Indonesian trade unions to rally as government files new labor rules to parliament

JAKARTA (Reuters) - A coalition of trade unions will mobilize thousands of people next week to block the Indonesian government’s plan to relax restrictive labor rules, as President Joko Widodo’s administration is set to hand over a bill to parliament.

The protest could set the stage for what could be a difficult parliamentary debate of a politically sensitive bill, despite Widodo’s coalition controlling 74% of the seats.

Revising the 2003 Labour law is unpopular, but it is top of the list that foreign investors hope Widodo will tackle in his second term in office, alongside improving education.

The current law includes some of the most generous severance pay rules in the world that investors say deters formal hiring and affects investment decision in Southeast Asia’s largest economy.

Airlangga Hartarto, Widodo’s chief economic affairs minister, said on Thursday the main points of the so-called “omnibus” bill, which include the planned changes in labor rules, have been completed.

The bill is currently awaiting legal drafting and will be submitted to parliament next week, Hartarto told reporters.

Officials have used the term “omnibus laws” to refer to legislation that pulls together diverse areas that can be agreed by parliament in a single vote, which critics say can be used to avoid scrutiny.

Thousands of members of more than a dozen trade unions plan to protest in front of the parliament building on Monday as lawmakers return from recess, Jumisi, deputy chairman of the Indonesian Confederation of Workers told a news conference.

“This law will push us toward the cliff of poverty and our children and grandchildren will be impacted,” said Jumisi, who goes by one name.

He also questioned the government for not including labor groups during the drafting of the bill.

A statement from the coalition of unions described Widodo’s legislation as “the wretched bill” and a “modern-day exploitation”, predicting the bill would significantly cut severance compensation, trigger a massive move toward outsourcing and eliminate protection of basic rights.

Trade unions took to the streets to protest after Widodo announced his intention to review labor rules last year and the move was also rejected during a series of student-led rallies in September.

Defending the bill, Finance Minister Sri Mulyani Indrawati in November said the legislation would aim to boost job creation, especially for new entrants to the labor force, and promised to provide an “even-handed approach” to appease both business and labor unions.

Widodo has asked lawmakers to prioritize the omnibus bills and conclude their deliberation within three months.

Reporting by Agustinus Beo Da Costa and Maikel Jefriando; Writing by Gayatri Suroyo; Editing by Michael Perry