Workers need to better their bargaining power

By Tjipta Lesmanaa

JAKARTA (JP): The current picture of Indonesian workers is not that encouraging. Of the 90 million-strong workforce Indonesia currently has, roughly 60 million are engaged in the formal sector as well as in the informal sector. Forty million of them earn only Rp 150,000 to Rp 200,000 per month, far below the poverty line set by the National Statistics Bureau.

Of the remaining 30 million, 20 million are categorized into disguised unemployment or those who work less than 35 hours per week. Adding to this is the bleak figure of 10 million unemployed, up from six million registered before the economic crisis in late 1997.

Labor costs in Indonesia are, undoubtedly, the cheapest among ASEAN countries. It is only 5 percent to 10 percent of total production costs, while the average figure in ASEAN countries is estimated at 25 percent. Labor costs in industrialized countries can be up to 40 percent of total production costs.

Previous governments gave themselves a boost with the cheap labor costs. It was conceived as one of the comparative advantages Indonesia could use to attract huge foreign investment.

Two main reasons are attributable to the cheap labor costs in Indonesia. The first is that it is part of the wholescale red tape system. Secondly, it is part of the government's strategy to lure foreign capital. Neither of the two factors are, however, worthy of appreciation.

Employers in Indonesia cannot afford to pay their workers well since they, more often than not, have to pay "fees" to various government agencies.

Such "fees" are widely seen as a normal practice in bureaucrat-business relationships. Considering its status as one of the most corrupt nations in the world, practices of this nature are very high indeed.

The amount paid by companies for this purpose is, according to Agus Sudono, former national trade union (SPSI) chairman, estimated to be no less than 10 percent (of total production costs).

The payment of these "fees" is needed to facilitate the procurement of licenses, and in supporting the employers from any "harassment" by the workers.

Collusion between employers, bureaucrats and security officials is deemed crucial in setting up peaceful conditions for production activities. Consequently, workers are paid only 60 percent of their real wages, while the remaining 40 percent goes to numerous government officials.

Another bleak figure regarding the labor force in Indonesia involves its quality aspect. Of 90 million people eligible to work, more than 55 percent are just primary school graduates. Many of them have not even finished their primary school education. Those who attain university education are no more than 10 percent. Efficiency and productivity across business lines is conceivably very low.

Those various factors mentioned above are contributing to the weak position of Indonesia's workers. They have the lowest salary scale among ASEAN countries. They are weak in bargaining with their bosses, who can, at any time, dismiss them with no serious legal consequences. They are reluctant to bring their fate to the attention of the officials at the manpower ministry because the latter is too concerned with businesspeople (the ministry supports the employers as they get money from them).

And finally, unlike their comrades abroad, they have no power to use strike mechanisms to pressure the employers.

The history of trade unions in Indonesia is marked by heavy political influence. Put another way, political parties in the past capitalized trade unions to sell and win their platform. That was one reason why all political parties in the past set up their own trade unions. By the time former president Soeharto seized power from Soekarno in 1996, there were about 23 trade unions in the country.

As a four star general, Soeharto ruled the nation with an iron fist giving no room to freedom of any sort. He claimed to be anticommunist, though. But his regime was, as a matter of fact, patterned on the communist regime.

Uniformity is one of the styles of the communist regime everywhere. Being aware that the political stability could be threatened by labor issues, he instructed his manpower minister to squeeze the 23 trade unions and blend them into one organization.

The motive behind this policy was easy to grasp: to effectively control the trade unions. That was the beginning of the Indonesian Trade Union Federation (SBSI), set up in February 1973.

Under Admiral Sudomo (as manpower minister), however, SBSI was dissolved and changed into the Indonesian Union of Workers (SPSI) which was unitary in its form. Sudomo was previously supreme commander of the powerful security agency Kopkamtib.

Like his mentor (Soeharto), Sudomo was a fierce and ruthless despot. Obsessed by the "efficiency" of armed forces organizations he altered the status of the trade union from a federation to a unitary body.

The move, however, aroused criticism from abroad. Fearing the criticism would endanger the business climate, Sudomo loosened his grip just before his term ended by agreeing to change SPSI into FSPSI (Indonesian Union of Workers Federation).

As Soeharto was beginning losing his grip on power, pressure to crack down on the monopoly of the trade union was mounting. Mochtar Pakpahan was the first intellectual who persistently fought for the setting up of an alternative trade union. His efforts were fruitful when the Indonesia Prosperity Trade Union (SBSI) was established in 1997. Pakpahan's popularity, at home as well as abroad, was even greater when the regime managed to have him sent to jail.

The movement of Freedom of Association for workers entered a turning point when the Soeharto regime was toppled in May 1998. Under heavy pressure from industrialized countries, Indonesia finally ratified the International Labor Organization (ILO) Convention No. 87 (on Freedom of Association).

Room for establishing alternative trade unions was widely opened by the government act. Indonesia suddenly became the only country in the world with the most number of trade unions: 17.

Freedom of association is, indeed, important in upholding workers' bargaining positions. But concern is mounting that the exercise of such freedom would only bring chaos without a clear ruling.

There is an urgent need to reform the legal system following the ratification in 1998 of ILO Convention No. 87 by the House of Representatives (DPR). The only ruling on trade unions until now was the manpower minister's Decree No 5/1998 which just covered the registration mechanism of trade unions. It was very limited in its scope.

The need for a law specifying conditions for setting up trade unions is very urgent. Is just about anyone free to form a union? How do the workers stage strikes and how do they reach a compromise when there is more than one union in their work place?

Without such a ruling, the existence of so many trade unions would only harm the workers. The right to stage a strike is also in need of a ruling. Production activity would, undoubtedly, be obstructed if every worker's petition of was channeled through a strike.

Each employee should bear in mind that the employer is his or her own partner in bringing about his or her prosperity. Without the owner, and an undistracted production process, any talk about prosperity makes no sense. Hence, both sides have to work hand-in-hand and respect each other as human beings in need of a decent living.

The position of Indonesian workers in relation to their employers during the past 30 years is, indeed, very fragile. They have low salaries, low levels of education, a weak bargaining position and no freedom of association.

Hopes were in the offing recently thanks to the political changes following of the demise of Soeharto. To seize the new momentum, the government should immediately bring in new laws to make it possible for workers to exercise their freedom of association and to set up a mechanism to solve industrial labor disputes.

It is also high time for labor union leaders to increase their knowledge and skills, especially in the leadership arena, in order to strengthen their positions. The ILO could play a substantial role in this regard.

The writer is a columnist and lecturer at the political and social sciences department of the University of Indonesia.