Omnibus Law on Job Creation

The Job Creation Law (Indonesian: UU Cipta Kerja), officially Law Number 11 of 2020 (Undang-Undang Nomor 11 Tahun 2020, or UU 11/2020), is a bill that was passed on 5 October 2020 by Indonesia's People's Representative Council (DPR), with the aim of creating jobs and raising foreign and domestic investment by reducing regulatory requirements for business permits and land acquisition processes. Due to its length of 1,035 pages and its coverage of many non-employment sectors, it is also referred to in Indonesia as an omnibus bill.[1][2][3] The final draft was changed to 812 pages due to pagination being changed to legal format.[4] After being passed into law, there were various substantial text alterations and deletions,[5] as well as procedural issues, which made its legal status eligible for being formally annulled.[6][7]

UU Cipta Kerja
People's Representative Council
Citation"UU Cipta Kerja", Act of 2 November 2020 (in Indonesian).
Enacted byPeople's Representative Council
Passed5 October 2020
Enacted3 November 2020
Amends
79 laws. incl. the Labour Law, Spatial Planning Law, and Environmental Management Law.
Status: In force

The law has been criticized on the basis of concerns it will harm labour rights and indigenous land rights, and increase deforestation in Indonesia by reducing environmental protections.[1][8] A series of protests are ongoing as of October 2020, demanding the law be revoked.

Background and passing

On 20 October 2019, after being sworn in for his second term, President Joko Widodo declared his intention to revise laws that inhibit job creation. He later said the revisions would be made in omnibus laws.[9]

The government initially aimed to submit the omnibus bill on job creation to the DPR in December 2019, but failed to meet its own deadline. On 12 February 2020, Coordinating Minister for Economic Affairs Airlangga Hartarto submitted the bill to DPR Speaker Puan Maharani.[10] The government set a target of having deliberations conclude within one hundred days.[11][12] However, the DPR leaders did not commence formal talks on the bill until 1 April 2020, when they discussed whether it should be deliberated on by a special committee or by the DPR's Legislative Council (Badan Legislasi)—a DPR body of eighty legislators from nine political parties.[13] The Legislative Council was supposed to hold meetings to discuss concerns over the bill, but it instead formed a working committee for this purpose. The working committee, which did not contain representatives of all political factions in the DPR, began discussing the bill with the government on 14 April.[14]

The draft version of the bill was criticized by elements of the Indonesian media, human rights groups, workers' unions, and environmentalists for favouring oligarchs and restricting people's civil rights.[15][16][17] On the other hand, the Indonesian Chamber of Commerce and Industry supported the bill.[18]

Following revisions of some contentious articles, the bill was passed by the DPR on 5 October 2020, three days ahead of a revised schedule and before another round of planned protests by labour unions. Just hours before the passage, thirty-five investment firms sent a letter warning the government of the bill's harmful consequences to the environment.[1]

The passing of the bill was supported by seven parties: PDIP, Golkar, Gerindra, Nasdem, PKB, PAN, and PPP. It was rejected by two parties: the Demokrat and the PKS.[19] It was signed into law by Widodo on 3 November 2020, becoming Law Number 11 of 2020.[20]

Bill

Sovereign wealth fund

The law mandates the creation of an "Investment Management Agency" that would be managed by the finance minister for the purpose of creating a sovereign wealth fund.[12] The sovereign wealth fund will contain Rp 75 trillion (US$5.1 billion) in order to "attract investment" and "support the economy".[21][2]

Pay and work hours

The law abolishes minimum wage by sector, but allows regencies and cities to set minimum wages using a formula based on inflation or economic growth.[22][23] The law abolishes fines for entrepreneurs who are late in paying wages.[24] Previously, law No. 13 of 2003, the Manpower Law (also referred to as the Labor Law) permitted a maximum of seven hours of work per day, cumulatively making the maximum permissible hours of work per week limited to forty hours. The previous law also did not allow any kind of part-time work as a legal form of employment.[25][26][27]

The law stipulates that the structure and scale of wages is to be determined by a company's capabilities and productivity. This abolishes the Manpower Law's previous determination of wages based on position, years of service, education, and competence.[28]

The law reduces the cap on severance pay from 32 months' salary to 19 months' salary, plus six months' pay provided by the government.[29] It also changes the 1-month of pay for every year of work standard for severance pay from the minimum pay to the limit.[22] Overtime limits are increased to four hours per day and 18 hours per week, and mandatory holidays are reduced from two days a week to just one.[18] The law also abolishes 2 months of long-service paid leave for workers employed for over 6 years.[29]

Taxation

The corporate income tax will be gradually lowered from currently 25% to 22% (starting 2022) and finally 20% (starting 2025).[30]

Digital companies such as Netflix, Steam, and Spotify will be required to charge customers a 10% value-added tax.[30]

Foreign workers

Rules were relaxed for foreign workers, to ease hiring of foreign labor.[19] Before the law was passed, outsourcing was only allowed for jobs that did not directly relate to production.[29] Foreign nationals residing (for more than 183 days a year) in Indonesia will not be taxed for income earned abroad.[30]

Environment

Environmental regulations for businesses were relaxed for projects not classified as "high risk", though such high-risk companies were still required to file an environmental impact analysis.[18][1] In addition, environmental experts will no longer be involved in environmental impact analysis.[12] The law hands over land use and authority permits to the central government and raises the fine for environmental damage.[2]

Investments

The law shrinks the list of industries barred from receiving private investment from 300 to six: illegal drugs, gambling, endangered fish, chemical weapons, and industrial chemicals.[2]

Firing

Rules for firing workers were relaxed and the required process of applying to an institution when firing workers, designed to protect workers' rights, were removed.[29]

Reactions

Academics

A number of typos in the final version of the law raised the suspicion that it was passed in haste. Academic Bivitri Susanti expressed the view that the Job Creation Law had several procedural breaches that made it not legally acceptable.[31] Feri Amsari criticized the illegal revisions of the final draft after the validation carried out by parliament that could bring a jail term for breaking Criminal Code section 264 relating to the crime of falsifying authentic documents.[32]

Protests
Main article: Indonesia omnibus law protests § Protests

Since February 2020, many protests have been held around Indonesia in front of DPRD buildings and on various streets. Some protests have been peaceful, while others have turned violent, causing the destruction of property, as well as fatalities and arrests.[18]

Role of social media influencers

Indonesian internet influencers on Facebook, YouTube, Twitter, and Instagram posted content supporting the bill during its deliberation. The hashtag #IndonesiaButuhKerja (English: #IndonesiaNeedsJobs) was used by several comic strip artists and content creators to promote the bill and counter opposition on the internet, while advertising campaigns supporting the bill were launched.[33] One such influencer, singer Ardhito Pramono, later apologized on Twitter and stated he was paid to promote the bill.[34]

International

The bill was condemned by the International Trade Union Confederation and by 35 international investment institutions which collectively manage US$4.1 trillion in assets.[18]

Domestic

Said Aqil Siradj, chairman of Indonesia's largest Islamic organization, Nahdlatul Ulama, stated his opposition to the bill and decried it for only benefitting capitalists, investors, and conglomerates.[18]

Ridwan Kamil, Irwan Prayitno, and Sutarmidji, governors of West Java, West Sumatra, and West Kalimantan, respectively, along with the Prosperous Justice Party, have called for President Joko Widodo to issue a replacement law to override the bill.[35][36]

Founder of opposition organization Action for Rescuing Indonesia Coalition (KAMI), Gatot Nurmantyo agrees with the law, saying, "I'll leave KAMI if became a political party".[37] Chairman of Gerindra Party, Prabowo Subianto also says the demonstration was funded by foreigners.[38]

See also

References
  1. Paddock, Richard C. (5 October 2020). "Indonesia's Parliament Approves Jobs Bill, Despite Labor and Environmental Fears". The New York Times. ISSN 0362-4331. Retrieved 7 October 2020.
  2. Sihombing, Grace (7 October 2020). "What to Know About Indonesia's Investment Law Overhaul". Bloomberg. Retrieved 8 October 2020.
  3. Putri, Budiati Utami (12 October 2020). "Final Draft of Job Creation Law Confirmed to be 1,035 Pages". Tempo.co. Retrieved 12 October 2020.
  4. "Draf RUU Cipta Kerja diperbarui lagi, berubah jadi 812 halaman". Kompas. 13 October 2020. Retrieved 13 October 2020.
  5. "Salah Ketik Bukti Penyusunan Uu Cipta Kerja Cacat Prosedural". Republika (in Indonesian).
  6. "Pakar Nilai UU Cipta Kerja Layak Digugat". Republika (in Indonesian).
  7. "Otak Atik Omnibus Law Dan Dugaan Para Penunggang Pasal". CNN Indonesia (in Indonesian).
  8. "Explainer: Indonesia bets on 'omnibus laws' to fix investment climate". Reuters. 12 December 2019. Retrieved 11 October 2020.
  9. Rahma, Andita (20 October 2019). "Jokowi Convey 5 Work Programs in Presidential Inauguration Speech". Tempo.co. Retrieved 11 October 2020.
  10. "Selain Cipta Kerja, Ini Daftar UU Kontroversial yang disahkan". Kompas.
  11. Akhlas, Adrian Wail (12 February 2020). "Government sends omnibus bill on job creation to House". The Jakarta Post. Retrieved 11 October 2020.
  12. Samboh, Esther (24 February 2020). "Guide to omnibus bill on job creation: 1,028 pages in 10 minutes". The Jakarta Post. Retrieved 8 October 2020.
  13. Dongoran, Hussein Abri (14 April 2020). "Omnibus Law, In Corona Flavor". Tempo. Retrieved 11 October 2020.
  14. Argama, Rizky (9 October 2020). "Major procedural flaws mar the omnibus law". Indonesia at Melbourne. Retrieved 11 October 2020.
  15. Achmadi, Julio (12 February 2020). "Omnibus Is Throwing People and Democracy under the Bus". Tempoo.co. Retrieved 8 October 2020.
  16. "Dangerous Omnibus Law". Tempo.co. 19 March 2020. Retrieved 8 October 2020.
  17. "Omnibus Law 'clearly and explicitly in the interests of the oligarchy': LBH Jakarta". Kompas.com. 20 January 2020. Retrieved 8 October 2020.
  18. "Indonesia: Thousands protest against 'omnibus law' on jobs". BBC News. 8 October 2020. Retrieved 8 October 2020.
  19. Post, The Jakarta. "Indonesia passes jobs bill as recession looms". The Jakarta Post. Retrieved 7 October 2020.
  20. "Jokowi Teken UU Ciptaker 1.187 Halaman, Nomor 11 Tahun 2020". CNN Indonesia (in Indonesian). 3 November 2020. Retrieved 3 November 2020.
  21. Post, The Jakarta. "'Prioritized': Indonesia to establish $5b sovereign wealth fund to support economy". The Jakarta Post. Retrieved 9 October 2020.
  22. "Poin-Poin Isi UU Cipta Kerja Omnibus Law Soal Pesangon hingga Upah". tirto.id (in Indonesian). Retrieved 8 October 2020.
  23. "UMK Dihapuskan dalam UU Cipta Kerja? Menaker: Saya Tegaskan Upah Minimum Kabupaten/Kota Tetap Dipertahankan! Halaman all". KOMPAS.com (in Indonesian). 7 October 2020. Retrieved 8 October 2020.
  24. Al Faqir, Anisyah (8 October 2020). "Poin-Poin Perubahan UU Ketenagakerjaan di Omnibus Law Cipta Kerja (I)". Merdeka.com. Retrieved 11 October 2020.
  25. "law No. 13 of 2003 on Manpower Law" (PDF).
  26. "All You Need To Know About Hiring Employees In Indonesia". NNRoad. 11 January 2021. Retrieved 29 January 2021.
  27. "TRAVAIL legal databases". www.ilo.org. Retrieved 29 January 2021.
  28. "Rincian Aturan Upah Pekerja dalam Omnibus Law Ciptaker". CNN Indonesia. 6 October 2020. Retrieved 11 October 2020.
  29. Media, Kompas Cyber. "Dari Kontrak Seumur Hidup hingga PHK Sepihak, Ini 8 Poin UU Cipta Kerja yang Jadi Sorotan Buruh Halaman all". KOMPAS.com (in Indonesian). Retrieved 8 October 2020.
  30. Post, The Jakarta. "5 things you need to know about omnibus bill on taxation". The Jakarta Post. Retrieved 7 October 2020.
  31. "Pakar Penghapusan Pasal Di UU Ciptaker Bukti Cacat Prosedur". CNN Indonesia (in Indonesian).
  32. "Omnibus Law: Apa konsekuensi jika draf yang disepakati DPR dan pemerintah 'diubah' dan 'tak sesuai prosedur hukum'?". BBC (in Indonesian).
  33. Media, Kompas Cyber. "Fenomena Influencer, Mulai dari Iklan hingga Promosi RUU Cipta Kerja Halaman all". KOMPAS.com (in Indonesian). Retrieved 19 August 2020.
  34. Persada, Syailendra (16 August 2020). "Influencer di Lingkaran Kampanye Omnibus Law RUU Cipta Kerja". Tempo. Retrieved 19 August 2020.
  35. "Usai Ridwan Kamil, PKS Minta Presiden Keluarkan Perppu". CNN Indonesia (in Indonesian). 8 October 2020. Retrieved 8 October 2020.
  36. "Gubernur Sumbar Irwan Prayitno Sampaikan Aspirasi Buruh Tolak UU Cipta Kerja". KOMPAS.com (in Indonesian). Retrieved 9 October 2020.
  37. Santoso, Agung Budi (17 October 2020). "SETELAH Puji UU Cipta Kerja, Jenderal Gatot Nurmantyo: Catat! Saya Keluar dari KAMI Jika Jadi Parpol". tribunnews.com. Retrieved 18 October 2020.
  38. "Prabowo Sebut Demo Tolak UU Cipta Kerja dibiayai Asing, Gerindra Nilai?". nasional.kompas.com. 18 October 2020. Retrieved 18 October 2020.
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