Indonesia: the contrasting fronts of capital, labour and the state

While there is still some uncertainty about the direction that President Joko Widodo (Jokowi) will take Indonesia since his election in July 2014 (he only assumed office in October), there are several worrying signs. Australians will be most familiar with his intransigence on the looming executions of Myuran Sukumaran and Andrew Chan. Within Indonesia, there are other political questions afoot. Key to this is a serious and longstanding conflict in the Indonesian state between the Corruption Eradication Commission (KPK), which has targeted a range of corrupt state officials, politicians, business people and lawmakers, and the police. Enraged by the KPK naming Budi Gunawan as a corruption suspect days before his inauguration as new national police chief, the police arrested the KPK’s deputy chairman in January.

Jokowi, who was elected as an anti-corruption, cleanskin politician, is caught between his supporters, who no doubt expect him to defend the KPK, and the old guard of Indonesian politics, including the police, the parliament and his own party, the PDI-P (Partai Demokrasi Indonesia – Perjuangan), none of which are interested in their allies being caught out by anti-corruption campaigners. Jokowi’s voting base transcends the rural and urban poor as well as more affluent ‘middle class’ Indonesians and some sections of business, like the small-to-medium sized business sector from which he himself hails.

Those hoping that Jokowi might bolster anti-corruption forces will be disappointed that, at best, the president is standing back and allowing the establishment to marginalise the KPK. Budi Gunawan’s nomination was probably supported by PDI-P chair, Megawati Sukarnoputri, and there is great pressure on Jokowi to allow the police to effectively neutralise the KPK by naming key leaders as corruption suspects—in which case, any serving KPK officer is required to step down. At the time of writing, the case wasn’t resolved, with some odd developments, like the decision of last year’s losing presidential candidate, Prabowo, to back Jokowi’s stance.

While the fate of the KPK and competing pressure on Jokowi dominates the headlines, changes on the labour front—which is the focus of this blog—have received less attention. It should be said that many unions, and other civil society organisations, have vocally supported the KPK, often urging them to be much more aggressive in targeting corruption. One welcome development was a protest called by the metalworkers’ union FSPMI in defence of the KPK (which also confronted a pathetic rump of pro-police protestors called the ‘Save Indonesia Alliance’).

Meanwhile, the national parliament will soon consider a bill to cut severance pay requirements for workers, particularly in labour-intensive manufacturing, which employers complain are a disincentive to employ workers. This is a sign of a hardening in attitudes against unions (Victoria University’s Indonesia expert Max Lane makes this point in this interesting interview on Melbourne’s 3CR radio). This comes after a strong union campaign in 2014, on the back of a wave of national protests and strikes in 2012-13, for higher minimum wages from municipal governments, which achieved mixed results (for a scorecard, see my analysis of ‘the wage question in Indonesia’ on 19 November here).

The Jakarta governor, Basuki Tjahaja Purnama (Ahok), was particularly strong-willed in resisting union demands, to the point that Jakarta now has a lower minimum wage than the industrial city of Bekasi, despite its relatively high cost of living. The absurdity of Ahok’s stance is even clearer with new data from Indonesia’s Central Statistics Agency (BPS) which shows that the proportion of poor residents increased in the capital in 2014, with inequality increasing substantially. Key to rising poverty was rampant inflation, which the official Decent Living Index (KHL) used to calculate minimum wage levels failed to address. According to BPS’ chief official: ‘Only the upper and upper middle class enjoyed the city’s economic development last year. Meanwhile, the poor are becoming poorer.’ As an indication of his hard-line approach, Ahok responded by saying that he believed poverty could be even higher than the official statistics indicate!

Despite the mixed outcome for unions in 2014, some business groups have suggested that their wage demands led to the cancelation of contracts, with the Indonesian Footwear Association (Aprisindo) claiming that 16 planned footwear factories, backed with Rp 4.8 trillion ($US 379 million) of Japanese and South Korean investment, were cancelled because of the conflict. While I don’t know about the veracity of this claim, it certainly runs against alternative evidence—for example, the Economist Intelligence Unit survey of 75 manufacturers that showed 54 new large-scale plants would be built by 2019, taking Indonesia past rival economies like Malaysia and Thailand in terms of total number of large manufacturing operations.

Employer groups should be pleased with Jokowi and Ahok, his one-time deputy governor, for their opposition to workers’ wage demands. But the politics of the presidency around labour is more complex than straightforward ‘anti-worker’ union bashing. In my view, there are contrasting fronts of the state’s attitude towards labour conditions and rights. I will mention three different areas of contention and regulation here: the exploitation of migrant workers, the terrible conditions of mining workers and the ongoing demands of Indonesia’s increasingly confident unions, above all the Congress of Indonesian Trade Unions (KSPI) in which the FSPMI plays a pivotal role. These cases traverse divides between workers in different income groups as well as the divide between ‘formal’ workers labouring in factories and ‘informal’ workers who largely work in small enterprises, often outside protective regulations such as minimum wage laws. This is probably true for the vast majority of agricultural labourers, domestic workers, construction workers and self-employed workers.

In each area, the response and engagement of the state seems quite different. First, the exploitation of migrant workers has become a huge issue in Indonesia. In 2012, official data showed 4.3 million Indonesians working overseas, although the real figure may be 2-4 times higher than this, with Saudi Arabia and Malaysia the biggest destinations. There are different categories of international migrant workers (known as TKI), like the 150,000 domestic workers employed in Hong Kong, a similar number of Singapore or the hundreds of thousands of plantation workers in Malaysia, including at least 200,000 from East Lombok. Indebtedness to labour contractors—a form of labour bondage—mistreatment, abuse and sexual harassment of women, as well as the precarious status as ‘non-citizens’ in foreign countries are key problems for these workers. For domestic workers, there have been some highly-publicised international cases of abuse, such as the Hong Kong employer facing up to seven years prison for beating an Indonesian maid. Worse still, perhaps, is the plight of workers who have been lured as domestic workers to the Middle East.

The exploitation of migrant workers has become such an issue that the government has been forced to make a high-profile stand. Jokowi has pledged to repatriate all ‘stranded’ overseas workers, while domestic worker migration to some Arab countries like Saudi Arabia, Qatar, Oman and Kuwait has been banned. In a recent case, Indonesian diplomats have tried to take action against 20 employers in Bahrain for abusing Indonesian maids, among 10,000 estimated to work in the country. These workers are effectively bonded with 2 year contracts and fees of $US 1300-2100 to break contracts early. The government has also imposed a moratorium on migration to the UAE. Nusron Wahid, head of Indonesia’s migrant workers’ board BNP2TKI recently suspended 30 migration and placement agencies for violating this ban.

In some cases, unregistered agencies have been sending workers overseas while, in others, workers have been promised jobs in Bahrain, Egypt and Oman and then smuggled into the UAE illegally. ‘Welcoming’ these workers home is now part of the government’s political rhetoric, although it is clear that the driving forces behind migration and bonded labour run much deeper than this, with connections to the lack of decent, secure employment in regional and rural Indonesia.

The second area of contention is the appalling record of health and safety for mining workers in Indonesia, which government has seemingly been far less willing to react to. Another worker was killed at the massive Freeport gold and copper mine in West Papua recently, on the back of several incidents, including the death of four workers hit by a mining vehicle late last year as well as 28 workers nearly two years when a tunnel collapsed, ironically during a safety training session. As I wrote on 22 October last year, nine workers died at a separate mine in accident in Papua in July and, in October, 19 workers were killed in a gold mine collapse in Kalimantan.

In the case of Freeport, the company’s record has been met with several strikes and blockades and unions have raised the issue nationally, including by the KSPI in protests in Jakarta. A combination of factors – the relative remoteness of many mines on the ‘outer islands’, the lure of wage income for rural workers and the informal character of most employment relations – perhaps explains why there is been far less government response to this issue in comparison to the growing national discussion about the exploitation of overseas migrant workers.

The final area of contention raised here is the ongoing campaign by unions over wages and employment conditions in the major cities and industrial zones, particularly in the manufacturing sector. With the presidential and parliamentary election campaigns long-finished and minimum wage cases also largely resolved – albeit with mixed results, as mentioned above – attention may well turn back to the industrial front, and with good reason. Lagging real wages continues to be an issue while, on Batam Island, a major electronics industrial zone, there have been recent cases of factory closures. In January, over 300 workers were left without jobs at a Chinese-owned Adidas supplier when the owner absconded without notice, following similar incidents by Malaysian and Japanese electronics manufacturers in recent years.

Elsewhere, the campaign against outsourcing and precarious employment continues. Several unions have united recently to achieve regular work for 280,000 workers in the public sector, including in large state-owned firms the State Electricity Company (Perusahaan Listrik NegaraPLN) and oil and gas giant Pertamina. Unions claim that 65 per cent of workers in garment, textiles and footwear industries may be outsourced or hired on short-term contracts, and up to 61 per cent of workers in metal and electronics manufacturing.

So here we have the contrasting fronts of state, capital and labour in Indonesia: state officials intervening in a national conversation about the exploitation of migrant workers (while not addressing the underlying drivers of migration and bonded labour), the state all but ignoring informal (and often criminal) activities in the mining industry and a continued imperative for unions to fight in the absence of any willingness by governments, including Jokowi, to accommodate workers’ interests over wages and employment conditions.

Main photo c/o:

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