Developing countries like Indonesia use foreign high-skilled and high-wage workers to drive economic growth and innovation. However, protection of their legal rights is often neglected, affecting these workers’ productivity and well-being and Indonesia’s reputation as a destination country for employment.
My research delves into the flaws of Indonesia’s labour market institutions, such as the national labour dispute settlement system, revealing that current mechanisms are inadequate in protecting the rights of high-skilled foreign workers.
The study
My findings show the national dispute settlement system exhibits significant systemic shortcomings, such as processing cases slowly and siding with employers, which limit its capacity to protect all workers effectively. But disputes involving foreign workers are further complicated by the fact that immigration law allows employers to cancel residence permits, meaning that the government requires the workers to leave the country even though the workers may have been unfairly dismissed.
Foreign workers are mainly from Northeast Asia (China, Japan and Korea), and their use on investment-tied projects coupled with Indonesia’s downstreaming programme will ensure their numbers continue to grow. In 2023, the Indonesian government issued 168,048 permits for foreigners to work in Indonesia with the top three destinations being Central Sulawesi (18,678), Jakarta (13,862) and West Java (10,807). By July 2024, the government had already issued more than 14% more permits than by the same time the previous year.
My study examined 92 labour disputes involving foreign workers between 2006 (when the new national dispute settlement system was implemented) and 2022, which were settled by the Industrial Relations Court. One additional dispute was filed in 2023, but the Industrial Relations Court has not yet published the settlement despite a legal requirement to do so.
I complemented these court settlements with 98 qualitative interviews with other stakeholders, including policymakers, labour rights activists, legal professionals, and other foreign workers, such as foreign spouses, remote workers and digital nomads.
As in other countries too, the number of registered labour disputes is only the tip of the iceberg, as workers tend to cut their losses and move on rather than invest time, energy and limited financial resources in challenging their better-resourced employers.
Employers were all Indonesian companies, so no foreign workers who filed a lawsuit worked for a multinational company, and those who did so had at least 20 nationalities.
In terms of geographical distribution, the studied disputes were settled in 13 local jurisdictions, and were mostly lodged by workers rather than employers.
The nature of the disputes mostly involved claims that an employment contract had been terminated prematurely (87 cases), while a much smaller number involved resignation (4 cases) or were unknown (1 case). Of the 92 claims, 83 were initiated by workers, and eight by an employer. In one case, the lodging party was not recorded in the final decision.
Hiring a private lawyer
Employers used the Immigration Law to undermine the protective role of the Manpower Law - as it stands foreign workers are only entitled to employment protection if they hold a valid residence permit, which employers can and do shorten. Doing so shows that the Indonesian government prioritizes the flexibility of employers at the expense of employment protection for foreign workers.
In at least 92% cases, foreign workers used paid assistance of a private lawyer to represent themselves at formal meetings and hearings required by the Disputes Settlement Law, the cost of which could be hefty.
As one foreign worker explained:
It’s always in the back of your mind, to do whatever to make employers happy if you want to stay. No matter what the work permit and contract say, they can ask immigration to kick us out within a week!“
A retired government official responsible for designing policy regarding foreign workers was surprised when he heard this, explaining that:
I thought they could look after themselves because they earn such high wages. Well, higher than the average Indonesian worker, that is.
Hiring a private lawyer is the only way to represent themselves throughout the dispute resolution process because they need to leave Indonesia once they are fired. Not having the legal right to remain in Indonesia makes it very difficult - even impossible - to do it without them.
Addressing institutional failures
Engaging a private lawyer served as an ‘institutional fix’ that enabled most foreign workers to engage with Indonesia’s labour dispute settlement system by attending formal meetings and hearings, as well as filling out required paperwork and sending essential letters and replies.
Addressing this institutional failure requires a shift in law and policy. Firstly, legal reforms are essential to ensure that immigration and employment laws are integrated to enable foreign workers to have access to legal processes intended to help protect labour rights. At a minimum, this would involve amending policy to prevent employers from cancelling residence permits so that foreign workers need to leave the country prematurely.
Alternatively, the Directorate-General of Immigration could still permit employers to do so, but then provide the affected foreign workers with a limited-stay visa so that they can remain in Indonesia to engage with the legal process. The Hong Kong Immigration Department does this for Indonesian migrant workers.
Secondly, there is a need for enhanced support systems that provide immediate and effective assistance to foreign workers. Government agencies tasked with settling labour disputes, such as local manpower offices and the Industrial Relations Court, should be equipped with adequate resources and trained personnel to handle migrant labour issues. Doing so would decrease the reliance of foreign workers on private lawyers.
Failure to protect the employment rights of foreign workers has the potential to damage Indonesia’s reputation as a destination country for employment. Such damage could undermine Indonesia’s ambitious plans to build a new capital city (Ibu Kota Nusantara) with the assistance of foreign workers, and undermine the government’s downstreaming programme, which helps Indonesia earn more from the export of raw minerals.
Wayne Palmer has received research funding from the International Labour Organization, the Freedom Fund, and the Australian Research Council.
This article was originally published on The Conversation. Read the original article.
