Tony Sitathan, Jakarta – Indonesia is hoping to improve its image as a safe haven for foreign direct investment, especially after the Bali bombings. That task will evidently include a tough battle to win the hearts and minds of workers, who account for almost one-third of Indonesia's 220 million population. Labor unrest appears to be fermenting while President Megawati Sukarnoputri's government prepares for an election in 2004.
Indonesia's labor unions, suppressed by the authoritarian regime of Suharto, seem to have made an unwelcome comeback. "We see greater participation of those in SBSI [Indonesian Prosperity Labor Unions] and PPBI [Center for Indonesian Labor Struggle] that were largely monumental in bringing down the past regime of Suharto," said labor activist Soemadi Wiratakusuma.
Neither large conglomerates nor smaller companies have been spared the sudden demand for more labor rights sweeping across Indonesia. Several months ago clove-cigarette maker Gudang Garam faced a major labor protest in its East Java factory in Malang. It crippled its production for at least two weeks and cost several billion rupiah in lost sales.
The mining industry is another hotspot for labor disputes. There was a major labor dispute last year at Kaltim Prima Coal, which is considered the largest coal-mining company in Indonesia. There were complaints of human-rights abuse as well as a lack of concern for the welfare of employees. However, company officials addressed the situation quickly and production resumed after several days.
More recently there was a labor dispute faced by PT Thiess Contractors Indonesia (TCI), the largest Australian-owned coal contractor operating in the mining and construction sectors. The labor dispute went all the way to parliament, where the House Commission VII, which deals with labor disputes, decided that the agreement between the management of TCI and its former 171 employees was final. It concluded that additional demands made by the workers were illegal since they had received a severance package and most of their outstanding issues were already resolved.
Another labor fiasco, which gained international media attention, was when Garuda Indonesia, the state-owned national airline, was plagued by a pilots' dispute that could have paralyzed domestic and international flights. The pilots complained that they had been severely underpaid compared with international pilots at other national airlines. To prevent a strike planned for this Tuesday, Garuda went to the police. Since then the matter has been forwarded to the Ministry of State Owned Enterprises and strike averted. The ministry has promised to look into the labor fracas.
After suffering massive losses, Garuda Indonesia had just broken into the black and had started paying off its overseas creditors. Perhaps the Pilots Association saw it as an opportune time to press for pay increases. Others in the airline industry saw it differently. Frank Samuel, who has been working with a foreign aviation-maintenance company in Indonesia for the past three years, called the proposed strike self-serving and said that the pilots should "be comparing their pay scale to Thai Airways and Malaysian Airlines instead of Singapore Airlines and Cathay Pacific".
Lim Hock Guan, a Jakarta-based businessman who frequently travels on Garuda, was even more critical. "They [the pilots] have little regard for the passengers. Many people rely on them for local travels and meeting families during the Hari Raya Haji holiday time that falls on February 12 ... I am not sure if they are being opportunistic or just plain foolish," he said.
According to Kim Dae-yong, a South Korean-based businessman who runs a Korean supermarket in South Jakarta, Indonesia will repel foreign investors if the labor unrest continues. "Look at globalization and the effects of AFTA [Association of Southeast Asian Nations Free Trade Agreement] in 2003, we see more competitive labor in Vietnam, China and even India. The cheap labor of Indonesia is not attractive enough for foreigners, [who] do not want to be embroiled in labor disputes and issues of poor productivity," he said.
The overall competitiveness of Indonesia's workforce is being questioned. And the fact that the government might pass a labor bill on crucial issues – including the recognition of the right of workers to strike, the existence of temporary workers, and sabbatical leave – has to be examined even more closely. Although many agree that Labor Law No 25/1997 passed by the Suharto regime stifled workers' rights, there has to be a tradeoff when it comes to balancing the interests of the employer and the employee.
The bill has drawn criticism from both labor unions and employers. The Jakarta Legal Aid Institute as well as several other labor groups maintain that the bill fails to address the issue of protecting workers from unfair dismissal or recognize the rights of temporary workers, who might be subject to abuse by employers.
Whatever the outcome of the labor bill, Indonesia has to realize that globalization is quickly changing the way companies and employees operate. The iron rice bowl of the past has given way to market forces that cannot be controlled by state ideology. Sukarno failed miserably to mold Indonesia into the spirit of Nasakom, which was the state's ideology for nationalism, religion and communism. Nor was it successful under the Suharto regime, when national development was a coveted trophy over basic human rights. A middle ground for workers has to be found – the sooner the better.