” Indonesian Labour Law Development and Reform “


I Nyoman Nurjaya*

Paper prepared for the International Association of Law Schools (IALS) Conference concerning Labour Law and Labour Markets in the New World Economy, conducted on May 20 to 22, 2010 at the University of Milan, Italy.


Labour law, which is also the so called social law, occupies a peculiar place in the national legal system due to its significant role as a set of rules that include in the space of both public law and private law as well. It has an intermediate nature in serving those dual objectives i.e.: firstly, introduced to rectify injustice as a result of freedom of contract includes principles that revise the civil law precepts, and secondly designed to settle conflicts emanating from the class confrontation between capital and the labor. It is, therefore, labour law had a rather strong policy-oriented structure.
Recently, however, labour law reflecting the demise of major socialist regimes and the overall trend of non-unionization in industrialized countries, no longer serves industrial relations based on class confrontation. It tries to transform production activities to adjust to the ecological system by enhancing law, and the definition depicts the characteristics of the modern labour law. However, labour law was not able to realize its objectives by revising civil law without questioning some of the fundamental principles of rights and property as well.
It is fair to say that labour law with its initially regulatory nature, possesses a particular space in the development process of a nation. In this respect, if the notion of development is narrowly defined and confined to the only economic terms, the primary concern of a developing nation is obviously economic growth, and the objective of attaining social justice will be less given emphasis before the imminent need for economic development.
In many Asian developing countries, including Indonesia, labour legislations and policy enacted by the Government that are restrictive in nature and sometimes even repressive  against free exercise of trade union rights, and the existence of labour law obviously repressive one. In other words, the State law tends to served to control the performance of trade unions, as well as to be used to managed conflicts between employer and workers.  It means that the law tends to be employed as a machinery to achieve their imminent policy that is economic growth and political stability, rather than to reach social justice of the workers. It is the so called the Corporatist Model or Regulatory Model in industrial relations in which the role of the Government is very dominant in labor-management relationships. In this sense, all employment terms and working conditions are defined and regulated by the Government within labour policy and legislations. Hence, the labor law of a country will be a legal compulsory and becomes part of the public law.
In the case of Indonesia, the development and reform of labour policy and legislations can be observed into two period of time namely before the reformation era of 1998 and after 1998.
In the period of prior 1998  the industrial relationships that established by the Government was the corporatist model or regulatory model. It meant that intervention of the Government in labor relations and its regulations was very dominant, and that was why the development of Indonesian labor legislations in this era defined as part of public law. In this respect, the regulations should be implemented and obeyed by both employees and employers otherwise they will be punished either with terms of imprisonment and or substantial fines.
The paper attempts to out line the development and reform of  Indonesian Labor Law which is interesting to be observed in relation to the dynamic of economical, social and political changes, the changes of which bring about the implication of  Indonesian legal reform and development includes the labour law, which taken place starting from the year of 1998 which is the so called the reformation era of Indonesia.

*Professor of Law at Faculty of Law Brawijaya University, Indonesia (nurjayai@yahoo.com)

Complete paper – Indonesian Labour Law Development and Reform


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