A Kind of Modern Slavery: Labor Flexibility Comes to Indonesia

An Interview with Saepul Tavip

Saepul Tavip is a member and past chair of the Indonesian Association of Trade Unions, representing workers in the finance and service sectors. He is also the current chair of the steering committee for the Indonesia chapter of the Asian Labor Network on International Financial Institutions.

Multinational Monitor: How is the Indonesian trade union movement organized?

Saepul Tavip: The Indonesian trade union movement is very segmented. Many union federations have formed in the reform era, after Suharto stepped down, but they are not united. The different trade unions have their own agendas and their own strategies. Some of the unions have ties to certain political parties. That makes it very difficult for the union movement in Indonesia to struggle effectively for worker rights.

In 2003, we faced a major problem with the draft Manpower Act. Some federations opposed the draft, but others said they could accept the Manpower Act.

The government and employers were able to capitalize on the fragmentation of the trade union movement. As a result, we have the Manpower Act, which clearly makes workers and unions weaker. Unions that objected to the Manpower Act challenged it in court, but failed. The union federations that were in favor of the Manpower Act did nothing.

There are currently 87 different union federations in Indonesia. The union movement here appears in public only when there is some labor issue at the national level. As long as there is no national issue, they do nothing. They are reactive, not proactive to respond to the situation of workers, even though every day we have serious labor problems in Indonesia.

MM: What were the key elements of the 2003 law?

Tavip: There are at last six main problems posed by the Manpower Act.

Number one is about outsourcing, or contracting out. We reject outsourcing, because it creates a flexible labor market, and we think labor market flexibility is a kind of modern slavery. Labor flexibility means workers will be flexible in the wages they receive, flexible in their working hours, flexible in the social security benefits to which they have a right, flexible in accepting dismissal — because the employer can fire the worker at any time under any condition.

The second issue involves the use of contract-basis workers. With the Manpower Act, it is not clear how long the workers can be contracted [before they must be treated as regular employees]. And then, it is not clear what kinds of job can be contracted.

The third issue is the dismissal process. In the Manpower Act, the dismissal process is made easier than before. The employer can fire the worker at any time, for any reason. In the past, the employer could only fire workers when they were indications that the worker was engaged in criminal activity.

The fourth issue is the protection of women workers. It is very weak for matters such as maternity or night work.

The fifth issue is about collective bargaining agreements. Under the Manpower Act, the right to create collective bargaining agreements is weaker.

Finally, there is the issue of the right to strike. Now it is very difficult for the union to organize a strike when they don’t agree with the policy of the employer. Under the Manpower Act, workers can strike only in the context of collective bargaining agreement negotiations. We can’t go on strike to show our solidarity with other workers’ problems in a different company. We cannot go on strike when we oppose state policy.

During the strikes that are permitted, we cannot do anything. We cannot make noise. We can only do what is very orderly and peaceful. It is very debatable what is a peaceful condition. The police can stop a strike for making noise when they think it may create a disturbance. This makes it very difficult for the unions to organize a strike.

MM: Does the Manpower Act apply to all employers, or only to the largest employers?

Tavip: To all employers.

MM: What were the conditions by which the Manpower Act was adopted? Who pushed for it?

Tavip: The government and employers urged the implementation of the Manpower Act, because they take a lot of benefit.

They also pushed for another law with which we have a serious problem, the Industrial Dispute Settlement Act No. 2/2004.

This is a continuation of the Manpower Act. Under the Industrial Dispute Settlement Act, workers can only raise disputes [involving workplace grievances] by filing a written complaint. But in Indonesia, there are many uneducated workers, who do not know how to make a written complaint.

Then, under the new act, we have to go to the court. In the past, disputes could be settled by the industrial settlement committee. Now the government has produced an Industrial Relations Court. There we have to follow a very rigid protocol, a procedure that is very difficult for the workers. The employer can easily hire lawyers to handle the dispute. But for the workers of Indonesia, who are very poor and uneducated, it is very difficult to hire a lawyer. So, some of the workers just say, “We give up. We cannot file. We cannot challenge the employer through this court.”

The selection of judges for the Industrial Relations Court is not transparent. We don’t know how the government selects the judges of this court.

We don’t want this labor court. We want a national industrial settlement committee. Recruitment of the members should be through fit and proper tests. At the national level, the parliament should review and approve the judicial candidates. At the regional level, they will be approved by the local parliament. Then everybody can see how they answer questions submitted by the parliament, and we can also submit questions. And workers can see the strength of their commitment, integrity and track record, as well as their capacity — their understanding of the law, and of labor problems. As it is now, we don’t know the ability, capacity, integrity, track record or commitment of this labor court judge.

MM: New amendments were proposed this year to the Manpower Act. What would they have done?

Tavip: The proposed amendments come from the employers. We oppose this initiative. We see that there are many, many elements that will put us in a weaker position.

We say to the government: first, we oppose the amendments; and also, we reject the Manpower Act itself.

In the three years since the Manpower Act was implemented, workers have had many problems in exerting their rights. Unfortunately, because the union federation movement in Indonesia is fragmented, the government has not heard the sound of the protest so clearly.

MM: What would the amendments have done?

Tavip: They want to reduce the compensation to workers who are dismissed. They want to outsource all kinds of jobs, without limitation. They want to prolong the period under which a worker can be a contract-basis employee.

Recently, the government has tried to change its strategy. Since the beginning of this year, there have been many demonstrations from the unions to oppose this amendment. Now the government does not propose to touch the Manpower Act itself, but to create change another way — by issuing regulations. So now the government tries to amend the Manpower Act indirectly.

MM: The regulations would be the same as the amendments?

Tavip: Yes. We see that the government and the employers are colluding, to provide more benefits to investors, particularly to foreign investors. That is why we oppose this very strongly.

MM: What has been the role of the World Bank and IMF in promoting these rules?

Tavip: Many people believe that the World Bank and IMF have had a very strong influence. The IMF and World Bank are always thinking about global capital, about foreign investment. They say foreign investment is very important for Indonesia, so the government must create a flexible law to enable foreign investors to come into Indonesia easily, and get out easily. Easy come, easy go. That’s why they say the investors need the flexibility of this Manpower Act.

Foreign investors don’t want to have ongoing obligations to their workers, and they don’t want to be burdened with labor problems if they want to withdraw investments from Indonesia. But now, if they want to close their factory or investment in Indonesia, they can go easily — they don’t have obligations to justify the dismissal of their workers or to provide funds to pay compensation to them.

We think that this is the global strategy of capital — to make investment easy come, easy go.

MM: So a concern with foreign investment has driven the labor law changes?

Tavip: Yes. That is why President Susilo Bambang Yudhoyono, in his visits to countries like Singapore, Hong Kong, the United States and Europe, always says to foreign investors, “Please come to Indonesia. We have very conducive conditions for investment. We will give you facilities to make your investment in Indonesia very profitable.” To generate more foreign investment, the government must create the right preconditions, including a flexible labor law.

MM: Have foreign companies directly demanded that the labor law be changed, and conditioned investment on such changes?

Tavip: When they discuss possible investments with the government, one of the conditions they demand is a flexible labor market, and recently insisting on a more flexible Manpower Act, or regulation. It can be in the form of a law or regulation, or even local government regulation. This is always what they say they need to make them more efficient in investing their funds in Indonesia.

MM: Has a company like Nike spoken out about this issue?

Tavip: Yes. Nike, Reebok — they open their factories, but they won’t contract directly with the workers. They use another agent to supply the workers. And the workers only sign a contract letter with the agent.

So they don’t have any obligation to pay compensation, or to think about working conditions. They can do anything, at their will. Because the obligation to think about the workers’ rights has been shifted to the agent. The existence of the agent is endorsed in the law. This way, there is a shifting of burden — shifting of obligation — from the investor to the agent. The agent becomes responsible for handling all of the problems of the workers — their rights, salary, social security and many things.

These matters no longer have anything to do with the employer or the investor. When they want to close their factory or company, they can just say, “Bye-bye Indonesia, I don’t care about the workers’ rights.”