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

Video Obama: Action on Climate Change 'Economic, Security Imperative'

President spoke to reporters on sidelines of UN Climate Summit outside Paris, where leaders are working to agree on binding measures

IMF Bets on China’s Resolve to Reform

IMF announcement already raising questions about just how much Beijing is committed to such reforms

What Happened When I Landed in Antarctica

Refael Klein chronicles what it's like to visit one of the coldest, most desolate places on Earth

This forum has been closed.
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.
With HIV, Can We Get to Zero?i
Carol Pearson
November 29, 2015 1:23 PM
The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video With HIV, Can We Get to Zero?

The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video Political Motives Seen Behind Cancelled Cambodian Water Festival

For the fourth time in the five years since more than 350 people were killed in a stampede at Cambodia’s annual water festival, authorities canceled the event this year. Officials blamed environmental reasons as the cause, but many see it as fallout from rising political tensions with a fresh wave of ruling party intimidation against the opposition. David Boyle and Kimlong Meng report from Phnom Penh.

Video African Circus Gives At-Risk Youth a 2nd Chance

Ethiopia hosted the first African Circus Arts Festival this past weekend with performers from seven different African countries. Most of the performers are youngsters coming form challenging backgrounds who say the circus gave them a second chance.

Video US Lawmakers Brace for End-of-Year Battles

U.S. lawmakers are returning to Washington for Congress’ final working weeks of the year. And, as VOA's Michael Bowman reports, a full slate of legislative business awaits them, from keeping the federal government open to resolving a battle with the White House over the admittance of Syrian refugees.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video After Terrorist Attacks, Support for Refugees Fades

The terrorists who killed and injured almost 500 people around Paris this month are mostly French or Belgian nationals. But at least two apparently took advantage of Europe’s migrant crisis to sneak into the region. The discovery has hardened views about legitimate refugees, including those fleeing the same extremist violence that hit the French capital. Lisa Bryant has this report for VOA from the Paris suburb of Cergy-Pontoise

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video Thais Send Security Concerns Down the River

As Thailand takes in the annual Loy Krathong festival, many ponder the country’s future and security. Steve Sandford reports from Chiang Mai.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Belgium-Germany Border Remains Porous, Even As Manhunt For Paris Attacker Continues

One of the suspected gunmen in the Nov. 13 Paris attacks, Salah Abdeslam, evaded law enforcement, made his way to Belgium, and is now believed to have fled to Germany. VOA correspondent Ayesha Tanzeem makes the journey across the border from Belgium into Germany to see how porous the borders really are.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

VOA Blogs