Thousands of factory workers blockaded the Padalarang highway in West Java causing traffic to back up 10 kilometres along the road for four hours on November 24. The workers, from the West Bandung industrial zone, demanded their regional minimum wage be fixed at 1.17 million rupiah (the equivalent to A$142.60), to match West Bandung’s minimum cost of living according to the region’s tripartite Remuneration Council, which has proposed a wage of only Rp1.02 million.
Ahmad Yahya, a protest leader from the National Workers Union (SPN) asked “why conduct expensive surveys to determine workers’ cost of living?” if the Remuneration Council “just rate our work according to the wishes of employers and officials”, the November 25 Jakarta Post reported.
For two weeks there has been a massive upturn in worker actions across Indonesia’s huge industrial zones. The wave was triggered not by low local minimum wage levels like that in West Bandung, but by a move in the national parliament to undermine all minimum wage levels. A joint decree of four ministers was issued on October 22 in response to the global economic crisis calling on provincial governments, which are responsible for setting regional minimum wages, to not set any minimum wage level for 2009. The decree also called for any regional minimum wage increases for 2009 to be kept below the level of national economic growth which the government estimates will be 4.5-5%. Inflation next year is estimated by Indonesia’s central bank to be 11.5-12.5%.
The ministers argue that these measures will prevent businesses from going bankrupt and slow the impending rise in unemployment. However, there is no indication that cutting wages will impact on unemployment. Wage levels are already low by international standards. For example, they are lower than wage levels in Guangzou province, the industrial heartland of China.
According to the official Antara News agency, half a million Indonesians working in Malaysia and Indonesia are likely to be fired over the next six months. In the same period, up to 1.5 million people will enter the workforce. Massive increases in unemployment will help bosses drive wages down.
What could have a significant impact on unemployment is widespread bankruptcy caused by the turbulence of the financial markets. This year, the rupiah has fallen almost 25% against the US dollar. For Indonesian capitalists who have borrowed money in US dollars, their repayments are now 25% higher than in 2007. This may bankrupt some very large businesses. The government bailed out and took over Bank Century this month in the first Indonesian bank failure since 1998.
Economic crisis
As the global capitalist economic crisis develops, capitalist investment is being withdrawn from markets seen as most risky, particularly the “emerging” markets of the underdeveloped capitalist countries. Reuters reported on November 25: “The havoc on financial markets has brought back uneasy memories of the Asian financial crisis, when the rupiah fell to 17,000 in early 1998, much of corporate Indonesia was technically bankrupt”, and was either bailed out using public money or sold to foreign capitalists, or both, in what the March 2, 1998 Business Week described as the “Invasion of the Bargain Snatchers”.
While the joint ministerial decree will have little impact on unemployment, it is helping to consolidate unity between Indonesia’s trade unions and to politicise the workers’ movement – which has been historically disparate since the 1965-66 massacres that ushered in the imperialist-backed military regime of General Mohammed Suharto. Since Suharto’s regime fell on May 21, 1998, the workers’ movement has built up a vibrant base of activity but has not yet been able to overcome geographic and economic separation or rebuild a united national movement. Working-class unity over the last decade has only been achieved for short periods of time, through mass protest campaigns against government policies such as cuts to fuel subsidies and changes to labour laws.
The last such campaign took off on May 1, in the lead up to 10th anniversary of Suharto’s ouster. It peaked on May 21, with a mass protest against the government’s cuts to fuel price subsidies. While short lived, this upsurge provided the opportunity for many unionists to meet and work together, resulting in the consolidated of the Workers Demands Alliance (ABM), the most important grassroots union federation in Indonesia. Now the ABM is helping to fan the flames of the current outburst of workers’ struggle triggered by the joint ministerial decree. The ABM is also being strengthened by the upturn, as is working-class unity in general as workers from thousands of workplace-based unions are again united by a common struggle.
Earlier in the year Direct Action spoke with Ely Sulomo, a leader of the Jakarta Federation of Worker Unions (FPBJ) and coordinator of the ABM’s education and training department. Sulomo pointed out that the de-industrialisation that has hit Indonesia over the last decade “undermines workers’ bargaining position” through factory closures and pushing up unemployment. However “our basic principle is we must not water down our movement’s demands in order to accommodate the needs of capital”. Instead, according to Sulomo, the ABM seeks to popularise examples of successful struggles.
He told DA: “In 2006 workers at the West Papuan Freeport copper and gold mine struck for three full days and won a 100% pay rise. As a result the West Papuan minimum wage is over 3 million rupiah [per month]. We often use this as an example of how the strike has to be used as weapon of the workers movement to demand rights. Had the Freeport workers not gone on strike there is no chance they would have been given a 100% pay rise.
“From [former president Jusuf] Habibie to [current president] Susilo Bambang Yudhoyono, Indonesian governments have adopted neoliberal policies resulting in the privatisation of vital industries such as water and electricity affecting not only the workers but the whole people. There needs to be a national progressive movement that can propagandise to nationalise these assets… But nationalisation alone is not enough. There needs to be workers’ control over these vital industries – so that it is the working class that becomes dominant in the production process.”
Alliances with farmers
Sulomo said that the ABM is “trying to forge a cross-class alliance against neoliberalism”, as all working people are affected by neoliberalism. “By privatising the gas industry, the price of fertiliser has been sent through the roof” affecting millions of poor farmers, so “neoliberalism creates the basis for united action” between workers and farmers.
“Trade union work in general is just one phase of our struggle”, said Sulomo. “In order to make basic improvements [in living and working condition] we need unions – this is the role of unions. However we don’t want the unions we are building today to only address immediate economic questions. By solving economic questions for workers at the factory level without fighting the capitalist system as a whole we still end up sick because the sickness does not begin at the factory. The whole capitalist system and neoliberalism are sick.
“Indonesia’s economic development model is in no way based on the objective conditions of Indonesian society. From the 1970s industrial development in Indonesia has been based on the needs of industry in the advanced countries. That is why Indonesian industry is weak. It is not built upon the potential of natural resources and the labour power of Indonesia’s 150 million working people.
“Now, when we look at de-industrialisation in Indonesia, we say ‘that is the evidence; the method of industrial development pursued in Indonesia was flawed’. It was perverted and never brought the Indonesian people well being. It is the role of trade unions to answer the capitalist economic crisis in that way – so we will not just become the victim of the system but we can say ‘this system is wrong’. Industrialistion as occurred in Indonesia is wrong because we have only developed light industry” which itself is poorly developed, according to Sulomo.
Industry “has never been connected, for example, with the agricultural development”. Sulomo argued that “there needs to be a rational plan integrating mining, basic industry, manufacture and agriculture. We have no basic industry today. There has never been a basic industry developed in Indonesia that is capable of becoming basis for the development of downstream industries. Resources are extracted and sold oversees unprocessed. We want more than this. We are not just talking about the method of development of industry but workers’ control over industry, so that the benefits of industrialisation go to working people.”