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Labour conditions in Indonesia
Since the middle of the 1980s Indonesia has carried out strategic industrial changes from an import substitution economy (ISI) to an export orientated industry (IOE). This change was initiated at the end of the "oil boom" in 1992 and influence by the reduction of the state's income. It the previous period, developing industries were blessed with protection and subsidies which were paid for by the profits from oil. Thus the era of IOE was also a turn back to dependence upon foreign capital. Within this framework there has been an increase in policies of economic deregulation. At the same time the government has embarked on a program of marketing the comparative advantage of a labour force which is cheap and of political stability in order to attract investment or foreign industrial relocation to Indonesia.
The term worker (buruh), was also considered to have a working class connotations and was not computable with Pancasila ideology and had to be changed with the term employee (pekerja).
However an element which is very important in the handling labour conflicts is the intervention of territorial military institutions, particularly Korem (Komando Resort Militer, Military Command at a level below the residency), Kodim (Komando Dearah Militer, District Military Command) and Koramil. Military intervention in the labour arena is legitimized under Ministry of Labour Decree Number 342 of 1986.
The number of new workers employed each year has increased at a higher rate than the increase in the number of establishments; an increase of 419 thousands in 1987 to 732 thousand persons in 1990, or an increase of approximately 20.4 percent per year. (BPS, 1990)
During this time, the export of industrial products in 1992 reached US$ 18.4 million, an increase of 24.9 percent over the previous year. According to the World Bank, in 1991 manufacturing's share of Indonesia's total exports was expected to rise to 65 percent by year 2000 from the current level of 45 percent. Moreover, the non oil-manufacturing sector has also increased its share of the Gross Domestic Product (World Bank 1993, adopted from Hadiz 1993)
The IOE strategy succeeded in taking advantage of investment relocation which in general, originates from the NICs. This shift of investment from NICs to South East Asian countries has been caused by increases in production costs in these counties due to wage demands along with the abolition of GSP for NICs in 1989. (Pangestu, 1993)
During this period Indonesian labour standards experienced its most gloomy period. But over the last eight years, worker resistance to achieve their rights through "wildcat" and organised strikes has continued to rise. Pressure for improvements in labour standards in Indonesia also comes from Non-Government Organisations and the international community. International pressure, in particular, has had a significant influence on the Indonesian government, which is still very dependent upon foreign capital and export markets.
HIP is operated through tripartite institutions between the sole worker organisation controlled by the state, SPSI (Serikat Pekerja Seluruh Indonesia, The All Indonesian Workers Trade Union), APINDO (Asosiasi Pengusaha Indonesia, Indonesian Employers Association) and the government (through the Department of Labour). The tripartite body's work is overseen by the security institutions (territorial military commands and the police) and state intelligence (Bakorstanas).
At the factory level, the operation of HIP is done through the DPC (Dewan Pimpinan Cabang, Branch Leadership Councill) and the SPSI work unit, the office of the Ministry of Labour, Muspika (Musyawarah Pimpinan Kecamatan, Council for Government District Officials). This council is made up of Koramil (Komando Rayon Milter, Military Headquarters at the ward level), Camat (District head), Polsek (Polisi Sektor, District Police), as well as Muspida (Musyawarah Pimpinan Daerah, Council for Provincial Government Officials), which is comprised of Kodim, Polres, (Polisi Resort, County Police) and the Bupati (Regent, government officer in charge of regency)/WaliKota (Mayor).
Coordination between these agencies is intended to combat effective worker resistance, especially strikes, either as individuals or collectively . In its daily implementation, the most intensive and effective control is carried out under the coordination of the local military agencies such as Koramil and Kodim along with Pores and Polsek.
Prior to this, the Department of Home Affairs merged all government employees in the government institutions into an Employee Corps, and prohibited them form entering other labour organisations. The Employee Corps, after the 1971 general elections in November 29, 1971 was changed to become KORPRI (Korp Pegawai Republik Indonesia, The Indonesia Civil Service Corps) which was part of the state party Golkar. Since April 1971 the government also stated that Indonesian labour regulations are not valid for workers employed in state companies. This move clearly succeeded in striking a blow to the labour movement as the traditional source of labour leaders generally came from the state sector.
FBSI submitted itself to HPP which denied the right to strike. Under the head of Kopkamtib (Komando Pemulihan // Keamanan dan Ketertiban, Command for the Restoration of Security and Order) at the time, Admiral Sudomo, FBSI was operated as a tool for safeguarding political security and stability, that is as an instrument of OPSTIB (Operasi Tertib, Operation Security). The heads of central or regional FBSI bodies were "ex-officials" from members of central or regional OPSTIB (1977). The selection of the executive leadership of local FBSI committees had to go through examination by Kodim, Kores (Komando Resort, District Police Command) and Muspida. Since 1985 the police have established screening for each region. At the same time Kopkamtib became active in containing labour strikes which arose at the time of the November 1978 devaluation and the approach of the 1982 general elections.
In 1985, the structure of FBSI again changed to become SPSI (Serikat Pekerja Seluruh Indonesia, The All Indonesian Workers Trade Union), which had a unitarian structure. This change was done because the federated structure of FBSI adhered to a liberal concept. The term worker (buruh), was also considered to contain a working class connotations and not computable with Pancasila ideology and had to be changed with the term employee (pekerja).
Limitations on the emergence of labour organisations which were strengthened by Ministry of Labour Decree Number 05 of 1987 pertaining to the registration of employee organisations and established difficult and complex conditions for this. According to the decree, the preconditions which must be met if a labour union is to be accepted as official require that it has a unitarian structure, branches in no less than 20 regions at the Sub-provincial level and 100 bodies at the District level and 1,000 units at the work place level. This regulation inverts the administrative conditions to become constitutional for the formation of a labour union, which for as long as they have been current have only been able to be fulfilled by SPSI.
The SPSI leadership at this time is administered under the authority of the DPP (Dewan Pimpinan Pusat, Central Leadership Council) which in practice is carried by the government and held by the Advisory Board, where the head is often an ex-official of the Ministry of Labour itself. Most head directors of SPSI are leaders of Golkar. Iman Sudarwo himself, the head of SPSI at the moment is a business person who owns a textile factory under the protection of P.T. Bounded Warehouse Indonesia in Tanjung Priok, Jakarta.
The state control of the SPSI's leadership is revealed by SPSI itself which since 1985 has been headed at both at the national and regional level only by people from companies or practicing politicians. The placement of retired military officers is considered most ideal for overseeing the labour movement.
Aside from this, control of a labour organisation funds run through the management of a "check off system", which is under the authority of the Department of Labour. The management of the worker membership dues not only creates organisational dependency on the state but in the end legitimatise state control and jurisdiction of organisations and distances the organisational position of the union from its members.
In the era of the Minister for Labour, Cosmas Batubara (1988- 1993), there was no meaningful change in the regulations on the right to organise despite pressure from the international community for changes to regulation to allow this. An example of this was the state's reaction in failing to acknowledge the existence of SBMS (Serikat Buruh Merdeka Setikawan, Free Trade Union Solidarity), which appeared unexpectedly in the approach to the third SPSI Congress at the end of 1990. The same attitude has been taken by the state toward the emergence of SBSI (Serikat Buruh Sejahtra Indonesia, Indonesian Trade Union for Prosperity), which appeared two years ago following a split within SBMS. Both organisations, which claim to be alternative labour unions, have not been banned by the state -- but have been left alone simply in order to make it appear as if there is freedom to organise in Indonesia -- however development of these organisations is blocked through threats of dismissals for workers who try to become involved in their activities.
At least, on paper, the involvement of companies in the process of the formation of labour unions in the factory continues. Department of Labour Regulation Number 438/1992, which is a revision of Regulation Number 1109 of 1986, states explicitly that the involvement of bodies outside of labour has been abolished. Although such involvement is still possible through the selection of leadership candidates and the fact that leadership candidates are recommended by the management based upon the conduct of their work. In practice, the involvement of companies in the formation of SPSI work units continues. Many cases can be found in factories where the company has rejected the formation of an SPSI work unit initiated by workers. Many cases can also be found of workers are sacked because they tried to form an SPSI work unit and acts of suspension taken by companies against workers because of their activity in SPSI.
The function of control of labour organisation activities in the work place is directly operated by the Department of Labour and SPSI which is given the authority to organise in a vertical manner from top to bottom. This is quite explicit in Regulation Number 438 of 1992 which forces unions at the factory level to submit to and join with a union at the branch level acknowledged by the government -- that is SPSI. In this case control by DPC SPSI is carried out through:
The restructuring of SPSI itself was carried out by the Minister of Labour, Abdul Latief, but it was not intended to open the passage for the freedom to organise for independent labour organisations. According to this regulation, labour organisations or federations which are accepted by the state are those which have:
The attitude of the state in these matters, was explicitly stated at a meeting of the Ministry of Coordination of Politics and Security in June 1993, which revealed that the policy of the sole /H/ union will continue to be maintained.
During Cosmas Batubara's era, the procedures for resolution of labour conflicts were lengthened, which had the result of disguising and closing labour conflicts. In the procedures which were developed by Cosmas, the institutional tool of control was run through the corpratist organisation such as SPSI and the Department of Labour which function as a mechanism to control of labour "flare-ups" so that they can be integrally coordinated through the systems of state control. This issue was explicitly stated by Cosmas who prohibited workers from using groups outside of SPSI in the resolution of labour issues.
On paper, strike actions can be divided into three groups (Yatin Kelana, 1993):
Aside from this, efforts to undermine the power of strikes also done by the giving of the right to companies to carry out mass sackings of worker who are on strike for six days in a row. Limits on the length of a strike were shortened to two days, although not long after the this decision was released it was withdrawn following a strong reaction from society. The limitation on the length of a strike reduces the pressure which can be exerted to obtain labour demands.
However an element which is very important in the handling labour conflicts is the intervention of territorial military institutions, particularly Korem, Kodim and Koramil. Military intervention in the labour arena is legitimized under Ministry of Labour Decree Number 342 of 1986. This regulation as well as allowing the company to include military agencies and the local government in dealing with strikes, also in its very principle alters the role and function of the Department of labour in supervising the resolution of labour disputes which should be neutral but instead takes the side of the company.
This regulation was, in the end, officially withdrawn on 16 January 1994 through Ministry of Labour Decision Number 15A/1994. But this still allows for the possibility of the military to be involved in the resolution of labour conflicts which are outside of "normative stipulations". This was reaffirmed by statements by state and military officials. The Territorial Military Commander, Major General Hendropriyono for example, stated that the withdrawal of this regulation does not mean that ABRI (the Armed Forces) will reduce their territorial operations in labour issues (Kompas, 18 January 1994). While the Director General of the Supervision Section of the Department of Labour, Drs. Suwarto said that the resolution of issues outside of the technical aspects of the Ministry of Labour will be coordinated by ancillary agencies. According to him, ABRI will not be left out of the handling of labour cases. (Republika, 10 January 1994)
Military intervention in the handling of industrial disputes, since 1989 has been coordinated by Bakorstanas, which holds a mandate to oversee and if necessary intervene in strikes and demonstrations or the sake of political and social stability.
The involvement of the military in controlling workers is not limited by responding to strikes by the "security approach" which among others is actively carried out through intelligence and intense operation. The mission and work of the military is to:
But at the same time accusations by the military that workers are prone to extremism, using PKI (Parti Komunis Indonesia, the banned Indonesian Communist Party) methods and linked to outside agitator using strike for their own purposes. This perhaps reflects serious concern that current strikes have the potential to threaten stability and induce broader politics into society. The other goal of this terror is the desire to separate workers from other social forces.
Most recently, there has appeared the tendency to "corner" labour strikes through legal means. Labour strikes which so far have been organised by workers outside of SPSI and without going through official procedures, encounter accusations that they are "wild strikes" or criminal acts and therefore can incur criminal punishments. This technique has already begun to produce results with a number of workers involved in strike actions being gaoled.
The ongoing government campaign of using negative labels pertaining to labour actions, cannot however, succeed in shifting the real problem of labour from the issue of politics and security which give legitimisation to the state to control them.
Table 1: Comparison of Wages Between Neighboring Countries
Country (US $/hour) ---------------------------------------- Indonesia 0.23 Phillipines 0.64 Thailand 0.68 Malaysia 0.82 South Korea 1.97 Hongkong 2.85 Singapore 3.09Source: Crosby Research Ltd.. adapted from Bisnis Indonesia, 8 April 1992.
In reality, the average minimum wage standard since 1993 is 60 percent of the actually KFM (Kebutuan Fisik Minimum, minimum physical needs), except for urban centres which have reached 70 percent.
Wages in private companies in the era of the New Order have utilised the model of the minimum wage, which is established through state intervention. The establishment of the minimum wage is carried out through "balancing" inputs from the DPPN (Dewan Penelitian Pengupahan Nasional, National Wage Research Board) will assistance from the DPPD (Dewan Penelitian Pengupahan Daerah, Regional Wage Research Board) which does research to provide to calculate the basic determination of the regional, sectoral or sub-sectoral minimum wage. From the results of this research the DPPD proposes a wage amount to determine the minimum wage for the aforementioned levels to the Ministry of Labour with a recommendation from the Governor. The DPPN is under the authority of the Ministry of Labour and the DPPD under the Governor.
Official regional minimum wages (ORMW) are determined once every two years. The ORMW levels for each province since 1994 are listed in table 2 below.
Table 2: Official Regional Minimum Wages (ORMW) by Provinces 1994
--------------------------------------------------------------- Provinces Increase in URMW (Rp) -------------------------------------------- Previous New % Increase --------------------------------------------------------------- Jakarta 3,000 3,800 27 West Java 2,600 3,800 46 Center Java 2,000 2,700 27 Yogyakarta 1,600 2,200 37 East Java 2,250 3,000 33 Bali 2,500 3,300 32 Batam Island 5,550 6,750 22 Aceh 2,133 2,600 22 North Sumatra 2,550 3,100 21 West Sumatra 1,900 2,500 31 South Sumatra 1,600 2,300 44 Bengkulu 2,000 3,000 50 Lampung 1,750 2,450 40 South Kalimantan 2,275 3,000 32 East Kalimantan 2,400 3,250 35 Centre Kalimantan 2,350 2,750 17 West Kalimantan 1,800 2,250 25 South Sulawesi 1,750 2,300 31 North Sulawesi 2,000 2,700 35 Centre Sulawesi 1,750 2,300 31 Maluku 1,800 2,300 28 East Timor 2,000 3,000 50 Irian 2,400 3,500 46 --------------------------------------------------------------Source: Department of Labour, 1994
The role of labour unions in the establishment of wage guidelines is not represented in these corporate institutions. From 18 people which are promoted to become members of the DPPN and DPPD, 16 of them represent a number of government agencies (one representing a state higher education institution) and the remaining two filled by worker organisations and business. Particularly representatives from labour and business are promoted and dismissed directly by the president on the recommendation of the Ministry of Labour.
Factors which are considered in establishing the minimum wage are far from the interests of labour. Ministry of Labour Decree Number 057 of 1989 pertaining to minimum wages, this is determine by:
It can be seen that KFM does not address issues of health, education and other important requirements in a workers life. The quality of the items which are calculated in the determination of FKM are no longer realistic for a worker's life. For example, the cost of a bed is calculated on the cost of a mat woven from pandan (mangrove) leaves, lighting calculated from the cost of kerosene, footwear from sandles, the non-rice component of food from small sea fish, clothing from simple cloth. Aside from this, the determination of the value of these items is calculated upon the basic market price, while in reality the daily purchases of workers are made at small shops in the area where they live who's price is obviously higher than the basic market price.
In reality, the average minimum wage standard since 1993 is 60 percent of the actually KFM, except for urban centres which have reached 70 percent.
Secondly, wage discrimination occurs based upon sex, region and city. Sections of the KFM also assume that the worker is male. KFM does not take into account the physical needs of women such as sanitary napkins/tampons, underclothes, toiletries etc. This difference devastates women workers, which are categories as unmarried regardless of whether or not they have a family or work experience. This is one form of exploitation of labour which is carried out through the conservation of patriarchal ideology within a modern system of production, that is a dominant view in society which sees women only as being complimentary to their husband.
Meanwhile, the recruitment of labour in the manufacturing sector which is labour intensive, such as the garment, textile, sports shoes, electronic industries is generally done and dominated by women workers (80 percent).
Thirdly, nominal determination of wage levels. This issue was different during the period of the Old Order (Sukarno regime), where minimum wage levels were determined by a comparison of the highest and lowest wage current in companies or divisions. The current model of determining minimum wages has caused the emergence of steep wage differentiation.
Fourthly, in practice the minimum wage becomes the maximum measurement for wage payment. Only a small section of industry pays wages above the minimum, and this certainly did not occur because of the results of bargaining by labour unions but apparently because of the "generosity" of the companies.
Generally the wage received by workers is established from the principle wage (75 percent) and subsidies (25 percent) supplemented by several types of incentives. The incentive component is usually manipulated in fixed subsidies, among others as attendance premiums, prestige premiums and other bonuses. The allocation of premiums is determined by the "physical" attendance of workers at their work place, this means that all of the incentives can be lost if an employee fails to come to work although this may only be a single day and with a legitimate reason. In this case the company uses incentive wages to increase productivity and worker discipline, not as a labour right which has already been sold.
On the other side, the government also give the opportunity to companies to delay the payment of the minimum wage after getting approval from the Department of Labour.
Payment of minimum wages has already seen the emergence of a tendency for workers to take overtime, which is forced upon them in order to fulfill their daily needs which cannot be covered by the minimum wage. In other words, to sustain life in the industrial sector they must supplement their wages themselves by running a production process which is outside of normal work hours. This situation brings with it consequences for the social life of a worker, separated from their social environment. They also have no opportunities to learn about organising, workers rights and so on. This problem is directly reflected in a weakness of awareness of organising by workers, considering that the manufacturing worker is the first generation in the modern industrial sector, who generally comes with village traditions and is unacquainted with industrial traditions. In other words, this low wage has become an effective tool for controlling the labour movement.
Workers are placed only as "consumers" and objects of programs in which they have no opportunity to be involved in. What is certain, wages are reduced by the obligation of payment of contributions to insurance schemes which are directly deducted by the company from workers' wages.
In Indonesia social security is covered by Regulation Number 3 of 1992 pertaining to the JAMSOSTEK insurance scheme which is under the authority of the a State-owned Corporation. This regulation in essence determines:
Secondly, the centralisation of the management of JAMSOSTEK funding has cause the emergence of a complex bureaucracy which makes it difficult for workers to obtain their rights. Because workers, working long hours, do not have sufficient time to carry out the administration. In reality in many cases of work place accidents are of the character that their administration cannot be delayed.
Thirdly, companies face very low sanctions if they violate these regulations, as low as fifty million Rupiah. This matter has caused the emergence of a tendency by companies to violate the regulations as the financial gains are higher than the costs of fulfilling them.
Fourthly, the types of work accidents or illnesses which receive compensation are politically determined (through presidential decrees), not through mediation. And many illnesses which arise are not because of work accidents but as a consequence of work conditions which are applied by companies. In Indonesia the working environment is generally very poor and uses dangerous materials, as is often the case with industries that have relocated to the Third World.
Fifthly, the people who particpate in determining ASTEK worker compensation regulations are from the company and not members of a labour union.
As a result, for example, workers who transfer from one company to another lose their long term insurance membership. In this way JAMSOSTEK regulations discourage workers from leaving their employers to seek better jobs.
Teten Masduki is the Labour Affairs Officer for Indonesian Legal Aid Institute Foundation (LBH). Translated by James Balowski.