Anissa S. Febrina, Jakarta – While public sympathy is rarely on the side of a firm that lays off workers, the fact is that Indonesian employers have long had it far from their own way.
Amid the recent fuel price hikes, a looming increase in electricity prices, and cheaper and more productive labor in neighboring China, Vietnam and Thailand, many Indonesian firms have no choice but to lay off workers if they want to stay afloat.
"Companies often have to choose whether to give up their workers or give up their markets," Indonesian Textile Association (API) secretary-general Ernovian Gysmi said recently. Laying off workers, however, frequently ends up in protracted and bitter labor disputes.
"Obviously, we have a different perspective from the workers. They always demand high severance pay, while we have to do our math carefully to avoid going out of business altogether," the owner of a textile firm in Surakarta, Central Java, told The Jakarta Post by phone on Wednesday.
And the bringing of a dispute before the Provincial Committee for the Settlement of Labor Disputes (P4D), or its incarnation at the central level, the P4P, often ended up satisfying no one – neither employers or workers.
"The old P4P had no legal powers," Indonesian Employers Association (Apindo) secretary-general Djimanto said. "The new labor court should produce more in the way of legal certainty." He explained that previously, many cases heard by the P4P were appealed to the Administrative High Court (PTTUN), thus often delaying the resolution of the disputes inordinately.
Apindo says there are around 508 such cases waiting to be handed over to the new labor court. "Especially layoff cases. This situation prevents companies from improving their efficiency," he added.
The new labor court, which has promised to hand down its rulings in just 140 days, would help companies accurately assess how much money they would need to cover severance payments, for example. "The rulings of the labor court will be more firmly grounded in the law," Apindo chairman Sofjan Wanandi added.
Previously, he said, too many third parties were able to intervene in labor disputes. "Local administrations and manpower agencies would quickly take the side of the workers without looking at the case objectively."
The labor court, he hoped, would be staffed by expert and impartial judges. "The assessors in the P4D and P4P were officials from the Manpower Ministry," Sofjan explained. "They lacked expertise, took too long in arriving at decisions and frequently handed down irrational rulings." In the new labor court, where cases would be decided by both career and non-career judges, rulings should be fairer and be handed down more quickly.
Sofjan added that the establishment of the labor court would relieve companies of a number of unacceptable costs, such as paying the wages of a worker being tried on criminal charges while awaiting a verdict.
"In the past, we could not fire a worker caught stealing until the P4D made it official. We still had to pay his wages until the process was completed," he said.
Legal certainty was what investors most needed in doing business, Sofjan added. "The certainty and predictability provided in the labor field by this new system is a good omen for the future."