The Indonesian Omnibus Bill, a Never Ending Debate

The government has submitted a Presidential Letter, Work Creation Bill, and Academic Manuscript to the Indonesian Parliament, on 12 February 2020. This Work Creation Bill proposed by the Government is a part of an Omnibus Bill, a form of law that contains various substance of cross sector regulations that amend several laws at once. The Omnibus Bill as claimed by the Government simplifies and amending 74 (seventy four) laws and hundreds, if not thousand, of their derivative regulations.  The Omnibus Bill itself targeted three major area which are the tax, work creation, and micro, small and medium enterprises regulations.

The proponents of the Omnibus Bill assert that this Bill will streamline complex and sometimes conflicting trade related regulations. This bill, as claimed, will boost Indonesia economic growth by providing flexibility that the economic players (foreign investors) crave. A favorable economic growth will eventually improve employment rate, and perhaps eliminate poverty rate. The writer argues that despite the relations between favorable economic growth and employment rate, the economic theory which the proponents argument is based is too simplistic. A country economic principle should not only be based on the simple market supply and demand theory but to also consider sovereignty and dignity, genuine competitiveness and people economic power when creating an economic agenda.

The Omnibus – Work Creation Bill proposed by the government and currently discussed in the House of Representatives continues to be rejected by the Trade Unions and Civil Society. They consider the Employment Creation Bill likely pro-investor and only put focus on economic growth without thinking about people’s welfare and social justice. They also claim that the articles in the Work Creation Bill which consists of 79 laws and 11 clusters supports modern slavery. Specifically articles that amend the existing minimum wage scheme, termination of employment relations (redundancy) and paid leave such as menstruation and paternity leaves are perceived as lifting the protection blanket of already disadvantage labours –please see the attached bill for more details.

The writer is in agreement with the opponents’ claim, but on the methods of redundancy. In principle, employment agreement  legal umbrella is the common contract law dogma which is established between two consenting parties. If employment agreement is equal to a common contract, termination of a work agreement shall be considered as sufficient with the consent of the parties. Moreover, of the severance package, the writer argues that unemployment welfare should be the responsibility of the Government. Firstly, although the connection between severance package and welfare it is not clearly defined in any regulative products, the essence of providing support to people livelihood when they exit the labour market is suspiciously similar with unemployment benefits. Secondly, once a work agreement or contract terminated obligations of the parties are expunged.  In other words, former worker’s welfare is not the responsibility of employer once their contractual relationship finished. Thirdly, in many countries, the concept of welfare that the financial source often comes from income tax is the domain of the Government instead of private sector.

The opponents of the Omnibus Law further argue that the Bill is contrary to the civil law system which Indonesia embraced. The concept of amending several cross sector laws is often used in countries that adopt a common law system such as the United States. The writer argues that although the fundamental thinking of the Bill such as the USA’s common law flexible labour market or trade regulations liberalization principles, there is no direct connection between the Bill with the common law system as not all countries adopting the system in question such as Australia and United Kingdom implement trade liberalization or flexible labour market at the same degree as the USA. The Omnibus Law, in a matter of fact, is merely a type of law reform which is recognized by the civil law system.

Echoing the opponents consideration that the Government to be hasty when drafting the bill so that raises a numerous questions and suspicions from stakeholders such as Trade Unions and Civil Society, the writer suggests the Government to go back to the drawing board instead of pushing the Bill further in the House of representatives. Also, the current global Covid-19 pandemic likely alter the traditional global economy practices and theories. Indonesia or any other sovereign country might not be so reliant to foreign investment and force to focus on building people centered economy due to the pandemic. Consequently, the Bill is no longer fit the original purpose and debates around the Bill in then obsolete.

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