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REPOSITIONING

OF

THE LABOR MOVEMENT

Road Map for the Indonesian LaborMovement after Reformasi

Rekson Silaban

Friedrich Ebert Stiftung2009

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REPOSITIONING OF THE LABOR MOVEMENT

REPOSITIONING OF THE LABOR MOVEMENTRoad Map for The Indonesian Labor Movementafter Reformasi

Published by:Friedrich Ebert Stiftung (FES) Indonesia Office

ISBN: xxxxxxxxxxxxxxxxxx

Written by:Rekson Silaban

Translated by:Mia Hapsari Kusumawardani

Edited by:James Patterson

Printed by:CV Dunia Printing Selaras (d’print communnications)

First Edition, November 2009All rights reserved. Not for commercial use orunauthorized distribution.

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Foreword

Introduction

Chapter I: The Urgency of Repositioning the LaborMovement

1. How the Labor Movement Is Gaining Relevance2. The Need for Repositioning

Chapter II. From Opposition to the Repositioning ofthe Labor Movement

1. Labor Movement as the Political Opposition2. The Main Labor Issues in the 1990s3. Contribution to Reformasi4. Milestones of the Struggle

Chapter III. A Roadmap for the Labor Movement inIndonesia

1. Main Labor Issues after Reformasi2. Nine Roadmaps for Breaking Out of the Labor

Crisis

Chapter IV. The Ideal Characteristics of the LaborMovement

1. The Present Condition and External Challengesof Labor Unions

Table of Contents

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3939

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2. The Internal Weak Points of the Labor Movement3. Strengthening Labor Unions: Opportunities and

Efforts for Development4. Ideal Characteristics of Labor Unions in the Future

Chapter V. The Labor Movement and Politics1. Basic Principles of the Relationship between the

Labor Movement and Politics2. Historical Context of the Relationship between the

Labor Movement and Politics3. Three Variants of the Relationship4. Future Course of the Relationship between the

Labor Movement and Politics

Chapter VI. Globalization and Revitalization of the LaborMovement

1. Impact of Globalization on the Labor Movement2. Globalization: The Indonesian Experience3. Strengthening the Internationalism of the Labor

Movement

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135139147

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This book is dedicated to all labor activistswho willingly accepted imprisonment

for the sake of the workers’ struggle, as well as to thosewho never allow themselves to succumb to lethargy

and remain independent labor activists.

“The hottest places in hell are reserved for those who,in times of great moral crisis, maintain their neutrality”

Dante

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Foreword

SINCE Indonesia recognized freedom of association in 1998,no book has been written on the agenda of the labor unionmovement after Reformasi, although the situation of the labormovement in the current era is very different from that ofthe previous era, in terms of labor policy and the industrialrelations system.

The author had the opportunity to learn about variousinternational labor movements in many countries over 15years (1993–2008). Those experiences have been turned intoa “road map” to guide the KSBSI in developing its strategyin the current struggle. This book provides a provocativeview of the strategy of the labor movement in Indonesia,which is characterized by fragmentation and unfocussedideas. The book also proposes a number of options toestablish the labor unions on a more robust footing.

I would like to thank Mr. Willy Thys, former SecretaryGeneral of the World Confederation of Labour (WCL) whohas provided the author with many opportunities to meetso many of the world’s leading figures at a number ofinternational meetings, as well as selecting him to sit on theILO’s Governing Body, not to mention many interestingdiscussions.

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I will also never forget my conversations with members ofleftist labor unions, such as CUT Brazil and KCTU Korea,as well as comrades from the Venezuelan, Indian and manyother labor unions. Many exciting hours were spent indiscussion in cafés, as they patiently explained how the Leftstill has major opportunities open to it, as well as how theleft-wing agenda has started to fade in some labor unionsin several countries, particularly those who were membersof the World Federation of Trade Unions (WFTU).

A number of people who have influenced the author’s ideas,as well as bringing about his deeper involvement in tradeunionism, deserve to be mentioned here, including: MuchtarPakpahan, Anton Westerlaken, CNV Netherlands, GuyRider, Secretary General of ITUC, Jean Pierre Page, CGTFrance, and Luigi Cal, CSIL Italy.

Lastly, I would like to thank my beloved wife, Melan, andour two “little champions,” Luigi and Morgan Garcia. Manytimes they have been patient with me when I had to travel,leaving them in Indonesia. They also supported me when Iwas writing this book, which I should have finished fiveyears ago.

Last but not least, I would like to express my gratitude formeeting bung (Indonesian term of endearment meaningsomething like ‘elder brother’) Frans Surdiasis, who helpedme in writing this book. Without him, the book may neverhave been finished. Bung Frans was very patient in makingadjustments to my extremely busy schedule. We had toconduct interviews at fishing ponds, at home, in the office,and in a number of other peculiar places.

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I hope this book will be useful for the development of thelabor movement in Indonesia and encourage the publicationof more – even better – ones. This volume was also writtenin response to the public’s concern that the number of booksavailable on labor unions is still very small.

Rekson Slaban

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Introduction

I remember that day in Geneva, Switzerland, at thebeginning of summer in June 1998, at the annual conferenceof the International Labor Organization (ILO). With apounding heart, I witnessed the announcement by the chairof the Committee on the Application of Standardsconcerning the success of the reform movement in Indonesia,which had toppled the military dictator, Suharto. The newpresident, Habibie, immediately introduced a new policy,ratifying the Freedom of Association and Protection of theRight to Organise Convention, 1948 (No. 87). It wasHabibie’s first international act after he was electedpresident.

This announcement was met with spontaneous applausefrom the conference participants. But when the chairmentioned that the key actor in the struggle was also presentat the conference, the audience spontaneously gave astanding ovation, with long, enthusiastic applause. It wasnatural for them to cheer, because it was the first Committeeset up specifically to monitor violations of ILO Conventions.For four years, the Committee had been continuouslyengaged in ‘war’ with the Indonesian government to bringto trial violations of freedom of association in Indonesia,particularly with regard to intimidation, imprisonment, andeven the murder of labor activists.

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Present at the conference, the author felt an incredible senseof pride and relief – proud to see that the SBSI’s efforts hadbeen successful in freeing labor from fear of assembling andorganizing. The author’s five years of travel around theglobe, campaigning to promote the Indonesian case to theinternational community, had not been futile. Habibie’s swiftmove in ratifying Convention No. 87 – only one week afterassuming the presidency – was connected to theinternational campaigns and lobbying conducted by theSBSI, together with two international labor organizations:the International Confederation of Free Trade Unions(ICFTU) and the World Confederation of Labour (WCL).With their headquarters in Brussels, these two organizationscontributed a great deal to raising Indonesia’s agenda fordiscussion in various global forums, such as the ILO’sInternational Labour Conference (ILC), UN Human RightsCommission hearings, APEC sessions, Mondial SocialForum, and a range of media publications.

Only three days after being released from Cipinang Prison,Muchtar Pakpahan was strongly urged to deliver a speechbefore the Committee on the Application of Standards.Muchtar presented his speech passionately and full ofemotion. After almost every paragraph, the audience gavehim a standing ovation. The author of the present volumelistened carefully to Muchtar Pakpahan’s speech, to makesure that he was reading the same speech that we hadprepared the previous night, with Claude Akvokavie, anold friend, the WCL’s Director of Human Rights, who iscurrently working at the ILO’s ACTRAV bureau in Geneva.

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It was a monumental contribution by the SBSI to theIndonesian movement. The SBSI was a pioneer in the fightfor freedom of association in Indonesia, combining the laborstruggle with international campaigns. Ideas previouslyproposed by other labor unions failed along the way becauselabor was not involved, providing the required mass support.If the SBSI had not joined the fight in the era prior toReformasi, Indonesia may not have ratified the ConventionNo. 87, for the same reasons why countries such asSingapore, Thailand and Malaysia have not yet ratified theConvention. Since the struggle, the SBSI has also beensuccessful in gaining recognition of the use of the word“labor,” a word previously alleged to be associated withfollowers of communism. In the “New Order”administration, the preferred term used to replace the word“labor” was “worker” or “employee,” notwithstanding thefact that the prevailing labor law from the Old Order stillused the term “labor.” Law No. 21 of 2000 established therevival of the term “labor” after long debates in theIndonesian House of Representatives on whether to includethe word “labor” in the Law.

For the ILO and the international labor movement, theIndonesian government’s recognition of freedom ofassociation in Indonesia was an important achievement, notonly because Indonesia is a large country with an enormouslabor force but, more importantly, as proof of their latestsuccess after 10 years without anything in particular tocelebrate. This contrasts with such success stories of the1980s as the Solidarnosc Labor Revolution in Poland, theestablishment of the alternative labor union KCTU in Korea,and the setting up of the new independent labor union

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“Cosatu” in South Africa, following Mandela’s victory overApartheid.

International campaigns and lobbying were by no meanseasy, because many other countries experienced similarproblems with establishing democracy: one might mentionthe murder of hundreds of labor activists in Colombia, lackof democracy in Burma, and the prohibition on associationin Belarus, Zimbabwe, and dozens of other countries.Lobbyists had to be able to put their case on the priority list,presenting the message of the campaign loud and clear. TheICFTU and the WCL organized the sending of hundreds ofthousands of protest postcards to every Indonesian embassy.There were also simultaneous demonstrations in front ofIndonesian embassies, TV campaigns, a large advertisementin the International Herald Tribune newspaper, when Suhartocame to the APEC meeting in Vancouver, Canada, lobbying,educational assistance by the SBSI in Indonesia, andcomplaints to the ILO and the UN Human RightsCommission. Only six years after the SBSI was establishedand three years after the SBSI had joined the internationallabor movement, the campaigns finally brought someresults. This success was a combination of tireless struggleby SBSI members in Indonesia and international lobbying.Unfortunately, the case of Marsinah’s death was notfollowed through by the SPSI in the international arena. Ininternational campaigning and the submission of formalclaims to the ILO, the rules state that only the organizationof which the person in question was a member may bringup the issue, while other labor unions can only providesupport.

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In global operations, the ICFTU and the WCL do not getalong particularly well, because of their competition overmembership and ideological conflicts in the past, but thetwo have launched joint campaigns in a few special cases,including the abovementioned case of freedom of associationwith regard to Cosatu in South Africa, Solidarnosc’s strugglein Poland, international advocacy of labor unions inColombia, and the campaign on the ratification of ILOConvention No. 87 in Indonesia.

The experience of cooperation between the twointernational organizations, however, in addition to theexperience of cooperation in the labor confederation at theEuropean level (European Trade Union Confederation),inspired the two organizations to merge in 2007 – in Vienna,Austria – to form the International Trade UnionConfederation (ITUC). We can see on the ITUC board, atthe global and Asia-Pacific levels, how the SBSI has beenable to position some of its representatives in importantpositions. This is Indonesia’s greatest internationalachievement with regard to the labor movement, at least inthe past 40 years. The positions held by the KSBSI atinternational level are as follows: the KSBSI President waselected Vice-President of the ITUC, as well as to theExecutive Board of the ITUC and as a Member of the ITUC’sGeneral Council. KSBSI members also represent Asia-Pacificas members of the ILO’s Governing Body, 2005–2011.Positions of other SBSI representatives include: SulistraSulistri, member of the ITUC-AP’s Equality Department;Maria Emeninta, Auditor, ITUC-AP; and Patuan Samosir,Senior Officer, Organising and Projects, ITUC RegionalOrganization for Asia-Pacific (ITUC-AP).

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Visits to many countries have also given the author ampleopportunity to learn more about various labor movementsall over the world. He has had many opportunities to meetrepresentatives of organizations of every ideology. Theseinclude the following. Far-left orthodox communists of CUTBrazil, and from Venezuela, Cuba, Bangalore, India,Vietnam, CGT France, GSEE Greece, and Maoist Nepal, aswell as the construction workers union in Sydney, Australia.Revisionist left-wing communists in the FNPR labor unionin Russia, CGIL in Italy, Cosatu in South Africa, Zenrorenin Japan, and FGTB in Belgium. Social Democrats inGermany’s DGB, the UK’s TUC, Israel’s Histadrut,Australia’s ACTU, and Canada’s CLC, as well as unions inSpain, France, the Scandinavian countries, and theNetherlands. State corporatism in NTUC Singapore, JTU-Rengo Japan, TUCP Philippines, UMT Morocco, Egypt,Kenya, and other countries. Christian Democrats in CSCBelgium, CSIL Italy, Solidarnosc Poland, Vienna, and theNetherlands. Muslim labor unions can be found in a numberof Arab countries, as well as Bangladesh and Sudan. Thereare also labor unions which take a more pragmaticapproach, without any particular ideology. Thisphenomenon can be found in developing countries in Asia,including labor unions in Indonesia.

Discussions with leading representatives of theseorganizations were held on many occasions, at seminars,educational courses, and cafés, as well as by living togetherwith labor activists. A number of labor movement prototypesmentioned above finally inspired the shape of the SBSImovement. Initially influenced more by leftist ideology, ithas shifted gradually to a more Social Democratic stance,

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because it shares a similar spirit to Indonesian culture,which prefers social dialogue to open confrontation insolving problems. This involved long discussions within theSBSI, because some activists wanted to retain a militant,uncompromising stance, with more strike action anddemonstrations. But the SBSI experience since 1992 has alsocreated a special awareness that the essence of struggle isto achieve a good result for the workers, enabling them toenjoy the fruits of their efforts. It is not the intention of theSBSI to court popularity in the media, with a leader whocultivates notoriety and is feared for militant massmobilization, but without securing real victories in thestruggle to defend the workers. If efforts to protect themare frequently defeated, workers will inevitably lose interestin joining a labor union.

The option of following the model of “social dialogue” wasalso based on consideration of the history of socialmovements in Indonesia, which has proven that a radicalsocial movement can never win a place in the hearts of themajority of Indonesians. Although at times, such movementsseemed to win over some Indonesians, they were unable tosurvive over the long term. Examples include the communistlabor movement, the socialist movement, the fundamentalistreligion-based movement, and other extremist movementswhich were introduced in Indonesia at one time or another.There were able to survive for only short periods because,as already mentioned, culturally, Indonesians avoid conflictsinstead of solving them properly, hence the fragmentation.The establishment of a large number of labor unions inIndonesia, but with few actual members serves as aparticular example. This profusion of labor unions happened

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as a result of numerous organizational splits. Many activistsknown to the author have been members of three differentlabor unions in the space of only five years. They have movedfrom one union to another because of the frequency ofdisputes and break-ups.

The results of the abovementioned studies, in addition tocopious international experience, have shaped the currentcharacter of the SBSI as a labor union which has opted toprioritize and bring real benefits to the workers. Sustainablevictories by the labor movement over the long term willenhance the positive image of labor unions in the eyes ofthe workers and encourage the latter to become members.

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Chapter 1

The Urgency OfRepositioning The Labor

Movement

The political freedom of the Reformasi era has opened up anopportunity for the revival of social movements inIndonesia. Reformasi has given rise to a more open politicalstructure, including a friendlier political atmosphere for thelabor movement. Following Reformasi in 1998, many labororganizations were established. There were no more politicalrestrictions. Indeed, practically anyone can establish a labororganization.1 Workers now have considerable freedom tofight for their rights and have staged numerousdemonstrations, giving voice to a wide range of demands.The question is, how can such freedom be best used for thebenefit of the labor movement?1 Law No. 21 of 2000 concerning trade unions/labor unions makes iteasier to establish trade unions or labor unions. Article 5, paragraph 2 ofthe Law stipulates that trade unions or labor unions can be establishedby a minimum of 10 workers. Furthermore, six trade unions or more canform a federation, and three federations or more can form a confedera-tion

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The political environment and the range of problemsconfronting the labor movement in the Reformasi era aredifferent from those characteristic of the “New Order” era.In the New Order era, one of the biggest issues was how tofind some sort of latitude for the labor movement amidstthe repressive policies imposed by the ruling administration;in the Reformasi era, however, this is no longer considered amajor problem. The question now is, how can the labormovement become really effective and more relevant amidsta range of complex labor and employment issues? Thisreality demands that the labor movement in Indonesiareposition itself. This applies to the platform of the labormovement (ideology), the form of organization (laborunion), the issues raised, and the grand strategy of theworkers’ struggle.

The idea of repositioning the labor movement assumes thatthe labor movement is still necessary and must, therefore,be adapted to meet the current challenges. There are twoimportant questions with regard to repositioning.

First, why is it necessary to sustain the labor movement oreven to make it stronger? Is the labor movement today moreimportant? If so, what makes it more important incomparison to other movements in the past? With so manyNGOs and political parties – not to mention the government– committed to labor issues, why is the labor movement inparticular need of support? Why should we not just handover care of the fate and future of the workers to theaforementioned institutions?

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The second important question is: Why does the labormovement in Indonesia today need to reposition itself? Whatis different about the context and challenges, which makesrepositioning so crucial? What would be the implicationsof such repositioning; how would it shape the ideology,strategy, issues and organization of the labor movement?

How the Labor Movement Is Gaining Relevance

In comparison to the past, the labor movement is todaybecoming more relevant and necessary. The generalsituation of workers in Indonesia requires that they seek tostrengthen the labor movement. First, more than in the past,workers today are confronted by hostile, more exploitativeeconomic forces, particularly in the form of neoliberalism.Following the end of the Cold War, globalization emergedas a new global world order, marked by efforts to make theworld into a single arena – a global market free of barriers.Globalization has extended capital movements and providesgiant global corporations or multinational companies(MNCs) with a highly congenial environment.

In Indonesia, we are witnessing a shift due to the growingstrength of global capitalism. In the past, global capitalismplayed a significant role only in relation to large-scalemultinational corporations in Indonesia, for example, inmining and a number of other major resources. Now, eventhe economic resources of the general public, like publicutilities, such as water and gas, or mineral resources, areowned by multinational corporations. Hand in hand withthis expansion come greater demands in terms of new formsof work organization, involving the introduction of more

Chapter 1 The Urgency Of Repositioning The Labor Movement

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flexible employment relations related to outsourcing, suchas contract work. Freelance and casual labor or day laborhave all grown significantly. All of this is aimed at reapingmuch larger profits by reducing the social and otherresponsibilities of the employer or capital owner for theirworkers. The keyword always raised by employers is“efficiency,” although what it boils down to is capitalowners receiving a larger share of the pie.

Unfortunately, labor law in Indonesia is inadequate to thesituation. Economic relations are changing rapidly andlegislation and similar provisions find it difficult to keep up.Regulations or laws always move more slowly than theconstantly arising challenges. As a result, we cannot relyentirely on labor law as a basis for fighting for workers’interests.

Furthermore, the Indonesian government at present doesnot have the political will to provide more effective protectionfor workers. In a number of its policies, the government isperceived to have sided with the employers in the name ofattracting foreign investment. For example, the governmentsupports – at least to some extent – the idea of work flexibility.Recently, the government – through the Joint Decision Letterissued by four ministries – tried to control the level of theregional minimum wage to keep it in line with the economicgrowth rate.

This is where the labor movement is becoming morerelevant. The movement consists of people who can directlyhelp the workers, negotiate with management, fight forcollective agreements, and provide training and advocacy.

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On the other hand, we must also recognize that labor issuesin Indonesia are not the concern of the labor movementalone. Other organizations – such as NGOs, political parties,and faith-based organizations – are also fighting for workers’interests. Nonetheless, their contribution is more on themacro level, on the “big” labor issues. On a more micro level,which is more crucial in the struggle for workers’ interests– such as direct negotiations with employers or businessowners – the latter groups do not have the requisite reachor legitimacy. In this situation, only the labor movement iscapable of standing in the front line to directly face laborexploitation in its various aspects. This makes the labormovement more relevant and necessary.

We are also witnessing the emergence of a new challengewhich further increases the relevance of the labormovement. In the past, employment relations were moreformal and permanent. Labor law clearly protected theinterests of workers, and labor was usually grouped in agiven company with transparent management, such asMatahari Department Store. Formerly, all employeesworking for Matahari Department Store were recruited byand under the management. Today, however, there are anumber of employee groups under the umbrella of MatahariDepartment Store. Each department is under a differentmanagement: the employees at the Polo counter arerecruited and under the management of Polo.

This shift has a number of implications for the labormovement. The supervision which used to be performedunder one management is now carried out by a number of


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managements, all with their own characters and rules. Inthe past, the labor movement needed to deal only with onemanagement in fighting for workers’ interests at Matahari:now, they have to face a whole clutch of them. In practice,the real problem is that relations between workers andmanagement are becoming more and more unclear, becausethe actual work is carried out in one place, but themanagement is located in another. The workers do notgenerally encounter their managers. They tend to berecruited through newspapers and their wages are paid byyet another entity. Under this model of employment andindustrial relations, it is very difficult to imagine howworkers can fight for better employment conditions. Thelabor movement is more vital than ever because it has greaterbargaining power, enabling it to sit at the same table anddemand attention from employers for the benefit of theworkers’ interests.

The Need for Repositioning

The labor movement today is confronted by a number ofimportant changes.

First, the changes in the political environment. As previouslymentioned, since the Reformasi in 1998, the labor movementin Indonesia finds itself in a new and more democraticpolitical field. In the past, the government represented amonolithic political power, but today political power is morefluid and fragmented. This new field demands that the labormovement create strategic alliances with other social andpolitical powers to create a political system which is morefriendly to the workers’ interests.

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Secondly, there are changes brought about by the new andincreasingly complex forms of employment. We havewitnessed changes in the labor market, revisions of the law,and interventions in the labor market by multinationalcorporations through international organizations, such asthe IMF. Unfortunately, responses to these changes so farhave tended to take the same old approach. At theorganizational level, for instance, we still see the old-stylestructure of central government, provincial government,and local government. This geographical model is no longerflexible enough.

The labor market has undergone many changes. Forexample, formerly we rarely had to deal with foreigncompanies whose representatives had not mastered BahasaIndonesia, not to mention the fact that they did notunderstand our laws and today’s corporate socialresponsibility was still unknown. Today, many foreigncompanies understand our regulations well.

The labor movement will be effective if it comes tounderstand how all these things are interlinked. The labormovement must acquire a proper understanding of all theissues it faces, but also develop an adequate approach toindividual companies. Important questions include: Wheredoes the capital owner come from? Does the companyacknowledge corporate social responsibility (CSR)? Has itsigned any international agreements? In this respect, thelabor movement must be more advanced in its approach incomparison to the past and develop the ability to analyzefundamental labor issues. The previous militant labormovement is longer sufficient for today’s situation. We need


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a professional labor movement, a movement which properlyunderstands all the complexities of the issues and is able toconduct negotiations.

Thirdly, the domestic labor movement is more integratedwith the international labor movement. In the past, localfactors had much more impact, but since the 1990s, theinternational labor movement has been confronted with thesame set of problems in the wake of globalization. In facingthe same problems, labor movements in various countriesshare the need to fight together and to develop a commonstrategy.

These changes call for a number of adaptations.

The first adaptation is at the organizational level. Tradeunions at present retain the old hierarchical model basedon geography, with an executive board at the central level,in addition to provincial and district levels. However, thisorganizational model hinders flexibility in response to laborissues, since it is bureaucratic and rigid. This kind ofstructure, with central and regional offices, is also inefficientin cost and decision-making terms. For instance, when ameeting is going to be held, notice must be sent to all parties,and the costs incurred include communication costs, as wellas the costs arising from holding the meeting. Today, labororganizations must be managed in such a way that theycan be flexible, professional, competent, and financiallyrobust.

The second adaptation is related to the skills and know-how of labor activists. To date, most labor activists have

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dealt with issues at the normative level. such as wagedemands. They have not yet addressed – and still do notfully understand – matters more characteristic of the macrolevel. Labor activists tend to prefer a reactive rather than aproactive approach, for example, in relation to proposalson changes in the wage system and on social security forworkers. In the face of the many changes happening today,the labor movement and its activists need to further developtheir alternative proposals and not merely protest againstgovernment policies. In this way, the labor movement canbecome a good partner for the employers, the government,and other groups in society seeking the right solution on arange of issues of interest to the workers.

The third adaptation concerns the “ideology” professed bythe labor movement. Often, this is unclear. In the face ofthe complex issues of today, the labor movement must returnto its core task: to strongly defend the labor movementwithout discrimination. The labor movement must possessfour basic characters. It must be: non-discriminatory,democratic, independent, and solidaristic.

Non-discriminatory

An ideal labor movement must be open (plural), allowinganyone to be a member. In this context, there must not bereligion-based labor unions in Indonesia, apart fromanything else because workers in factories adhere to avariety of religions. It would be inappropriate to have laboragreements signed by trade unions that represent onlyworkers of the same religion. Such religion-based tradeunions would face particular obstacles in regions in which


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that religion is in a minority. For instance, an Islam-basedtrade union would face obstacles in Bali or in Papua. Sucha trade union would only serve to bring into beingunnecessary barriers in the fight for workers’ interests.Basically, labor organization should be pluralistic.

The supporters of religion-based trade unions argue thatreligion serves only as a platform, while the struggle is stillopen to other groups – in other words, even though theorganization is based on a particular religion, it will defendother groups, too. One simple answer to such arguments isthat, if the struggle is intended to include everyone, whynarrow it down in the first place with reference to aparticular religion? The case is different in relation to Islam-based political parties, whose constituency is clearly votersof that religion. Labor unions are different. The existence ofreligion-based labor unions can in no sense be perceived asan instance of pluralism or democracy in the labormovement. Although it is certainly permissible in ademocracy, if the broader labor movement is to bestrengthened, organizations must be open to everyone fromthe very beginning. All must benefit from collectiveagreements and no resentments should be created. Incontrast to political movements which sometimes rely onreligious sentiments in recruiting supporters, labor unionsmust abjure this approach, both in recruitment and theimplementation of their struggle.

In Indonesia today, however, religion-based trade unionsare not part of the mainstream and do not have significantprospects.

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Democratic

The labor movement and trade unions must be democratic.At the organizational level, democracy means that theelection of members of the executive board must reflect thetrue wishes of the workers and not be the result of backroomagreements with political parties. In addition, the membersof trade union executive boards should not owe their placesto nepotism or cronyism, based on the dominance ofparticular groups.

Independent

The labor movement must be independent, but withoutisolating itself from other movements. It will acquirelegitimacy based on its ability and willingness to fight forthe best interests of the workers. Whether or not individuallabor activists are also involved in other organizations,independence will allow them, and the labor movement asa whole, to stand up for the workers most effectively. Eventhough trade union activists hold other positions in politicalparties, NGOs or companies, or if they also representparticular ethnic groups or religions, in the end they mustput the workers first. Labor unions must not be a steppingstone for other interests, which may eventually come todominate the labor movement.

It is important to note that independence does not meanthat labor organizations should not enter into politicalalliances. Alliances with other societal forces, includingpolitical parties, are necessary. However, in every allianceof this kind, the question must be, which one is the


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independent party: the labor organization or its partner?The crucial issue is whether the labor movement determineswhat programs are to be implemented or it is subservient toa partner.

There are two layers of independence. First, independenceat the institutional level concerns the overall orientation ofthe organization. Secondly, there is independence at thelevel of labor activists. A labor union which is able tosafeguard the workers’ interests against external forcesseeking to exploit them must be independent at both levels.

Solidaristic

Ultimately, the labor movement must defend all workers,regardless of union membership. When workers experiencedifficulties, the labor movement must be able to provideassistance, whether in Indonesia or elsewhere. The solidarityof the labor movement has three strands: internal solidarity,in terms of which the members of a particular labor unionexpress their solidarity with fellow members; solidaritybetween labor organizations, in terms of which labororganizations support each other; and internationalsolidarity, in terms of which the labor movement also showsconcern for labor movements in other countries, sharing thesame fate.

The labor movement in Indonesia has shown solidarity. In1995, the labor activists who, at that time, were under thecoordination of the SBSI, staged a protest againstMyanmar’s repression of the labor movement in thatcountry, which was demanding higher wages and freedom

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of association. Labor alliances from various unions inIndonesia lodged protests and staged a demonstration infront of the Myanmar Embassy in Jakarta. This action waspart of the international solidarity of the labor movement.

Such solidarity has also been demonstrated in coordinationbetween international labor unions in a number of specialactions. For instance, when the labor movement inIndonesia engages in protests against employers andcompanies from other countries, we ask labor activists inthe employers’ country of origin to do the same.

As another form of solidarity and support, the labormovement in Indonesia – among others, the KSBSI –provides training for workers in Cambodia on establishinga strong and independent labor movement. The democratictransition in Cambodia has moved more slowly than inIndonesia; our experience of forming stronger labor unionsis still a step ahead of them.

Cooperation can also take the form of relaxing the rules ofmembership, whereby workers from one country canbecome members of trade unions in other countries.Members of trade unions registered in the United States,for example, can become members of the SBSI, and workersin Indonesia can also apply to become members of tradeunions in the States. Under the banner of solidarity, thelabor movement recognizes no geographical boundaries.


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Chapter 2

From Opposition to theRepositioning of the Labor

Movement

As described in Chapter 1, the repositioning of the labormovement is necessary today because the labor movementfinds itself in a significantly different environment incomparison to the past. The challenges it faces are alsodifferent. In order to better understand the context of thenecessity for repositioning, we need to understand thedynamics of the labor movement over recent years, frompre- to post-Reformasi, starting in the 1990s. There are tworeasons for this.

First, the 1990s were an important period in the history ofthe labor movement, but also for Indonesia as a whole.Under the New Order regime, it was during this period thatthe labor movement was able to establish a strong presence,without having to stay underground as the oppositionpolitical power against the repressive regime under Suharto.

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Secondly, the labor movement’s struggles during this periodserved as the foundation for the birth of a relatively freelabor movement after Reformasi. It is difficult to understandthe labor movement and the establishment of a range oflabor unions after Reformasi without looking at how themovement started in the 1990s. The freedom and courageof the labor movement after Reformasi did not appear out ofnothing, as if it was only a ripple in the Reformasi wave.Rather it started to grow even before Reformasi, in the early1990s.

The Labor Movement as the Political Opposition

Two important questions need to be raised about the labormovement in the 1990s. First, what was the situation of thelabor movement at that time? Secondly, how did thesituation in the 1990s influence the labor movement at thattime and as it stands today?

At the start of the 1990s, the issue of transparency began togain ground in Indonesian politics, referring to the need forthe government to provide more room for the growth ofdemocracy. This political transparency was characterizedby an easing in the government’s attitude towards theopposition.

One result of this new transparency was the expression ofa desire to set up an alternative or rival labor union to theSPSI (All Indonesia Workers’ Union), the only – government-sponsored – labor organization which was permitted toexist. A central question raised by the labor movement atthat time was whether it was the right moment to set up

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labor unions. This question became an important topic ofdebate before the establishment of the SBSI (IndonesianProsperity Labor Union).

At that time, two major poles of opinion dominated. Thefirst centered around those who took a pessimistic view ofthe development of democracy in Indonesia. For this group,it was not the right time to set up a new, alternative laborunion. The government, it thought, was not ready to accepta labor union other than the SPSI. The establishment of anew union would be viewed as political dissent or oppositionand thus would be subjected to government repression.Labor activists would be victimized and criminalized. Thiswould make things very difficult for the labor movement,since the judicial system in Indonesia at that time was notindependent. It was almost certain that the establishmentof a labor union would constitute a fast track to ending upin the prisons of the New Order regime. If labor activistsdecided to set up an alternative labor union the entire labormovement would be jeopardized. It would be better,therefore, to wait for a more suitable opportunity.

The second group viewed the political situation moreoptimistically. The founders of the SBSI belonged to thisgroup, which also included a number of NGOrepresentatives. In its opinion, no momentum would everbe created if no measures were taken to set things in motion.Momentum had to be created and maintained: it would notsimply fall from the sky. The involvement of the workersalso depended on such momentum.

Chapter 2 From Opposition to the Repositioning of the Labor Movement

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This group’s optimistic view was based on an analysis ofthe current situation, the upshot of which was that it wastime to push for freedom of association in Indonesia byestablishing a new labor union. Indonesia’s dependence onoil and gas revenues was diminishing and a shift was underway to the non-oil and gas sector. As a consequence of thisshift in the main source of state income, Indonesia wasopening its markets to international trade. Hence, sooneror later, Indonesia would eventually have to acceptinternational standards if it wanted its products to beaccepted on international markets. These standards includedrespect for human rights, acceptance of and compliancewith ILO Conventions, and respect for environmentalstandards. Indonesia would undoubtedly makeinternational concessions. The government would not beable to act as it used to do when it still relied heavily on theoil and gas sector, enabling it, to some extent, to floutinternational opinion. Indonesia’s dependence oninternational markets would only increase as new oil andgas discoveries diminished in Indonesia. If Indonesia wantedits products to be accepted in international markets,particularly Europe, at least two conditions had to be met.First, environmental problems would have to be addressed;secondly, human rights must be given a clean bill of health.

When Indonesia received aid and cooperation packagesfrom Western countries, as well as from organizations suchas IGGI, or when Indonesia became a beneficiary countryof the Generalized System of Preferences (GSP), it took onboard the attached conditions, such as recognition of humanrights, at least in principle, notwithstanding many violationsand deviations on the ground.

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This situation was considered to have generated enoughmomentum for the establishment of an alternative laborunion. At that time, the founders of the SBSI realized thatthis would be positive lunacy.

With this rationale, a National Labor Meeting – or PBN –was held at the Hotel Cipayung Bogor, Jawa Barat, attendedby 106 participants: 90 workers, mostly from the leadershipof the SPSI at the enterprise level, and 16 activists/laboradvocates from 10 provinces. This National Labor Meetingwas facilitated by the LPBH-FAS (Legal Aid and Awareness-raising Institution – Just and Prosperous Forum), which wasled by Sukowaluyo and Yakom (CommunicationFoundation), headed by Sabam Sirait. On the second dayof the meeting, on Saturday, April 25, 2009, the participantsagreed to establish a new labor organization, to be calledSerikat Buruh Sejahtera Indonesia or the Indonesian ProsperityLabor Union.2 Those present at the meeting includedMuchtar Pakpahan, Sabam Sirait, and K.H. AbdurahmanWahid. Pakpahan was elected the first Chair of the SBSI.After Reformasi, at the 4th Congress, the organization wastransformed into Konfederasi Serikat Buruh Sejahtera Indonesiaor the KSBSI – the Confederation of Indonesia ProsperityLabor Union.

2 Three alternative names were proposed: SBSI, SBS (Prosperous LaborUnion), and SBI (Indonesian Labor Union). The participants chose thefirst. After its establishment, the SBSI was registered as a mass organiza-tion at the Ministry of Home Affairs, in compliance with Law No. 8 of1985, and was registered as a Labor Union at the Ministry of Manpower,in compliance with Law No. 21 of 1954 and Law No. 18 of 1956. But theNew Order administration at that time did not register the organizationbecause it was deemed incompatible with the New Order administration’spolicies.


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Aside from the external factors, internal factors also stronglyencouraged the establishment of an alternative labor union.The situation of the workers was deeply worrying.Employers were able to act arbitrarily, summarily firing orotherwise abusing workers. Workers also received very lowwages. In Jakarta, at that time, the wage was IDR 2,000per day. The employers also imposed long working hourswithout compensation for overtime and if any workersrefused, they would be laid off. Other workers were forcedto work on Sundays and holidays. Other rights, such asvacations and menstrual leave for women were not granted.It was also a frequent occurrence that workers were abusedby the army when they demanded their rights.

The SPSI, hitherto the only labor organization, never stoodup for the workers. When conflicts of interest betweenemployers and workers arose, the SPSI took the side of theemployers. At a higher level, in conflicts of interest betweenthe government and the workers, the SPSI took the side ofthe government.

The establishment of the SBSI at that time was a majorbreakthrough, an act of resistance against the statecorporatism that the New Order had successfully practicedto date. If we look back, the New Order established the FBSI(All Indonesia Labor Federation) on February 20, 1973,marking the end of the plural labor unions era in Indone-sia, to be succeeded by the era of the single organization.3

In 1985, the FBSI was transformed into the SPSI (All Indo-nesia Workers’ Union) by Sudomo. This transformation alsomarked a change in the system of the New Order’s laborunion, namely from the federative system, in which each

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group of workers would have its own organization, accord-ing to sector, and then form a confederation. By establish-ing the SPSI, Sudomo changed the system into a unitaryone, with only one labor union. Every worker was to be amember.

We rejected this monolithic system in principle and createdan alternative in the form of the SBSI. From the workers’perspective, the establishment of an alternative labor unionwas deemed urgent. At that time, the workers had virtuallyno protection at all. The SPSI was acting more as agovernment organ than as an organization fighting for theinterests of the workers. Also, unlike today, the minimumwage was not increased annually and there was no cleartimeframe for minimum wage increases. This differsconsiderably from today, when the minimum wage isincreased each year.

Aside from the wage issue, workers in many enterprises atthat time faced intimidation by the armed forces, whoseconsiderable powers enabled them to effectively repressworkers fighting for their interests.

3 The establishment of the FBSI was initiated one year earlier when theIndonesian Workforce Foundation (YTKI), in cooperation with theFriedrich Ebert Stiftung (FES), held a seminar on October 21–28, 1971,which was intended to bring up the idea of establishing a single labororganization at the national level. The seminar recommended that thelabor union must be independent of any political power and focus onsocio-economic activities. This became the principle of the FBSI and,later, of the SPSI labor union. A comprehensive review of this can befound in Edi Cahyono’s article, “Labor: from Dutch colonialism to theNew Order” (Indonesia, 1998).


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Many workers lived at subsistence level, earning a wagesufficient only to provide them with the basics. The rulingregime had little concern for this. There was no likelihoodof any upward movement in terms of workers’ prosperity;at best, things would remain the same. Thus, the situationof 10 years previously would be the same as the presentday.

The labor movement in the 1990s was marked particularlyby the spirit of fighting against the government (laboropposition). This characteristic of the labor movementduring this period set it apart from the labor movement inthe 1970s or even in the 1980s. In this period, more “wildcat strikes” were witnessed, neither organized nor controlledby a labor union, but rather spontaneous actions by workersin pursuit of their interests. The major strikes held in anumber of cities, such as Bogor, Medan, and Surabaya, wereout of the hands of the SPSI. This showed that there wasopen opposition to the government. The founders of the SBSIviewed this as potential support which needed only to bebetter organized. Resistance among the workers escalated,since they no longer feared the threat of losing their jobs, aswell as from the police or the military.

The seeds of resistance began to sprout everywhere,although they were rather sporadic, because they were notunder the control of a labor union. It is also important tonote that the situation developed as the manufacturing sectorwas growing, increasing the number of workers inIndonesia.

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Amidst this grave situation, the government made no policychanges at all to improve workers’ lives. The governmentresponded to workers’ aspirations in the same manner asbefore, relying on repression, with the armed forces as theirspearhead. Wages were not increased. Labor disputesettlements were protracted and largely benefited only theemployers’ interests.

The presence of the SBSI in this context brought aboutimportant changes, both for Indonesia as a whole and forthe labor movement.

The SBSI also broke through the political stalemate. At thattime, the authoritarian political system of the New Orderwas considered to be firmly entrenched. The emergence ofthe SBSI represented a form of resistance to the system. Thisinspired other forces to undertake reform, such as thelimitations on the number of political parties and professionalassociations – only a single organization was possible in eachcategory. The SBSI movement was the start of the fall of theNew Order’s political system, which later collapsed like ahouse of cards. The labor movement was the first to makean impact, to be followed by other political movements.Other changes to monopolistic organizations followedafterwards, including AJI, Peradi, and so on.

At the union level, the existence of the SBSI constituted acorrection to the New Order regime’s belief that a singlelabor union can solve all labor issues. The emergence of theSBSI gave workers a boost in their efforts for more freedomof association. What happened after Reformasi, when manylabor unions were established, did not happen overnight.


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The seeds of the breakthrough had developed long before,including the establishment of the SBSI. People began tofind courage that they had not believed themselves capableof before. Although the existence of so many labor unionsmay be viewed as counterproductive, since it does notnecessarily mean that the lives of the workers will improve,it gave rise to a new spirit, an understanding that theoppressed labor unions could also manage thingsthemselves. This was one of the critical contributions of theSBSI’s establishment.

At that time, the SBSI encouraged the establishment of laborunions at the enterprise level. This has become an importantgoal, alongside the demand for more freedom at the nationallevel. In order to have their struggle recognized, the SBSImust have real representation at the enterprise level. Itwould be impossible for the SBSI to obtain governmentrecognition if it did not really represent the workers. Byincreasing its membership, the SBSI will enhance itsbargaining position in relation to the government.

The agenda of the SBSI at that time did not differ from thoseof many other labor unions: namely, to improve workers’lives through wages, social security, employmentprotection/status, and freedom of expression. In Triparta,a company partnered with Caltex, the SBSI was able toachieve the status of permanent employee for many workerswho previously had contract worker status.

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The Main Labor Issues in the 1990s

There were at least two main labor issues in the 1990s: first,freedom of association and, second, the labor problemsarising from the shift of Indonesia’s economy away fromoil and gas to the industrialization of new sectors.

Many people who formerly worked in the agricultural sectorthen went to the cities to work in industry. However,workers had little legal protection, either from the laborcourts or from labor unions. Wages were also an issue. Inthis period, industrial disputes were rampant in Indonesia.The labor movement was unable to contain itsdissatisfaction. The number of labor demonstrationsincreased sharply. While in 1989, there were only 19 labordemonstrations, involving a total of 1,168 workers, in 1990the number leapt to 69, involving 27,839 people. Indeed,the number of labor demonstrations continued to increase,with 350 in 1996, involving 209,257 workers.4

From the perspective of the Indonesian government,Indonesia started to open up because its main source ofincome – from the oil and gas sector – was diminishing.More and more anti-government NGOs were beingestablished, in various sectors. Demands for a free press alsostarted to grow. Stories about resistance started to bepublished in the mass media, which added to the

4 Data obtained from Akiko Kodama, “The participation of womenworkers in the Indonesian labor opposition movement in the 1990s,”Southeast Asian Studies, a journal of the Southeast Asian Studies StudentAssociation, Vol. 3 (Fall 1999).


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momentum. There was a conviction that it was time for thegovernment to accommodate alternative ideas.

The demand for a free press was mirrored, in the context ofthe labor movement, by calls for the freedom to establishindependent labor unions, which was the predominantnarrative of the labor movement in the 1990s. In this period,the primary demand was freedom of association and a moredemocratic political situation. This become the main themeof workers’ demands. It was believed that workers couldnot enjoy freedom if human rights and freedom in generalwere unavailable. Thus, civil liberties had to be establishedprior to labor rights.

In the 1990s, normative labor issues such as wages becameminor issues for the labor movement. Together with otheractivists, workers were at that time involved in voicing majordemands for democracy. For example, they were activelyinvolved in protesting against the ban on Tempo magazine,Detik (a tabloid newspaper), and Editor (a magazine) in 1994.Workers, together with other social groups, were activelyinvolved in a number of demonstrations protesting againstthe government’s arrest of activists. Workers were also in-volved in demanding the revision of the five “political laws”on which the current political system is based (the laws onmass organization, the House of Representatives (DPR), thePeople’s Consultative Assembly (MPR), political parties,regional administrations, and elections). Labor activists,together with university students, NGOs, and the Indone-sian Democratic Party were involved in establishing theIndonesian People’s Council (MARI).

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In the 1990s, there were two important events pertainingto labor issues which had strong national reverberations.The first was the murder of Marsinah in 1992; the otherwas the mass workers’ demonstration in Medan in 1994.Of the two events, the workers’ demonstration in Medanwas the one which most affected the labor movement andthe structure of national politics in general. The momentumof Marsinah’s death must be acknowledged to have hadwider reverberations, but the waves resulting from theincident created a stir only in media reports. The death ofMarsinah was not used to maximum effect to strengthenthe labor movement.

In contrast, the event in Medan – in which the SBSI was the“driver” – strengthened the labor movement considerably.The repressive actions of the government did not stop thestruggle, but rather increased the workers’ determination.The fight spread to other regions and cities. Three yearslater, in 1998, the labor movement finally got its just reward:freedom of association. This was the first major campaignstaged by the SBSI. Approximately 105 labor activists wereimprisoned, including Mochtar Pakpahan himself.

Contribution to Reformasi

Some have questioned the contribution of the workers andthe labor movement to Reformasi in 1998 and during theperiod leading up to it.


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Vedi R. Hadiz,5 for instance, in an interview, expressed theview that the labor movement did not play an importantrole in building up the momentum which led to Reformasi.Even after Reformasi, in his opinion, the labor movementhas not become an effective large-scale movement,particularly with regard to the major issues facingIndonesia.

In my view, however, the labor movement during this pe-riod played a significant role in the making of Reformasi.The great political changes experienced in 1998 did notcome out of the blue, but were the result of previous struggles,which had gathered sufficient momentum to find properrelease in the crisis in 1998. For example, it was the labormovement which first raised the issue of plurality with re-gard to social and political organizations. We staged massdemonstrations long before the students had begun to doso, although at the end the students did indeed take theirplace in the frontline. The labor movement’s important con-tribution to Reformasi has been recognized by the govern-ment in the reform era. The first international policy adoptedby Habibie was to ratify the ILO’s Freedom of Associationand Protection of the Right to Organise Convention, 1948(No. 87).

The view presented by Vedi R. Hadiz is correct to the extentthat, when Reformasi occurred, the students rather than thelabor movement were in the frontline. However, it is

5 Dr. Vedi Renandi Hadiz, “The labor movement is highlyfragmented,” interview with Coen Husain Pontoh.Available at: Indoprogress.blogspot/2007

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important to note that Reformasi was somehow centralizedin Jakarta and a number of other large cities. At that time,the workers did not have the option of joining forces withthe students – who were perhaps more politically aware –because the latter’s agenda was not clearly related to theirown calls for wage increases. The main issues raised at thattime were relatively distant from labor issues, such as thedouble function of the military and reform of the fivepolitical laws. But the labor movement’s demand forfreedom of association was an essential contribution at thesectoral level.

Following ratification of ILO Convention No. 87, numerouslabor unions sprouted like mushrooms after rain. Theemergence of so many labor unions gave considerable colorto Reformasi in 1998.

The most important question in this regard concernswhether so many labor unions can somehow be broughttogether to establish the labor movement as a significantforce in post-Reformasi politics and able to help determinethe course of Reformasi?

It must be recognized that the labor movement is not yet ina position to become an important political catalyst becauseof its low membership: only 8 percent of workers – fivemillion people – in the formal economy are registeredmembers of a labor union.

Aside from that, the labor movement is fragmented at thenational and regional levels. There is no common goal orcommon political platform which can serve as a basis for


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the labor movement. As a result, the unions’ bargainingposition is weak when it comes to expressing an opinion onmacroeconomic and important social issues. At present, thelabor unions tend to concentrate more on sectoral levelissues, such as wages and social security. Ideally, however,the labor unions’ struggle should not stop at the sectorallevel. Labor activists must also talk about such issues asinvestment, income tax and special economic zones. Similarto unions in other countries, labor unions in Indonesiashould be actively involved in campaigning on these issues.

Looking back, however, it is clear that the labor movementhas made significant progress. Union recognition, forexample, has greatly improved. Labor activists have moreinvolvement in decision-making, especially concerningemployment issues, together with the Indonesian House ofRepresentatives (DPR), the government and internationalinstitutions, such as the IMF and the World Bank.

Although it remains limited, union recognition has led toan increase in bargaining power with the abovementionedinstitutions. The difference between the current situationand the past is palpable. Today, the unions are frequentlyinvolved and called upon to participate in exchanges ofideas: for instance, on the issue of a fuel price hike and itsimpact on workers or the Joint Decision Letter of the FiveMinisters concerning changes in the operating hours ofindustry for the sake of energy efficiency. In all these ways,union recognition has clearly increased. Nevertheless, thelabor unions could be more involved in more general issues.It would be a major step forward to involve them in publicpolicy consultations.

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The fragmentation of the labor movement has been largelynon-ideological and primarily the result of euphoria. Thelabor unions’ programs are almost the same. At the sametime, many people are involved in labor unions only forpersonal gain, without a genuine commitment to theworkers’ cause. As long as such fragmentation persists,regardless of the reasons for it, the labor movement will notbe able to establish itself as a major power. Another problemis the movement’s lack of resources, which hinders its effortsto contribute to the development of larger purposes.

Furthermore, the more fragmented the labor movement, themore easily it can be broken. This threatens to reduce evenmore the bargaining power of the labor movement as awhole and its influence on crucial public issues.

Recognition and acceptance of the labor movement has alsooccurred at the enterprise level. A particularly useful wayof gauging the labor union presence at this level is theexistence of a collective agreement between the workers andthe enterprise. Many collective agreements have beenreached since Reformasi, which is perhaps the ultimateexpression of a labor union’s success. A failure to obtainsuch an agreement undermines the unions’ foundations andlegitimacy. No other benchmark has such significance.However many demonstrations and strikes a union mightinitiate, they mean little if they do not result in a collectiveagreement.


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Milestones of the Struggle

As already mentioned, the apex of labor’s struggle forfreedom of association was reached in 1998, when thegovernment ratified ILO Convention No. 87 on freedom ofassociation and the right to organize, adopted on June 17,1948. This ratification can be considered the first majorsuccess in the struggle of the labor movement and otherpro-democracy forces after the end of the New Order era,and encouraged the emergence of numerous labor unions,alongside the SPSI.

Habibie ratified the ILO Convention through PresidentialDecree No. 83 (1998), only two weeks after becomingpresident. Ratification was an interesting move, consideringthe context and priorities at that time. With many otherurgent tasks at hand, why did the government prioritizeratification of that particular convention? It was the firstinternational action taken by Habibie and its speed can betaken as a good indication that the government considersfreedom of association to be an important issue. It had beendebated for years and its acknowledgement at this pointshows that labor was regarded as a leading group in society,alongside the students, in demands for reform.

The ratification of the ILO Convention was a symbol ofvictory of the labor movement in the 1990s. It was a kind oftrophy won by the workers who had been willing to fightin the face of repression. It was as a result of their effortsthat the government conceded freedom of association. Thesupport of the international labor movement must also be

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noted in this context.6 The international labor unions havealso contributed financially, for example, to capacity-building training for workers in Indonesia. They have alsoprovided assistance in international lobbying. For example,with their assistance, the author of this volume was able tomeet the Managing Director of the IMF, Michael Camdessus,and the President of the World Bank, James D. Wolfensohn,in 1998. This meeting may also have been a significant factorin persuading the government to ratify the ILO Convention.

In his capacity as the SBSI’s Head of International Relations,the author was asked to give his views on the attitude ofworkers to the two institutions’ plans to provide Indonesiawith financial assistance to help it to overcome the economiccrisis. At the meeting, we declared that the two institutionsshould include the demand for freedom of association inthe package. If the program was to be well run, it wouldhave to be properly overseen, for which purpose theexistence of independent labor unions was crucial. And ifthe demand could not be made in writing, in a Letter ofIntent (LoI), it should at least be conveyed verbally to theIndonesian government. When the IMF visited Jakarta in1998, another meeting was held at the Grand Hyatt hotel.At that time, there was an intensive exchange ofcommunication between workers in Indonesia and the IMFand the World Bank.

6 The government’s ratification of ILO Convention No. 87 was viewedby Anne Banwell (case study on the role of the Indonesian ProsperityWorkers’ Union (SBSI) in drafting Law No. 21 of 2000) as “a result of bothnational and international pressures, one of the first acts of the incominggovernment was labor law reform.” (Anne Banwell, “SBSI and the TradeUnion Bill,” Case Study II, Jakarta: 2001, p. 1.)


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At the Grand Hyatt meeting, we also asked them to urgethe Indonesian government to speed up reform of the “fivepolitical laws” and to release political prisoners, includingMuchtar Pakpahan. These requests were successful. Itturned out later that Pakpahan was the first political pris-oner to be released as a result of the discussions with theIMF and the World Bank. Those discussions probably alsoexplain why Habibie then ratified the ILO Convention: thegovernment would not have responded so quickly in theabsence of international pressure. Not long after his release,Pakpahan was invited to come and speak at an ILO forum,where the audience gave him a standing ovation.

Apart from its positive impact on the labor movement,ratification also had a number of negative implications.Maria Dona7 noted five such implications of ratification.First, since the government ratified Convention No. 87,horizontal conflicts have arisen between labor unions inindividual enterprises as they struggle to be acknowledgedas the sole representative union. Previously, non-SPSI laborunions confronted the government and enterprises solelyin fighting for workers’ interests. Secondly, workers inindividual enterprises have been affiliated in a number oflabor unions, thereby diluting membership. This hasadversely impacted on the position and bargaining powerof labor unions in relation to the enterprise. Thirdly,ratification of ILO Convention No. 87 has so far notautomatically resulted in freedom for the executivecommittees of non-SPSI labor unions to be active at the

7 Maria Dona, “Democratic Labor Union amidst Changes in the LaborSituation 1997–2004,” SEDANE Journal, Vol. 3, No. 1, 2005.

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enterprise level. Fourthly, the emergence of non-SPSI laborunions, each with their own characteristics, “banners,” andissues, has created difficulties in reaching agreement onissues within the labor movement (labor unions and laborNGOs) at the local and national levels. Fifthly, a split in thelabor movement has emerged, between the labor unions andthe labor NGOs. However, because the labor unions stillneed the NGOs, especially with regard to education on laborlaws, the debate on this split has yet to really get underway.

By means of Law No. 22 of 1999 on regional government,Indonesia entered an era of regional autonomy. From apolitical perspective, this was obviously progress. With theimplementation of regional autonomy, delegation ofauthority to regional governments increased, includingdecision-making on the minimum wage, which waspreviously the responsibility of the DPPN (NationalRemuneration Research Council) at national level and ofthe DPPD (Regional Remuneration Research Council) at theprovincial level. Since regional autonomy was introduced,the Minister of Manpower has delegated authority to theprovinces and districts/cities to decide on and implementminimum wages. The minimum wage, which used to becalled the UMR (“regional minimum wage”) was renamedthe UMP (“provincial minimum wage”) and the UMK(“district/city level minimum wage”). This change inminimum wage policy has also affected the mechanismsfor formulating wages in general, as well as the partiesinvolved in the wage boards , at the provincial and district/city level.


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Another important milestone in the development of thelabor movement took place in 2000, when the governmentenacted Law No. 21 of 2000 on labor unions/trade unions.This Law introduced the freedom for workers to establishorganizations to represent their interests. Only 10 workersare needed to establish a labor union at the enterprise level.

On the other hand, the Law also has a number of negativeimplications. As already mentioned, the emergence of somany labor unions has exacerbated conflicts between laborunions, triggered by competition to attract members withinan enterprise and competition to obtain legitimacy as theworkers’ representatives. To take one example, at a largecigarette company in Central Java – Gudang Garam – therewere more than 18,000 workers, represented by more thanfive different labor unions, all competing to represent theworkers (Hemasari Dharmabumi, 2000: 21). In 2002, the issue of most concern to the labor movementwas its rejection of the Draft Bill on industrial relations,dispute settlement, and the development and protection ofthe workforce. The main focus of this rejection was theregulation legalizing the delegation of work in the form ofoutsourcing and subcontracting. The labor movementargued that this would reduce employment security andlabor rights.

In 2003, the government and the House of Representatives(DPR) passed Law No. 13 on employment. Although noteverything in the law reflects workers’ aspirations, it is stillconsidered to be pro-labor: for instance, the provisions

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limiting the type of work which can be performed on a part-time basis. The law clearly stipulates that work agreementsfor a fixed period (PKWT) – that is, contract work – can bemade only for particular jobs, according to their nature orwhen the job will come to an end in a specified period. Thus,if a job is basically a permanent job, it may not be performedunder a work agreement for a fixed period. The provisionon severance pay in the case of employment termination isalso fairly good for workers in comparison to the previousera.

Workers’ demonstrations between 2003 and 2005 mostlyconcerned enforcement of the Law. Companies continuedto employ workers on fixed contracts rather than takingthem on as permanent employees. There were alsodemonstrations against employment termination and on theissue of severance pay.

After a relatively calm period in 2005, in 2006 a major labordemonstration was staged. This time, the workers wereincited by the government’s plan to revise Law No. 13 of2003. In some quarters, the Law was considered too pro-labor and detrimental to employers. The government,therefore, felt that a number of amendments were necessary,which the workers believed would harm their interests. Theplan to revise the Law was the clearest sign yet that theSBY (Susilo Bambang Yudhoyono) administration was noton the side of labor. The tendency of the planned revisionwas to liberalize employment policy to attract foreigninvestment, at the expense of the workers.


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At the end of 2008, the workers joined forces to reject theJoint Decision Letter produced by four ministersrecommending that wages be determined by Governors orDistrict Heads to ensure that wage rises did not exceedproductivity growth. According to the government, thispolicy was intended to serve as a safety net for workers inthe face of possible job losses as a result of the economicdownturn. The workers believed, however, that the proposalwas unrealistic, given that their burden must also increase.Limitations on wage increases like this could only harm theinterests of the workers.

A whole range of important developments with regard tolabor issues after Reformasi make it clear that the labormovement must reorganize its course, vision, strategy, andfocus. In the 1990s, before Reformasi, its oppositionalcharacteristics were the labor movement’s key attributes.After Reformasi, however, the labor movement mustreposition itself so that it can become more relevant andeffective in fighting for the best interests of the workers.

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Chapter 3

A Road Map for the LaborMovement in Indonesia

I. Main Labor Issues after Reformasi

After Reformasi in 1998, labor issues became more complexin Indonesia. The long-drawn-out economic crisiscontributed significantly to this, with issues ranging fromunemployment to legal certainty. Since Suharto wastoppled, Indonesia has undergone four changes ofgovernment. In the space of only six years, Indonesia hadfour presidents, each with a relatively short term of office.However, for all these changes in national leadership, theeconomic crisis did not seem to end. In Asia, Indonesia wasthe last country to be hit by the crisis, but also the one thattook the longest to finally get out of it.

In this chapter the outlines of the main labor issues inIndonesia are drawn, particularly in the wake of Reformasi,

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and how those issues have affected or shaped the labormovement in Indonesia is considered.

Unemployment

Unemployment has been one of Indonesia’s major problemsover the past few years. The number of jobs being createdhas not matched the number of those looking for work.

According to data from Statistics Indonesia (Badan PusatStatistik – BPS), the unemployment rate has been decreasing.BPS notes that the open unemployment rate in Indonesiain August 2008 stood at 8.39 percent or 9.39 million peopleout of a total workforce of 111.95 million. This representeda fall in unemployment in comparison to August 2007,when it stood at 9.11 percent or 10.01 million.8 However,this claim is questionable. According to the statisticaldefinition used by PBS, if a person works fewer than 35hours per week then they are categorized as in disguisedunemployment, not open unemployment, which is confinedto those who do not work at all.9 This means that a personwho works as little as one hour per week is not categorizedas openly unemployed.

Under this definition, persons are considered as inemployment even if they cannot make a living from their

8 Antara News Agency, 23 January 20099 According to the Central Bureau of Statistics (BPS), unemployment inIndonesia is classified into two groups. The first one is openunemployment, i.e. all workforce looking for a job, either new job seekers(first time job), or those who have worked previously. The second onewas underemployment, i.e. those who work less than 35 hours per week.

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job. With such a loose definition, a low unemployment ratecan be statistically maintained while the poverty ratecontinues to rise. But whether the unemployment rate isrising or falling, the real issue in Indonesia is those personswho shift from formal employment and a decent standardof living to the informal sector. The number of informalworkers today is higher than that of formal workers andthis tendency will only continue.

What is needed to solve the problem of unemployment isnot only technical adjustments but also – and moreimportantly – a change of paradigm in economic strategy.Indonesia remains too attached to the theory of economicgrowth, with its assumption that high economic growth willautomatically create jobs. In reality, the high economicgrowth driven by capital markets and capital intensiveactivities will not create many jobs. Given the current highrate of unemployment, what we need is high economicgrowth driven by labor intensive industry. Economicstimulation is needed to create jobs; we cannot just wait forthe economy to grow and hope that jobs will be created inits wake.

What Indonesia has experienced since the 1970s illustratesthe paradox of economic growth accompanied byunemployment. A study by Dhanani Shafiq in 200410 foundthat one paradox of this kind is the fact that theunemployment rate in Indonesia was relatively high andstable alongside high economic growth. As alreadymentioned, the reason for this is the fact that this economicgrowth was driven primarily by capital markets and capitalintensive industry, which does not always create new jobs.

Chapter 3 A Road Map for the Labor Movement in Indonesia

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10 Dhanani Shafiq, unemployment and underemployment in Indonesia,1976 - 2000: Paradoxes and Issues, Geneva, International Labour Office,2004. Dhanani noted some paradoxes in relation with the reality ofunemployment in Indonesia. (1). Unemployment in the urban areas isthree times higher than unemployment in the rural areas. The number ofopen unemployment in Jakarta is the highest in Indonesia. (2). Openunemployment among youth is higher than adults, although corporationsor government organizations always recruit new graduates instead ofpeople who are over 30 years old. (3). Open unemployment amongwomen is higher than men, although corporations and all modern sectorsincluding labor intensive manufacturing industries, supermarket,department store, restaurant, banks and hotels recruit more women astheir workers. (4). Open unemployment among educated workers ishigher than the uneducated. The 1997 data shows that graduates of seniorsecondary school and university predominate the figure of openunemployment i.e. 60 percent. (5). Indonesia’s economic growth sincemid 70s has reached 7-8 percent per year, but the rate of openunemployment has always reached 2-6 percent per year.

A particular weakness of Indonesian governments in driv-ing national economic growth has been their dependenceon large economic actors. However, if more attention waspaid to small and medium-sized enterprises, the effect onoverall economic growth would be enormous. This wouldalso do a great deal to improve the unemployment situa-tion. Government programs offering micro and low-inter-est credit to such companies must be properly implemented.The Indonesia government estimates that there are around40 million medium-sized enterprises in Indonesia: if thegovernment offered long-term micro credit facilities to thesebusinesses – say, IDR 10 million – accompanied by an obli-gation to take on one new worker, it would solve the un-employment problem overnight. Under such a scheme, theissue of open unemployment could also be addressed, forinstance, by offering formal or informal jobs. More impor-

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tant is the development of economically productive busi-ness activities, however. In this way, the government wouldnot need to rely so much on big business.

Informal Employment Increasing

Still closely related to the unemployment issue, over the pastfive years there has been a major decline in formalemployment, matched by a major increase in informalemployment. In comparison to 34 million formal workersin 2005, the figure is only 28 million in 2008. In 2006, thenumber of informal workers, according to BPS estimates,was 60.6 million, with only 25 million in formal employment.By August 2008 the number working in the informal sectorhad reached 69 percent of the workforce.

The increasing migration of workers from the formal to theinformal economy over the past five years has been causedby a number of factors. First, the protracted economic crisisand the lack of jobs. Companies laid off workers to maintainoperations. Second, migration is also the result of improvedtechnology: fewer workers are now needed. Third,companies are increasingly inclined to outsource or to useday laborers or seasonal workers. The situation is furthercomplicated by the fact that a number of companies haverelocated their businesses abroad.

To address this problem, what we need is more labor-intensive enterprises which would be able to absorb asignificant proportion of the workforce. At least 2.7 millionnew school graduates join the workforce every year, readyto enter the labor market. This harsh reality makes the


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development of labor intensive industry an urgent priority,so that a large number of workers could be employedquickly. The service industries alone will be unable to absorbthe new labor market entrants. In the author’s opinion, forthe next several years, prioritizing labor-intensive industryshould be adopted as the main policy for addressing theissues of unemployment and poverty.

In the past five years, a number of companies have relocatedto China, Cambodia or Vietnam, in search of lower wages.This relocation has, of course, led to more unemploymentin Indonesia, further increasing the number of informalworkers. The policy or practice of low wages has becomean important tool for survival.

In general, there are three models of competition which maybe adopted by different industries in different countries,based on (i) wages, (ii) technology or (iii) services.

Some enterprises entering Indonesia have chosen to seekcompetitiveness on the basis of low wages. This means thatwages are usually lower than wages in other countries. Ifwages rise, however, these companies relocate elsewhere,perhaps to another district: if wages in East Java are higher,employers will move to Central Java or even abroad. Thistype of industry does not have a long-term commitment; itmay be described as footloose because it is easy for suchenterprises to move – the costs of relocation are also lowbecause they lease everything.

With so many industries competing on the basis of wages,protection for Indonesian workers will be jeopardized over

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the long term. If wages in Indonesia no longer provide acomparative advantage, industry will relocate to countrieswith lower wages. We need to rethink Indonesia’s long-termeconomic strategy, including how we can deal with thiseasily-moving, footloose industry. With abundant workers,what we need is to develop labor intensive industry, butwith comparative advantage no longer built merely on wagemargins. We need to do more to enhance our industry’scompetitiveness. We must seek to excel in efficientbureaucracy, conducive taxation and banking regulations,interest rates, legal certainty and security. We must build alegal infrastructure which creates general advantages forindustry. It is no longer the time to sell our labor cheaply toattract foreign investment. In any case, in future, thispractice will not be sustainable as global marketsincreasingly converge and the same standards come to beapplied everywhere.

If Indonesia were able to increase its competitive advantagein these ways, it would be possible to overcome thereluctance shown so far by foreign investors with regard toinvesting in Indonesia due to problems with infrastructure,high costs, and overlapping bureaucratic regulations. If asolid policy framework can be established, investment willcome, even when wages have ceased to be the competitivevariable. The author’s experience in meetings with foreigninvestors confirms that their main grievance is not wages,but the other problems mentioned above. The main barriersto investment frequently mentioned are inadequateinfrastructure, including electricity, roads, clean water andtechnology, together with tangled and opaque bureaucracy:sometimes a regulation already applied at the central level


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is applied again at the local level, causing double costs. Thebureaucracy is also very slow moving. Security issues arealso important in increasing Indonesia’s attractiveness toinvestors. Without security assurances, it is difficult forinvestors to predict the risks attached to investment in thecountry. Industrial relations issues, such as wages, areranked as of lower importance by investors.

To date, there has been a misconception that labor issuesare the main barrier to more foreign investment in Indonesia.As a result, the government has adopted a number ofpolicies to control wages. However, only in industries whosevery survival depends on wage margins is this a crucialissue. Such industries or companies will tend to relocate –or at least threaten to do so – if labor unions ask for decentwork, decent pay and decent living standards for workers.They are not ready to compete in other ways and thereforeopt to migrate to places where the wage structure seems tobe more beneficial. As already mentioned, relocation cantake place between provinces or between countries.

Educational and Skills

One of my main criticisms of the high unemployment rateis the fact that for so long we have failed to adopt the rightstrategy to address unemployment in Indonesia. Oneproblem is that the education system still does not meet theneeds of the labor market. What is taught in universities orschools often takes little account of the labor market. Thecurriculum is not designed appropriately.

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Another issue is the lack of vocational education. Secondaryschools are dominated by general schools whose mainorientation is to prepare students for higher education.However, many of our young people go no further thansecondary school and enter the labor market without theskills they need. The national and international media arefull of stories about skills shortages – in Indonesia, vacanciescannot be filled due to lack of competence and experience.What is needed in the future is more and more young peoplegraduating from vocational schools and polytechnics. Thegovernment needs to pay more attention to this. In order tobetter equip our youngsters for the world of work, thegovernment must, for instance, set up more VocationalTraining Centers. School curricula must also be adapted.Enterprises, too, must take more responsibility fordeveloping a skilled workforce. Participation of enterprisesin giving additional work experience to young people mustbe enhanced through well planned apprenticeshipprograms.

In order to promote Vocational Training Centers, theirestablishment should be based on a Presidential Decree,which would be implemented in all regions up to sub-districtlevel. If the number of Vocational Training Centers wasincreased systematically, the effect on the provision of askilled workforce would be remarkable. By means of aPresidential Decree, furthermore, Vocational TrainingCenters could be established not only in urban areas –particularly, big cities – but also in the regions. This wouldhelp to overcome labor market deficiencies. Localgovernment should take more initiative and be moreresponsible for preparing citizens to acquire the skills


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required by the labor market. With high training standards,the outcome of vocational training in a given region wouldbe competitiveness at the national level as workers wouldbe able to enter the domestic labor market anywhere.

It is important to underline the fact that Indonesia today issuffering not only from a lack of jobs, but also from shortagesof skilled workers. In other words, jobs are available, butthere are not enough skilled workers to take them. Thisproblem will become ever more apparent as globalcompetition increases, with every country increasinglyrequired to open up its labor markets. Several years ago,people in Sumatera competed only with their compatriotsin Java for jobs; today, they have to be ready to competewith fellow workers in China, India, Japan, Korea and otherdeveloped countries. In 2015, ASEAN countries will openup to form a single market. This means that youngIndonesians will have to be prepared to compete withworkers, not only in Indonesia but also in other countries.When the labor market becomes more open and competitive,there is no other way for Indonesia to participate in it thanby developing the right skills. This is a huge challenge forthe future, and we need to start thinking about it now. Ifwe do not, Indonesia will be unable to do much more thansend people to work as domestic staff in other countries.

The establishment of Vocational Training Centers,consequently, must also take place within the frameworkof a long-term vision: preparing workers who aresufficiently skilled and able to compete in the global labormarket. In meetings with a number of foreign investors, theauthor was made aware that one of the main problems

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investors face when seeking to invest in Indonesia is thelack of experts. Bringing in experts from other countrieswould clearly increase their costs. For example, in Indonesia,the Internet reaches only 3 percent of the population. IT-based industries are sometimes put off coming to Indonesiabecause of the lack of adequate expertise. Another obstacleis foreign language skills. If Indonesian workers are tointegrate into the global labor market, mastery of foreignlanguages is a basic prerequisite, not only for working inother countries but also in Indonesia itself. Withoutpreparing ourselves properly, we will become victims ofglobalization. One of the main issues of globalization today,for workers, is how they can secure a place in the globalmarket, which is becoming flat. The biggest challenge, aswell as the main duty of the government is to provide qualityhuman resources, thereby helping Indonesian youngstersto secure a place in global competition.

Wage Issues

Wages are one of the main labor issues in Indonesia. Thewages of many workers are not sufficient to allow them tomeet their daily living costs, so enabling them to lead adecent life. Wage increases have repeatedly failed to keepup with the real cost of living.

Wages in Indonesia are better than in Vietnam, Cambodia,and Bangladesh, it is true, but below those in the Philippines,Singapore, Malaysia, Thailand, and China (Shanghai andBeijing).


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Aside from insufficient wage levels, another problem withwages in Indonesia is enterprises’ frequent failure to paythem. Although the amount of the minimum wage isformally agreed in the tripartite forum (workers, employers,and government), on the ground, many companies fail toimplement it. Only 30 percent of enterprises pay theminimum wage in compliance with the regulations. Themajority of workers have to take what they can get, underthe pressure of high unemployment, and often much lessthan the official minimum wage. For instance, most workersin shopping centers and SMEs in Jakarta are paid belowthe minimum wage. This is also the case in other regionsand sectors, such as workers on government plantations orin the urban commercial sector, as well as private securityguards. Many enterprises at the district or city level do notcomply with the minimum wage. The figures i.e. the actualamount of wage received by labors are increasing every yearin nominal terms but are eaten up by inflation, even moreso as a result of poor state supervision. Not all regions havegood, professional supervisory personnel who do not takebribes. Some regions do not even have labor inspectors.

Wages are particularly inadequate for workers with families.They often have to work overtime, even during holidays,just to meet their daily needs.

A number of factors make it possible for enterprises to avoidcompliance with minimum wage regulations.

First, the current wage system is not fair, in the sense thatwages are the same for all enterprises, regardless of whetherthey are large or small, export- or domestic market-oriented,

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a five star hotel or a basic hotel, a giant corporation or asmall company. Under this system, enterprises making highprofits benefit particularly, although they could afford topay higher wages. In contrast, small companies or craftshops are required to pay the same standard wage as muchlarger companies. As a result, some employers fail to paythe agreed minimum wage because of the unfairness of thesystem. Indonesia needs to realign its remuneration systemto follow the model implemented in many other countries,where wages are classified into three types: first, wages forsmall/micro businesses (marginal businesses) and SMEs;second, wages for labor intensive industries; and third,wages for white-collar workers. In Indonesia, wagecalculations apply equally to all classes of business, hencethe deviations and inconsistencies.

Second, the high unemployment rate in Indonesia does notprovide workers with many options; they simply have toaccept unfair wages because they need the job. Manyworkers still receive wages lower than those prescribed inthe UMR provision (Upah Minimum Regional – RegionalMinimum Wage) and their living conditions are very poor.

The minimum wage system must be changed to take intoaccount the scale of the business unit and each enterprise’sability to pay. Enterprises must be categorized on the basisof size, demonstrated on the basis of truthful andtransparent bookkeeping. If necessary, the government cansend in independent auditors if the workers suspect fraud.In setting wages, the government must not evade itsresponsibilities; it must remain involved in decision-makingon minimum wages in districts and municipalities (safety


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net wage). Companies must not pay below the level of thesafety net wage as prescribed by the government (throughtripartite discussions). Thus, more profitable enterprisesshould pay workers above the safety net minimum wage (5percent or 10 percent higher, depending on profits andproductivity). Under such a system, the minimum wageshould be the lower limit, functioning as the minimumreference amount in all regions. Wage levels in eachenterprise should be negotiated separately andtransparently. Therefore, a more advanced enterprise withhigher profits can pay higher wages. At the other extreme,enterprises which are about to go bankrupt must be treatedappropriately. This also means that subsidies should not begiven to large companies because the practice is detrimentalto small companies, as is the case today. The author has, ona number of occasions, proposed that the governmentrealign the wage system. This will require significantchanges in the law and must be at the top of the labormovement’s agenda for the foreseeable future.

The new remuneration system proposed here assumes thatemployers and workers must be transparent in negotiatingwages in the enterprise. Without transparency, it is verylikely that conflicts will occur.

Reference is sometimes made to the classical dilemma withregard to wages and employment. On the one hand, workersdemand higher wages, while on the other hand, there is ahigh rate of unemployment. It is argued that higher wagesmay reduce the capacity of companies to maintain, let aloneincrease employment, and so the market should be allowedto determine wages.

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It is true that some enterprises compete on the basis of lowwages. However, there are also enterprises which invest inIndonesia because of the country’s natural resources, goodmarket, manpower, and infrastructure. This is whatIndonesia must emphasize in its pursuit of foreigninvestment. The main attraction for investing in Indonesiacan no longer be the promise of low wages. If companiesare not willing to invest in Indonesia for any other reason,the country should not worry. It should be public investmentpolicy not to promote investment based on laborexploitation.

In October 2008, the Joint Decision Letter or SKB (SuratKeputusan Bersama) of the Four Ministers (Manpower, HomeAffairs, Industry, and Trade) was issued. The SKB stipulatesthat minimum wage increases in each region shall notoutstrip the national rate of economic growth. Thegovernment’s aim was to enable employers to remain inbusiness and to refrain from laying off workers in the currenteconomic crisis. Under this policy, low wages represent akind of stimulus or incentive for business.

This policy was, of course, rejected by the labor movement,principally on the grounds that the rate of economic growthcannot be used as a reference in determining by how muchwages should increase, particularly in view of the fact thatover the past few years economic growth has generally beena mere 4 percent or so. Workers’ living costs have risen morethan the rate of economic growth. As a result, workers wouldinevitably be worse off. The reality of pauperization isincreasingly the experience of workers in Indonesia.


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Outsourcing and Contract Work

Outsourcing and contract work are global phenomena.Indeed, they might even be described as “icons” ofglobalization. Outsourcing is very much a marketmechanism, intended to improve business efficiency.However, such practices create major employmentuncertainties.

In general, outsourcing can be divided into two forms. First,job outsourcing involves the assignment of specific tasks toexternal parties on a contract basis. This practice has a longhistory. Secondly, there is “human outsourcing,” whichlargely involves dividing business operations into smallerunits.

The labor movement is opposed to human outsourcing. Thispractice can be a source of efficiency for businesses, but itseriously harms the interests of workers, bringing down theirwages and making employment uncertain. For enterprises,splitting their operations into smaller units makes it easierfor them to react to changes in the labor market and theeconomy. For workers, on the other hand, this makes it moredifficult for them to organize in pursuit of their interests.Workers may be contracted to work only for a certain periodof time and so have no certainty or security of long-termemployment.

Take the example of Colombia in Indonesia. This companydoes not have large stores; usually, there are no more than15 employees in a given establishment, which makes laborunion recruitment difficult. The workers in Columbia are

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fragmented, small in number and have the status of contractworkers. This reduces the capacity of labor unions to expandbecause recruitment is expensive and the time span for workis too short for organising. This can harm the labormovement significantly. In the past, labor unions were ableto sit down with the company management to negotiateand all workers could be union members. Today, companiescan be divided into 50, even 100 smaller entities, forcinglabor unions to contend with that many counterparts if theywish to attempt negotiations. This is a complex process andtakes time. However, non-unionized workers tend to beexploited because they are unaware of their rights and ofchanges in the law.

Today, for example, a security guard working at a particularcompany may work under a separate management. Thesame applies to office cleaning staff. They do not have adirect contact with whom their needs and rights can bediscussed; everything has to be done through anintermediary. Such workers do not even know to whomthey should turn if they have complaints. This differsconsiderably from the previous management system:workers and management were part of the same company.If the workers had a problem, such as an accident at work,they did not have to go to the trouble of finding out whothey had to deal with. The workers in a given establishmentmay be employed under a number of different managements:one for security guards, one for the cleaners, one for frontoffice staff and one for drivers. The only thing these workerswould have in common is their status as outsourced workers.The same holds true in companies such as McDonalds,whose delivery and cleaning staff are outsourced workers.


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Perhaps the only workers who are not outsourced are thosewho work as cashiers.

Conceptually, contract workers are different fromoutsourced workers. Outsourced workers are, for example,permanent, while contract workers are – by definition – not.Outsourcing or outsourced workers may create competition,but not contract workers. Outsourced workers have accessto severance pay, but not contract workers. In practice,however, around 80 percent of outsourced workers arecontract workers. The definition of outsourcing remainsunclear: the law has laid down some boundaries, but it mayhave multiple interpretations. The government needs to setclear restrictions on which sectors should use permanentworkers to perform jobs. For fields of work which cannotbe unambiguously classified as permanent or non-permanent, further arrangements must be made by bipartiteforums or through negotiation. The hotel sector, for instance,must clearly specify which part of the business constitutesthe core business, which must use permanent workers, andwhich part can be outsourced.

Our biggest criticism of outsourcing is that it does notprovide proper protection for workers. Many outsourcedworkers are employed in production units or other coreunits, which is prohibited by Law No. 13 of 2003.Unfortunately, the Law does not clearly stipulate sanctionsfor violations of outsourcing regulations. The Law is lackingin detail, hence the frequent misinterpretations. It must,therefore, be amended to include sanctions for violations.

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Outsourcing is the truest manifestation of the principles oflabor market flexibility and it can be found in almost allparts of the production process. Experience shows that labormarket flexibility generally takes the form of changing thestatus of permanent workers to that of contract workers.The rights of contract workers and outsourced workers areunclear. Contract periods which violate the Law (that is,annual contracts) are often extended more than three times(with a one month interval between contracts). Enterprisesoften dismiss permanent workers who are active in the unionand replace them with contract workers.

Criticisms of using outsourced and contract workers alsorelate to working conditions. Discrepancies arise betweenpermanent workers and contract/outsourced workers interms of facilities, wages, and employment status, despitethe fact that they often do the same work. There is alsoflexibility of working hours. Non-permanent workers areoften employed without any limitation on their workinghours and without additional remuneration. Some mayreceive overtime but many do not. For permanent workers,the presence of contract and outsourced workers alsoreduces their income since enterprises tend to give extrahours to non-permanent workers.

Such practices have led to a degradation in workers’ welfareand working conditions. Real wages are also declining.Contract and outsourced workers in general do not receiveanything other than their main salary; they also have topay a monthly fee to their agency. There are no benefits orother facilities for non-permanent workers (contract/


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outsourced workers) such as those of permanent workers,although they do the same work.

Labor market flexibility indirectly eliminates workers’ rightsto fight for their interests, including the right to strike. Thedemands and strikes of outsourced workers can easily becountered by employers simply by means of lay-offs. Asalready mentioned, labor market flexibility adversely affectslabor unions by systematically eliminating permanentworkers, who constitute the basis of labor unions. Unionorganization is seriously hindered in this way, asmembership falls and it become increasingly difficult to buildsolidarity.

To date, the supervision of compliance with regulations oncontract workers or the Work Agreement for Definite TimePeriods (PKWT), outsourced workers and severance pay fordismissal, as stipulated by Law No. 13 of 2003 has beenvery weak. There are no sanctions for practices which clearlyviolate a range of provisions in the Law. The main sourceof weakness is the failure of those charged with enforcinglabor law, particularly the Disnaker (local manpoweroffices). These offices suffer from a low level of competence.

The other source of weakness in the bureaucracy iscorruption, including the involvement of officials engagingthemselves in outsourcing business practices. The role ofthe Disnaker is also considered to be less important by localgovernments in terms of increasing PAD (Regional Own-Revenue). In general, local governments pay little attentionto public welfare.

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Employment Supervision

The current employment supervision system is anothersource of problems in Indonesia. Employment supervisionis intended to monitor compliance with labor policies, witha view to protecting the interests of workers. It is alsosupposed to provide the government with information onpolicies in need of improvement. This supervisory institutiondoes not have any authority to impose sanctions, however.It is purely advisory in function.

Employment supervision was centralized prior to theintroduction of regional autonomy. Since Reformasi,inspections are carried out autonomously at the district orcity level. Inspections are no longer centralized, butdelegated to the regional supervision. However, thisdecentralization has caused supervision to grind to a haltin many regions, which do not pay it much attention.Consequently, inspection standards are low. Inspection, intheory, applies to both employment practice on the groundand the implementation of labor laws in and outside theenterprise. Compliance with laws, supervision at regionallevel, implementation of jamsostek (social security forworkers), wages, employment issues, and other workingconditions must be supervised by the government throughspecial inspectors. This supervision has been delegated tothe regions, but, as already mentioned, they do not considerit a priority. Many local manpower offices are notfunctioning properly and have even been merged with otheroffices, such as local offices of the funeral department.


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At least four issues have been identified as characteristic ofthe system and practices of labor inspection in the regions.First, the number of labor inspectors is too low to cover thenumber of workers for whom they are responsible: the ratiobetween the number of inspectors and the number ofenterprises for which they are responsible is 1:110 – the idealratio would be 1:40. The second issue is professionalism:among other things, inspectors are not adequately trained.Third, the perception of the political leaders in the regions,who do not consider supervision to be important and oftenmerge it with other affairs. Fourth, collusion and corruption:there are no follow ups on complaints and, hence, noimprovements result.

Ideally, supervision must be carried out on a tripartite basis,involving government, labor unions and employers. Thesupervisory system is also intended to enhance industrialrelations in the regions. The government should not be solelyresponsible for problems in industry; the labor unions mustalso be involved. This understanding and accompanyingpractices have been implemented in many countries, suchas the Netherlands and Belgium. In both countries, althoughthe government takes the lead in supervision, the unionshave access to the relevant information, such as officialreports of the Prosecutor’s Office, the findings of criminalinvestigations and budgets allocated to supervision, whichin Indonesia is allocated from the APBD (local budgets). Atripartite approach has been adopted in Indonesia on anumber of issues, such as occupational safety and healthand productivity, and it is time to set up a tripartitesupervisory system. This would also enable legislators toenact more appropriate laws. Workers and employers must

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also receive proper training to enable them to participate insupervision properly. Local government must step in here,for example, by funding training and providing certificationfor inspectors. With an effective supervisory system in place,the number of industrial conflicts would be reduced and,in the long term, productive and harmonious industrialrelations would develop.

Social Security for Workers

Another labor issue that requires serious attention is socialsecurity for workers. The basis of our concern is the factthat many workers do not have decent social security.Ideally, every enterprise should provide social security forall their employees, regulated by law. In reality, at mostcompanies coverage is extremely patchy. Only a smallnumber of enterprises have joined Jamsostek. Data from PTJamsostek in 2008 show that only 26 million workers from172,444 enterprises are signed up to the Jamsostek program.Only 7.8 million of them are active, while the rest no longerpay contributions regularly.

A number of factors explain the low participation ofemployees in the Jamsostek program. For example, manycompanies have not signed up to Jamsostek. Also, awarenessis low among workers; low levels of education are a factorhere and no politician has so far sought to explain this issueclearly to workers. Furthermore, in practice, there are nosanctions on failure to participate in Jamsostek. The pooradministration of Jamsostek is another factor; it does notencourage enterprises and employees to participate in


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Jamsostek. PT Jamsostek is still much in need ofimprovement.

Aside from social security for workers as it is generallyfound, we need to think about alternative models of socialsecurity in Indonesia. One would be social security for theunemployed. One reason why workers in Indonesia needthis kind of social security is that they are vulnerable to lay-offs. The basis of the idea is that there is a need for securityfor employees when they become unemployed and areunable to get a new job. The basic principle would be toprotect workers’ welfare, whether they are employed orunemployed.

Indonesia would benefit greatly from the implementationof this model of social security. Other countries, such asVietnam and India, have implemented such practices bymeans of a number of simple mechanisms. Revenues can becollected from salaries – for instance, a 5 percent deduction.When the employees eventually claim their pension, theircontributions are retrieved. In order to encourage theparticipation of workers in this program, we can adopt themodel introduced in Thailand, where funding is borne byboth the workers and the government. But such fundingneed not burden the APBN (National Budget). We can seekalternative sources. We may also be able to take lessons fromFrance, where assistance for poor people in developingcountries is not merely derived from the government budgetbut also from funds collected from the public. For instance,there is a 2 percent deduction from airfares. In Indonesia,we can put the same thing into practice. Let us say thateveryone who purchases an air ticket pays an additional

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amount of IDR 10,000 as a social security fund contribution.This could represent a major source of funding, which thestate could manage for the welfare of workers in Indonesia.At Sukarno Hatta airport, 48 million people board planesevery year: imagine what that would mean if they allcontributed IDR 10,000. Another method would be to collectan additional amount from all phone bills which come tomore than IDR 1 million. There are many ways of raisingrevenues.

Does this mean that other people must bear the brunt ofunemployment? Social solidarity is important. Those whoare well off must contribute more in terms of socialcontributions. Workers must bear the main responsibilityfor their own protection by saving a certain percentage oftheir income, however. The government, through publicfunds, will provide only partial assistance.

There would, of course, be time restrictions for benefitpayments. For example, assistance would be provided onlyto those who have previously worked; the period in workwould determine the level of the benefit payment. Ifsomeone has worked for three years, for example, the benefitmight be for only three months. If the person in questionremains unemployed, from the fourth month they will nolonger receive benefit. In other countries, the unemployedare entitled to 100% assistance in the first three to six months,followed by 75 percent until the assistance period runs out.

Jamsostek would be the right institution to manage thissystem. At present, however, it is hemmed in by legallimitations. If we want PT Jamsostek to manage social


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security, the government must review the legislationregulating how it operates.

II. Nine Steps to Break Out of the Labor Crisis

The labor issues described in this chapter are fundamentallyinterconnected. An integrated and coherent framework istherefore necessary for their solution. An effectivegovernment policy framework must address at least nineareas.

1. The government must take concrete measures to reduceunemployment by setting targets: for example, theunemployment rate must be reduced to a set figurewithin five years. Such a clear formulation would serveas a benchmark, enabling everyone to see whetherefforts to reduce unemployment were actuallyworking. For the government, it would serve as thebasis for performance evaluation. The commitment toreduce unemployment must be implementedsystematically: it is not enough to provide a generaloutline without clarity on operational aspects. Thus,a roadmap must be established for an UnemploymentReduction Framework, with a clearly targetedschedule and clear identification of the bodies directlyresponsible for implementation.

2. The government must provide more vocational trainingand revive the Vocational Training Centers at districtand city level. It must also establish affordablepolytechnic education. This must become part of theemployment strategy in Indonesia, not only in relation

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to the domestic labor market but also labor marketsabroad.

3. Unemployment must be addressed by means ofincreased economic growth and immediate jobcreation. Economic growth without the creation ofnew jobs would not do much to strengthen thefoundations of the national economy, and would besocially and politically damaging. In order to spureconomic growth alongside job creation, thegovernment must provide more funding for all businessinitiatives likely to create jobs, particularly for smalland medium-sized enterprises.

To support such efforts, the government mustimplement tax incentive programs (tax reductions) andallowances (such as reduced interest rates, cheaperrents) to labor intensive businesses. Businesses with along-term future and employing many workers shouldbe encouraged.

4. Foreign direct investment (FDI) should be encouragedby improving infrastructure, reducing costs andcreating harmonious industrial relations. Low wagesshould no longer be used as an incentive to attractFDI. The government needs to reduce costs (legal andillegal), so the competitiveness of Indonesian industryis not based on low wages (cheap hiring and firingcosts), but on good infrastructure and efficientbureaucracy.


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5. Freedom of association and negotiation should beencouraged. The more collective agreements arereached between workers and enterprises, the moreconducive industrial relations will be. Collectiveagreements are basically a form of partnershipbetween workers and employers, based ontransparency and accountability.

6. The government needs to formulate clear policies toprevent “human outsourcing” and misuse of contractwork. There are a number of directions that can beused as reference. First, the abolition of humanoutsourcing (workers who do their jobs in oneenterprise but are employed by another). Outsourcingon a contract basis for reasons of specialization wouldstill be allowed – as when, for instance, Toyotaoutsourced the making of leather car seats to acompany specializing in such production – as long asthe working conditions and requirements are the sameas those applied by the primary company. Second,the wages of outsourced workers and contract workersmust be higher – by at least 8.3 percent – than those ofpermanent workers. This 8.3 percent margin wouldtake the form of a monthly contribution to substituteseverance pay. Third, the working time of outsourcedworkers and contract workers should take intoaccount the entire working period including previousprofessional experience. This would help to preventarbitrary lay-offs (particularly for the purpose ofmuzzling labor union activists). Fourth, in order toprevent abuses of outsourcing and contract workers,labor inspection should be carried out on a tripartite

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basis. Even though those producing the BAP (officialreport) would be government employees, all partiesinvolved in the inspection system would be allowedto follow up the findings. This is aimed at creatingstronger legal enforcement and reducing collusion/corruption.

7. Membership of Jamsostek must be increased. To thisend, Jamsostek must be reformed immediately. It mustbe turned into a trust fund and a minimumcontribution (of both employers and workers) of upto 20–22 percent must be established, alongside theexpansion of membership and programs.

8. A program must be launched for social security for theunemployed. This could take the form of a kind ofunemployment allowance. A number of countrieshave already put this into practice (Thailand,Malaysia, Vietnam, China and South Korea). Theadministration could be carried out at national orregional level or, as already explained, funding couldbe obtained from the government (national orregional), as well as from workers and employers ona voluntary basis (Corporate Social Responsibility,CSR). The Law on Regional Autonomy shouldstipulate that each region create social securityprograms to provide training on skills enhancementfor those who are made redundant. Funding could beobtained from local government as part of CSR (sinceCSR is obligatory in Indonesia). This training could beprovided in certified regional vocational trainingcenters.


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9. The Industrial Relations Court must be reformed. TheIndustrial Relations Court (PHI) was established onthe basis of two main considerations. First, becausethe old system (P4D /P4P) were too protracted andcostly and decisions were not binding. Second, PHIwas expected to provide rapid resolutions: no laterthan 50 days in the District Court and no later than30 days for PHI after an appeal to the Supreme Court.

In practice, however, the Industrial Relations Courthas experienced significant problems over the past twoyears. First, in theory, Law No. 2 of 2004 confirmsthat any claims with a value of less than IDR150,000,000 shall be free of charge. However, in thePHI in the District Court system, workers must payfor an official stamp, administrative fees and a fee toreceive notification of the decision. Second, trials forindustrial relations cases are often neglected sincecareer judges and registrars usually prioritize trials inthe general court. Third, allowances for lay judges areoften paid late, and in any case are very low, at onlyIDR 3,750,000 per month, without any socialprotection. In comparison, career judges in the courtof first instance receive a salary, allowances and otherbenefits in the amount of more than IDR 10,000,000.

The use of Civil Code procedures in the PHI has hadadverse implications for workers. Lengthy trials andprotracted evidential procedures deprive workers ofan equal footing in comparison to employers. In termsof documents and witnesses, for instance, workers donot have any access at all to the evidence because the

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employers have absolute control over theiradministrative and personnel affairs – evidence in thesetwo areas constitutes the bulk of the evidence in mostcases.

The period established for appeals to the SupremeCourt is subject to virtually no time limit, moreparticularly with regard to non-judicial processes,such as administrative correspondence on supremecourt judges’ assignments reaching decisions anddelivery of the decision.

The government needs to reform the Court andestablish a reliable PHI, enabling not only workers,but also employers to obtain justice when industrialdisputes occur.

By taking these nine steps – which might be described as aroadmap – labor issues and the investment climate inIndonesia would be improved, promoting long-termproductivity and economic growth.


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Chapter 4

The Ideal Characteristics of theLabor Movement

1. The Present Condition and External Challenges of Labor Unions in Indonesia

In the past ten years, workers in Indonesia have faced twomain challenges. First, the economic situation is yet to emergefrom the global crisis which struck in 2008. This crisisthreatens to erode Indonesia’s economic capacities acrossthe board. Second, still under the aegis of neoliberalism,globalization seems to be gaining strength in its attempts toenter Indonesia and force it, ready or not, to open itself upto the global liberalized market.

Alongside these two major concerns, the labor movementin Indonesia is facing a number of other problems andexternal challenges. We shall concentrate on eight issues inparticular.

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(a) Freedom of Association

Freedom of association is yet to be fully accepted. At firstglance, this seems rather paradoxical, given the moredemocratic political environment since political liberalizationin 1998. The emergence of many new labor unions at alllevels – enterprise, city, provincial, sectoral and national –has not eliminated violations of freedom of association,however. Stories continually emerge of labor unions beingmuzzled and labor activists imprisoned or criminalized fordemanding workers’ rights. Ideally, the issue of freedom ofassociation should have been settled, once and for all, andworkers’ energies diverted to more important issues, suchas occupational safety and health, the impact of globalwarming on employment, and universal social security.

Law No. 21 of 2000 on the establishment of labor unions isconsidered very liberal: it is possible to establish a laborunion with only 10 people. The only other country in Asiawhich is as liberal with regard to the establishment of laborunions is India, where as few as seven people can establisha labor union. Both exceed the ILO recommendation of aminimum of 20 people for the establishment of a new laborunion.

However, it is important to note that this liberalism remainslargely on paper. In reality, especially at the enterprise level,employers and managements only accept labor unions whencompelled to do so, not because they believe that thepresence of labor unions in the enterprise is a good thing.Labor unions are largely imposed on them as industrialrelations partners. The notion of compulsion is a legacy from

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the past. Under the New Order regime, the closest partnersof the employers were the military and the governmentapparatus. At that time, the employers were able to call onthe armed forces – which were particularly powerful in thosedays – to quell workers’ demonstrations.

The employers could also rely on the state bureaucracy tosmooth their path when it came to permits or licenses, aswell as with regard to wages. The employers chose to dealwith bureaucratic decision-makers rather than negotiatewith the workers. The situation today is different: employersneed to approach the labor unions and employers’associations if they wish to adjust wages, for example, inline with productivity.

Today, when the freedom to establish labor unions isstrongly anchored in the law, employers are forced to accepta union presence as a legally incontestable fact. As alreadymentioned, in Indonesia labor unions are only grudginglyrecognized – the employers have not experienced anepiphany and come to the realization that they need anegotiating partner or that industrial relations should becharacterized by equal partners coming together to try toreach agreement in a spirit of mutual respect, not to mentionunderstanding the benefits of a strong and capable partnerin industrial relations, one which is able, for example, tosuggest alternatives for more efficient production processes,laid down in mutually beneficial collective agreements. Fewemployers as yet understand that, by accepting labor unionsas partners, enterprises can become more productive andsustainable.

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(b) Labor Unions Considered as Barriers to Investment

There is a strong negative perception that labor unionshinder investment.

Those who continue to assert that the presence of laborunions, whose main purpose is to fight for the interests ofthe workers, hampers investment in Indonesia often citeworkers’ demonstrations in support of their rights, which,they claim, have scared investors away. This opinion iswidespread, not only among academics, but also the public.

Workers’ struggles have never led to enterprise bankruptcies.However, the workers are often made the scapegoat to coverup management failures. In Indonesia, labor costs are, atpresent, a mere 6–10 percent of total company costs. Laborunion demands for wage increases and improved welfareconditions could be offset by increasing productivity,enhancing production, adjusting market strategy andimproving efficiency. A World Bank survey of 26,000enterprises in 53 countries, carried out in September 2006,ranked employment issues eleventh among the factorshampering investments in developing countries. Far moreimportant in this regard are such things as legal and politicaluncertainty, instability, high taxation, corruption, and anadverse regulatory framework and judicial system.

(c) Weak Implementation of Freedom of Association

So far, no employer or manager has even been prosecuted,still less punished for obstructing the establishment of a laborunion at the enterprise level. On the other hand, many labor

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activists have been imprisoned for fighting for freedom ofassociation. For example, nine SBSI activists have beenimprisoned in the past four years, all of them based on“elastic articles” in the Criminal Code, such as incitementor distributing offensive material. In contrast, the police havedone little about allegations brought by workers concerningsuch criminal matters as fraud and embezzlement – forexample, workers’ Jamsostek contributions have beensubject to embezzlement. Wage payments have also beensubject to abuse, lay-offs are often carried out incontravention of the law, and hired thugs are often broughtin to intimidate workers. At the beginning of Reformasi, thepolice appeared to engage in reform, particularly after theywere separated from the TNI (or ABRI, at that time), but inthe past few years police failures to follow up complaintsfiled by labor unions concerning violations of Law No. 21of 2000 have been appalling. Many police officers areapparently unaware that the Law even exists.

(d) Changes in Employment Status: From Permanent toOutsourced / Contract Workers

This is the most important issue the labor movement hashad to face in the past 10 years. As globalization went fromstrength to strength under the impulse of neoliberaleconomic ideas, international financial institutions such asthe World Bank, the IMF and the ADB demanded moreflexible employment to make it easier for employers torecruit and dismiss workers. The World Bank caused somecontroversy in 2008, for instance, with its “Doing BusinessReport,” in which they advised countries wishing to addressunemployment and attract foreign investments to make


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their labor policy as flexible as possible. In brief, the reportadvised that the lower the cost of hiring and firing workers,the better the country would appear in the eyes of foreigninvestors. They also advised that laws stipulating highamounts of severance pay or redundancy benefits shouldbe revised, making it possible to reduce or even abolish suchpayments.

Many neoliberal economists concurred, without consideringthe fact that social security benefits in Indonesia were amongthe lowest in the world. The belief prevailed thatunemployment in Indonesia justified the notion of labormarket flexibility. For the sake of efficiency, employers wanttheir workers to work under temporary contracts which donot entail their eventual appointment as permanentworkers. Outsourcing has become rampant and poses aparticular challenge to labor unions as it erodes themembership base (see Chapter 3) and impoverishes theworkers.

(e) Unemployment and Informal Employment

Unemployment and the huge proportion of workers in theinformal sector – now standing at 70 percent of theworkforce – pose major problems for the involvement ofworkers in labor unions.

The informal sector is rather refractory with regard to laborunions because it is fluid, populated by workers who donot work regularly and are extremely fragmented. Suchworkers face major obstacles in joining or establishing laborunions. Data from a PT Jamsostek report in 2008 support

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this: a mere 64,000 informal workers were payingcontributions to Jamsostek out of 70 million informal workersall over Indonesia. Since many workers shift to the informalsector because they cannot find regular jobs, the number ofworkers becoming members of labor unions is falling.

(f) Long Working Hours

The need to work excessive overtime in order to make endsmeet inevitably limits the interest of workers in unionactivism. Low incomes and a high cost of living forceworkers to take on as much additional work as they can, asa consequence of which they have neither the time nor theenergy to be involved in labor organizations. The long-termconsequences for labor unions are that they lose membersand revenues from membership dues, which may jeopardizethe labor unions’ independence.

(g) Political Co-optation

There is a tendency in Indonesia for labor unions to be co-opted by the political parties instead of playing their properrole as political catalysts.

Many members of labor unions are also members of apolitical party and some even run for political office. Suchinteraction is not wrong; it also happens in other countries.In the Indonesian context, however, this relationship tendsto have a negative impact on labor unions because theirviews tend to be subsumed by those of the political parties,not the other way around. Ideologically, the union is thendissolved into the political party and boundaries become


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unclear. In many cases, labor union members gain nothingby sitting in the legislature because, ultimately, the dominantinterest is that of the political party or the personal interestsof individual activists. The political involvement of unionistsshould represent a good opportunity to fight for importantworker issues. In contrast, labor unions tend to be turnedinto political instruments.

Forming alliances with other forces in society, includingpolitical parties, is a matter of necessity for labor unions. Inthe United States, for example, the labor unions havehistorically formed political alliances with the DemocraticParty. The same applies in Germany to the DGB and theSocial Democratic Party, and in the UK to the TUC and theLabour Party. Many other examples could be cited. Unionsand political parties have cooperated to fight for the interestsof the workers.

It is with this in view that labor activists and labor unionsin Indonesia have tried to form strategic alliances with otherforces in society, but cooperation tends to take place only atthe practical level and not on the ideological one. In otherwords, such alliances tend to be used as vehicles andstepping stones for political purposes.

Ideally, the presence of labor unions in political partiesshould be of strategic importance, especially if the unionsrepresent large numbers of workers, giving them a betterbargaining position. Union members who enter the politicalarena should not only represent their individual interests,but also seek to introduce workers’ issues into partyprograms.

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(h) Union Independence

This is under threat because of a lack of funding. Labor unionorganizations in Indonesia are still relatively poorlydeveloped due to the low number of members andinsufficient contributions. With limited finances, laboractivists and unionists become vulnerable to financialtemptation. If it is to be financially independent at thenational level, a labor union needs a minimum of 50,000members. On the assumption that members’ monthlycontributions are IDR 5,000, the union will receive IDR 75million per month. Contributions are usually distributed asfollows: the executive at enterprise level receives 40 percent(IDR 2,000), the executive at branch/city level receives 30percent (IDR 1,500), and the executive at provincial andnational level receives 30 percent (IDR 1,500). With IDR 75million in contributions, a national labor union is able to doa great deal to serve its members. In detail, revenues tend tobe allocated as follows: office rents, stationery, electricity,water, and telephone: 25 percent (IDR 18,750,000), casehandling and advocacy 10 percent (IDR 7.5 million),education 30 percent (IDR 22.5 million), wages for threefull-time activists 15 percent (IDR 11,250,000), and 20percent (IDR 15 million) for consolidation and networking.

This is what unions have to have at their disposal if theywish to be independent from employers, government,political parties and foreign entities (not-Indonesian). Laborunions which have fewer than 50,000 members will faceproblems of financial independence, as well as a threat totheir sustainability. Aside from fragmentation as a result ofcorruption, many activists leave labor unions when they


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realize that participation in the labor movement does notguarantee a decent living, especially if they start a family.

II. Internal Weaknesses of the Labor Movement

Aside from the external challenges already described, thelabor movement in Indonesia has several fundamentalweaknesses which emerged as a result of its own actions,intentionally or unintentionally, with profound effects onthe movement’s effectiveness overall.

Ideological Weakness

The labor unions are regarded primarily as “resistance”organizations rather than as organizations whose mainpurpose is to campaign for the interests of the workers. Someactivists use their positions in labor unions merely forpersonal gain, union activities being regarded as nothingmore than an opportunity to make money. Some, forinstance, become labor lawyers or labor consultants. At itsworst, this amounts to allowing the workers’ cause to bebought and sold.

Many of those in the labor movement regard it as acontinuation of the euphoria generated by Reformasi – forexample, after ceasing to be active in the students’movement, the next stop may be the labor movement orbecoming a labor activist in an NGO. The majority of today’slabor activists and labor unions have a fluid ideology. Theabsence of a strong standpoint is clear from the way inwhich labor activists campaign on labor issues. Wages

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provide a good illustration. Often, labor activists merely reactto government policies, which are regarded as primarilyneoliberal in orientation. The labor activists do not offeralternative ideas, but instead simply reject the governmentposition out of hand.

The labor movement is particularly remiss in failing to offeralternative ideas on how policies might be pursued withoutharming the interests of the workers. For instance, on theissue of outsourcing, workers tend to reject it because it tendsto conflict with their interests. On the other hand,outsourcing is a reality in the economy and it is taking placeall over the world. No country can escape it. However, somecountries are more liberal than others with regard toimplementation. Outright rejection of outsourcing serves nopurpose; it is important to identify what particular formsof outsourcing should be abolished. The type of outsourcingwhich involves subcontracting specific tasks to morespecialized companies surely makes sense. When Toyotaoutsources its car audio or car seat manufacturing to other,more specialized companies, it is entirely justified from aneconomic standpoint. The most important thing in suchcircumstances is that the status and benefits of outsourcedworkers must be the same as those of Toyota workers. Thetype of outsourcing that should be rejected is so-calledhuman outsourcing, in which companies outsource theircore business as a means of reducing labor costs, for example,severance pay, Jamsostek contributions, and bonuses.Examples include security guards, drivers, customer servicepersonnel, waiters, and hotel reception staff. This ismotivated merely by greed and there is no considerationfor the impoverishment that it inflicts on the workers. The


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outsourcing of specialist tasks is carried out to improve thequality of the products and existed long before the adoptionof Law No. 13 of 2003. The latter kind of outsourcing is notrelated to improving products and satisfying customers –often it works to their detriment – but is done merely for thesake of bigger profits and as quickly as possible.

This practice is often referred to as modern-day slavery. Thepublic and the Indonesian House of Representatives tendto misunderstand when they hear labor unions demandingthat the government abolish outsourcing with noexplanation of which type of outsourcing is in question.What alternatives would the unions propose to improve theoutsourcing system? Alternative ideas are usually not raisedwhen labor unions campaign or engage in advocacy on aparticular practice or policy. In the effort to reduce the useof outsourcing and contract workers, for example, KSBSIhad a special hearing with Commission IX of the House ofRepresentatives and sent a letter to President Susilo BambangYudhoyono, popularly known as “SBY.”

The proposal had two parts. The first was the amendmentor abolition of Law No. 13 of 2003 and the Law on IndustrialRelations Courts. However, instigating the necessarymomentum for this may be difficult. Such processes areprotracted and, in any case, the end result might not beany better, given that the current Members of the House ofRepresentatives have a poor understanding of employmentissues.

The second component of the proposal is the developmentof new policies without having to change the law: for

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instance, the monthly wage of outsourced and contractworkers should be increased by at least 8.3 percent. (Thefigure of 8.3 percent was arrived at because, over 12 months,it is the equivalent of an extra one month’s salary.)Employers use outsourced and contract workers mainly toavoid responsibility for severance pay, for which they mustallocate at least one month’s salary for every new worker.Another idea is to involve the labor unions as members ofthe tripartite employment supervision team, for example,to help prevent corruption among labor inspectors. Thetripartite team should cooperate with other tripartiteinstitutions, such as those dealing with wages, OSH, andproductivity. Another idea is to give the labor unions theright to obtain copies of the permits for using outsourcedand contract workers issued by Disnaker, thereby enablingthem to perform oversight and take legal action if there areany deviations from the granted permit. Based on theauthor’s observations, it seems that deviations from the lawon outsourcing and contract workers are even tolerated bythe government (Disnaker): even when abuses are clear,permits are still granted. Next, the government needs toregulate that the main employer (the core enterprise) shallalso be responsible for any violations by the direct employer,in other words, the agency for outsourced or contractworkers, since the main employer chooses the partneragency. This regulation would be aimed at preventingabuses and lower payments by the recruiting agency, aswell as making principal employers more selective inchoosing a trustworthy partner.

The same applies to the workers’ rejection of the wagesystem. It is better for the labor movement to explain what


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the workers want from the wage system and not simply toask for high wage rises without further ado. This was alsothe case when the labor movement voiced its demands inrelation to the Jamsostek reform. It must develop proposalson the best social security model for Indonesia, which hashigh unemployment and enormous informal employment.There are several good international experiences on whichIndonesia can draw, such as the unemployment benefitsystems in Vietnam, Thailand and Malaysia. There is also asuccessful social security scheme for farmers’ groups in Indiaand a good social security scheme for health in Thailandand Colombia. Instead, the labor movement confines itselfto criticisms, without a comprehensive and fundamentalperspective on how the social security system for workerscan be improved and on how the system could quicklyrecruit members (social security coverage for all).

From the ideological perspective, the labor movement inIndonesia can be categorized into four groups. However,ideological tendencies in the country are quite fluid.

The first group represents the basic ideology of conventionallabor movements. The purpose of the labor movement is tofight for better welfare for workers through negotiations,demonstrations, lobbying, and other conventional methods,which have existed for a long time.

The second group comprises the “leftist” labor unions. Theydo not believe in the state and its institutions as theycurrently exist. The latter, in their view, must be totallyreplaced because they are the products of capitalism andonly harm the workers’ interests. They believe only in the

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power of the workers, on the basis of a kind of proletarian-oriented ideology. This is similar to communism, althoughit does not tend to adopt communist theories wholesale. Themain activity of this group is the staging of large and militantdemonstrations against both the global and nationalpolitical and economic systems. They do not believe indialogue as a way of solving problems.

The third group is religious in orientation, with specificallyreligious aspirations and sentiments. There are severalreligion-based labor unions.

The fourth group has no clear ideology. They call themselves“activists” and move with the tide of events. They want tohave their voice heard and are always active, but they donot have a particular point of view. This group tends to flitfrom one ideology to another. Sometimes they go along withthe religion-based labor unions, only to move on to thenationalist labor unions, before switching to the leftist laborunions. Many labor organizations today can be categorizedin this fourth or non-ideological group.

The particular ideology which characterizes KSBI representssocial democratic ideas, including consultation, dialogue,and consensus. The point is not to struggle for particularends, thereby attaining only symbolic victories: the endproduct of struggle must be an agreement. This is whatdistinguishes us from the other labor groups. We alsoemphasize establishing a high level of trust with ourpartners, such as companies and government, because theycannot be considered merely as representatives ofcapitalism. The theory of class conflict is not relevant today;


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industrial and labor market relations are now morecomplex.

SBSI is also social democratic in orientation. In thisperspective, the management of the national economy isnot based merely on democratic processes because suchprocesses can also be affected by a dictatorship of themajority, even when the economy is managed on a socialbasis. Democracy must have a strong social dimension. Takethe example of the investment law. Procedurally, everythingwas fine and democratic, starting from the draft billpresented by the government to the House ofRepresentatives for approval and until the law was finallypassed. But if the law does not solve social problems or,rather, provides solutions for primarily economic issues andsides with the interests of capital, labor unions such as SBSIwill campaign against it, as something not in keeping withsocial democratic ideas. Public policies, prevailing laws, andpolitical interests should do more to prioritize social interestswhich are part and parcel of democratization.

The labor groups with a social democratic orientationdemand government intervention in public sector issues. Thevital public sector should not be handed over entirely tomarket mechanisms. Who would determine social interestsin an entirely free market? Sectors such as education, healthcare, social security, and wages are still in the governmentdomain, along with the representatives of various civilsociety groups, such as labor unions and women’s groupsof the kind which are willing to take a cooperativeapproach. However, this does not mean that we are anti-

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market, as long as market mechanisms are proven to besocially beneficial and in line with social democratic notions.

Social democratic views have not been adopted by manylabor unions in Indonesia. The essence of social democrats,perhaps, is their willingness to engage in dialogue, to openup their hearts and minds to different alternatives, and toaccept different perspectives, as long as they are not harmful.Thus, social democracy is not a militant or fundamentalistperspective. Labor groups in Indonesia are not familiar withthis kind of approach, having more experience with the “oldways,” which tend to be confrontational in relation to thestate.

Labor Unions Highly Fragmented

The labor movement in Indonesia is fragmented into anumber of groups, making it difficult to build up solidarityand a strong social-political bargaining base. Thisfragmentation is partly the result of the emergence of somany labor unions in Indonesia after Reformasi. Inpercentage terms, the increase in the number of new laborunions is higher than the increase in the number of workersjoining unions. At the beginning of Reformasi, there wereonly a few labor unions, but now there are around 100 labororganizations at the national level. This does not includelabor unions at the provincial, city, district, and enterpriselevels. This excessive fragmentation poses problems forestablishing labor unity. The priority for most has, instead,been simply to set up new institutions of their own.


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As for the workers themselves, the presence of so many laborunions tends to divert their attention from dealing withconcrete labor issues. Often, an organization’s efforts toassert its existence are given much more priority, includingestablishing a media presence or frequently stagingdemonstrations.

The fragmentation of the labor movement is also due to thedifferent perspectives on what constitutes success for thelabor movement in Indonesia. Many consider that theemergence of more labor unions is good in itself, but it harmsworkers’ interests because individual unions have fewmembers and so are weak. Small membership levels makeit difficult for the labor movement to establish itself inpolitical bargaining and to fund its own programs. It clearlyreduces the strength and sustainability of the labor unions.

A financially frail labor union is inevitably hampered in itsefforts to campaign on key labor issues because its activistswill be bogged down merely keeping the organization inexistence. The attentions of labor activists will be devotedto administrative and financial issues, such as how to makemoney to rent an office, to pay for electricity and water,and conduct correspondence. Consequently, the labormovement has little time to concentrate on the big issuescentral to building an organization, such as establishing aresearch unit, which is needed to help labor unions to betterunderstand labor issues or to discuss alternative formatsfor industrial relations in Indonesia.

The fragmentation of the labor movement today is alsorelated to the pragmatic interests of individual labor

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activists. This aspect is getting worse in tandem with theongoing failure of the labor movement to formulate commongoals.

There is a misperception in the labor movement that aproliferation of labor unions is the best way of assertingfreedom of association. On this understanding,fragmentation is a virtue. “Freedom to associate is notfreedom to split,” one ILO observer from Genevacommented in Jakarta after witnessing the rampantestablishment of labor unions with no thought of unification.The point of freedom of association is to achieve particulargoals. For instance, freedom of association must go hand inhand with the freedom to engage in collective bargaining.The freedom of labor unions should be used to pursue theinterests of the workers. It must therefore be accompaniedby a willingness to negotiate with other parties. Laborunions will never acquire importance if they do not pursueconcrete results or output. Labor unions of this kind wouldbe better off as NGOs. Labor unions without collectiveagreements achieved on the basis of negotiations representonly a kind of negative freedom. Freedom of association doesnot mean freedom to fragment; the more labor unions wehave, the more precarious the situation of existing laborunions will become.

Looking to the future, labor unions in Indonesia need toreflect upon the three main models of labor unions, whichexist in many countries. The first is the “single union system,”with only one labor union federation at the national level.This kind of model is usually applied in communist countriesor countries with strong labor or social democratic parties.


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This system is applied in Germany, Australia, Austria,China, Vietnam, Russia, the United Kingdom, and Cuba,among others.

The second is the multi-union system, in which there canbe more than one labor federation at the national level,representing different ideological orientations. This modelexists in countries such as France, Spain, Italy, India,Mexico, Brazil, and Morocco.

Thirdly, there is the unlimited multi-union system, which ischaracterized by extreme fragmentation. Newlyindustrializing countries, in which ideological positionshave not yet become established, generally operate such asystem, such as Indonesia, the Philippines, India,Bangladesh, Thailand, Cambodia, and Congo.

Of the three models, the most successful is the second, thelimited multi-union system. Labor unions under this systemare generally strong because they represent the principalpolitical orientation in that country. In contrast, in countrieswhere there are many labor unions, they tend not to be amajor force due to their pragmatic approach.

Insufficient Advocacy by the Labor Unions

To date, relations between labor unions and their membershave been similar to those between doctors and theirpatients, or lawyers and their clients. Doctors treat theirpatients when they come in search of a cure; when thepatients are no longer ill, their relationship ends. They willonly meet again if the patients get ill again. This kind of

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relationship is more like a “patron–client” relationship. Themodel and nature of this kind of relationship has beenfollowed by labor unions so far, with labor activists tryingto help workers deal with problems. This approach toworkers’ problems is rather curative or reactive in nature.

This relationship must be upgraded. Still using the analogyof doctors and patients, doctors also make thoroughdiagnoses (general check-ups) to obtain a fundamentalunderstanding of their patients’ condition, for example, toprevent illness from occurring again. The doctor must alsosee the patients to deliver the worst diagnosis so as to reduceindividual cases. This more preventive approach should beadopted by the labor movement. Individual cases must beanalyzed at a higher level so that the roots of problems canbe addressed. The energy of union executives should not bediverted to dealing with the many individual cases thatconstantly arise.

Individual advocacy must be complemented by a higherlevel of advocacy within the larger social context. This doesnot mean that advocacy is not needed to deal with individualcases. The resolution of workers’ problems, for instance, iscrucial in order to keep up the long-term momentum. Inorder to maintain long-term relations with workers, unionsmust show a commitment in their day-to-day activities indefense of workers. If trade union efforts to help workersfail, for example, ending up with lay offs – even withsubstantial severance pay – the workers will lose confidencein the labor unions.


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Horizontal Conflicts among Labor Unions and betweenLabor Unions and Other Social Movements

The emergence of so many labor unions as a result offragmentation tends to attenuate the labor movementbecause the unions do not have a clear platform andmembership. Labor union fragmentation makes it impossibleto take collective action. The absence of collective actiontends to lead labor unions to engage in activities designedto win public recognition. For instance, these unions like tostage demonstrations to get media coverage by voicingunreasonable demands, such as raising wages by 100percent, abolishing the industrial relations court withoutan alternative, and so on. Conflicts among labor unionsoften occur, especially with regard to competition formembers. A lot of energy is spent on running down unionrivals, with little left for the fight against capitalism and theunfair employment system. This energy should be used toestablish a coalition to fight for the workers’ interests. Thisalso lowers the labor unions’ moral standing in relation toother forces or groups in society. The political parties, forexample, do not consider the unions as an important groupwith which they should be on good terms; they are regardedas unqualified to act as the essential catalyst in bringingabout social, economic, and political change.

Conflicts with other social groups often arise when groupsof local thugs or fighters or tribal chiefs of traditionalcommunities are hired by companies, for example, to represslabor demonstrations. Companies often use local people todeal with demonstrations staged by labor unions. Thistriggers conflict between labor unions and locals.

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Low Capacity of Activists and Organizations

This accounts, among other things, for the labor unions’failure to develop alternative policies. As already mentioned,the dominant approach is reactive: in other words, waitingfor the government to issue a policy, then reacting to thatpolicy. This approach neither prevents future problems noryields solutions to the problems already at hand. Thecapacity of labor activists to understand economic and otherdata remains low, and this hinders any efforts to come upwith alternatives. The activists do not have access to muchdata. As a result, the labor movement is not on an equalfooting with business or the government when they comeface to face.

Low capacity also affects their ability to manage internalconflicts, which is another source of union fragmentation,triggering the emergence of new labor unions. When oneunion splits, others are established. This will not help tobuild a strong labor movement.

The generally low level of education among workers isanother problem. There are estimated to be around 4.5million university graduates in Indonesia. Most workers atbest graduate from secondary school, many only fromelementary school. This is an indication of the compositionof the workers as a social group.

In addition to education, another reason for low capacity isinability to unite the labor movement. A number of laborunions have qualified activists, but they are not coordinated.They do not stand together in the same organization and


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therefore their capacities are stretched and cannot becoordinated. They have their own expertise but they arenot united; if they could come together, they could help tobuild a strong labor federation.

Another consequence of the fragmentation of labor unionsis that there are many small labor unions which cannotfinance their operations. There are many committed andwell educated people in the labor movement, but since theiractivities are basically voluntary, it is not easy to keep them.Without pay, many qualified activists cannot stay on todevelop organizations because they need to pursue theircareers and seek higher pay. If they join the big labor unions,at least they will receive a salary paid from members’contributions.

The labor movement should not be managed on a voluntarybasis. Voluntary status is suitable only for those who wishto be involved on a temporary basis, such as those who wantto know more about the labor movement, for example,university students and retired people who join as part-timers. To build a permanent, solid, and effective institution,we need people with an analytical capacity and withsuitable experience. Labor organizations often undergorapid changes in leadership. If the leadership changes toofrequently, along with the staff, the organization’s capacityto maintain a consistent line is threatened. Consequently,the labor unions must train new people from time to timeto fill key positions as they arise. When people have sufficientexperience, they will move on in search of higher salariesand positions. This can be disadvantageous to the labororganization, but it does not justify the practice of everlasting

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monopolies in the leadership, which only change when theDivine Lord calls.

Poor Representation of Members

The members of labor unions are poorly represented. Forinstance, one national labor union has fewer than 2,000members, and even that figure is uncertain. With fewmembers, labor unions face long-term difficulties in fundingtheir activities. Many labor unions do not have establishedpremises or programs. They also cannot pay for permanentstaff in their secretariats. As a result, many labor activistsexploit their positions for personal gain, financial or political.This seriously impugns the reputation of the Indonesianlabor movement.

No exact number can be given for the optimum membershipof a national labor union. From a financial perspective,however, a national level organization must have at least50,000 members. So far, labor unions in Indonesia haveusually imposed a 1 percent contribution scheme – that is,union dues are 1 percent of the monthly wage. As alreadymentioned, these contributions are allocated to three levels:enterprise level, local level, and regional level, in theproportions 40 percent, 30 percent, and 30 percent.

Labor organizations in Indonesia are generally inadequatelyfinanced. Today, only around 12 labor unions out of 100 orso have 50 thousand members or more. But even some ofthese unions suffer from irregular contributions. Thus manylabor unions survive on the basis of enthusiasm. However,a spirit of enthusiasm will not last long and therefore the


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labor unions need to think seriously about how to cut thenumber of labor organizations at the national level. Withfewer unions, the labor movement will be more professionaland be more financially robust, increasing their capacity tocampaign for and serve workers effectively.

Today, many labor unions survive by relying on outsideassistance. Even a confederation the size of KSBSI cannotrely entirely on its members as a source of funding and italso receives assistance from organizations such as foreignlabor unions and the ILO, for example, for educationpurposes. Unfortunately, not all labor unions have accessto ILO assistance. Only the more reputable organizationswould be likely to receive ILO help, and even then theywould have to engage in a certain amount of lobbying.

Ideally, members’ contributions could fully fund theactivities of labor unions, so that they would not need torely on external assistance. In countries in which unionsare well established, union activities are entirely funded frommembers’ contributions.

III. Strengthening Labor Unions: Opportunities andDevelopment Efforts

Opportunities for the Future Development of LaborUnions

The prospects of future development are wide open for thelabor unions in Indonesia. They could form the largest unionconfederation in the world. The largest union federation in

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the world today is the US AFL-CIO, with 9.3 millionmembers. The membership used to be as high as 13 million,but the union split in 2005 with the establishment of theChange to Win (CTW) labor union. The ACFTU labor unionin China claims to have 170 million members, but it is notcategorized as a labor union as usually understood because,under the current political system in China, they are anorgan of the Communist Party, which, apart from anythingelse, does not acknowledge freedom of association.

The enormous potential of the labor movement in Indonesiacan be illustrated with a number of examples.

(a) As industrialization in Indonesia intensifies, more peoplewill become involved in the labor movement. This isreflected in the growing proportion of the workforceemployed in the industrial sector and the decliningnumber of farmers and fishermen.

(b) Traditionally labor-intensive industry is likely tostrengthen the labor unions because it is relatively easyto organize, in stark contrast to the service industryand capital intensive sectors.

(c) There is increasing public acceptance of the role of laborunions. Today, many workers are becoming membersof labor unions even though they are still widelydispersed. The government and the House ofRepresentatives frequently invite labor unions to engagein dialogue and consultation, and the media alsoprovides a forum for statements issued by workers.Furthermore, many labor activists are able to provide


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solutions to manpower issues. Although there are stillsome who view labor unions negatively, the reputationof the labor unions is slowly improving compared tothe era of the single union under the New Orderregime.

(d) The capacities of labor activists are improving, althoughmany new activists often wish to make publicappearance by using the pattern of university studentsand NGO movements. Slowly, however, many laboractivists are acquiring the necessary know-how andskills, including analysis of employment issues,producing publications, working for and becomingcontact persons for international institutions, andmastering foreign languages.

(e) The emergence of militant and dynamic young activistsalso represents hope for the innovative continuationof the labor movement in the long term.

Efforts to Strengthen Labor Unions for the Future

1. Strengthening the capacities of labor unions in negotiations

Labor unions, historically, have sought and engaged innegotiations. Labor unions which are not willing to negotiate– whether on a bipartite or a tripartite basis – are actingcounter to the fundamental nature of the labor movement.Of course, strikes and demonstrations can still beimplemented in order to speed up negotiations and to helppush workers’ demands. However, the future, in which theeconomic system and employment relations will become

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ever more complex due to globalization, will require thatlabor unions constantly improve their ability to negotiatewith employers. The situation is complicated in particularby the fact that employers seem to be becoming more“abstract” or remote, due to the emergence of third-partyemployers (the result of outsourcing), foreign ownership ofshares, and various international agreements signedbetween multinational companies and international laborfederations, such as International Framework Agreements(IFAs), as well as OECD Guidelines on MultinationalCorporations, CSR, General System of Preference, BetterWork, and so on. All of these mechanisms have become basicfor activists involved in negotiations and advocacy.

2. Revitalizing the labor unions in the eyes of the public willhave to focus not only on labor issues but also on general ones

Labor unions are for labor – but this does not mean thattheir activities must be confined to labor issues withoutpaying attention to other, related concerns, such as foreigndebt, global warming, WTO clauses and agreements,democratization, the economic system, and so on. Havingsaid that, labor unions must not lose focus and be divertedby external issues: the main activity of the labor unions is todefend the workers from injustices which lead to theirimpoverishment.

3. Campaigning to promote the idea that freedom of associationhas a positive correlation with productivity, social securityprotection, and strengthened democracy


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Labor unions must launch public campaigns to raiseawareness that unions are not barriers to foreigninvestments; quite the contrary, a union presence cancontribute to the creation of industrial peace and makenegotiations with workers run more smoothly. Unions canalso be partners in improving efficiency and productivity.There is considerable research evidence to support this claim,for example, the findings of the World Bank, published in2003, which indicate that freedom of association correlatespositively with company sustainability. OECD research from2005 also shows that compliance with eight ILO CoreConventions will ultimately benefit companieseconomically. There is a plethora of similar results from otherindependent studies. Employers should, therefore, nothesitate to embrace labor unions.

4. Ensuring that relations between the government, labor, andthe employers are not oppositional but based on permanentpartnership

Labor unions are different from NGOs, students’movements, or opposition parties in their dealings with thegovernment. Labor unions should not stand in openopposition to the government, in the sense of rejecting thegovernment’s very existence and refusing to participate inmeetings. By behaving in this way, the unions denythemselves the opportunity to have a voice in minimumwage setting, social security, OSH, and other employmentissues – decision-making is left in the hands of thegovernment and the employers. Elsewhere in the world,labor unions are involved in bipartite or tripartiterelationships. However reluctant they are, labor unions

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must be willing to negotiate to reach agreement on laborissues. If not, there will be no resolution. Studentorganizations or NGOs are not the same as labor movementsbecause they do not represent the workers (they do not haveworkers as members), and therefore have nothing to losewhen opposing the government or the employers. To be sure,labor unions may oppose the government, but on a differentbasis; their opposition must be neither absolute norpermanent.

5. Encourage the unification of the labor movement by creatinga common platform and reducing the number of labor unions

Ideally, there should be four labor confederations inIndonesia. This would make industrial relations mucheasier. With too many confederations, difficulties arise innegotiations at tripartite level, for example, in determiningwages and revising legislation. The figure of fourconfederations is arrived at on the basis of ideologicaltendencies in Indonesia. Four confederations would coverdifferent standpoints. One confederation would representcenter/social democratic groups. Another would representleftist/socialist labor unions. Thirdly, there would be aconfederation with a religious orientation; and fourthly,there would be a confederation with a more pragmaticorientation. To bolster the workers’ struggle, smaller unionsshould amalgamate with larger unions, especially unionsat the enterprise level. It is not reasonable for the leaders ofsmall labor unions to seek to remain small and unrecognizedwhen there is an opportunity to forge organizations whichare large and influential. In the future, these fourconfederations should attempt to establish a united platform


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in the struggle to bring into being a joint forum, althoughwithout having to merge into a single organization. Forinstance, an Indonesian Workers Presidium Council couldbe set up to strengthen the fight against neoliberalism, aswell as to improve negotiating capacity in relation to otherpolitical organizations. To strengthen the labor movementfrom an international perspective, the four confederationsshould join the international labor union, the ITUC. Asidefrom participation in global debates and the opportunity tocontribute on global issues, affiliation with the ITUC wouldmake it easier for Indonesian unions to engage in advocacywith regard to multinational corporations (MNCs). TheITUC, by its very nature, is committed to “internationalism.”The fact that much of the income disparity, poverty, andother injustices experienced by workers is caused by theunjust international economic system means that the bestway of responding to it is to make labor unions into aninternationalist movement.

IV. Ideal Characteristics of the Labor Unions of the Future

Qualitative Characteristics

Any labor movement, at any time and wherever it might bein the world, must have four basic characteristics if it is tomeet international standards. It must be (a) non-discriminatory, (b) democratic, (c) independent, and (d)solidaristic.

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Non-discriminatory

This means that an ideal labor movement must be open(plural), allowing anyone to be a member. In this context,ideally, there should not be religion-based labor unions inIndonesia: workforces in enterprises comprise a wide varietyof religious affiliations. It would be inappropriate to havelabor agreements reached by trade unions representing onlyworkers of the same religion. For example, such religion-based unions would face obstacles in regions in which thatreligion is in a minority. For instance, an Islam-based unionwould experience difficulties in Bali or Papua. Such unionswould only create unnecessary barriers in the fight forworkers’ interests. Basically, a labor organization shouldbe pluralistic.

Democratic

On the organizational level, democracy means that theelection of members of the executive board should reflectthe true aspirations of the workers and not be the result ofbackroom agreements with political parties, resulting inparty appointees sitting on the board. Aside from that,executive board members should not be appointed as aresult of nepotism or clientism, with the trade union beingdominated by a particular group.

Independent

The labor movement must be independent without isolatingitself from other movements. The labor movement shallfound the legitimacy of its existence on its capacity and


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willingness to fight for the workers’ interests.Notwithstanding the fact that labor activists may personallycome from and be involved in various organizations,independence allows activists and the labor movement as awhole to campaign effectively for the workers. Even if tradeunion activists also hold other positions as political partyfunctionaries, NGO staff, or capital owners, or if they alsorepresent a particular ethnic group or religion, ultimatelythey have to prioritize the workers as a group. Labor unionsmust not be a stepping stone for other interests, which mayeventually come to dominate the labor movement. The labormovement must also not be directed towards fighting forthe interests of other groups or become the extended arm ofa political party, the government or employers.

It is essential to recall that independence does not meanthat labor organizations may not seek political alliances.Alliances with other forces, including political parties, arenecessary. In any alliance of this kind, however, the questionmust be whether the labor organization remainsindependent. The answer to this question will be conditional.If the labor movement determines what programs will bepursued, it will tend to be the independent party. In contrast,if the other party dictates, the labor movement can no longerclaim to be independent.

Solidaristic

Ultimately, a labor movement must defend the workers,whether they are union members or not. When workersexperience difficulties, the labor movement must be able toprovide assistance without unnecessary divisions, either in

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Indonesia or in other countries. The solidarity of the labormovement moves in three directions: internal solidarity, withthe members of a particular labor union showing theirsolidarity with fellow members; solidarity between labororganizations, with labor organizations supporting eachother; and international solidarity, with labor movementsshowing concern for labor movements in other countries,especially in cases involving MNCs, migrant workers, globalwarming, and other issues.

Quantitative Issues

Strong labor unions generally have the followingcharacteristics.

Large Membership

The more members a labor union has, the better it is for theworkers. Today, the number of union members in Indonesiais far from its optimum level. Nationally, it is estimated thatonly 10 percent of workers, at most, are union members.Furthermore, only 12 organizations – out of almost 100 –have 50,000 members or more. A large membership, ofcourse, goes hand in hand with larger contributionrevenues. Many labor unions in Indonesia are financiallyweak. Ideally, the main source of funding for labor unionactivities should be members’ contributions. More robustfinances are also needed to enhance the quality of unionprograms and to reduce the temptation for executive boardmembers to misuse their positions for personal gain. Thecredibility of the labor unions will also be improved in thisway.


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Collective Agreements

This is one of the main advantages of labor unions and notavailable to other organizations. The “ultimate victory” inevery union’s struggle at the enterprise level is the adoptionof a collective agreement. This governs the rights andobligations of both employers and workers.

The collective agreement has higher status than legislation,in the sense that it may contain provisions which exceedwhat is laid down in the law. The collective agreement isalways decisive because it is an agreement between workersand employers. For instance, if we refer to the law, thenumber of leave days allotted to workers is 12; however, ina collective agreement the number of days can be higher.

The relevance of the labor movement lies essentially in itscapacity to negotiate collective agreements. If unions areunable to produce such agreements and workers have torely on the law alone, labor unions are almost superfluous.The provision of advocacy is also not enough, because thatcan be undertaken by lawyers or NGO activists. In theabsence of collective agreements, the labor movement doesnot differ from the NGO or student movements.

Collective agreements have almost sacred status for workersat the enterprise level. Their status is higher than that ofcompany regulations, which are usually oriented towardsthe interests of the employer. A strong labor movement isgenerally defined as one in whose activities collectiveagreements outweigh company regulations. The principal

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orientation of collective agreements is to shift the emphasisfrom corporate interests to those of the workers.

Ability to Influence Public Policy

Public policy-making is, in essence, an effort to negotiatethe many interests of societal groups, which may not alwaysbe the same. The labor movement seeks to assert theinterests of workers in negotiations on the formulation ofpublic policies, for instance, through active involvement inthe process of formulating labor laws. Therefore, it is veryimportant that the labor movement have the capacity toget involved in public policy-making with regard to laborissues. So far, the labor movement in Indonesia has oftenbeen unable to provide alternative responses to governmentpolicies. However, labor unions must keep up to date withglobal developments and be on hand to propose the latestalternatives to government policy, where necessary, toimprove the lives of the workers. In responding to suchpolicies, unions must have the ability to assess whether theymay be beneficial to the workers. The capacity to lobby andto develop alternatives is therefore extremely important forlabor activists.

Rapid and Mass Mobilization

The ability to quickly mobilize a large number of workers isone indicator of the success of the labor movement. Strikesand demonstrations are the ultimate weapon among thevarious means at workers’ disposal in pursuit of theirinterests. As the option of last resort, strike action must bringvictory, otherwise, the outcome will be disastrous. When


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selecting this tool, labor activists must ensure that it isultimately successful.

Why is size an important indicator of success? The purposeof the labor movement is to fight for the interests of theworkers en masse. The number of workers mobilized inpursuit of their cause shows the success or failure of theunions’ efforts: if only 100 workers demonstrate out of aworkforce of 1,000, the attempt can be described as havingfailed. A show of force must involve at least two-thirds ofthe workers affected.

Conflicts can arise in industrial relations at any time. Anorganized labor movement must therefore have the abilityto react smartly. Mass mobilization must not be protracted.Otherwise, the momentum may be lost and people willincreasingly lose interest in the struggle. Thus labor unionsmust have the ability to quickly bring people out onto thestreets. Ideally, of course, the labor movement must favornegotiations over mass rallies. In Indonesia today, however,there are more mass rallies than negotiations, perhaps as aresult of 32 years of repression.

Mass rallies are often used by workers in pursuit of theirinterests because employers tend not to respond to demandschanneled through local labor unions. Apart from that, thereis an unwillingness to opt for negotiations to settle industrialdisputes because the law does not require bipartitenegotiations before an industrial relations case is passed onto the labor inspection. Employers tend to reject negotiationsso that the case can be brought immediately before the laborcourt. In many countries, both parties must be willing to

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negotiate because negotiation is a precondition. Therefore,negotiations are encouraged and a case cannot be broughtbefore a court before the parties have tried to resolve theissue through dialogue.


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Chapter 5

The Labor Movementand Politics

Reformasi, which took place in 1998, opened up a newpolitical sphere in which the labor movement will be ableto redefine its political relations, particularly with politicalparties. The labor movement, the purpose of which is tofight for the best interests of the workers, will not be able toavoid political interaction. In other words, there can be noabsolutely apolitical labor movement, which expresslyrefrains from political activities. The question is, then, howbest to form relations between the labor movement andpolitics? The available options will, of course, depend onprevailing political conditions and the condition of the labormovement.

A number of important questions must be raised. First, onwhat principles should the relationship be established?Second, what is the historical context? Third, what optionsare available in choosing a model for the relationship?

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Fourth, which model would be most suitable for the situationin Indonesia?

1. Basic principles governing the relationship betweenthe labor movement and politics

In the broadest sense, the labor movement naturally hasstrong links with the political sphere, which is ofoverwhelming importance for the workers. The workersmust also understand the connection between politics andtheir everyday lives, not to mention the labor movement.Politics will inevitably have a fundamental influence on theworkers.

Relations between the labor movement and politics havetwo main aspects.

First, the labor movement is but one part of a general socialmovement aimed at establishing a social order that canprovide justice for all. Therefore, the involvement of the labormovement in politics is required in order to create a bettersociety. As mentioned in the previous chapter, the labormovement must therefore take an interest in political issueswhich are not directly related – at least, on the surface – tolabor issues. This amounts to a social responsibility of thelabor movement in Indonesia.

The relevance of the labor movement, both today and inthe future, must also be viewed in a broader perspective.The labor movement’s concerns must not be confined tonational issues, such as employment, but must alsoencompass issues which are outside the general practical

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scope of labor unions but which nevertheless have a majorimpact on the workers. One example is foreign debt. Theloans to Indonesia which have put the country in such debtto the World Bank, the IMF, and the ADB are a matter ofconcern, not primarily because of the interest that has to bepaid, and so on, but rather because of the policy packagethat comes with such loans, in which liberalization projectsand privatization are set as preconditions.

At the international level, the labor movement has increasedits awareness, taking in such issues as global warming. Byinvolving ourselves in the wider political stream, the labormovement takes into consideration not only the interests ofthe workers but also of society as a whole.

In the face of the many difficulties entailed by finding a jobin Indonesia today, a job creation scheme has beendeveloped which involves assigning more workers to thepalm oil plantations – the number of which is also beingincreased – for example to take part in logging vast areas offorest. This idea has put the labor movement in somethingof a dilemma. On the one hand, there is clearly an urgentneed for job creation, but on the other hand, large-scaledeforestation will, in the long run, have a serious ecologicalimpact which will, in the first instance, affect workers inagriculture due to problems with the water supply and theirregularity of the seasons in Indonesia, but also fisheriesand similar sub-sectors.

The labor unions must pay more attention to such “macro”issues, as policies applied in particular sectors become evermore closely linked.

Chapter 5 The Labor Movement and Politics

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Secondly, although the main aim of the labor movement isto fight for the workers’ interests, it should not confine itselfto the enterprise level, but also operate at the level of publicpolicy. The issue of poverty, for example, is not just anormative matter, but also a structural concern arising fromthe confluence of much larger developments. As wasexperienced at the beginning of the labor movement inIndonesia, there is a strong awareness that the issues ofpoverty and repression of the workers also have a decisivestructural dimension. The struggle of the labor movementmust, therefore, also be aimed at the higher, structural level.In the past, the structural situation was also related tocolonialism. Efforts to fight for the interests of the workerscannot be separated from the struggle against the colonialpowers.

Today, poverty and repression of the workers also have astructural dimension. For example, labor law has not doneas much as it could to protect the workers’ interests. Twoexamples illustrate this particularly clearly.

The first is old-age pensions. The pension for workers inIndonesia paid out on the basis of social securitycontributions is very small, at only 5.7 percent of last salary.The pension in Indonesia is, in fact, among the lowest inthe world. A number of other countries at the same economiclevel as Indonesia offer old-age pensions representing morethan 7.5 percent. This clearly does not enable workers tolead a particularly comfortable life in their old age. Thismatter must be regulated under labor law.

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The second example is wages. At its current level, theminimum wage prevents its recipients from having any kindof aspiration towards advancement, not even for theirchildren. Blue-collar workers cannot even dream of givingtheir children a better education. This is exacerbated by thefact that the Indonesian education system is becoming moreand more expensive.

This state of affairs results from laws which do nothing toensure decent living standards for the workers. The labormovement must seek to build bridges with the politicalsphere in order to obtain a voice in creating a better life forall.

The political involvement of labor unions must be built onthe four universal principles of labor movements: democracy,independence, non-discrimination, and solidarity (seeChapter 4).

In order to realize the four ideal characteristics of a labormovement, its political involvement must be strengthenedby means of, in the first instance, political education. Thiswould also include civic education to ensure that theworkers are best able to exercise their rights as citizenswithout being unduly affected by other factors, such asreligion and ethnicity. A good education will make availableto the workers political options which can improve theirworking lives.

The political character of the labor movement is slightlydifferent from that of NGOs or students’ movements, whichtend to be confined to opposition. The labor movement is


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not in opposition to the government. Labor unions mustreach some sort of modus vivendi with the employers andpolitical parties. The labor movement is unique because it isbound by the principles of “bipartism” and “tripartism”: itmust seek to cooperate with the other social partners. Thelabor unions must not be in permanent opposition to thegovernment and the employers because they must negotiatewith them, for example, on wages.

It is, therefore, crucial that the labor movement chooses itslong-term allies carefully. The main objective of the labormovement is to fight for the interests of the workers, togetherwith the government and the employers. The choice ofcoalition partner must be based on the workers’ interests.The labor movement has to do much more than merely setitself up in opposition to the government. It has to seek theright solution to existing problems or the right positionamidst strong differences of opinion.

In order to ensure union independence in politics, labororganizations must engage in political analysis, not confiningthemselves to more practical issues, such as the manpowerlaws.

2. Historical context of the relationship between the labormovement and politics

In the Indonesian context, the labor movement is inseparablefrom the general political movement. As noted by IskandarTedjasukmana, throughout its history, the labor movementin Indonesia has revealed its political characteristics.11 Labor

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unions have political aspirations, are involved in politicalactivities, and maintain close relations with political parties.The labor movement played an important part in Indonesia’sindependence movement, as well as in consolidatingindependence at the beginning.

The labor movement in Indonesia has its origins in labororganizations in the plantation and transportation sectorsduring the era of Dutch colonialism. The existence ofworkers’ organizations preceded the establishment ofpolitical parties and other mass organizations. As describedby Tedjasukmana, the first labor union can be traced backto 1905, when workers in the State Railway Companyestablished SS Bond (Staatsspoorwegen). This labor unionbecame stronger when the railway workers, from both state-and privately owned companies, agreed to establish theVSTP (Vereeniging van Spoor-en Tramveg Personeel inNederlansch-Indie) on November 14, 1908. Under theleadership of Semaoen, this labor union developed into amilitant organization.12

During the era of Dutch colonialism, the Dutch IndiesAuthorities treated labor organizations as a dangerouspolitical movement. The labor movement was muzzled andmany of its activists were victimized. For the unions, politicalaims were indispensible because the only solution to theproblems of poverty, suffering, and oppression of the

11 Iskandar Tedjasukmana, The Political Character of the Indonesian LaborUnion Movement, TURC, 2008, p. 59.12 Semaoen was the VSTP’s second president, following Sneevliet, aDutchman. See Tedjasukmana, op. cit., p. 8


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working class at that time was the fall of the Dutchcolonialist regime.

At the beginning of the independence era, the labormovement was active in strengthening Indonesia’sindependence. Not long after independence was proclaimedon August 17, 1945, a number of workers’ representativesgathered in Jakarta to formulate a common platform on howthe labor movement could participate in strengthening thenew republic. This meeting was successful in establishingthe Indonesian Workers’ Front (BBI). In the same year, theSOBSI was established, which strengthened the laborunions’ close concern with political or governance issues.As Tedjasukmana concludes, the government regardedlabor unions as politically necessary. This recognition canbe illustrated by the election of 40 prominent labor unionfigures as temporary members of parliament in theindependence era.

In the 1950s and early 1960s, the SOBSI (All-Indonesia Cen-tral Workers’ Organization), supported by the PKI, was thestrongest and most active labor organization among themany which were connected to political parties. The SOBSIwas highly influential, for instance, in the nationalizationof Dutch companies in the late 1950s. However, the mili-tary emergency and managerial control of those companiesput the armed forces in a position of direct confrontationwith the communist-led militant labor movement (Hawkins,1963).

The destruction of the PKI following the so-called “1965incident,” according to Vedi R. Hadiz, caused the politicaltraditions of the labor movement almost to die out, and this

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legacy continues to hamper the organization of workers inIndonesia. From the 1970s until the downfall of the Suharto-led New Order Regime, workers were subject to a highlyauthoritarian corporatist system that provided room for onlyone legitimate labor union federation, established andsupported by the government.13 This single labororganization and industrial relations based on the conceptof Pancasila (“five principles”) became the primaryinstruments of the New Order Regime in eliminating thepolitical character of the labor movement in Indonesia.

Reformasi, which came about as a result of the political andeconomic crisis in 1998, has opened up new opportunitiesfor the organization of workers in Indonesia. According toVedi R. Hadiz, the capacity of the labor movement toinfluence state policies depends on its position in theconstellation of broader social power. When the old andnew elites reestablished themselves within a democraticpolitical framework after Reformasi, organized workers ingeneral did not have much influence on state policies. Noneof the main forces competing to establish a post-New Orderregime was supported by the labor movement, mainlybecause of the systematic disorganization andmarginalization of the workers under Suharto (Hadiz,2001).

The economic crisis in Indonesia, which caused a hugeincrease in the unemployment rate, is one of the factorsexplaining the weak bargaining position of labor

13 Vedi R. Haditz, “The Politics of the Labor Movement in South EastAsia,” Sedane 2001


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organizations. The stagnation of the Indonesian economydestroyed hundreds of companies, including in the export-oriented manufacturing sector, which was very importantfor Indonesia’s growth after the oil boom and before thecrisis (more or less from the early 1980s until 1997). Manyurban workers had no choice but to return to their villages(Manning, 2000), looking for shelter from the crisis – andthis included many experienced labor activists andgrassroots labor organizers.

When a number of new labor unions emerged, there wasno national union federation to coordinate the movementon behalf of the workers. Labor organizations have not beenable to fully utilize the momentum of openness created inMay 1998 to restore the influence of the labor movement.One illustration of this was the new law on labor unions,finally adopted in mid 2000. In the face of protests by themajority of unions, the government sought to divide the labormovement, which was regarded as posing a threat to the“national interest.”

Historically, the labor movement has been involved inpolitics and needs a political profile in order to fight, notonly for the interests of the workers, but also for other socialgroups. Today, there is a need to reformulate the relationshipbetween labor unions and political parties in light of currentdevelopments, especially given their sub-optimal nature atpresent.

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3. Three variants of the relationship between the labormovement and politics

What is the ideal model for relations between labor unionsand political parties? To answer that question, we mustexplain several possible forms and their preconditions. Awide range of relationships between labor unions andpolitical parties can be seen throughout the world.

In the first variant, the labor unions establish a “labor party.”Examples include Great Britain, Poland, and Australia. Inother countries, such as Brazil, the labor party is known asthe democratic or social democratic party. The rationale isthat the labor movement can fight for the workers’ interestsin two arenas at the same time. Both movements arenecessary if the workers’ interests are to be properlyrepresented. Therefore, the labor unions embody the labormovement and the political movement is the responsibilityof the labor party. The political movement campaigns atthe level of the superstructure and infrastructure of nationalpolicies and legislation, while unions struggle, for example,to improve working conditions at the enterprise level, aswell as voicing workers’ aspirations.

In these circumstances, labor unions must be led bycompetent union activists, while the labor party must beled by people from the labor movement who are talented inpractical politics. In this case, the labor unions fund the laborparty, as in Brazil and Australia, where the labor unionsfund the labor party in order to enable their members to getseats in parliament. This is possible for the labor unions in


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these countries because they have adequate funding tomount a full election campaign.

The British Labour Party is a classic example of this directrelationship, in which the initiative to establish the partycame from the workers. The British Labour Party wasestablished in 1900 as a result of meetings of union activists.The party was established to fight for the interests of theworkers in the British political arena, which was thendominated by conservatives and liberals. Today, therelationship between the Labour Party and the unions iscoordinated by TULO (the Trade Union and Labour PartyLiaison Organization), an umbrella organization for 15labor unions affiliated with the Labor Party.

The second variant involves a special relationship betweenlabor unions and a particular political party.

In this case, relations with political parties are not direct.There is, however, a kind of unwritten political agreementbetween labor unions and a particular political party. Thelabor unions do not establish the party, which already exists,but happens to be pro-labor.

The Democratic Party in the United States, the SDP inGermany, the Democratic Party in Japan, and the SocialistParty in France are examples of parties which are historicallyclose to the workers. These parties were not established bylabor unions, but historically they have been supported bythe unions. The relationship is usually long-term. In general,they do not shift their allegiance to another party, eventhough sometimes they may be disappointed.

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On this model, the labor unions do not specifically assignactivists to sit on the party executive or to become directlyinvolved by competing for a seat in parliament. Labor unionsusually do not fund the party in question, although theymay make donations, either to the party itself or to itscandidates, as happens in United States. In the USpresidential election in 2008, for instance, the US laborunions under AFL-CIO (American Federation of Labor andCongress of Industrial Organizations) not only declaredtheir open support for Barack Obama, but also contributedto his election campaign. In July 2008, AFL, with 56 memberunions, officially supported Obama. Obama’s health carereform program and his support for fair trade are the twomain reasons for union support so far. AFSCME (AmericanFederation of State, County and Municipal Employees), with1.4 million members, also supported Obama and donated ahuge amount of funds to his election campaign.

In other countries, labor unions contribute by providingopportunities for election campaigning among theirmembership. In return, the party is obliged to campaign ona pro-labor platform, such as better social security andreducing unemployment, as well as more social assistanceprograms and introducing progressive income tax.

On the third variant, the labor unions choose to beindependent of political parties.

This means that they use their political influence to shapepolicy, lobbying all parties in pursuit of their interests. Laborgroups tend not to vote for a particular political party. Thismodel of relationship usually exists in a political environment


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of relatively fluid ideologies, such as France, South Africa,Switzerland, and Hong Kong. In these countries, there aremany political parties, often without a strong ideologicalplatform.

Practice in Indonesia in the wake of Reformasi has been moreor less patterned on the third model. This is because thereare many political parties, but there are no significantideological differences. In the past, such differences wereclear cut and so affiliations between labor unions andpolitical parties were easy to establish. For instance, an NU-based labor union would affiliate with the NU party orSOBSI would follow PKI.

In Indonesia, all three kinds of relationship between thelabor movement and political parties have been tried. Thefirst model may be illustrated by the relationship betweenSBII (Indonesian Islamic Labor Union) and Masyumi. Thesecond – in which labor unions are, to some extent, a branchor subordinate structure of one political party – isexemplified by the relationship between SARBUMUSI andthe NU Party, as well as between GOBSI-IND and PSII. Thethird type of relationship, in which labor unions becomeassociates of a political party, cooperating as equal partners,is typified by the relationship between KBKI and PNI.14

14 Iskandar Tedjasukmana, op. cit, p. 157.

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4. Future course of the relationship between the labormovement and politics

The main question for the labor movement in Indonesia is,which variant of the relationship would be the best choicein pursuit of the workers’ interests?

If we take the first variant, in which the labor unionsestablish a labor party, as in Great Britain, the workers inIndonesia would encounter problems. Two conditions areneeded for this model which cannot be met in Indonesia atthe moment.

First, the labor unions must have a large membership (highunion density). Second, the unions must not be fragmented.When the British Labour Party was established in 1900, morethan 50 percent of workers were union members. There wasonly one national confederation. With such a large numberof members, the labor unions clearly had a strong mass base.Therefore, it was not difficult to establish a strong politicalparty. Indonesia is severely lacking on both counts. For astart, out of a total workforce of around 104 million, lessthan 40 percent are in formal employment, and only 15percent of them have joined a union.

The second condition is industrialization, whereby a countryenters into a modern industrialized era, no longer dependenton agriculture. Employment must be concentrated inindustry rather than in agriculture, thereby accumulatinga sufficient mass of support.


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The current situation in Indonesia differs from thissignificantly. A fairly large proportion of the workforce areemployed in agriculture, fisheries, and forestry. These sectorsare rather distant from modern industry. A large proportionof workers also work in the informal sector, in which,traditionally, the labor movement and labor parties find itdifficult to build support.

If Indonesia wishes to take the first path, it would be betterto have only one union federation with a strong mass base.The labor movement would have to wait until it hadestablished itself as a mass organization.

The second model, on the pattern of the United States,Canada, Japan, Korea, and France, as already mentioned,involves labor unions supporting certain political parties,although such parties were not founded by the unions. Thereis a kind of symbiosis between the unions and the politicalparty. To attain this kind of relationship, labor unions musthave a strong bargaining position, particularly groundedon a mass base. The Democratic Party in the United Stateshas a strong relationship with the labor unions for this veryreason. The voice of the workers strongly influences thebalance of power. If they fail to provide support, it has amajor impact on the party.

In the Indonesia context, this path, too, would be difficultto follow. First, labor unions in Indonesia are highlyfragmented; the consolidation of labor unions as a unifiedpower with a mass base would be difficult. Second, politicalparties in Indonesia regard the labor unions as incapable ofproviding mass support. Workers’ support is regarded as

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rather fluid since it does not have a strong collective politicalawareness. The unions need to do more to provide therequired education in this regard. In these circumstances, itwill take some time before the labor unions in Indonesiacan catch the attention of the major political parties.

The third, more fluid kind of relationship, in which the laborunions develop independent relationships with partiesacross the political spectrum is more likely to emerge in acountry in which democracy is a recent development. Thepolitical parties do not have clear and firm ideologies; theirpolitical platforms are almost the same and the labor unionsmay as well cooperate with any of the parties. This is thesituation in which Indonesian labor activists find themselvesand they are trying to take advantage of it. Some have joinedreligion-based parties, while others have joined parties basedon nationalist principles or even newly emerging parties.In this model, the most prominent feature is the personalrelationship between labor union activists andrepresentatives of political parties. No wonder this modelhas so far progressed as largely opportunistic in nature, withthe labor unions serving only as stepping stones for laboractivists to enter politics. In the first and second variants,involvement in a party is intended to help in the fight forworkers’ interests, but in the third, such involvement isregarded only as a means of promoting personal interests,seeking a place in the political arena. Even when they makeit to the House of Representatives, labor activists cannotinfluence the party mainstream, partly due to their ratherinchoate affiliations. There is no clear distinction betweenlabor activists who join political parties and party memberswho join labor unions.


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The next question is, which direction shall the labormovement and politics take in the future?

For the author, it is time to develop a stronger strategicalliance between labor unions and political parties inIndonesia. Of the three models described above, the authorbelieves that the most feasible and most suitable option todayis the second, in which the labor movement, through variousindividual unions, builds a long-term alliance with onepolitical party. There would be a kind of political agreementwith that party, within the framework of which the workerswould support the party and, in return, the party wouldclearly adopt platforms or policies which are in line withthe interests of the workers.

The first variant, in which the labor movement establishesa labor party, would be ideal, giving the unions real politicalinfluence. But this option would be difficult to realize in theIndonesian context. As already mentioned, a relatively largenumber of workers – at least 40 percent – would have tojoin unions. In Indonesia, the figure is still far below this. Itwill be a long time before there is a strong labor party.Experience from the two elections in which the labor party– which was established by several prominent labor figures– participated shows how difficult this path would be inthe Indonesian context. Another obstacle is the fact thatengaging in politics in the wake of Reformasi is becomingmore and more expensive. This is another obstacle toestablishing a large labor party. Despite the difficulties,however, this variant would be suitable for the futuredevelopment of the labor movement, depending on howquickly labor activists can set aside their egos.

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In the third variant, in which the relationship is more fluid,there are no benefits for the labor movement. Workerscannot put their hopes in the persons and organizationswho typify this sphere. The third model or variant wouldnot yield real benefits for the workers.

The second variant – in which the labor movement establishesa special relationship with one party – is the most feasibleoption in current circumstances. To this end, union leadersin Indonesia must have the wisdom and willingness to unitethe labor movement, currently fragmented into manyorganizations, in order to strengthen their bargainingpower. The dominant labor unions should unite to choosea party that can serve the interests of the workers.

To ensure that such political involvement does not adverselyaffect the labor movement, it would be better if the chairsof labor unions did not have seats in parliament. If key unionfigures sit in parliament, the party may be strengthened,but the labor unions would experience major internalproblems as people jockey for position to launch a politicalcareer. This would deal a severe blow to the labormovement.

Uniting the labor unions into a single power is not an easytask, given the current fragmentation. The labor movementand committed labor activists need to be patient in buildingup the workers as a political and societal force. The tendencytoday is to establish a new union, no matter how small,rather than to join a larger union. The egos of labor activistsare the dominant factor in this respect; they are afraid oflosing their position if they unite with other unions to form


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a larger and stronger labor movement. Thus many laboractivists continue to fetter themselves in small unions withno financial resources and a small membership base, makingit almost impossible to attain recognition and assertthemselves on the political stage. Labor activists willeventually have to acknowledge that it will be very difficultfor labor unions to gain influence without strong financialbacking from members’ contributions, as well as politicalbargaining power, which requires mass support. At thesame time, workers will realize that joining a small unionmakes no sense since they need stronger protection.

Another condition which must be met if this option is to berealized is the creation of a mass base that would make thepolitical parties sit up and take notice. Innovations areneeded to mobilize the workers, with the labor unionsreaching out to other groups. Labor groups need to formalliances with farmers’ groups, for instance. In Indonesia,workers in formal employment are estimated as comprising30–40 percent of the workforce. Of this, only 15 percent areunion members. This is a small figure which does nothingto attract the interest of political parties. The labor movementshould not be too dependant on industrial workers. We mustcreate a new variant, in which urban industrial workersand rural workers join forces.

Of course, this would be very difficult. Another seriousconstraint on the labor movement in seeking to formalliances with political parties is the high cost of politics inIndonesia. It is very expensive for someone to become amember of parliament, with either DPR or DPRD. This

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threatens the development of democracy in Indonesiabecause it is expensive and elitist.

In Indonesia, the workers do not comprise a relativelyhomogenous political mass of the kind characteristic of, say,Great Britain (at least until recently). In that country, theworkers long formed a fairly homogenous group, as a resultof the country’s early industrialization; the fact that the bulkof workers faced similar issues made it easier for them tounite as a single political force. This explains why they wereimmediately successful after establishing a political party.

In Indonesia, many workers have at best a weak politicalawareness, especially with regard to the relationshipbetween politics and workers’ interests. When workers casttheir votes, for instance, they do so under the influence ofother factors than their interests as workers, such as religion.Workers will not necessarily vote for a labor-based party ora party with a pro-labor policy.

This is partly to do with (lack of) political education. Mostworkers in Indonesia have only a low level of education;many do not even graduate from secondary school. Ifpolitical awareness was greater, the workers might be reliedupon to cast tactical votes in elections. If they properlyunderstood that the roots of injustice in workers’ lives inIndonesia lie in labor law, workers would support the laborparty at national level, while support could also be given tovarious parties at local level. With three levels of politicalelections – national, provincial, and district – workers havea considerable opportunity to assert their political views.


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Many union activists choose to distance themselves frompolitics and some are even anti-political. Politics is regardedas a dangerous and dirty zone. However, this approachleads to lethargy, and political lobbying falls by the wayside.At the same time, as already mentioned, the political partiesdo not regard the labor unions as worth cultivating. Laboractivists, too, are considered to be free-floating, without amass base. This makes it difficult to build up mutuallybeneficial strategic alliances between labor unions andpolitical parties.

Ideas concerning the best options under currentcircumstances in Indonesia are continuing to develop. Atthe practical level, progress has been made in relation tothe third variant, on the basis of which activists would joinpolitical parties. The problem is that activists are rather“pragmatic” in orientation: the workers’ interests merelyprovide window dressing for their real concern, which ispursuit of their personal interests.

In the past 10 years, there has been no serious discussionamong labor activists on the establishment of a platforminvolving the labor movement, labor unions, and politicalparties. Such discussions as there were, have been internalto individual unions. There is no joint forum in which laboractivists can seriously discuss the matter. The tendency isnow moving towards the third variant. The labor movementmay be found everywhere, in the Democratic Party, PAN,Golkar, PDIP, PKS, and PDS.

In the future, the labor movement must engage in adiscussion on its relations with political parties so that the

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workers’ interests can be achieved. Without any seriousattempt to launch such a discussion, the labor movementwill lose ground.


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Chapter 6

Globalization and Revitalizationof the Labor Movement

Globalization has become the major phenomenon in the pasttwo decades, especially since the late 1980s, which wasmarked symbolically by the fall of the Berlin Wall in 1989.Previously, the Cold War was the principal framework forthe global order, but globalization has succeeded it as theexplanation and shaping power of the new global order.According to Thomas L. Friedman, globalization hasreplaced the Cold War as the new international system. Thisnew system, says Friedman, possesses its own unique logic,rules, and pressures and incentives. This era emerged asthe cost of communications began to fall sharply, thanks tomicrochips, fiber optics, satellites, and the Internet.15

15 This interesting view on globalization can be found in Thomas L.Friedman, The Lexus and the Olive Tree: Understanding Globalization,Penerbit ITB, 2002.

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There are many definitions of globalization. According toLee (1996), globalization is mainly characterized by rapidgrowth in global commerce, an increase in foreign directinvestment (FDI), and the proliferation of transnationalfinancial transactions. Factors accelerating growth in thesethree areas, according to Wood (1995), include internationaltransportation and cheaper, faster, and higher qualitytechnology and telecommunications, reinforced by theInternet. These changes were also made possible by changesin the political (regulatory) framework.

As an all-pervasive power, globalization influences not onlythe economy, but also social and political life. It is notsurprising that globalization is controversial, especially indeveloping countries, such as Indonesia. But there have beenprotests by workers and other groups all over the world, inSouth Korea, France, and in Seattle, in the United States.For its supporters, globalization is an opportunity for muchhigher economic growth, while for its critics, globalizationthreatens economic welfare, political sovereignty, andcultural integrity.16

In the developed countries, the main concern arising inrelation to globalization is the unskilled workforce andindustrial contraction, while the main concern in developingcountries is related more to political sovereignty and loss ofcontrol of the national economy (Champlin and Oslon,1999).

16 See the paper by Joyce S. Osland et al., “Globalization andEnvironmental Sustainability: An Analysis of the Impact of GlobalizationUsing the Natural Step Framework.”

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The IMF defines globalization as “a continuously increas-ing economic dependency between countries through anincrease in the volume of transactions of goods and servicesacross borders and through international capital flows, sup-ported by a rapid and broad diffusion of technology” (IMF,in Wolf, 1997). The ILO, in its Global Report 2000: Your Voiceat Work, views globalization as a combination of an openand integrated market which is supported by innovationsin technology and political reform.

In the same document, the ILO underlines the fact thatglobalization does not include all levels of society in thisopen and integrated market. There are many groups insociety which do not participate in globalization and areoutside the market. The groups that do not really benefitfrom the opportunities presented by globalization includeworkers, particularly in many developing countries.

Globalization, according to the ILO, provides extraordinarynew opportunities, but they tend to be concentrated in asmall number of countries, while many other countries –and this applies to workers and employers alike – do notbenefit from globalization. In these circumstances, it is notsurprising that many groups in developing countries, likeworkers in the industrialized countries, feel that the processof globalization and the accompanying global commercialsystem pose a threat. This perception has been growing and,in some quarters, amounts to a rejection of globalization,which has found in expression in violent demonstrations inGeneva, Seattle, and Davos. Given that the social legitimacyof this process has been seriously called into question,clearly, economic and social arrangements in the globaleconomic order are in need of reform.

Chapter 6 Globalization and Revitalization of the Labor Movement

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Main Characteristics of Globalization

Source: Presentation material from ACTRAV, ILO Programme forWorkers’ Activities International Training Centre, Turin, Italy.

Globalization, regardless of the definitions and meaningsassigned to it, generally includes a number of aspects: trade,production, finance (investment and capital flows),corporations, politics, and culture. The underlying logic ofglobalization, which serves as the core neoliberal economicand political doctrine, is that if we eliminate thetransnational barriers to private capital flows, goods andservices, there will be an increase in productivity, GDP,employment, and real incomes.

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The complexity of globalization and the chains of economicactivities which make it up can be simply described in thefollowing terms: a garment is designed in the United States,produced in China in a factory managed by a Hong Kong-owned company, using raw materials imported from anumber of countries, and brought to England in a containership bearing a Philippine flag, manned by Indonesianseafarers, with payments and other data being processedin Asia. This illustrates how globalization functions as aborderless economy.

The Impact of Globalization on the Labor Movement

What have been the effects of globalization on workingconditions and what should labor organizations do?

Ray Marshall, in his book The Future of Labor Unions17, statesthat globalization is an undeniable fact. Labor unions haveto find ways of revitalizing their activities, both at enterpriselevel and in society. If labor unions cannot mobilizethemselves to renew their influence, they will be unable tosustain their existence in the long term.

Joseph Stiglitz (2002) has explained that the negativeimpacts of globalization on workers are caused by a powerimbalance between workers and capital owners. Theworking class – which is often the group most directlyaffected by international trade agreements – are not included

17 The Future of Labor Unions: Organized labor in the 21st century. Ed-ited by Julius G. Getman and Ray Marshall. 2004, University of Texas atAustin


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in negotiations; their aspirations are not even heard. This isbecause the power of the working class is highly fragmentedat the national, regional, and global levels. The only optionfor the labor movement in seeking to make its voice heardin the broader sphere of globalization is to increase globalsolidarity, thereby becoming an international force whichis a match for capital interests.

In order to revitalize their presence, labor unions everywhereneed to become stronger. The relative strength of tradeunions in Europe can be taken as an example. In some Eu-ropean countries, membership of a labor union is a right –one can opt to be a member or not. In order to strengthenthe labor unions further, however, some countries – suchas Belgium –regulate that unemployment insurance is runby the labor unions. Workers may also deal with the matterthemselves, but this may involve hiring a lawyer and willcertainly be more costly. In this way, workers are more orless “coerced” into becoming union members.

The provisions in the national constitution are clear,however: becoming a member of a labor union is a rightand not an obligation. People are free to choose. But therequirement that claims for social security must be filedthrough labor unions, particularly unemployment benefits,constitutes a strong incentive to join a union. This is acontributory factor in the relatively high union participationrates in Europe (union density).

Indonesia must take similar measures to strengthen the laborunions, but adapted to local circumstances. In Indonesia,for instance, the informal sector is huge. The unions could

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run collective social security schemes for informal workers.This would make it virtually an obligation for workers inthe informal sector to join a union to obtain access to socialsecurity. The intention of such a policy would not be tocomplicate the process. The system would functioneffectively because it would be difficult for individuals toobtain social security benefits any other way. It would beeasier for individuals to gather in one organization. Asidefrom union initiatives, workers’ initiatives, in terms of whichthey would actively and voluntarily join a union, wouldalso determine the success of this kind of social security.With the current system, the situation is more complicatedand expensive.

Nowadays, unions face a totally different situation fromwhat they experienced in the past. The unions can no longeroperate to serve a special interest group, focusing only ontheir members, without real participation from peopleoutside the organization. Today, the unions must mobilizetheir members and forge alliances to obtain victory.

The key to success in revitalizing labor unions is buildingcapacities in mobilizing and creating sustainableparticipation, as well as large and sustainable coalitions.This will be an important tool in fighting against globaleconomic forces. If the unions try to use traditional methods,addressing only such issues as work contracts and wages,without going to the root of the problem, the labormovement will become a peripheral power, as during the1970s and 1980s.


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Amidst the current tendency towards a stronger globaleconomy, revitalization is an essential aim for the unionsbecause globalization strongly affects the organization oflabor.

Globalization often goes hand in hand with ExclusiveProcessing Zones (EPGs) or Free Trade Zones. In Indonesia,they are called “Kawasan Ekonomi Khusus” (SpecialEconomic Zones or Free Trade Areas/FTAs), something thatdid not exist in the past. Today, workers are located in suchareas, which are difficult to access due to bureaucratichurdles or security systems. This is found in many countries,above all in China.

Globalization is also responsible for accelerating theinformalization of employment (informalisasi). Manyworkers have only an informal employment relationship oreven work as day laborers. Other workers have freelancestatus, being paid by the hour: they might perform workfor employer A, before moving on to work for employer B.

Furthermore, an increasing number of people are movingto foreign countries as migrant workers. This makes itespecially difficult for the unions to organize them. ThePhilippines typify this state of affairs. The workers whoremain in the Philippines tend to work in the informal sectorand in small or medium-sized enterprises, which aretraditionally impervious to labor unions.

Another concern in relation to globalization is its tendencyto give rise to anti-union legislation. Labor law, in particular,does not reflect an interest in protecting the workers. For

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instance, labor court procedures are often lengthy andexpensive. Protracted judicial processes seriously underminethe workers’ bargaining position. With little financial backup, workers cannot afford to enter into lengthy legal casesand generally opt not to continue legal action to the highestlevel. Even when the court decides in their favor, the workersstill face difficulties of enforcement, again due to protractedbureaucratic processes.

Globalization does not favor the settlement of workers’ issuesarising from the need for structural and cultural adjustmentto rapid changes in the labor market. In the past, companiesoften had a large number of workers, but things havechanged. Companies are downsizing, reducing the numberof workers through contract work and outsourcing. In thepast, 500 workers might have been employed by oneemployer, but today these workers are likely to be dividedamong several employers in various small companies. Thismakes union organization much more difficult.

Globalization also fosters the restructuring of multinationalcorporations through the franchise system. The underlyingidea is that, rather than operating in one location with alarge number of workers, it is better for the corporation tooperate in various cities or countries using the franchisesystem and with a smaller number of employees. In order,for example, to get closer to their customers, for the sake ofefficiency a company might have only 15 employees, butwith a web of franchises. This makes things extremelydifficult for the unions: in the past, a company with 500workers might require only two organizers, whereas now,as many as 20 companies might be involved, which means


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that at least 20 union officials are needed to deal with thesame number of workers.

These are some of the reasons why the labor movement mustbe revitalized. Revitalization must involve the labormovement broadening its concerns to encompass macro-level issues. For instance, the labor movement in Indonesiashould have paid more attention to government policy onFree Trade Zones. The government should not have been soreckless. This system creates injustices in other regions.Instead of creating FTZs, it would be much better for thegovernment to formulate a more targeted policy to makeIndonesia as a whole an attractive, efficient trade zone withgood infrastructure. This would be a much better driver ofthe national economy than one or two FTZs in particularareas. Current policy is impractical and presents difficultiesfor other regions: for instance, people in Papua or NTT mustgo to Batam in search of goods at a lower price. This policymay bring prosperity to one region, but impoverish others.Thus, it is better for the regions to have their own FTZs,which need not be confined to manufacturing.

As already mentioned, globalization increases the numberof migrant workers, thereby exacerbating the difficulty oforganizing them into one solid labor movement. What nowneeds to be put onto the agenda is how to encourageinternational cooperation among labor movements toprotect migrant workers. At the moment, although the labormovement is universal and professes international solidarity,in practice there is a long way to go. Workers are notsupposed to be limited by citizenship when they wish tojoin other labor unions. Thus, Indonesian union members

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can join labor unions in Hong Kong, Malaysia, or Korea.The problem is that not all countries have ratified ILOConvention No. 97, which asserts that migrant workers havethe right to the same protection as native workers, includingwith regard to wages, the right to obtain services from laborunions, and the right to be a member of a union. Forexample, there are already many Indonesian labor unionsin Hong Kong, but not all countries are so obliging. In SaudiArabia, for instance, it is difficult for migrant workers tojoin a local labor union to obtain protection.

The labor unions in Indonesia have tried to facilitate theadmission of migrant workers to unions in the countrieswhere they work and have also developed cooperation withlabor unions abroad to encourage greater flexibility in theadmission of migrant workers. This kind of cooperation isan established item on the international agenda. Onepotential problem is rigid labor laws in some countries.Another problem is that many unions in countries receivingmigrant workers consider them to be a threat to localworkers, because migrant workers are willing to acceptlower wages.

Revitalization of the labor movement in the face of everstronger globalization is necessary so that the labormovement and the labor unions can take part in importantdebates. Indonesia must take its cue from the strong labormovement in Europe. Ray Marshall explains that one of thereasons why labor unions in Europe are relatively strongeras compared with the United States, for instance, is thatcollective agreements in Europe tend to be national andbipartite in nature. Regardless of the membership status of


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a worker, once something has been agreed at the nationallevel – for example, on wages or social security – theagreement will apply to all workers throughout the country.In Indonesia, wage setting applies only at the provinciallevel, however, because it is difficult to set a nationalstandard.

In Europe, social security for workers, including healthinsurance, is much better. That is one of the reasons why,on average, the proportion of workers who become unionmembers – or union density – can reach up to 30 or 40percent of the workforce. Even in countries such as GreatBritain, for instance, the participation level is quite high. InIndonesia, out of 100 million workers only 7 million at mostare union members. A participation level of around 40percent would be ideal for Indonesia. In Norway, Sweden,Denmark, and Finland, the level of participation is 80–90percent, the highest in the world. However, the populationsof these countries are relatively small and it is easier toorganize the workers.

Another factor which explains why unions in Europe arerelatively stronger is the tradition of wider coalitions. RayMarshall explains that in Europe, unions have a long historyof entering into coalitions with political parties and civilsociety organizations. Labor issues in Europe tend to reflectclass relations, as in the past. In other words, labor issuesare built on class differences. Such differences between thebourgeoisie and the working class in Europe in the past wererelatively strong, and something of this lingers on, althoughwatered down. They remain in coalition, however. Thesituation is different in the United States, where labor unions

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are organized on the basis of professions, and not classes,as in Europe. In the United States, there is more emphasison how benefits for workers can be improved.

In simple terms, in Europe, labor issues are partly an issueof ideology, while in the United States they are largely aneconomic matter. The labor movement in Europe still retainssome characteristics of the class struggle. Not only do theydiscuss current phenomena, but they also analyze the rootsof the problem. Their concerns cover a broader range,including global issues, such as how to reduce the numberof rogue and greedy capitalistic corporations. In the US, itis more a matter of how workers can obtain higher incomes.

Globalization: The Indonesian Experience

Indonesia’s involvement with globalization has becomeincreasingly evident since Reformasi in 1998. The economiccrisis that hit Indonesia became the gateway for ideas oneconomic reform of neoliberal inspiration, which also serveas the basis of globalization.

Economic assistance from international financial institutionssuch as the World Bank, the IMF, and the ADB is providedtogether with neoliberal policy packages designed topromote the creation of one global market. The privatizationof BUMN (state-owned enterprises) was one of the mainpoints of government policy at the beginning of the reform.

With regard to employment, these international institutionsurged the adoption of flexibility, especially through theNational Development Planning Agency (Bappenas). This


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agency came up with proposals to revise employment policy.According to Bappenas, the priorities for reformingemployment policy include: (i) integrating employmentpolicy into the same package for investment growth astaxation, investment permits, and so on; and (ii) paying dueattention to unemployment and poverty alleviation.

Labor market flexibility is part of a program to liberalizeIndonesia’s labor market, implemented by relaxing theregulations and relying more on market mechanisms. Aflexible labor system allows employers to “hire and fire”workers very easily, according to their needs. In practice,this system is implemented through various forms ofoutsourcing (subcontracting) and temporary work agencies,which provide the services of ready-to-use manpower.

The labor movement in Indonesia rejects such laborflexibility, particularly in relation to human outsourcing. In2006, the workers staged a mass rally to reject thegovernment’s plan to revise Law No. 13 of 2003 to betteraccommodate flexibility principles. This rejection wassuccessful, although it could not fully eliminate humanoutsourcing.

This did demonstrate, however, that a solid labor movementwill be able to balance international capital flows. The ideais not to reject globalization, but rather to minimize itsadverse effects, at the same time as helping workers tobenefit.

Globalization is an unavoidable reality. We must take astance and try to minimize its adverse effects. One such

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effect is the so-called “race to the bottom,” in whichmultinational corporations compete to find countries whichcan provide them with low production costs. They appearto be little concerned with the effects of their practices onthe workers. Such corporations tend to move around inregions in which many poor countries are located, includingSouth East Asia: Bangladesh, Indonesia, Vietnam,Cambodia, and Laos. If we are too aggressive in pushingfor wage increases, these corporations will go to othercountries that are willing to provide lower wages. Indonesiahas already experienced this, as many companies wererelocated abroad. Many Indonesian garment enterprisesoperate in Cambodia and Vietnam.

Although globalization also provides opportunities,Indonesia at present is suffering more of the negative effectsof globalization. Education is one factor. In Indonesia, only4 percent of the workforce have been to university. Thismeans that most Indonesians are predisposed to be victimssince only this small minority can have access toglobalization, while the rest, who do not have access toinformation technology, are shut out.

In order to benefit from globalization, the labor movementin Indonesia must pay serious attention to education andtraining. This will, of course, take time, because inculcatingan understanding of information technology requires long-term education, not to mention the mental and culturalobstacles which must be overcome. The labor movementalso needs to seriously help workers to access informationon the companies they work for, as well as sharing


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information on international agreements that haveimplications for workers’ rights and standards of living.

Turning to the potential benefits of globalization, today, itis easier for people to obtain information on labor laws,remuneration systems and social security systems in aparticular country. Such information would be very helpfulfor workers in Indonesia when negotiating withinternational corporations from a particular country. If aproblem persists, it would be possible to trace who ownsthe company and launch a global campaign against them.It would also be possible to find out where the products areeventually sold. Today, it is easier to launch a campaigntargeting consumers. Global branded products can beattacked by consumers’ organizations, which boycottoffending companies, for example, because of human rightsviolations.

In the era of globalization, it is easier to engage in advocacyand to investigate companies. Almost all multinationalcorporations have entered into international agreements.The reason why double standards are applied in Indonesiais that law enforcement remains weak and the labor unionsare not aware of the international regulations with whichcorporations must comply. At the SBSI, globalization is oneof the important subject matters in training courses forworkers, including, for instance, how to analyzeinternational agreements. Companies which have signedinternational agreements include Accord Hotels (IBIS,Crown, and so on), Federal Express with the worldtransportation workers’ union, ITF, Carrefour with UNI,and so on. Such training is intended to improve workers’

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understanding of the standards such companies aresupposed to apply in dealing with workers. Aside from laborrights, training also includes explanations of obligations withregard to environmental issues and corruption. For example,how does national law in the country of origin of thecompanies in question regulate those matters? In general,these companies are not permitted to damage theenvironment in their business operations. Training isprovided to raise awareness among participants that thereare global regulations which must be complied with, butalso that local regulations may be introduced, as long astheir status is not inferior to those at global level.

Strengthening the Internationalism of the LaborMovement

The labor movement is primarily an international movement.In facing the global power of high-mobility capital, workersneed to adopt new strategies. They must incorporate atransnational agenda.

One strategy required to reduce the negative impact ofglobalization, as well as to promote workers’ interests, isthe inclusion of international labor standards in all tradeand investment agreements. ASEAN Trade Union Council(ATUC), of which Indonesia is a member, has launched adebate on labor and social standards for AFTA (ASEANFree Trade Area).

This has also been done at the international level. DuringBill Clinton’s administration, for the first time the regionalfree trade agreement NAFTA included labor standards.


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Clinton proposed the establishment of the NAALC (NorthAmerican Agreement on Labor Cooperation) as a parallelagreement with NAFTA.

In Europe, there is the European Social Charter, which isintended to prevent “social dumping” within the frameworkof global free trade. This agreement is intended to preventthe reduction of labor (and environmental) standards. TheCharter is intended to promote the idea that global economiccompetition should not be driven by the pursuit of cheaplabor. Such was the case with the establishment of the TradeUnion Advisory Council (TUAC), an organization led bylabor unions to monitor the operations of investors fromadvanced industrialized (OECD) countries. It is intendedto ensure that enterprises from developed countries whichoperate in poor countries do not violate labor rights.

The labor movement also continues to urge that provisionswhich might have implications for workers should beregulated not only nationally, but also internationally: allthe countries involved should have to comply with the samerules. This would make it easier for the labor movement toengage in effective action. One example is provisions onmigrant workers. Regulations must be laid downmultilaterally, not under the dominance of individualcountries. Another example is provisions on workingconditions. International regulations are more effective.Globalization should result, not only in a common market,but also in a common set of rules.

Such multilateral arrangements would help workers indeveloping countries. So far, international corporations have

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often applied double standards when operating indeveloping countries. Multinational corporations shouldapply the same standards wherever they operate, at leastin accordance with those which apply in their country oforigin. In practice, this never happens, however. Differentstandards – usually lower – are applied when suchcorporations operate in developing countries, such asIndonesia.

If it is to be able to push for an agenda which benefits theworkers, the labor movement – whether at national orinternational level – must build up its strength to boost itsbargaining power. Aside from strengthening labororganizations at various levels, the labor movement shouldalso actively build networks and cross-sectoral coalitionswith other movements (such as the environmentalmovement, the feminist movement, and so on), as well aswith the movements of ordinary people, such as fishermen,farmers, and the unemployed.

In Indonesia, not all labor unions at present have stronginternational alliances or actively participate in internationallabor organizations. Among the few which do, the SBSI,besides building cooperation between workers throughinternational labor organizations, sits on the boards ofinternational institutions and actively contributes tointernational issues.

In the face of the strong pressure exerted by globalization,one of our main proposals is to strengthen the internationalmission or internationalism of the labor movement.Globalization facilitates communications and shortens


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geographical distances; in response, the labor movementshould also reduce the bureaucracy involved in its ownsolidarity. In the past, such international cooperation wasdifficult, due to cultural, informational, psychological,political, and ideological barriers, making it harder for thelabor movement to unite against economic liberalization.We have to develop an international mind set, although thisdoes not mean that we should abandon nationalist principles.

International cooperation is needed because many systemsoperating in the area of employment refer to internationalstandards. The remuneration system in Indonesia, forinstance, was modeled on systems in common use in anumber of countries. Even our labor laws copy internationalregulations, with some adjustments here and there. Thesame applies to the social security system.

A strongly nationalistic bias hinders awareness of positiveexperiences or practices internationally. This requires a moreopen approach, involving international cooperation. We canno longer rely on national coalitions to fight for the workers’interests. Labor activists and labor unions today must beable to work internationally, actively involved at theinternational level, sharing experiences and pursuing acommon framework on crucial labor issues. In 2009, forinstance, the ILO, together with various labor organizations,will discuss an international framework to protect domesticworkers and how they could also join labor unions. Thedomestic household sector will, in future, no longer beconsidered to be in the informal sector, but a formal sector,based on rules. Multilateral regulations which applyinternationally will be drafted; so far, there has been no

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regulation in this area and things remain unclear. Indonesiacan share its experiences in this area, which will differ fromthose of other countries.

A nationalist vision is still considered to be the orthodoxone. But the world is getting flatter and merging because ofglobalization. This flat and merged world requires a newapproach; we need to expand our horizons inunderstanding and addressing national and local issues. Wecan no longer solve our problems simply within the nationalframework. The issues faced by workers today are globaland need to be addressed globally. But no global solution ispossible if our vision is not internationalist. The labormovement must therefore adapt itself to internationalism.For instance, how can the capital flows coming intoIndonesia be turned to the benefit of the workers? There isa particular need to know, in relation to MNCs, who is thecapital owner and from which country, as well as whethera particular corporation has signed any internationaltreaties.

International cooperation would make it easier for the labormovement in Indonesia to deal with such matters. On thebasis of internationalism, we could transform the labormovement into an international power, able to effectivelyaddress international capital flows. The labor movement inIndonesia must develop its capacities at least to such a levelthat it could become an active player. Then it would be ableto harness the positive aspects of globalization, as well asmaking a positive contribution to helping other countries.If the labor movement in Indonesia can develop positiverelations with companies, it will be able to share experiences


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with other countries, thereby strengthening networks andsolidarity, making individual relations stronger to matchthe power of multinational corporations.

We are unlikely to be able to protect workers effectively ifwe are unaware of the basic nature and ideology ofinternational corporations operating in Indonesia.Corporations from Asia will inevitably differ fromcorporations from Europe or the United States. Thesecorporations will help the labor movement to provide betterprotection with regard to labor rights. All companies in theUnited States, for instance, prohibit child labor. Even if acompany operates in Indonesia, it must comply with suchregulations. In this knowledge, labor unions in Indonesiacan be more effective in fighting against such corporationsif they are found to be employing child labor. In suchinstances, the fight will not be confined to Indonesia, butmay be taken to the United States, whose labor unions, onthe basis of good international cooperation, will help in thestruggle. This shows the importance of global connectionsbetween labor movements, as well as of internationalism asa new orientation for labor unions.The author is a trade unionist who has been involved in thelabor movement since 1992. His experience in fightingagainst the Suharto regime and his visits to almost all themajor nations of the world to seek essential sources ofinspiration have contributed to the preparation of this “roadmap” for labor unions.

The author is currently a member of the Governing Body ofthe International Labor Organization (ILO) in Geneva, 2005–2011. He is also Vice-President of the International Trade

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Union Confederation (ITUC) in Brussels, 2007–2011, aposition which has brought a sense of pride to labor unionsin Indonesia, after being absent from these organizationsfor over 40 years. In the domestic arena, the author isPresident of the Indonesian Prosperity Labor Union (KSBSI)and a commissioner of PT Jamsostek Persero.


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