Labor policy may be defective

By Vedi R. Hadiz

JAKARTA (JP): Amid the election campaign frenzy, with political parties demonstrating support supposedly articulating people's aspirations, few have noted the spate of labor strikes occurring along side the campaign trail.

While this is hardly surprising, it is still rather pitiful.

Thousands of industrial workers have been involved during a time which authorities have been most keen on emphasizing stability and nondisruptive acts.

This may prove that there are sections of society which presently feel excluded from the country's political process.

These strikes would less likely take place if, for example, institutions existed which could better represent and articulate the aspirations and interests of workers.

Such institutions are simply nowhere to be found. The Federation of All-Indonesia Workers Unions (FSPSI), for instance, which is the only trade union federation recognized by the government, has been notoriously ineffective.

Thus workers have had to resort to striking.

To be fair, there have been scattered press reports on these strikes. Workers demand that their employers honor government minimum wage stipulations.

Kompas (May 6, 1997), for example, reported that workers in seven factories in Tangerang, one of the most important manufacturing centers of the country, have gone on strike to protest employers' noncompliance with government policy.

Indeed, the Ministry of Manpower has put into effect since last April new regulations which have increased minimum wage. However, many employers have responded by applying for an exemption from these regulations, citing economic difficulties.

Many business leaders have complained that the government policy of periodically raising the minimum wage is unsound given the huge burden that businesses have to bear in the form of bureaucratic levies. These levies, many of which are illegal and therefore comprise what is popularly known as "invisible costs", have been estimated to comprise up to 30 percent of a manufacturing firm's total production cost.

By contrast, wages are said to comprise only about 10 percent of this cost, thereby giving rise to the idea that, in practice, powerless workers have been subsiding more powerful, and corrupt, bureaucrats. Thus many employers have urged the government to accompany its policy of raising minimum wages with a policy of curbing these bureaucratic costs.

Not surprisingly, the government has done little to address this issue. Obviously, the Ministry of Manpower, which is responsible for setting the minimum wage, has little power to change the behavior of officials of other government bodies and institutions, from the central government right down to the local level. It cannot even control the behavior of its own officials.

Thus, what we have now is a standoff: increasingly assertive workers are demanding better pay and a better life, while employers say that they can only accommodate the wishes of workers if the government does something to address the endemic problem of corruption in our bureaucracy.

Unfortunately, the government may not fully recognize the gravity of the situation it has at hand. While it has taken up the policy of improving the welfare of workers by raising minimum wage levels -- response to growing labor unrest throughout the 1990s -- it has refused to acknowledge the link between welfare improvement, freedom to organize, and a high-cost economy.

We have seen that by tackling the problem of the high-cost economy more seriously, there is theoretically much more room for improving welfare because employers are more likely to agree to rising wage levels. The government has also been unwilling to tackle the politically contentious issue of the freedom to organize. It has refused to grant workers more freedom in this area, presumably in the fear that it will lead to even more labor unrest.

However, it may be argued that placing too many restrictions on the freedom to organize has been one of the roots to the problem that the government now faces in relation to labor.

The government says, for example, that it would not recognize a union federation other than the FSPSI because this would contravene the "national consensus" struck in 1973 that there would be only one such organization in Indonesia. But this was a consensus which was produced nearly two-and-a-half decades ago.

The face of Indonesian society has in fact changed considerably in the meantime, precisely because of the government's success in promoting the economic development and industrialization process.

A much larger, better educated, and more aware industrial working class exists today. Many workers feel that they are inadequately represented and protected by the existing union federation. Would not the existence of a "rival" union encourage the FSPSI to improve its performance in representing the interest of workers?

If workers then felt that they had an institution that they could count on, would this not help alleviate labor problems that the government now faces?

Quite distressingly the government's thinking on the matter seems to be taking quite a different direction, if the currently hotly debated manpower bill is any indication. Here, the government still seems intent on curbing the capacity of workers to organize, in the hope that this will in turn curb labor unrest.

While this bill, for example, recognizes the right of workers to go on strike, it places so many barriers to the exercise of that right that it becomes meaningless.

Striking can only be undertaken if it does not harm public order and security according to one of the bill's articles. Furthermore, according to an "elaboration" of this article, urging someone else to go on strike constitutes doing such harm.

Thus, an individual can go on strike, but collective action, which can only take place when individual workers organize (therefore, "urge") their co-workers to go on strike, becomes impossible.

The government is mistaken if it believes that policies such as these will solve its labor problems. Workers have continually demonstrated that they now possess the ingenuity to get past many of the various obstacles that government has placed in front of them, in relation to the freedom to organize.

They have, for example, tended to organize in informal groups at a community level, rather than at the factory, because of the severe restrictions on factory-level organizing.

Unfortunately, the end result of the government's current approach is only to further alienate workers from the country's existing social, political and institutional framework. Thus, we should not be too surprised if many workers simply dismiss the current election-time preoccupation with democracy slogans as irrelevant to their lives.

The writer is a PhD graduate of Murdoch University, Perth, Australia and is a research fellow at the Asia Research Center of the university.

Window: We have seen that by tackling the problem of the high-cost economy more seriously, there is theoretically much more room for improving welfare because employers are more likely to agree to rising wage levels.