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.