Reconciling the Interests of Labor and Corporations

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– April 10, 2013Posted in: April 2013, Headlines, Opinion, TPP, Volume 2

By Hendra Manurung


Labor protests against low wages and the outsourcing system occurred in almost every city in the country. The workers also took to the streets to reject the Social Security Organizing Body (BPJS) and the National Social Security System Law (UU SJSN). The workers had threatened to stage demonstrations until President Susilo Bambang Yudhoyono issue a government decree in lieu of the UU SJSN.
The workers’ welfare has to be improved simultaneously with efforts to improve the business climate and by immediately eliminating high cost economy. Entrepreneurs should be able to improve the workers’ welfare without reducing the competitiveness of the products or services they offer, especially ahead of the ASEAN Blue Print 2012: ASEAN Single Market. The government is responsible for finding or offering the best solution to overcome the so many problems and to anticipate any potential that may disrupt the stability of the national investment climate, especially those related to manpower.
Regional governments have taken a short cut with a popular policy that favored the workers without calculating how drastic the wage increase is. This could pose a problem for the national industrial sector and job opportunities if it’s conducted without differentiating the business scale, type of business and the company’s performance. The increase in the provincial minimum wage (UMP) by almost 50% will serve as a big blow for the micro, small, medium enterprises (MSME) and the labor-intensive manufacturing sector. Entrepreneurs who could survive the condition might have to cut production cost by for instance cutting jobs or increase the prices of products or services. At the end of the day, inflation and industries will not be able to compete both in the country and international market scene.
It’s in the government’s interest to end exploitation on labors as long as it’s still in line with the legal corridor and as long as it doesn’t hurt the national interest, including the long term economic plans. Let’s prevent 75% of around 110 million workers both in the formal and non formal sector from losing their jobs and incomes.
The formula which fully sided with meeting the workers’ welfare lies in Article 95, Clause 4 of the Labor Law. Article 95 (4) of Law No. 13/2003 on manpower stated that: “In a case where a company is declared bankrupt or liquidated according to the existing law, the workers’ wage and other rights become debt and that it must be paid first”. Based on that, the company or employer and the government (state) have the responsibility to pay the workers’ rights.
The situation becomes dilemmatic when the rights which are guaranteed by both international and national human rights regulations clashed with another law on bankruptcy and guaranteed goods. The regulation which prioritizes paying tax debts (or those related to the state money) and payment to individual creditors didn’t emerge just like that. The regulation already existed before this republic was born and it was regulated under the civil code and commonly used on credit guarantees both locally and internationally.
Aside from that, if the regulations about the credit guarantee system, which covers creditors, is ignored just like that, it will shake up other systems such as the banking credit system, in which the disruption in the banking credit system will eventually hurt the investment climate.
Problems related to the improvement of the workers’ welfare become worse with the court’s inconsistency in issuing rulings which names workers as the credits. In one ruling the workers are said to be special creditors who should be paid first. On another ruling, workers are said to be preference creditors, not special creditors. The inconsistency will certainly create uncertainties on whether the workers’ rights can be fulfilled as mandated under UDHR, ICESCR, 1945 Constitution, and human rights law.
With regards to the implementation of the SJSN program, a more focused formula and mechanism is needed, one that doesn’t burden low-income people without eliminating the state’s obligation to provide the national guarantee. So, it’s clear that entrepreneurs would not be reluctant to pay the minimum wage of Rp2.2 million per month if it’s followed by improvement on skills, productivity and quality of the workers’ work ethics.
Keeping the interest of both workers and entrepreneurs balanced is a must to create harmony, conducive industrial relations and sustainable business to provide job opportunities.
* Hendra Manurung is a staff/lecturer of international relations at the International President University, Kota Jababeka, Cikarang Bekasi

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