Walking on Thin Ice: How Indonesia’s Job Creation Bill Poses Risks of Fuelling Modern Slavery

This article is part of AASYP’s “Break the Chain” programme that highlights innovative solutions to modern slavery, human trafficking, and forced labour.

On 5 November 2020, the Indonesian government enacted the contentious job creation bill (the “Omnibus Law”) into law. The Omnibus Law is an attempt by the Jokowi administration to improve economic activity by enhancing Indonesia’s regional competitiveness. Although the bill was touted as a cure-all for Indonesia’s economic troubles, its passage was met with significant opposition from Indonesia’s civic society.

The Jokowi administration intends to create jobs by attracting more foreign direct investment to Indonesia. The Omnibus Law improves legal certainty and the ease of doing business for investors by consolidating 70 existing legal provisions into a single piece of legislation. Among the consolidated and pruned legislations are the industrial relations regime, the investment framework, and environmental safeguards. While the result could be an increase in job opportunities, it may also create other problems, such as engendering an environment where modern slavery practices can thrive.

While poor labour practices alone is not a cause of modern slavery, it can push workers into conditions that constitute modern slavery if combined with other indicators. For example, delayed payment of wages, excessive working hours or verbal threats do not lead to modern slavery by themselves. However, a combination of multiple abusive practices at the same time may reach the level of modern slavery.

The Omnibus Law reduces many protections granted to workers under Indonesia’s previous Labour Law No. 13 of 2003, including minimum wages, severance pay, vacation, and more. As a result, the bill was met with protests and opposition from labour unions, students, and other civil society groups who were displeased with the lack of public consultation. The Omnibus Law is notorious for being drafted in secret despite the government claiming to have involved 14 trade unions in the Public Consultation and Coordination Team on the Omnibus Bill. Trade unions have consistently denied this fact. In reality, public participation was non-existent until the bill was submitted to the Speaker of the Indonesian Parliament, Puan Maharani, on 12 February 2020.

The aforementioned is only the tip of the iceberg. In an attempt to create a more flexible industrial relations regime, the bill has loosened some of the stricter provisions under the previous labour law. For example, under the previous law, companies were only allowed to outsource “non-core activities” to third parties. The exclusion of this restriction from the Omnibus Law will allow more extensive outsourcing arrangements and more informal work arrangements in Indonesia.

However, the most concerning problem with the Omnibus Law is that it gives greater leverage to corporations at the expense of the worker. The weakening of labour rights makes it easier for corporations to exploit and violate workers to advance their interests. The greater bargaining power of corporations means that workers can only rely on their superior numbers to have a voice despite the exclusion of labour unions in drafting the Omnibus Law. The government must now be proactive in defending workers’ rights since the removal of protections guaranteed by the previous legislation will leave workers vulnerable to exploitation.

While increasing investment to improve the economy is vital, it should not take precedence over human rights. Corporate greed where corporations wield significant influence and dominance in terms of deciding and overriding nation states is often followed by the idea that growth is based on export-oriented growth. This development model is underpinned by the belief that enticing foreign investment is a necessity to achieve growth, even if that means lowering labour standards or worse, eliminating them. Without the protection of strong labour laws, the risks of modern slavery would be greatly increased.

Policymakers should prevent the Omnibus Law from fuelling modern slavery by reevaluating labour practices that undermine the rights of workers and strengthening existing protections for workers. As most labour violations occur due to the lack of enforcement of existing labour protection laws, regulators need to be empowered to enforce the law. Without a robust regulatory framework, wrongful practices would be able to slip through the cracks and create a perfect breeding ground for labour practices that resemble modern slavery. The eradication of modern slavery must begin by focusing on preventing violations of existing labour standards. Therefore, the Indonesian government should fulfil its obligation to protect workers by strengthening labour rights and ensuring that a robust judiciary system exists to enforce those rights.

This article was written by Adila Nurul Ilma, edited by Andrew Thomson, and reviewed by Choo Qian Ke.

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