'Social Clause' refusal unreasonable

By Teten Masduki

JAKARTA (JP): The Indonesian government refused to discuss the so called Social Clause in the International Labor Conference in Geneva recently.

The clause refers to a scheme to incorporate minimum labor standards into international trade regulations.

Indonesia's formal ground for this refusal, as stated by Manpower Minister Abdul Latief, was the fact that in the meeting of the governing body last March no agreement had been reached whether or not to discuss it.

As a matter of fact, Indonesia, and other countries of the Association of Southeast Asian Nations (ASEAN), had attempted to reach an agreement to commonly reject the Social Clause. The rejection of the clause was also announced in the New Delhi Declaration, which was signed by ministers of manpower of non- aligned countries. Just before the ILO conference started, ASEAN ministers of manpower had agreed to reject the Social Clause proposition during their meeting in Chiang Mai, Thailand.

The rejection reflects the unpreparedness of Indonesia and other ASEAN countries to face the consequences of the application of this clause. Should it be put into effect, it would have the potential of hindering development of manufacturing industries in developing countries, which are mostly known for their unfair labor practices.

Exploitation, and other grim realities of workers' conditions in developing countries, in this respect, can be claimed as unfair competitive elements used by developing countries in expanding their exports into international markets.

The ideal concept of the Social Clause, according to its proponents, will bring about a lot of benefits. First, it would provide protection, for the workers, against repressive actions by the government, as well as exploitation by the management of multinational corporations. In the long run, the people of the producing countries will greatly benefit from general trade growth and expansion, which will be more equally distributed.

According to the scheme of the Social Clause, improvement of the quality of life for the workers can be achieved by imposing trade sanctions to countries that fail to respect the international labor standard. Acceptance of the Social Clause will allow for import restrictions or postponement of products that enjoy preferential status from industries or corporations in which the working conditions are inferior to the minimum labor standard. So, exporting countries that fail to meet the minimum labor standard will have to choose either to improve the welfare of their workers, or to face the risk of trade barriers in their export markets.

So far, growth in trade does not automatically result in an increase of the work quality and improvement of workers' conditions. This is believed to be the result of the monopolistic practice of collective bargaining, the absence of independent labor unions, the existence of repressive and anti-worker labor laws.

However, it seems that the ideal concept of the Social Clause is contradictory to the interests of the governments of developing countries. To most developing nations, such as Indonesia, the need to ensure decent workers' condition falls far below another priority, namely, the creation of new jobs for the people. At a glance, this argument seems perfectly valid, because so many people in this country still have to find jobs.

Most of the governments of developing countries also believe that improvement of workers' quality of life will be achieved as their industries and exports grow. They believe that the proposal of the Social Clause is actually a disguised form of protectionism, which may actually hinder the growth of their industries and eliminate one important factor in their comparative advantages, namely, the low wages of workers.

Finally, in general, there is still a strong view among developing countries that the human rights issue is domestic in nature, and therefore no other country should be allowed to interfere.

Furthermore, the reality of workers' rights in Indonesia is an inseparable part of the industrial development strategy carried out by the New Order government. As we already know, the era of the oil boom was over in early 1980s, and the New Order government began to shift from import substitution industry to export oriented industry strategy.

During this period, as well as in subsequent years, Indonesia has followed a very tight labor control policy. Labor activities have been controlled in an integrated manner, under a tripartite corporatist institution, consisting of the only workers, organization--the All Indonesian Workers Union, or SPSI; the only association of entrepreneurs, or APINDO; and the Manpower Ministry. Activities of this tripartite institution, and other workers' activities outside the production relation, fall under the control the military, the police and regional administration at each government level.

In short, the New Order government has to provide a cheap and politically obedient labor force--which is an increasingly determining factor in creating political stability--as Indonesia's comparative advantage in order to attract foreign investments, as well as industry relocation from advanced countries.

The need of the New Order government to provide an inexpensive and co-operative labor force still seems to be the basis for the labor policy in Indonesia in the future, particularly now that we are facing strong competition from other developing countries that have just entered the arena, such as China, Vietnam, Bangladesh. These countries are also relying on relatively the same comparative advantage. Up till now, there has been no indication that Indonesia will abandon the manufacturing industry as the prima donna of national exports.

Since early last year, Minister of Manpower Abdul Latief has been carrying out a limited reform of our labor policy. For example, he has restructured the SPSI into a federation and he has abolished military intervention in labor disputes. However, these initiatives have not been sufficient to prove that the freedom of association has been guaranteed, and the government's refusal to recognize Serikat Buruh Sejahtera Indonesia (SBSI), or the Indonesian Prosperity Trade Union, confirmed just that.

As a consequence, the reform of the workers' corporatist organization was nothing more than a reproduction of a state- based control institution with the aim of making a more effective handling of increasingly strong workers' resistance, as is evident in the waves of strikes in the last four years. Military intervention is still applied, under the legitimacy of the decision by Bakorstranas security agency No. 02, 1990.

The proposal of adding the scheme of the Social Clause to the international trade agreement, which would be supervised by the World Trade Organization, may become a reality if there is strong support and pressure from the general public, particularly the workers themselves. Unfortunately, the concept of the Social Clause is not yet widely known in Indonesia, particularly among low-level workers.

An important aspect to note is that support from the workers could be obtained only if the implementation procedure of the clause can guarantee that it can achieve its ideal concept.

Up to now, we have had bad experiences with the realization of the general system of preferences by advanced countries. Indonesia has been receiving the General System of Preferences (GSP) facility from the U.S. since 1976, and it has always been extended, although we still have discouraging workers' conditions.

The U.S. government has been threatening to revoke the GSP facility if Indonesia still fails to improve the rights of its workers. However, the general public views the threat of the revocation of the GSP facility as merely an economic penetration tool that the U.S. uses in order to obtain certain economic concessions from Indonesia in the middle of the increasingly strong capitals of East Asian countries, most of which play a dominant role in trade and industry in the ASEAN region.

Therefore, there is now a similar concern over the possibility that the Social Clause will only benefit advanced countries and some of the local business people who collaborate with multinational firms. In the meantime, the sufferings sustained by our workers become nothing more than a political commodity in the bilateral relationship between the state and the capital.

The writer is head of the Labor Division at the Indonesian Legal Aid Foundation.