On January 6, 2021, not even a week into the new year, President Joko Widodo laid down sinister groundwork for silencing dissent. Presidential Regulation No. 7/2021 includes plans of a community policing program—residents, citizens themselves, will be trained to support law enforcement and help keep the peace.
The Regulation was passed ostensibly as an anti-terrorism bill, but rights groups are already worried. With such a loose and vague definition of what constitutes extremism, relying on citizen policing could instead be weaponized in the name of hate, triggering witch hunts and creating more friction within communities.
These concerns are all the more pertinent in light of the new Omnibus Bill, also known as the Job Creation Bill, which came into force last October 5, 2020. The Bill was met with massive protests all over the country, but also with a divided cyberspace. Under the hashtag #Indonesiabutuhkerja (or #IndonesiaNeedsJobs) some 20 online influencers expressed their support for the new legislation.
It has since been revealed that these personalities had been paid for the online promotion (and at least three of them have apologized for it), but the damage had been done. The seeds of influence had been planted and the support, particularly online and among business groups, had already been earned.
Warnings of law’s danger
Critics have sounded the alarm on the torrential problems the Omnibus Law could bring to the environment and workers’ rights and welfare, on top of the undemocratic process it underwent toward passage. Widodo, on the other hand, is bent on its implementation.
The Omnibus Law banners Widodo’s economic reforms since he assumed his second term as president. It amends 79 laws on business, labor, and environment, generally easing the restrictions to attract investments and revive the economy especially now that the country is in recession for the first time in two decades.
The law reduces the red tape and many regulations including those that protect workers from corporate abuse. Notable changes in labor standards include: the removal of the statutory period for fixed-term/contractual employment; the abolition of sectoral minimum wages; extended work hours; lower severance pay and benefits; expansion of terms for dismissal; and the promotion of outsourcing and contract work that will further depress wages.
According to Widodo’s opening remarks in the recent virtual dialogue hosted by the World Economic Forum, “[the law] will add value to the government’s efforts in handling the pandemic and support economic recovery in a balanced and synergetic manner.”
Despite the economic decline, the 1-percent year-on-year increase in foreign direct investments for the third quarter of 2020 – amid pandemic – bolstered the government’s thrust to a more inviting business environment. The more investments, the more job opportunities. But will the Omnibus Law deliver?
*Hover over the bars to see the exact point estimates of growth rate by sector.
The year 2020 devastated Indonesia’s economy. Nearly all of its sectors recorded negative growths as a result of the various lockdowns enforced to curb the COVID-19 pandemic. For the first time in two decades, the country has fallen into recession.
From bad to worse
The pandemic weakened the growth of the majority of Indonesia’s economic sectors, which affected 29.12 million out of Indonesia’s 270.2 million population. They comprise 14.2 percent of the country’s workforce. Unemployment is at its all-time high in the last nine years, according to data from the government institute Statistics Indonesia. The open unemployment rate reached 7.07 percent, with a total of 9.77 million people jobless in August 2020.
The government estimated 5.5 million at risk of being unemployed by the end of 2020, summing up to 12.7 million jobless Indonesians for the year. Peak unemployment rate is expected to be at 9.2 percent, according to the Ministry of National Development Planning of Indonesia.
* Hover over the points to see the exact point estimates of unemployment rate by year.
Along with ravaging the economy, COVID-19 also drove millions of Indonesians out of their jobs. By the end of 2020, unemployment rate nearly tripled from the year before, accounting for over 12 million people left jobless by the pandemic.
Without jobs, millions of Indonesian households – considering the country’s largely patriarchal culture – have little to no source of income to buy their basic needs. This is especially true for those from the construction and transportation and storage sectors. Movement restrictions that disrupted the global supply chain affected the prices of commodities. Food inaccessibility has contributed to the country’s serious hunger situation.
The employed were not exempt from the effects of the pandemic, either. It forced nearly 5 percent or around 6.27 million formal workers to shift to informal work. At the onset of COVID-19, the livelihoods of 70 million informal workers from the most-hit sectors were endangered, particularly in accommodations and food service, trade, and transportation and storage. At present, six out of every 10 of the 128.45 million Indonesian workforce are informal workers.
With the paralysis of travel, the two million ojek (motorcycle taxi) drivers of ride-hailing apps Grab and Gojek were disadvantaged. Both companies are now struggling – laying off workers and jumping into the food- and grocery-delivery trend – and as of December last year were in talks of a merger to cope.
Precarity is innate in informal work: lower earnings, no safeguards or benefits, job insecurity, and cruel working conditions. With the passage of the Omnibus Law, the number of informal workers is set to rise, while companies are liberated from their obligation to safeguard workers’ rights.
* Hover over the bars to see the exact percentages for each category across the hardest-hit sectors.
Indonesia’s crashing economy proved to be catastrophic for both formal and informal workers. Among the formally employed, millions were forced to shift to informal arrangements; among the gig workers, many more jobs were endangered, especially in the sectors of accommodations and food service, trade, and transportation. The recession ravaged livelihoods across all industries, and did not spare anyone regardless of sex, employment status, or income bracket.
The service sector, which constitutes half of all employed in Indonesia, will take the heaviest blow. Many gig workers, including ojek drivers, largely work in this sector.
The rising precarity also affects the youth. According to the International Labor Organization, four out of every five employed youth in Asia Pacific work in the informal sector. Youth unemployment is also projected to intensify in the region – even double in some countries.
Last year marked Indonesia’s highest youth unemployment rate in eight years at 21.1 percent, the second-highest in Southeast Asia. Because of their sheer number and lower skill level, Indonesian youth workers are an easy source of cheap labor and are generally dispensable. If the regional minimum wage hikes take place this year, they will be the major casualties of the warned mass layoffs.
The exposure to youth unemployment and informal work is a result of weak social services, especially education, and widespread poverty. The fact that 15-24 year-old workers are more likely to be poor – with an estimated 3.7 percent of its population already living in abject poverty in 2019 – reflects this.
Share of Unemployed Youth in Southeast Asia
* Hover over the countries to see the exact point estimates of their youth unemployment rates.
In Southeast Asia, Indonesia has the second highest unemployment rate among the youth, outranked only by the Philippines. In 2020, its youth unemployment rate climbed to 21.1 percent, the highest in nearly a decade. These young people are ripe for exploitation as cheap labor, and are at risk of losing what little income they have due to regional wage hikes.
Indeed, the already-vulnerable poor bear the brunt of the pandemic and its subsequent employment crisis, and as many as 6 to 8 million Indonesians were at risk of falling into poverty by the end of 2020. The country’s induced recession considerably hit the middle-income earners across all sectors, along with the lower-income earners of the construction sector. Just in its first quarter last year, 1.63 million had already dropped to below the poverty line, according to Statistics Indonesia.
Indonesia may register a relatively lower poverty rate in comparison with its Asian neighbors, but being the fourth most populous nation, it is home to the greatest number of people in one country living in poverty in Southeast Asia. The 9.4 percent of the population living below the national poverty line is equivalent to 26.42 million people – 2.5 times greater than South Sudan’s, which has the highest poverty rate in the world at 82.3 percent.
From worse to awful
Majority of the poor live in rural areas. According to the World Bank, the rural poor comprise four out of every five subsisting below the international poverty threshold. In Indonesia, they constitute three out of every five in poverty. About 20 percent of rural poor households do not have enough food to eat, and the new Omnibus Law further threatens their tables.
Agriculture is a major component of the Indonesian economy, being its second-largest contributor. During the pandemic, the sector was able to help in the recovery of the economy. It employed the most people, or 27.7 percent of workers. Agricultural growth and employment share, however, saw a sharp downturn in the past decade.
Boosting the agriculture sector seems to be the logical answer to rural poverty, but the opportunities that the Omnibus Law will create for the Indonesian rural poor are the agribusiness investments the law will facilitate.
* Hover over the countries to see the exact point estimates of employment by sector.
As Indonesia’s economy falls, its agriculture sector has proven to be the country’s salvation, providing nearly a third of the jobs available in 2020. One of the goals of the Omnibus Law is to boost agriculture, but by opening the industry to businesses, rather than empowering its rural people, the government risks further labor abuses, environmental degradation, and widening wealth gap.
Indonesia is the world’s top producer and exporter of palm oil, and its export considerably contributes to the economy. The Omnibus Law opens Indonesia’s protected forest areas to mono-crop plantations, with the government’s “food estate” program as pretext. In turn, palm oil companies are now looking forward to acquiring two million hectares of disputed protected areas.
But aside from landgrabs and environmental plunder, the law decriminalizes unfair labor practices.
Prior to the Omnibus Law, palm oil workers employed for two years with one year of prolongation had the benefit of being regularized. Many companies, however, were not compliant with this policy. Today, temporary work has become the norm, affecting 17 million palm oil workers. They will also have to compete with foreign workers who can now freely enter Indonesia.
Women palm oil workers, in particular, are extremely vulnerable. As it is, they already suffer from unfair wages and job insecurity. Under the new law, women—who are usually in charge of applying fertilizers and are therefore at greater risk of being poisoned by the toxic agrichemicals they handle daily—will have no health or labor safeguards.
With the projected surge of investments, the Omnibus Law can generate jobs. But it also sets Indonesia’s labor force up to more exploitative conditions. In the context of employment and poverty, Indonesian workers are put in a very disadvantageous position.
As it is, the law is inherently flawed: It surrenders the country to corporate interests at the expense of the rights of the Indonesian people, which violates Indonesia’s very own constitution and its obligations under international law. It sets a dangerous precedent for future policy changes and sets a dangerous example for other countries.
Because of the COVID-19 pandemic, neoliberal reforms like Indonesia’s Omnibus Law have triumphed in many countries to save their ailing economies. These, however, come with a price. While corporations enjoy the breeze propelled by these policies, the future of work is at stake. ●
Gail Orduña is a freelance writer and activist in the Philippines. She writes about human rights and food sovereignty.
