Indonesian unions up the ante for 2015 with national strike

17 December, 2014

Up to a million workers were part of national strike action across Indonesia on 10 December. 2014 has been a critical year for the Indonesian labour movement, with the arrival of a new national government led by President Joko Widodo (Jokowi), trade union backing for various, rival political candidates exposing disagreements and divisions within the movement, mixed results for unions targeting city and provincial governments for higher wages and fairer cost of living calculations and, now, a massive national protest reiterating a number of important demands on Jokowi’s administration.

As part of this, about 50,000 workers marched in the capital, Jakarta (with nearly 17,000 police officers mobilised in opposition!). Thousands also rallied in Bandung in West Java and Medan, North Sumatra, where the Governor set an appallingly low minimum wage in November. The 10 December protest was organised across 12 provinces of Indonesia, and was based on a program of demands, including lower fuel prices, revised calculation methods for the cost of living (the Decent Living Index, or KHL) which influences minimum wage setting (UMP), compulsory pension insurance, greater spending on healthcare and an end to outsourcing, particularly in the public sector. While divisions within the major union confederations continue—for example, the KSPSI, formerly the state-sponsored union from the Suharto era, argued that Jokowi’s cuts to fuel subsidies should be supported by workers—there was involvement by all three confederations in the national protest, including KSPSI, KSBSI and, above all, the KSPI. KSPI is led by Said Iqbal and spearheaded by the metalworkers’ unions, FSPMI, which is arguably the best organised in the country. For example, FSPMI’s automotive manufacturing division, SPAMK, has experienced considerable success organising and representing workers in car, motorcycle and scooter factories in West Java’s key industrial zones where, according to recent government figures, up to 3.1 million people work.

While these union demands are not new, they continue to gain a hearing in Indonesian society. Said Iqbal argues that Jokowi’s cuts to fuel subsidies will cut the purchasing power of wages by up to half. While unionists have made different wage demands on regional governments depending upon local circumstances (see my 19 November post here), the national protest also made a uniform call for a national minimum wage of no less than $US 273 per month and reiterated a demand to widen the number of items used to calculate KHL from 60 to 84. Unions have been particularly angered by the Jakarta administration’s belligerent refusal to raise minimum wages above employers’ preferred level. On pensions and health insurance, Iqbal argues that union demands are about ensuring full and proper implementation of new and existing laws so that all eligible people can access their rights.

There are some critical debates to be had about the movement’s demands. For example, even if unions succeed in winning fairer KHL and UMP calculations, the vast majority of workers do not get protected by these decrees—as many as 80 per cent of workers, according to one estimate, including the vast majority of agricultural workers, construction workers, domestic workers and the self-employed. Some of these categories of workers have particular economic survival strategies and needs that can be quite different from the ‘formal’ workers that constitute the core of the union movement—formal in the sense that they have usually have an identifiable employer-employee relationship and may have other benefits denied to informal workers, e.g. an employment contract. Migrant workers (TKI) form one such category. For example, there are close to 150,000 Indonesian domestic workers, mostly women, working in Hong Kong. Many of these workers pay large sums to placement agencies which can be as high 7.5-9 times higher than the Hong Kong minimum wage, which is set at a low $HK4,110 a month (about $US 530). These workers are vulnerable to debt bondage orchestrated by unscrupulous labour contractors, as well as repressive local visa restrictions on migrants’ demanding their rights. Similar problems confront thousands of Indonesians who work as domestic workers in Singapore or as plantation workers in Malaysia.

As the KSPSI’s dissent suggests, there are also issues with the KSPI’s stance on fuel subsidies. Subsidising fuel does divert massive fiscal resources into blunt policy instrument that benefits rich and middle income earners as well as informal workers and the poor. It’s a highly inefficient economic policy and there are also questions about how high fuel prices will be in the future in the context of falling world oil prices. In my view, however, Said Iqbal and his colleagues are quite right to oppose Jokowi’s fuel subsidy policy in the absence of an appropriate safety-net for workers and the poor. This is essentially a class question, i.e. the costs of cutting fuel subsidies will be disproportionately and unfairly borne by the poor and this, by itself, justifies the KSPI’s current stance.

The importance of informal workers who are outside collective bargaining and formal wage agreements also underlines the importance of unions raising questions about the implementation of pension rights and health insurance coverage. Jokowi recently launched the Indonesia Smart Card and Indonesia Health Card, which is meant to provide free health care for the poor, 12 years free education for students and free higher education for poor students who pass university entrance exam but cannot afford to pay fees. These are good ideas in theory, but the scheme faces massive challenges with government officials having a lack of data about the needs of the poor and problems extending the scheme to workers in all provinces, especially the millions who lack bank accounts. The health scheme, if successfully implemented, is supposed to deliver free health checks to 88 million Indonesians who are below the poverty line (GKM for food and GKBM for non-food essential commodities like clothes, electricity and fuel). The scheme is funded by a monthly health insurance premium of Rp 19,225 per person ($US 1.50). As the unions have suggested, there is no chance that this scheme can help to compensate for rising fuel prices, and the knock-on effect on other commodities, if it is not fully and carefully implemented with appropriate institutional support.

So, Indonesian trade unions keeps rising to the challenge of life under the new Jokowi administration and the belligerence of employer groups demanding that wages be kept low. There are many challenges, such as political divisions within the labour movement, problems of relating to millions of informal workers around various non-workplace based demands and achieving the implementation of protective pension and healthcare reforms. There is also the challenge of achieving fair wage increases. In some areas, like the industrial zone of Bekasi, workers have won a reasonable increase in the minimum wage. In others, like Jakarta or Medan, unions have had fair less success. Despite these challenges, it looks like workers and unions will continue to influence and shape economic development and politics in Indonesia in 2015.

Photo courtesy of IndustriALL:

Please note: this is the final 2014 post for ‘Labour in the Asian Century’. Season’s greeting to all and best wishes for 2015!!! TB

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