Widodo’s Employment Creation Law, 2020: What Its Journey Tells Us about Indonesian Politics

Summary

INTRODUCTION

On 12 February 2020, the Indonesian government sent a draft for a Bill, the Cipta Kerja Bill, to the Indonesian parliament. Soon afterwards the RUU Cipta Kerja Working Committee (Panitia Kerja, or PANJA) was established with representatives from all parties sitting in the committee, except the Justice and Prosperity Party (PKS). The PANJA Committee was headed by a member of Gerindra Party, with a deputy chairperson from the Indonesian Democratic Party of Struggle (PDI-P). This committee would prepare material for the various stages of the House of Representatives consideration of the Bill. The PDI-P deputy chairperson was Rieke Diah Pitaloka. At the time of the formation of the committee, Pitaloka expressed the sentiment that the government should withdraw the Bill for the time being, and that, in any case, there were opportunities to amend it. She urged that all clauses relating to Labour Law be removed and that the Bill be renamed the Ease of Investment and Permits Bill (Kemudahan Investasi dan Perizinan). Pitaloka had associated herself with trade union campaigns for reforms over the previous ten years. The government did not act on Pitaloka's suggestions.

Eight months later, the Bill was passed by an overwhelming majority of parliament on 5 October 2020. All member parties of the governing coalition voted for the Bill. Two political parties outside the governing coalition voted against it, although they had not actively campaigned against it during the previous seven months. These were the Demokrat Party, which had been a member of the PANJA, and the PKS. The Bill was signed into law by President Joko Widodo on 2 November 2020.

During the intervening seven months, which coincided with the growth of the COVID-19 pandemic, the Bill was strongly supported by employer and business groups and opposed by labour, civil society and environmental groups. The bigger trade unions criticized the Bill and lobbied the government to drop the Bill; and there were some street protest campaigns, with the smaller trade unions playing a leading role. Major educational institutions, particularly those connected to private religious schools, opposed specific aspects of the Bill dealing with education. During the deliberation of the Bill, only two amendments of substance were made, removing the provisions relating to the education and media sectors.

THE CONTENTS OF THE LAW

The RUU Cipta Kerja is a massive document, over 1,000 pages long.4 It includes revisions to 73 existing laws, and consists of 15 chapters and 174 articles.