Zubaidah Nazeer, Jakarta – Indonesian unions vowed to step up pressure on employers to refrain from using contract labor, a day after an unprecedented nationwide strike shut thousands of factories in Asean's largest economy and caused an estimated 1 trillion rupiah ($104 million) in production losses.

"This was a warning," said Said Iqbal, chairman of the Indonesian Metal Workers Federation. "We have given the government two weeks to hold a dialogue with employers and labor associations. Then we'll see if the results are satisfactory."

Both President Susilo Bambang Yudhoyono and Coordinating Minister for the Economy Hatta Rajasa agreed to look into improving workers' welfare and benefits, and especially their demands over outsourcing – the practice of using contract workers who do not enjoy any basic benefits.

The vigor of the protests, which closed more than 5,000 factories across 12 provinces, has stunned a region that has seen the sprawling archipelago become an island of growth amid the slowing giant economies of China, Japan and India. The Indonesian economy grew 6.5 percent last year, on robust exports and an expanding middle class that is driving domestic consumption.

As employers totaled up their losses, Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), told The Straits Times: "We estimate about 1 trillion rupiah in losses from interrupted production. At least 5,000 factories in Tangerang, Batam, Medan, Bekasi and Surabaya (were affected)."

Though the workers have since returned to work, employees at state-owned oil company Pertamina reportedly blocked access to its refinery in the Indramayu district in West Java.

The massive strike, which hit most industrial estates, has raised concerns that investors may be put off from investing money in Indonesia at a time when infrastructure development is crucial. Observers say the strikes are an indication of the increasing power of unions.

Said Iqbal's union is one of three belonging to an alliance under the Indonesian Council of Workers. The alliance boasts nearly five million members.

While Indonesian labor laws allow outsourcing, this is restricted to certain jobs. But many companies flout this regulation by offering contract terms to workers doing other jobs.

According to Rekson Silaban, chief of the Confederation of Indonesian Workers Welfare Unions, nearly half of the 41 million formal workers are on such contract terms.

Both union leaders and Apindo say they will hold a meeting next week to discuss the issue. Manpower Minister Muhaimin Iskandar said: "We ask for more time – six months to a year – to meet all parties and resolve this."