News / Asia

Labor Unrest Unsettles Booming Indonesia

Freeport McMoRan Copper & Gold Inc.'s workers await bus at Gorong Gorong station in Timika, Papua province, Indonesia, Jan. 3, 2012.
Freeport McMoRan Copper & Gold Inc.'s workers await bus at Gorong Gorong station in Timika, Papua province, Indonesia, Jan. 3, 2012.

Indonesia has some of the cheapest wages in Asia, making it an attractive destination for companies feeling the pinch from rising labor costs in China and elsewhere in the region. The standard minimum wage in Jakarta is $170 a month compared to $240 in Shenzhen.

It also has a booming economy: Consumer-goods manufacturers and commodities exporters hauled in record profits in 2011.

But labor unions have taken notice, and now they're demanding a bigger slice of company revenues.

In late January, months of unrest that accompanied demands for wage increases culminated in a protest by 20,000 workers at an industrial estate on the outskirts of Jakarta, effectively shutting down scores of businesses.

In response, the government and the Indonesian Employers Association, a lobbying group also known as Apindo, agreed to workers’ demands for a 15-percent salary hike.

Apindo's deputy chairman Hasanuddin Rachman says while his group supports raising wages, not all companies can afford to.

"If the company is able to pay, please pay, but we have to protect SMA, small and medium enterprise, who are not able to pay this minimum wage," he says.

Many companies plead poverty when negotiating employee wages, but January’s settlement with Apindo and a high-profile agreement with the U.S.-based mining giant Freeport McMoRan have encouraged labor unions looking to raise salaries.

Freeport's Indonesia operations bring in about 30 percent of the company’s global revenue, which totaled more than $5 billion in 2010. Its Indonesia-based employees received wages starting at $1.50 an hour before they negotiated a 37-percent increase in December.

Labor unions are also demanding a renegotiation of 2003 labor laws that mandate high severance payments for terminated workers, a regulation many companies simply ignore or circumvent by hiring contract laborers.

The result, say union leaders, is a significant decline in the number of permanent workers since 2003. Whereas government Officials have discussed revising the regulations, talks have broken down in recent weeks, and lawmakers now say they have no intention of revising the law.

A powerful alliance of the country’s main labor unions has warned that, until reforms are implemented, they will continue to stage rallies and strikes.

Hasanuddin worries about the potential impact the ongoing unrest would have on foreign investors.

“They’re concerned that if the situation is like this they’ll move to another country," he says.

Japanese and South Korean businesses have recently filed complaints with Indonesian authorities claim the unrest has severely harmed their businesses.

"So that’s why we have to take care of this situation," says Hasanuddin. "We also persuasively talk to Korean Embassy, Japan Embassy: ‘Please don’t go from Indonesia. We will settle this problem.’”

Hasanuddin has appealed to the government to reassure investors that it is serious about taking action, but so far there is little to indicate that negotiations are nearing a resolution, which means labor unrest is likely to continue.

You May Like

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid