Employers relaxing the pressure for revision of labor legislation

The Jakarta Post, Jakarta

The Indonesian Employers Association (Apindo) appears to be backing off on the proposed amendments to the 2003 Labor Law, saying that there are other more urgent ways in which the business climate can be improved.

Chairman Sofyan Wanandi told The Jakarta Post on Friday that the association's priority at the moment was to encourage an overhaul of the taxation, customs and excise, and investment legislation.

"To improve the existing investment climate, new legislation in these sectors needs to be finalized as quickly as possible. As for the labor legislation, it'll be OK if it is revised later on," Sofyan said.

He said that while the amendment of the labor legislation was important to improving the investment climate, it was not the only factor.

"We need one big package that includes laws on taxation, customs and excise, and investment, as well as improved infrastructure and a revision of the labor legislation," he said.

A spate of labor unrest followed proposals to amend the 2003 Labor Law so as to allow greater freedom to employ part-time workers and outsource work, limit severance and service payments to dismissed workers earning monthly salaries of Rp 1.1 million (US$100) or less, and greater freedom to employ expatriates.

Workers staged two rallies to protest against the proposed changes on May 1 and May 3. The latter protest turned violent, with demonstrators knocking down part of the fence around the House of Representatives complex, prompting police to arrest eight union members.

The employer's association said that the May 1 rally alone, which had disrupted production in many factories, had caused losses of Rp 850 billion.

Since then, representatives of the employers and labor unions have agreed to seek solutions by holding a bipartite meeting in June.

Sofyan said that the outcome of the meeting between the employers and workers would be presented to the government at a tripartite meeting. "Hopefully, we can bring the results to the tripartite meeting in July so that they can be brought before the House in August".

Sofyan said that he hoped all the new legislation to improve the business climate would be finalized by the end of the year.

He said that due to poor regulation and the effects of the high cost economy, foreign investors were shunning Indonesia, and putting their money in other countries. (08)
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