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.
TEXT SIZE - +

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

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 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.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid