Labor policy may be defective

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.