An appeal for corporate democracy<\/p>\n
By Rochman Achwan<\/p>\n
JAKARTA (JP): In the very near future, Indonesia will enter a
\nnew and difficult era on the road towards becoming an economic
\nand political democracy.<\/p>\n
The signs are visible. The rise of resentment in public and
\nprivate corporate sectors continues unabated. Beginning with mass
\ndemonstrations by employees of the Jakarta public water supply
\nfirm, followed by civil servants of dissolved government
\nministries and continued by employees of Bank Bali.<\/p>\n
Resentment tends to expand, touching other modern sectors as a
\nconsequences of macroeconomic restructuring. If in the last two
\nyears the public arena was occupied by series of communal violent
\nincidents, in the months to come Indonesians will witness the
\nbreakdown of corporate solidarity in various sectors of
\ncorporations.<\/p>\n
This calls for a plea of moralism, directed at state leaders,
\ncorporate employers and employees to halt it, considering the
\nwidespread danger of its political implications.<\/p>\n
The breakdown means that a process of economic exclusion is
\nunder way, expelling a majority of employees out from their
\ncorporations. This should not only be understood as loss of jobs,
\nbut more importantly, as a loss of social status and of identity.
\nA plea for moralism should not be interpreted in the same way as
\nstate leaders' appeals to avoid dirty, corrupt business
\npractices.<\/p>\n
It also has to be interpreted as the materialization of an
\ninstitutional way of mediating between conflicting interests in
\nany corporation. This sort of \"social bridge\" sows the seeds for
\nthe rise of corporate trust, lubricating business performance.<\/p>\n
Such a social bridge is not only important for adjustment to
\neconomic globalization, but is also a precondition for the rise
\nof democratic corporate governance. Policy makers seem to
\noverlook its importance in the implementation of economic
\nrestructuring. Current Russian economic restructuring can be
\ncited as an important case in point.<\/p>\n
Observers lament that the Russian transition to a market
\neconomy has arrived at a point contrary to the predictions of
\neconomists. Many public corporations have run out of industrial
\nsteam and are facing difficulties paying salaries.<\/p>\n
As sociologist Vladimir Dakhin vividly illustrates in his 1999
\nbook, huge numbers of unpaid employees are leaving corporations,
\nlooking for opportunities in the informal sectors. They then
\nparticipate in public demonstrations, expressing unclear
\npolitical demands to the ruling powers.<\/p>\n
The Russian transition is characterized by the rise of
\n\"vagrantification\" -- a process by which the public arena is
\nfully occupied by hundreds of disjointed and unclear political
\ndemands. Most trade union leaders contribute to this process by
\nshifting their allegiance to ruling politicians rather than to
\ntheir members. A public arena as a medium of economic salvation
\nceases to function as a medium used for the settlement of
\npolitical disputes between the state and society.<\/p>\n
The most alarming consequence of such vagrantification is the
\ncontinuing rise of dangerous social associations in Russia, in
\nwhich groups of people organize economic activities by means of
\nviolence. Criminal gangs, like professional hit squads and drug
\ntraffickers, are increasing. The failure of Russian economic
\nrestructuring should not be attributed to the operation of the
\nmarket economy itself, but it has something to do with the
\nabsence of social bridges in an economic society. Corporate trust
\nas the essence of morality is missing, and therefore incapable to
\nshape benign social bridges.<\/p>\n
What lessons can be learnt from the Russian case? Indonesian
\ncorporations have the potential to slip into a Russian-like case.
\nAlmost all the prerequisites are already in place, shaping a
\nnecessary condition for the breakdown of corporate solidarity.
\nDownsizing of management, the feebleness of trade unions and an
\nabsence of state social policy over corporations can lead to the
\nfailure of benign mediating institutions to grow.<\/p>\n
The absence of such institutions might lead employers to lay
\noff their employees. The skilled unemployed together with
\nunskilled unemployed will fill an ocean of Indonesian
\nunemployment. The public arena will be dominated by the
\nconflicting demands between supporters of economic freedom and
\nsupporters of solidarity with the unemployed in the months ahead.<\/p>\n
Today, Indonesians are beginning to witness new political
\nepisodes of the battle between those two conflicting demands. The
\nrecent mass demonstrations by Bank Bali's employees are one case.
\nOn the surface, the employees demand the rejection of the
\nmanagement's steering of, and later taking over of, Standard
\nChartered Bank. This would be against the supporters of economic
\nfreedom. The way in which this case is settled will determine not
\nonly the future of skilled employees in Indonesia, but also the
\nfuture of foreign investment in Indonesia.<\/p>\n
The time has come now to create a so-called \"trilateral
\nagreement\" between the state, employers, and employee
\nrepresentatives. It should stress the importance of mutual
\nsacrifice, and employee reduction should be a last resort. Such
\nagreements were practiced and helped revive economies in a number
\nof continental European countries in the early years after the
\nend of World War II.<\/p>\n
Employers and employees should be able to create institutions
\nthat peacefully mediate conflicting interests within
\ncorporations. The intention to share a social burden now seems to
\nemerge, as long as employers are willing to transparently inform
\nemployees over problems and strategies for healing their
\ncorporate ills.<\/p>\n
A drastic reduction in working hours, rather than laying off
\npeople, should be the goal. By doing so, employers would be
\ntreating employees not as a commodity but as human beings.
\nCorporate trust as a source of morality would begin.<\/p>\n
This strategy of creating business morality is a prime concern
\nin the history of German corporate industries. Today, Germany is
\nconsidered as the country with the most democratic industrial
\ngovernance, and its corporate industries are the most productive.<\/p>\n
Rochman Achwan PhD, is a senior lecturer in Economic Sociology
\nat the University of Indonesia.<\/p>",
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