Newsgroups: bit.listserv.seasia-l
Date:         Fri, 10 Apr 1992 10:36:53 PDT
From:         "Indonesia Publications/Task Force" <apakabar@IGC.ORG>
Subject:      Indonesian Labor
X-To:         seasia-l@msu.edu

Forwarded from PeaceNet reg.indonesia conference:
Topic 539The Toll of Low Wages
nlutzreg.indonesia11:58 pm  Apr  6, 1992

Source: Far Eastern Economic Review   Date: April 2, 1992
Story Type: Analysis                  Original Language: English
Dateline: (Jakarta)                   Byline: Suhaini Aznam
Text: Full

                 THE TOLL OF LOW WAGES

Recent years have seen a growing incidence of strike action by
Indonesian workers, caused both by heightened awareness of
workers' rights and by increasing desperation over their meager
wages. This is despite the Manpower Ministry's constant upward
revisions of minimum wages, albeit in small doses, to catch up
with inflation and alleviate worker poverty.

Unemployment continues to be a major headache, with the workforce
expected to expand by 2.4 million each year, a rate unmatched by
private sector growth. To alleviate the problem, some seek work
abroad. The government-sponsored Antar Kerja Antar Negara
program, (which roughly translates as "Send our workers, send the
nation"), has sent 295,037 Indonesians overseas since April 1989
under the current five-year development plan, with Saudi Arabia
leading the list of destinations.

Although unemployment is a statistically tiny 2.36%, in real
terms this means that 1.9 million of Indonesia's 80 million
workforce are known to be without jobs. Parents in rural areas
still send money to jobless city youths -- the dependency ratio
is a high 1:4. And almost 78% of Indonesian workers have only
primary education, thus precluding most job options.

Also, some 39.26% of the workforce are underemployed, or working
less than 35 hours a week, and therefore earning less than a full
day's pay. Again, the problem is aggravated because the bulk are
unskilled. For every disgruntled worker, employers can hire 100
willing to work for a pittance.

Although unskilled workers form the bulk of the jobless, growing
numbers of unemployed graduates -- estimated to reach 600,000
during the current five-year plan period -- are worrying the
government because of socio-political implications. During
1989-94, local universities will have produced 1 million
graduates, of which the government -- trimming down its staffing
demands -- will absorb 350,000.

Strikes in factories leapt from 61 in 1990 to 112 last year.
Taking a pragmatic approach, Manpower Minister Cosmas Batubara
has encouraged labor leaders to be more courageous in fighting
for workers' interests, preferably without resorting to strikes,
and urged employers to observe minimum wage standards.

"We from the government want workers to learn about their
rights," said a Director-General of the Manpower Ministry,
Payaman Simanjuntak. "The government realizes that wages are low
and we want to increase them. Workers look at the big cars driven
by management, while it takes one and a half hours for them to
get to work by bus. They feel themselves to be victims of the
rich men."

Apart from rising expectations, there is the external influence
of foreign trade unions "who raise very vocal voices," conceded
Simanjuntak. American and Australian unions work with non-
government organisations in Indonesia, even providing financial
assistance.

In a dramatic incident last year, Jeffrey Ballinger, the
representative of the Asian American Free Labor Institute, was
recalled after he -- acting in his personal capacity -- printed
and distributed 2,000 postcards depicting industrialist Dewi
Motik Pramono opposing increases in minimum wage.

In January, minimum dail wages for Jakarta went up to Rps. 2,500
(U.S. $1.24) from last year's Rps. 2,100. This would
theoretically be the sum earned by a new factory hand beginning
at the bottom of the ladder, though in practice some companies
claim they cannot afford to pay even that. At today's food
prices, Rps. 2,500 meets only 70% of minimum physical calorific
needs; no one can explain how workers are expected to obtain the
balance.

Employers who fail to observe minimum wage requirements can be
charged in civil courts. Informal sector workers, such as maids
or bajai (motorized trishaw) drivers, do better than factory
hands. Those in the construction industry would also do extra
work on weekends.

"Real wages should be increased every year," said Simanjuntak.
"By April 1994, wages in all regions should match physical
needs."

The state of labor in Indonesia goes back to Dutch rule and the
use of coolie labor. With independence, there was clearly more
upward mobility, but the stratified manager-worker attitudes
remained.

Labor organizations before and immediately after independence
were under the shadow of political parties, noted labor activist
Saut Aritonang, president of the legally unrecognized Setiakawan
labor union. They existed not to promote the welfare of workers
but as recruitment outfits for political parties, he explained.

That ended with the failed communist coup of 1965. With the New
Order, labor and political parties became separated; today the
All Indonesian Workers Union (SPSI) is the sole government-
recognized workers' union. As a rival organization, the
Setiakawan is not banned -- freedom to organize is mentioned in
the constitution -- but it exists in a kind of no-man's land,
denied official legitimacy and frowned upon.

The government's attitude to labor is reflected in the much
touted Pancasila Labor Relations, under which workers and
employers are supposed to forge ahead as one big family. To the
workers, however, there is little equality at this family table.
One of the more notable protests last year was at the Gadjah
Tunggal tire factory, where the ration between the lowest and
highest pay was 1:200, labor lawyers pointed out. Some 14,000
workers downed tools demanding the government-approved minimum
wage, a better food allowance and the right to organize.

The unintended by-product of setting a minimum wage can be that
employers take this as the wage guideline rather than merely the
base. The minimum wage rule is only for those employers who
cannot afford to pay, argued Simanjuntak. The government has said
that state banks should refuse loans to firms which pay their
workers less than the set minimum.

Minimum wages are also interpreted in different ways. In some
factories, the minimum wage is actually handed out in a package
combining a lower basic wage, a food allowance and monthly and
weekly incentive payments, the total equalling the legal
requirement. But during the past six months, since the
government's tight loans policy was implemented, several
factories have closed down, lending support to management
excuses for low pay. The Labor Ministry allows a ratio of 75%
basic pay to 25% in allowances in the package matching the legal
minimum. The SPSI wants basic pay to represent the entire 100%
minimum wage.

Aritonang, however, argues that local and foreign firms can
afford to pay more, as shown by the number of companies which
have expanded to become conglomerates. And their products are
marketable, meaning that they have achieved a quality which
justifies workers sharing the benefits, he said. Setiakawan is
now campaigning for a U.S. $3 minimum daily wage.

In some 85% of union sections within individual companies, the
leaders are chosen by employers instead of workers, said
Aritonanag. Out of 11,000 industries with labor unions, only
8,000 have collective agreements. And among these, 70% of the
agreements are not implemented.

The Legal Aid Institute (LBH) can only assist workers when
dismissal has taken place. In 1991, all but one of the
approximately 20 companies brought to court paid fines of Rps.
100,000 each, said labor lawyers. Only one case involved a jail
term, and that was for only a week.

Some 80-90% of the cases brought to the labor courts fail,
leading to a potentially explosive situation, said human-rights
advocate H.J.C. Princen. "The situation could be improved if
there was open and frank dialogue between employers and
workers," he added. "But because many employers are very close
to the government, they can get help from the army to strongarm
and help suppress discontent among workers."

Only a small percentage of workers involved in labor disputes
are arrested and charged, noted labor lawyers. Intimidation is
far more common -- suspected ringleaders might be detained for
two or three days and subjected to daily interrogation.

"Strikes are signals to the government, and the government should
heed them," said Princen. There are benefits in the country's
current prosperity, he said, pointing to roads and infrastructure
projects, but workers do not feel such benefits directly.

Wages do not reflect years of service, noted Aritonang. There is
no job security and workers can be sacked at management's whim.
He would like to see some social guarantee that income earned is
enough to support a family -- provisions akin to a family
allowance. And he would like to see promotion opportunities
clearly outlined within each company. But such noble goals may
never be achieved -- there are simply not enough jobs.
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