Labour discontent grows in Indonesia

By Ahmad Pathoni Jan 26, 2012, 2:06 GMT

Jakarta - Thousands of Indonesian workers recently occupied toll roads linking Jakarta and its suburbs to demand higher pay, causing traffic jams extending several kilometres.

Elsewhere in the country, police clashed with factory workers seeking an increase in regional minimum wages.

Labour unrest has been growing in recent months as discontent over pay and working conditions grow.

Workers from both state-owned and multinational companies have gone on strike.

'Things have become more difficult for workers,' said Bambang Wirahyoso, chairman of the National Labour Union. 'Their minimum wages are too low and they lack protection.'

Of 30 million workers in the formal sector, only 9.7 million are enrolled at the national pension fund Jamsostek, he said.

'Violations of workers' rights are rampant, but the government is doing little to tackle the problems,' he said.

Some of the protests have turned violent.

At least one worker was killed in October during a clash between police and employees of a giant gold and copper mine operated by US company Freeport-McMoRan in Papua province.

After three months of strikes, the company in December agreed to increase wages by 37 per cent.

In the industrial town of Bekasi, just east of Jakarta, workers took to the streets after the Indonesian Employers' Association took the local government to the State Administrative Court for raising the minimum wage by around 15 dollars a month.

Association chairman Sofjan Wanandi said smaller employers could not afford the raise and they made up 80 per cent of companies in the area.

'We are defending the interests of these small and medium-sized companies,' he said.

But Obon Tabroni, who represents about 50,000 employees from different sectors in Bekasi, dismissed Wanandi's claim.

'Of 3,000 companies, only 16 have raised objections' to the increase, he said.

Tabroni said even with the rise the workers could barely make ends meet.

'Our wives have to help supplement our income by opening small food stalls at home,' he said. 'Some of us moonlight as motorcycle taxi drivers at night.'

Indonesia's economy is relatively strong, growing about 6 per cent annually at a time when many other countries are being affected by the global economic uncertainty.

Two global rating agencies, Fitch and Moody's, recently raised the country's status to investment grade.

These upgrades are likely to result in yet more foreign investment in South-East Asia's biggest economy, analysts said.

But many workers have yet to enjoy the fruit of the economic boom, said Latief Adam, an economist at the Indonesian Institute of Sciences.

'It's a zero-sum game,' Adam said.

'Companies are exploiting workers because the cost of doing business here is high, due to bad infrastructure and bureaucratic costs, including corruption.'

Adam said the government must not rely on cheap labour to draw investment in its competition with other growing Asian countries like China and Vietnam.

'The government must address this high-cost economy so that companies can reduce costs and spend more on workers' welfare,' he said.

Indonesia did reform its labour laws in 2003 in response to pressure from workers' organizations.

But both companies and workers have said those rules are unfair.

Employers complain that they make it difficult to fire employees by imposing high severance pay on top of length-of-service compensation for workers with three or more years' service.

A 2010 World Bank study found that 'severance pay is estimated to be equivalent to a 'hiring tax' of around one-third of a worker's annual wage.'

And workers say the legislation guarantees them little in the way of social protection and makes it too easy for companies to outsource jobs.

Trade Minister Gita Wirjawan said the government was trying to address the workers' dissatisfaction.

'We need to dig deeper into why discontent might have been there, but I think it's natural for workers to want more as (the rest of the country's) purchasing power goes up and the cost of living goes up,' he said.

'I think there are enough people in the government that are looking at it a lot more seriously,' he said. 'The question is: Is (the unrest) being spurred by pure economic reasons, or some others?'