AROUND this time last year, Jakarta and several other cities in Indonesia were rocked by huge and sometimes violent protests involving thousands of people from various groups representing the weak and the poor in society.
The object of their anger was the Indonesian Omnibus Law which was passed by Parliament in early October last year.
The bill aims to attract investment from within and outside the country by repealing a number of regulations that were said to complicate the operations of business organisations. The most controversial feature is the abolition of regulations that protect workers' rights as well as those that protect the environment.
Among others, minimum wage rules as well as rules that protect employees from being fired by employers without good reasons have been abolished.
The objective is to give more flexibility to business organisations, allowing them to reduce the number of employees if faced with financial difficulties. Rules that require business organisations to conduct environmental impact analyses have also been relaxed.
This was obviously a result of pressure from the industry and investors who are facing an increasingly challenging business environment. The level of competition in almost all sectors is intensifying, forcing business organisations to reduce operating costs, especially payroll costs.
But workers and students felt that they will be the ultimate victims. They also felt that the government was prioritising the interests of big corporations.
This is not new. It has happened before in several other countries, including developed ones. For example, in 2006, thousands of students and workers in France engaged in violent protests against the government led by prime minister Dominique de Villepin.
The French government, under pressure from business organisations, had proposed a law that would allow companies to lay off new employees without having to provide justifications.
The reason was French companies were facing stiff competition from abroad, especially Poland and Hungary where labour costs were lower and labour laws more flexible. Despite the protests, the French government proceeded to implement the new law.
We need to be aware that the business environment around the world currently is that of extreme competition or hyper-competition. The main factor is the increase in the number of organisations operating on a large scale in almost all business sectors.
This is due to the availability of funds that can be borrowed from the banking industry. These funds help business organisations grow at a faster pace.
However, when many organisations follow the same strategy, the level of competition becomes intense. The situation can worsen because unlike in the past, money is now largely in electronic form.
This allows the banking sector to create new money from thin air which they lend to the business sector. The only thing they need to ensure is that the loans are repaid. Otherwise, the banks will end up being insolvent.
In a way, business organisations are also victims of the financial system which squeezes them continuously. To survive, they in turn squeeze their employees. The workers do not understand the role of the financial system in all this and put the blame on the government for not protecting their interests.
As was the case in France in 2006 as well as in several other countries, the efforts of Indonesian workers to block the implementation of the omnibus law were in vain.
The Indonesian government did not waver as it is more concerned with making sure that the country is as business-friendly as possible to ensure it is more attractive to foreign investors.
More intense competition will mean that there will be reduced employment opportunities and very slow increments in pay as the cost of living keeps increasing.
What can really create a just situation for workers in the future is a change in the values of society so that economic and material growth is not the be all and end all, and the debt-fuelled economic growth model is replaced by an equity-based model which is more stable and sustainable.
The writer is a professor at the Faculty of Business and Economics, Universiti Malaya