Jakarta. The omnibus bill on job creation offers more benefits to workers than the existing manpower law, chief economic minister Airlangga Hartarto said on Monday as he attempted to ease anxiety among labor unions worrying about a draconian law.

The bill stipulates job loss insurance, in addition to the existing workers' protections such as accident and life insurance, pension fund and retirement plans, Airlangga said in a meeting with chief editors of national media companies in South Jakarta. 

"We have met with all labor union leaders and they agreed with the omnibus law," Airlangga said. Also present at the meeting were House of Representative commission leaders Dito Ganinduto and Meutya Hafid.

Airlangga claimed that labor union leaders were involved in the drafting of omnibus bill on job creation, in a separate group discussion from employers.

"The government really pays attention to demand from workers and we listen to them,” he said.

Comprising 15 chapters and 174 articles, the bill will not override the existing law on manpower, nor will it reduce the agreed minimum wage, he added.

In the case of a layoff, the maximum job loss compensation will be reduced to 17 times of the monthly wage from currently 27 times, but workers will be entitled to job loss insurance and a reward equivalent to five times of their monthly wage, depending on the length of their employment. In short, the proposed law doesn’t reduce benefits for workers, but it only changes some of the ways to deliver them, he said.

Airlangga also dismissed allegations that the bill seeks to open door to foreign workers at the expenses of local workers. He said foreign workers will be restricted to skilled professionals. The government has no intention to import bricklayers, carpenters or other types of unskilled workers, he said.

Airlangga argued that a lack of firm regulations on foreign workers has often cancelled foreign investments because investors cannot bring their skilled workers into Indonesia. The omnibus bill will make changes to solve this issue, he said.

The bill offers benefits to contract workers similar to those of permanent employees. They include medical insurance, accident and life insurance, and job loss compensation, he said.

Structural Transformation

The bill being deliberated by the government and the House of Representatives is a key part of the ongoing “structural transformation” in the Indonesian economy, the minister said. The transformation will require a strong legal foundation and therefore the government comes out with the omnibus bill, he said.

Indonesia has gone through two major economic transformations in history. In 1967, in the face of hyperinflation and negative growth, the government and the House enacted the law on foreign investments, which proved crucial to lift the country from crisis.

During the severe financial crises in 1998, the government was forced to seek help from the International Monetary Fund, which dictated a series of political and economic reforms to help the country cope with sinking currency and ballooning foreign debts. The reforms led to the adoption of business competition law and the birth of the Corruption Eradication Commission (KPK), among other things.

The two dramatic events were propelled by domestic and external pressures that provided no choice for the government.

The third and present transformation is conducted without pressures from anybody, Airlangga claimed.

"We embrace the third structural transformation of the economy to spur growth, create more jobs and enhance prosperity of the people," Airlangga said.

The main reason for drastic changes today is the country’s overly regulated business environment, where there are 8,470 central government regulations, 14,758 ministerial regulations, 4,317 state agency regulations and 15,966 regional government regulations.  

"In total, there are 43,511 regulations. The president has the authority to harmonize all these regulations," he said.

Apart from job creation, the government also proposes two omnibus bills on taxation and the new capital city.

Airlangga said the structural transformation aims to boost economic growth to between 5.7 percent and 6 percent and create more than 45 million new jobs. 

Indonesia’s competitiveness is lagging behind other Southeast Asian countries. Airlangga said that in the view of Japanese investors, the productivity level of Indonesian workers is behind that of the Philippines, Singapore, Thailand, Vietnam, Laos and Malaysia. 

"Companies who want to relocate their businesses from China prefer to go to Vietnam and Thailand," Airlangga said.

House Support

Airlangga added the omnibus bills have won support from six political parties in the House of Representatives and they look set to be enacted without many problems. 

According to him, the bills already got 75 percent of the votes among lawmakers.

"We don’t talk about profit or loss for workers and their employers. The bill on job creation is a very important thing for the country,” he said.