Jay Solomon and Kate Linebaugh, Tangerang – On a lazy Saturday afternoon in this industrialized zone 40 kilometers west of Jakarta, a group of workers lounge near the gates of the Korean-owned shoe factory where they work, bemoaning their worsening plight. During the past six months, they note, 75% of their colleagues have been laid off, while living expenses have jumped.

"The worsening situation could lead people to run amok," says Agus, one of the workers. "Rioting is sometimes the only means to make sure there aren't price increases. Sometimes it's the only way to be noticed."

In fact, social unrest is already mounting as the diving rupiah translates to higher prices. Tension remained high in the East Java town of Jember over the weekend as Indonesian security personnel patrolled streets after townspeople attacked stores whose owners, they charged, were selling staple products – such as rice – at inflated prices. And though East Java's violence has subsided, fear remains high in Indonesia that this type of unrest could soon spread.

Revised Agreement

Much hope had been placed on the signing of a revised agreement last week between Indonesian President Suharto and the International Monetary Fund as a means for stabilizing the rupiah and diminishing social pressure. But two trading days after the package's announcement, the rupiah has actually weakened on concerns it doesn't address political concerns or devise ways Indonesians can repay some $133 billion in foreign debt.

The rupiah closed Friday in Asia at 8,450 rupiah to the U.S. dollar, 14% below its value before the revised IMF terms were unveiled. Further slides would bode ill for stability in the world's fourth-most-populous nation. Few areas in Indonesia could prove a more-likely lightning rod than the Tangerang "factory belt." For years this industrialized zone has been an engine for Indonesia's 7% annual economic growth and employed hundreds of thousands of migrant laborers. Korean, Taiwanese, Japanese and American companies sought out the area's cheap labor to spin out textiles, shoes, zippers and scores of other low-end products.

But in Tangerang now, tens of thousands have been laid off. Those who haven't grumble that their salaries can't keep up with living expenses. Mr. Agus, who like many Indonesians goes by just one name, says that the cost of 50 kilograms of rice has jumped 36% since the currency crisis hit Indonesia in August. Electricity prices have tripled; milk is up 50%; and cooking oil 40%.

More Unrest

The next few months promise several events that could trigger more unrest. Prices are likely to climb further when the government stops subsidizing prices of soybeans, sugar and flour on Feb. 1 and scales back subsidies on fuel and electricity on April 1, as agreed last week with the IMF.

Mr. Agus and his colleagues say that wage increases and higher bonuses – which are due to be paid next week – could help ease the blow of the economic crisis. But they hold out few hopes. Signals from management suggest that this year's bonus could actually shrink, Mr. Agus notes. Rather than equaling more than triple their monthly salary as it did last year, he says, the bonus is likely to contract to just over double.

And few observers expect cash-strapped companies to be able to raise wages on April 1, as the government requires. In fact, Finance Minister Mar'ie Muhammad has already said that civil servants won't be getting pay raises.

"Things were bad in 1974 and 1975, but this is the worst I can remember," said an older member of Mr. Agus's group. "It's like we're heading back to the Dutch times when we had to learn to live on just one meal a day."

Severance Pay

Across town at the tire factories of PT Gajah Tunggal, an employee named Nursalim doesn't give quite as dire a picture as Mr. Agus and his friends. A soft-spoken man in his late 20s, Mr. Nursalim gives Gajah Tunggal credit for sticking by the guidelines agreed with the union. In particular, those who have been fired received severance pay, while the company is trying to maintain its present labor force by staggering workers through shorter shifts.

Despite his optimism, Mr. Nursalim says that pressure is building among his fellow workers, however, as their 300,000-rupiah-a-month ($37.50) salaries have lost much of their value. Unlike his married friends who sit nearby, Mr. Nursalim notes he can withstand the worsening living situation. Many, he fears, can't.

"It [unrest] might just come about spontaneously, or maybe someone will organize it," Mr. Nursalim says. "But people are complaining more and more."

The government, heeding the growing tension, has launched a drive to create public-works jobs and soften price increases. IMF Managing Director Michel Camdessus also announced last week that tariffs on imported food would be cut to help the poor in a country hit by drought last year. He also said the Asian Development Bank was preparing to provide microfinancing to small-scale businesses.

City Projects

These plans are already being thrown into action, says Harry Mulya Zein, the spokesman for Tangerang Mayor Djakaria Machmud. He says the city is seeking to put people to work with projects like sewer cleaning, street painting, gardening and village improvement.

Mr. Zein also says that efforts have taken on a religious tone. Muslim clerics are preaching calm to Tangerang's populace in daily prayers, he says, and Mayor Djakaria is making rounds from mosque to mosque to impart this message every morning.

So far, military officers in the area say their operations focus on monitoring food prices and mediating between workers and employers. But one officer notes that military action can't be ruled out. "We have been placed on alert in anticipation of possible unrest," he says.

Eliminating Monopolies

Whether this unrest explodes or not depends on whether Mr. Suharto's government persuades the people that the rich are sacrificing as much as the poor, says Marzuki Darusman, a member of Indonesia's National Human Rights Commission. The president's announcement last week that he is eliminating the monopolies enjoyed by many of his family members and friends may go some way to achieving this aim, Jakarta analysts say. Most surprising to people was that the 76-year-old leader would cut perks for what were once seen as "sacred cows," particularly his son Hutomo Mandala Putra's national-car program and his friend Mohamad "Bob" Hasan's plywood cartel.

But by declaring his intention to personally take charge of implementing the reform plans, Mr. Suharto also signaled that he intends to remain in the driver's seat. That comes as Indonesia's workers start to echo many of the complaints issued by foreign-exchange dealers and investors during the past week: Economic reform isn't enough. Many workers, as in the past, blame the dominance of a few large conglomerates for choking off the economy. But some people are now blaming the government for their troubles.

"The U.S. government should put pressure on Suharto now rather than helping him," said one of Mr. Agus's colleagues. "They should realize that most Indonesians no longer like the government."