Jakarta – After weeks of nationwide, sometimes riotous agitation, Indonesia's labor unions scored a major victory last week when the Wahid government decided to delay implementation of two new decrees criticized for undermining workers' interests. But trade union activists worry that this is but a temporary win given the dark clouds of anti-labor pressures building up in the Indonesian economy, which has yet to recover from the impact of the 1997 Asian economic crisis. Both the International Monetary Fund, whose handouts are crucial to the functioning of the national economy and foreign investors, threatening to close down factories, are lobbying hard with Jakarta to curb the burgeoning labor movement.
The latest row between labor organizations and the Indonesian ministry of manpower primarily relates to changes to labor law regarding severance conditions and payments. It started in June last year, when the previous minister of manpower introduced a decree to protect workers from mass retrenchments by employers due to the economic crisis. Under that decree, clauses provided the same termination requirements to personnel who left a company voluntarily as to those who were retrenched. The decree stipulated that compensation – consisting of annual leave, allowances for transport, health and housing, and severance and service payment depending on duration of employment – was payable to retiring or dismissed workers.
Following protests from both the domestic and foreign business community that the compensation required was excessive, two new decrees were issued recently annulling the requirement that employers provide severance pay and service fees to workers who either resigned or were sacked for committing major violations. They would only be eligible for regular compensation.
Critics added that the provisions for sacking workers under the revised decree infringed on the right to legal trade union and protest activity. "The issue is one of job security and workers' fundamental rights," says Maulana, a garment factory worker in Jakarta who took part in a rally against the new decrees outside the Indonesian president's palace recently. Trade union activists say that given the uncertain economic situation at present, workers wish to ensure they receive a proper compensation for their years of service in case they lose their jobs for any reason.
The militant labor protests come in the context of relentless loss of jobs and income in recent years. Indonesian workers, even during the years of economic boom, were among the least paid and protected in Southeast Asia. Only some one-third of the country's workforce of 89 million had permanent jobs in 1997. Since then several million have lost their jobs and forced to work in the informal sector or join the ranks of the poor, now numbering 25 percent of 213 million Indonesians.
The legal minimum wage during the Suharto period was around US$1.27 a day, the lowest in Asia after Bangladesh. While the average wage in industries in the capital Jakarta was around 250,000 rupiah a month (around $100), after the crisis, with the collapse of the domestic currency it is worth only some $25. This, coupled with steep increases in prices of basic necessities, has made survival of even industrial sector workers in the cities and towns of Indonesia difficult.
"While the economic conditions have worsened it must be pointed out that Indonesian workers today have much greater political freedoms than they ever had under the Suharto regime," says an International Labor Organization (ILO) official in Jakarta. According to him, part of the militancy of workers during the recent demonstrations is due to their exercising basic rights denied to them for decades by the former dictator.
Since the ouster of the Suharto regime in May 1998, Indonesia has drastically modified its labor laws. It has thrown out draconian laws that prevented workers from forming trade unions and provided for the use of military force in settling industrial disputes. In June 1999, Indonesia became one of the few countries in the Asia-Pacific to ratify three major ILO conventions that express the principles underpinning freedom of association, non- discrimination and the elimination of forced and child labor. The government of President Abdurrahman Wahid has also been praised for lifting the ban on several trade unions considered "subversive" during the Suharto era and freeing dozens of labor activists.
From a situation in the past where the country's entire labor force was represented only by one government-controlled union now there are 26 major unions in Indonesia and dozens at the regional and grass-roots level. But increasing trade union activity and expansion has also spurred a backlash against labor activists from the business community and the state security apparatus, which had the upper hand for three decades under Suharto's repressive rule.
Unionists complain of a growing number of attacks on their organizers by paramilitary groups supported by the military and police and paid for by employers to intimidate workers or to break strikes. Even during the recent wave of labor protests, activists of the National Front for Indonesian Workers Struggle (FNPBI), a radical but rapidly growing trade union, were assaulted in mid-June in the West Java town of Bandung by members of an unknown militia and the offices of the left-wing People's Democratic Party (PRD) was sealed by police for "provoking workers".
But even more sinister, activists say, is the attempt to turn the clock back on long-term legislative gains made by trade unions because of pressure from investors and more particularly the IMF with its free-market "reforms". With Wahid, considered soft on labor, likely to be removed from office at impeachment proceedings early August, union activists fear that a future administration may negate numerous gains made by the country's trade unions in recent years.
"Just as in the Suharto era, there is now a growing trend among politicians and bureaucrats trying to justify anti-labor policies by giving greater priority to foreign investors and so-called industrial peace," says Dita Indah Sari, chair of FNPBI. All through the three decades of Suharto's regime, she points out, trade unions and worker's rights were suppressed in the name of fostering growth.
When the crisis came, it was the workers again who paid the biggest price, she adds. Even as the labor movement grows by leaps and bounds today, she says, there is an ever-increasing chance of the business- bureaucrat-military nexus trying to use "labor unrest" as an excuse to go back to the previous repressive era.