Faisal Basri: President Jokowi Is Implementing Low Wages Politics Through The Job Creation Law

President of the Republic of Indonesia, Joko Widodo. (Photo: Twitter @jokowi)

JAKARTA - Economist Faisal Basri said that the reason for the government to issue the Omnibus Law on Job Creation to attract foreign investment to Indonesia was incorrect. Because, without the Job Creation Act, the growth of foreign investment entering RI was very good.

"Our investment does not have a problem, I am just showing a few special foreign investments. He said Indonesia lost to Vietnam, Thailand and Malaysia. This is official data, UNCTAD 2019 data, Indonesia is in the top 20. There are no Vietnam, Malaysia, and Thailand. "he said, in a virtual discussion entitled 'Job Creation Law vs Corruption Eradication', Thursday, October 15th.

Based on data from the United Nations Conference on Trade and Development (UNCTAD) in 2019, which are included in the top 20 countries that host foreign direct investment are the United States, China, Singapore, the Netherlands, and Ireland.

Then, Brazil, Hong Kong, England, India, Canada, Germany, Australia, France, Mexico, Russia, Italy, Cyprus, Indonesia, Sweden and Israel.

"So we see what the government says is baseless. ASEAN here is only represented by Indonesia and Singapore," he said.

Cheap Wages Politics Through Job Creation Law

Faisal said, if what the government meant was that Indonesia lost to Vietnam, Thailand and Malaysia regarding the relocation of foreign companies from China, this is indeed true.

"What is missing is industrial relocation from China to Indonesia. Indeed, we do not deserve to pursue such relocation. Because the relocation is labor-intensive industries that rely on cheap labor wages," he explained.

According to Faisal, it was because of this cheap labor wage that made Indonesia unable to compete with Vietnam. Because of that, he said, the relocation was not suitable in Indonesia.

Furthermore, Faisal regretted the government's move to encourage the relocation of foreign companies from China to Indonesia for labor-intensive activities through the Job Creation Law. He considered that the government seemed to be implementing low wage politics.

"So of course industrial relocation is not right for them to Indonesia. They fled to Bangladesh, Cambodia, Pakistan and Vietnam. This is what I feel sorry for in Pak Jokowi's speech. It is clear that in Pak Jokowi's speech we apply low wage politics," he explained.

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According to Faisal, the politics of low wages is reflected in President Joko Widodo's statement during a limited meeting with governors regarding the need for the Job Creation Law for investment.

"First, he (Jokowi) said the reason was that every year there were 2.9 million new working age residents, young people who entered the labor market. So that the need for new job absorption is very, very urgent," he said.

Then, said Faisal, Jokowi also said that in the midst of the COVID-19 pandemic there were approximately 6.9 million unemployed and 3.5 million workers affected by the COVID-19 pandemic. Thus, it is necessary to encourage the creation of new jobs, especially in labor-intensive sectors.

"At that time the government included a sectoral labor-intensive minimum wage but in the end it didn't," he said.

Faisal explained, if you look at the classification of workers based on education, 39 percent of workers have education only up to elementary school (SD) or never go to school at all. Then, workers who have a secondary school education are 18.34 percent. This means that around 57 percent are junior high school graduates and below.

Furthermore, Faisal said, what is interesting is that the largest number of unemployed workers are not those with low education. Because, the lower a person's education level, the less unemployment.

Faisal said, for the SD level the unemployment rate is only 2 percent. Then, the highest unemployment is those with SMK education. Then, the second highest number is diploma 1 and diploma 3. Then, high school, and finally those who graduate from college.

"So these unemployed people have higher education and are young in age. So it is not suitable if labor intensive is pushed around. People with low education are already working. Only a few are unemployed," he said.

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