope and
keeping the phenomenon of a high-cost economy in place.

There are three reasons which explain how this condition would
come about.

First, in the future, workers will lose jobs more easily. As
permitted by law, every company will tend to recruit workers for
temporary work, rather than employing them permanently.

In this way, a company can freely replace its workers with
fresh recruits, who are abundantly available in the labor market.
It may also happen that companies will not renew work contracts
of workers who do not show good conduct -- for example, those who
demand a wage increase or join a sit-down.

In short, job insecurity will emerge. It is this condition
which will actually trigger labor unrest in future.

Second, with the adoption of the subcontract system and that
of individual contracts, labor unions and the collective
bargaining mechanism will lose their function as a means to
articulate workers' interests in companies.

In addition, government intervention in the formation and
limitation of the function of a labor union will give birth to a
pro forma labor union.

The two conditions which may come about will perhaps prompt
labor movements to find an alternative. Labor movements may
return to political unions, leaving behind the method of
collective bargaining.

Such labor movements usually constitute an alliance of
supporting groups with sociopolitical interests.

However, the future of labor movements will be determined by
the extent of the government's ability to implement law
enforcement in protecting the normative rights of workers and
improvement of their economic conditions.

Labor resistance in Indonesia in the form of wildcat strikes
and mass demonstrations have been in the 1990s on the increase
and in the past two years over 800 incidents have occurred. In
the majority of cases, strikes were triggered by companies'
violating minimum wage stipulations.

The most alarming thing resulting from the intensification of
labor unrest is that political patronage may be established in
business. To protect their capital, business circles will depend
even more on security services. If this happens, labor repression
will intensify to maintain the interests of state order and
capital accumulation.

We know for a fact that solving labor conflicts through
coercion is not only fruitless but also tends to increase
production costs because of non-labor cost, which enables the
phenomenon of a high-cost economy to continue.

Mass-media reports say that some business circles estimate
that invisible costs now reach 16 percent to 30 percent of
production costs while labor wages account for only 4 percent to
11 percent (in the manufacturing industry sector).

Labor rights violations will certainly be part of labor
conditions in the future, and this will harm the growth of
national industry.

Perhaps Indonesia's export products will face restrictions in
the global market because there is at present a strong tendency
to link trade policies with labor conditions, at bilateral and
multilateral levels. At a private level, boycott campaigns have
gained intensity against export products which are allegedly
created through labor exploitation.

With the introduction of the manpower bill, it is likely that
Indonesia will be accused of practicing social dumping. Many
provisions in the bill run counter to International Labor
Organization conventions.

Should trade sanctions be imposed, then national exporters
would sustain big losses compared to multinational corporations
which control access to the global market.

The writer is head of the labor division at the Foundation
of the Indonesian Legal Aid Institute.