Brussels, 17 and 18 June 1997


Workers' Conditions in Indonesia

by Apong Herlina
Indonesian Legal Aid Foundation, Jakarta

Since the decrease of foreign income following lower oil prices on the world markets, the Indonesian government has changed its industrial strategy orientation from import to export.

The government has also involved local and foreign investors in the Nation's building by preparing preconditions for capital investment, such as a highly disciplined workforce, political and economic stability and low production costs. The intention is to make manufacturing products more competitive in the international market.

Tougher competition in the world economy has created a process of capital globalization where there is a transfer of capital concentration of certain industries from the developed to developing countries. One of the reasons for this is relatively lower production costs.

From 1967 to March 1997, the number of foreign investors approved by the Coordinating Body for Capital Investment were 4,911, totalling a US$174.2 billion investment. Meanwhile, domestic investment amounts to US$ 141,306.5 billion in 6,478 projects. (These details are show in the following table (quoted from the Business News, 24 February, 1997 and Media Indonesia, 1 April 1997):

to March1997197

In Indonesia, to reduce production costs, employers try to limit wages and working conditions. This practice will not last long with the reactions of workers. The fact that there are many labour strikes in Indonesia is undeniable. Workers are becoming more and more open in expressing their interests, which is causing an increase in the number of strikes. See the following Manpower Ministry's official data on strikes:


There have been two phases of strikes within the New World Order. Firstly at the beginning of the 1980s when the number of strikes increased drastically in 1982 with 200 strikes. The second phase started at the beginning of the 1990s and the number has been increasing as shown by the following data:

YearNo. of cases

* (Quoted from the 1997 Index)

Most of the strikes (70%) occurred in Jakarta and its greater areas Bogor, Tangerant and Bekasi during 1991 and 1992.

(APONG HERLINA: The Strategy of Industrial Labour Strike: 1993)

Five common labour problems are: wages, dismissal, working period (including overtime), worker health and safety (including social security), membership of a trade union, and employers' treatment of workers.


General problems regarding wages in Indonesia are:

1. Low Wages

The salary of workers is relatively low in Indonesia compared to other Asian countries, and compared to any countries in the world. Morgan Stanley Research, as quoted by Business Times Singapore, revealed that in 1991 wages were US$0.22 per hour, which was ranked 37, one place above that of Russia (at US$0.03 per hour), the lowest of those 38 countries surveyed.

The minimum wage in Indonesia is variable according to the region. For example, the Regional Minimum Wage in Jakarta and its greater areas Bogor, Tangerang, and Bekasi is Rp 172,500/month or about Rp 5,750/day, as at April 1997, compared to the previous minimum wage (April 1 1996 - 30 March 1996) which was Rp 5,200/day. The amount is still under the Minimum Life Needs (90% according to the Manpower Ministry) for a single worker. The salary is for seven working hours per day, 40 hours per week, and applies for all contract and daily workers as well as those completing a probationary period.

The Rp 5,750 (US$ 2.3) daily minimum wage in Jakarta is equivalent to the cost of five cans of coca cola, or two pieces of Kentucky fried chicken, or three hamburgers, or three bowls of egg and rice.

2. No real increase in wage levels

The low salary never increases in real terms. Experts have analysed the figures and concluded that wage levels have not increased during the past 25 to 30 years. (Ginanjar Kartasasmita, Kompas 4-5-1994, Chris Manning, Kompas 22-3-1994).

Even though the Manpower Ministry has said that the workers' minimum wage has increased by 300% since 1970, in practice it is not enough for the workers to fulfill their Minimum Life Needs, considering inflation. To show this clearly:

In 1992 the price of a bowl of rice with egg was Rp700 with the minimum wage at Rp2100.

Today same menu costs Rp1800 and the minimum wage is Rp5,750.

3. Wage ratio

In Indonesia, no law regulates workers wages, apart from the minimum wage, and there is no ratio between highest and lowest salary. This creates a discrepancy between the middle/higher classes and the lower unskilled workers. The wage comparison in a company could be as high as 1:50 or even more (Suara Karya daily, 20-5-1994).

The current implementation of wage rates tends to create a social discrepancy, with a too high difference between the lowest and the highest salary. By comparison, in Japan it is 1:9, Singapore 1:11, Thailand 1:18 (Republika daily, 26-5-1994).

4. Implementation of the Minimum Wage Regulation.

Though the government adopted the minimum wage regulation in 1970, there are some weaknesses. The regulation mentions that the minimum wage elements are basic salary + facilities. Consequently, many companies which have previously paid workers salaries plus pick-up bus facility, food and bonus, convert them to: basic salary + transportation allowance + food allowance + bonus (merely converting things to money, so that they seem to have fulfilled the government's regulation).

The government still gives an opportunity for employers not to pay minimum wage by letting them submit requests for postponement after having an agreement from the workers or from the workers union. Employers could easily get this by threatening the workers with dismissal. The Indonesian Shoe Association (Apresindo) has submitted a request for postponement for 1997, as has the Indonesian Textile Association.

Control of the implementation of the minimum wage is still weak, and allows many violations by employers. Also, the penalty is very light for employers - Rp 100,000 in fines (a negligible amount for employers) or 3-months imprisonment. An example of this kind of violation is as follows: by paying the old minimum wage of Rp 156,000 instead of the new rate of Rp 172,000, which was due on 1 April 1997, a company employing 10,000 workers would profit Rp 16,500/worker/month x Rp 10,000 = Rp 165,000,000/month. Having to pay the Rp100,000 fine if caught by the Manpower Ministry, it would still be in profit.

Research by Apong Herlina in 1996 on Nike shoe factories in Jakarta and its greater areas showed that 90% of the companies had not implemented the new minimum wage at that time.

Work Health and Safety

Employers are still slow to register their workers for the social security programme (Jamsostek) and to provide proper occupational health and safety services. One of the reasons is that they still regard this as an additional cost. (Biana daily, September 11, 1994) For example, in a city in West Java, 35 out of 49 transportation companies which are registered to Jamsostek have violated Jamsostek law No. 3/1992, which has a sanction of 3 months imprisonment or a maximum fine of Rp 50,000,000. No action has been taken with regard to the offending companies.

Workers too have a low awareness on the importance of health and safety facilities in the workplace.
The majority of workers do not pay enough attention to these facilities, which are a matter of life or death. Examples of occupational dangers for workers' health and safety include: chemicals, dust, excess noise, and heavy and sharp machinery. Continuous use of certain parts of the body can also be dangerous: sewing all day would eventually damage the back, leg or hand. Shiftwork also causes physical burdens. In addition, the use of high-tech tools without proper skill and training is dangerous.

Unfortunately, no data is available on the dangers of each kind of job and the number of male and female workers engaged in dangerous working conditions. There is some data for work accidents: 25% happened in textile companies, 16% in paper, wood and machine companies, and a small percentage in non-mechanical sectors (Baut, 1989)

One of the current popular cases on worker health that has incited strikes is food contamination, which caused many to be hospitalized. Female workers commonly work in textile, spinning, garment, shoe and electronic companies, where they depend on noisy machines.

According to Dr A.M. Sugeng of the Central Java Manpower Ministry Office of Health and Safety Affairs, workers who work in a 95 decibel surrounding and who do not wear ear plugs or muffs will suffer from a hearing problem after a period of five years, and deafness is a possibility. Diesel power machinery is noisier, between 100 and 200 decibels, compared to the use of electricity which is "only" 85 to 90 decibels - in which conditions workers are not allowed to work more than eight hours.

There is evidence which shows that the majority of female workers who work in an environment with high noise levels develop hearing problems.

Problems relating to working hours are night shifts and overtime. Law no. 12/48 limits night work for female workers to public services, such as hospitals. However, many companies use night shifts for female workers in order to fulfill productions targets.

Most of the textile and shoe factories set up shifts from 07.00 - 15.00, 15.00 - 23.00 and 23.00 - 07.00 both for male and female workers. Night shift and overtime are dangerous for pregnant workers. There can be 7- 9 hours overtime, even though the regulation on overtime does not allow more than 4 hours.

Research by Nurbaiti and Edriana showed that some workers who worked overtime at PT Great River Garment Industries had pregnancy and maternity problems, including loss of the baby. Shiftwork and overtime have caused problems for many female workers.

Research from 1995 shows that:

1. Health

Most of the workers in labour intensive companies do not have proper health facilities. Some companies provide only certain medicines for various kinds of diseases, with only one doctor present for just 2 hours a day to serve around 5,000 to 10,000 workers.

Others do not provide health clinics. In this case workers can go to the local community health services and be reimbursed. But some companies do not reimburse medication. The 1996 research by the Indonesian Sportshoes Monitoring Network (ISMN) revealed that workers commonly suffer from breathing problems, stomach aches, dizziness, ulcers and anaemia.

2. Lunch

A proper lunch is needed so that workers can get enough energy to perform their production activities. Employers should provide a free nutritious lunch to allow workers reach high productivity. Allowing that a worker needs 2,600 calories per day, he or she should get 1,500 from lunch. But even that is not nutritious enough to produce the energy needed for high productivity.

Some companies that do not provide lunch instead pay workers about Rp300 to Rp500 to buy their own lunch. This is not enough for nutritious food. Even the cheapest portions of lunch - rice and meat and rice and egg - cost Rp1800 and Rp1500 respectively.

3. Shelter

Proper housing is a basic human need, and it is not enjoyed by workers. Commonly three or four have to share a 4 x 3 metre room, without bathroom facilities.

The dormitories which some companies provide are not adequate. There can be twenty people crowded into a room of 10 x 5 metres (with multi-storied beds) and one bathroom. In order to have a bath before work they have to queue for four hours, between 3am and 7am.

Security in the dormitory is tight. Complicated procedures are involved for visitors, first to report to security and secondly to the dormitory manager. A worker who receives many visits may be liable to an official warning and may be required to work overtime.

Working Period

Research has revealed that many companies employ their workers for a period longer than provided for by Law No.1/1951 on the Working Period and Break Times. The law states that workers are not allowed to work more than seven hours per day or 40 hours per week. A night job or one particularly dangerous to health and safety should not be more than six hours per day or 35 per week.

Another article of the law states that workers should get one day off per week. In an emergency situation due to excess of work, overtime is allowed, but not more than 54 hours per week. However, this law does not apply to the kind of work that is dangerous to worker health and safety.

Research has shown that in the broidery section of Korean's PT NG producing Nike shoes, workers are kept in a standing position and are not give breaks even for lunch. They have to find time themselves to have lunch by stealth while watching the machines.

Sources have said that the workers in this company are required to work overtime. One worker's payroll showed that he had worked 191 overtime hours in a month.

Most of the surveyed companies have violated Law no. 1/1951, especially on the Working Period and Break Time. Most of the respondents said that they had worked for 12 hours per day, and some worked seven days per week.

Female workers in shoe and garment export factories are "obliged" to work until 9 p.m. or longer; they have to continuously work overtime on Sundays. Thus, the workers practically do not have time to rest.

Even though they receive overtime pay, they are honestly not happy about working overtime. There is no choice. Refusal would mean dismissal, regardless of the fact that overtime is voluntary, not an obligation.

Targets (Piece Work)

Most of the labour intensive companies pay their workers according to the number of orders. Less work means less pay, more work more money. In practice, everyone is required to reach a minimum target and receives sanctions if they do not achieve them. This leads to an atmosphere of fear and stress.

The target system has made a worker merely a factor of production. Fulfilling the target is the only focus, a condition which has made many ignorant towards their environment and towards friends who might be in trouble. The system has killed their feelings and friendship, not to mention any trade union activities.

Under the target system and tense control, workers become more and more negligent, having no interest in socializing. The whole system traps them in a process of large-scale deception.

Trade Unions

Some companies in Indonesia do not have trade unions. The existing ones are not independent, and are not well run. This is shown by Collective Bargaining Agreements (CBA) which are prepared in advance by the management. Union officials have no opportunity to negotiate or to consult members, but only to sign.

Non-independence is the reason for the weakness of trade unions in Indonesia. Fear of losing their jobs makes union officials loyal to the employers rather than defendants of their members' interests.

Consequently, many companies use the union officials for their own interests, to suppress strikes by workers. The following cases prove this:-

The management of a company that has a strong trade union tries in various ways to suppress the union. For example, union officials may be transferred to other departments or threatened with dismissal if they refused. Examples:

Unfair Dismissal

There are many ways for companies to minimize production costs, for example:-

  1. Dismissal of senior workers because of their relatively high salary compared to newer workers. The companies then recruit young workers who receive the minimum wage. This happens a lot in labour intensive companies, where most of the workers are unskilled and female.
  2. Changing the workers' status from permanent to contract. Companies keep extending the contract, which is usually for one year to avoid paying severance pay in case of dismissal. They refer this to the Ministerial Decree No. 03/Men/1996 on Dismissal, stating that the company is not obliged to pay severance pay or other penalties for a terminated contract.
  3. Relocating the factory. This is to avoid paying high minimum wage, which is different for each province. This would also force workers to resign due to higher cost of transportation to the new factory, which the company usually does not provide, or provides only inadequately.
  4. Sub-contracting workers to other companies. This transfers one company's responsibilities to others, even if the workers still work for the same company. Such a strategy has recently found favour among many big companies in Indonesia. They give their reasons as helping small companies, yet they close their eyes to working conditions in the new companies. Some companies which have been practising this strategy are, amongst others, those producing well known and leading brand names, i.e. Nike, Reeboek, LA Gear etc., as well as PT Unilever, BASF, Hagag Lloyd etc.

Company Discrimination

Female workers are still discriminated against for getting married or giving birth. Many companies directly or indirectly dismiss their workers for getting married, getting pregnant or giving birth.

Women are also discriminated against with regard to wage levels. Many female workers do not get family allowances and are considered as single regardless of the fact that they are married and a family's breadwinner. This condition still exists in Indonesia even though the government has ratified ILO Convention No. 100 and the UN Convention on the Elimination of All Forms of Discrimination Against Women.

Discrimination happens in companies employing a majority of female workers (90%). Here, males hold positions of power as supervisors and trade union officials.

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