Indonesia : Balancing business

Indonesia’s unions are engaging in electoral politics in unprecedented ways in an attempt to balance the influence of business

The presidential elections this time around are a big deal not only for business. They are also a big deal for Indonesia’s unions, who have taken sides in the presidential race. Said Iqbal, the leader one of the major labour confederations, has openly backed Prabowo. Others are backing Jokowi.

The stakes are incredibly high. Iqbal expects to become minister for manpower. If Prabowo wins, Iqbal will be under enormous pressure to ensure that he actually does become minister and then to deliver worker-friendly policy. If Prabowo loses, Iqbal’s credibility and the credibility of his union will suffer. Jokowi’s union backers, meanwhile, would have to show that they can deliver.

The very public engagement of union leaders in the lead-up to the presidential elections would have been unthinkable just a decade ago. Even years after the fall of Suharto, unions didn’t engage openly in politics. But now many union leaders feel that there simply isn’t a choice. Business is there boots and all. For there to be any hope of a more pro-worker approach to policy, labour has to follow.

Growing engagement

The 2014 elections are not the first time unions have experimented with electoral politics. It all started back in 2004, when political parties began to approach leading union figures as the legislative elections drew near.

Union leaders’ interest intensified in the lead-up to the 2009 legislative elections, when the parties wooed trade unionists for support in union-dense districts – some even running union candidates on their tickets. This trend continued in the 2014 legislative elections when dozens of trade union candidates ran on party tickets. A number were elected.

In many ways, unions’ engagement in local executive elections has been even more important. It’s hard for union candidates to get traction in legislative races. Even if they do make it, there’s not much you can do if you’re the single labour candidate in parliament.

With a few notable exceptions, labour candidates understand that they don’t have a hope of winning a mayoral or district head race. But what they can – and have done – is leverage these contests to push for wage rises.

Votes for wages

In Indonesia, raises for most workers depend more on negotiations around the minimum wage than on workplace-based collective bargaining. Minimum wages are set by tripartite committees – comprised of unions, business and the government – at the district and city level. Negotiations take place annually.

The minimum wage setting process creates multiple opportunities for horse-trading within the committee structure and with executive officers at the local and provincial levels, both for members of the Employers’ Association and for unions.

Given that labour and capital seldom agree on wages, the government’s vote on tripartite committees is decisive. Government representatives on the committee are drawn from a variety of local offices, but all are accountable to the district or city head, not to the local legislature. Knowing that they are unlikely to convince each other, business and unions concentrate on currying favour with government representatives.

The strength of the Employers’ Association lies behind the scenes, where money can be used to influence government representatives. Unions, knowing this, typically mount protests warning the government that there will be more trouble if wage increases are low. The number and intensity of the protests depends on the extent to which unions think the local government is playing ball.

Ultimately, the district head or mayor makes the final call in the form of a minimum wage recommendation, which is forwarded to the provincial governor for approval. There, unions and employers have one last chance to affect the outcome before the wage decision comes into effect.

Jockeying for influence

When wage negotiations take place close to the date of a local executive election, they present an opportunity for unions to exert political pressure on local executives – especially when candidates expect a tight race.

Candidates for local executive positions have two reasons for cutting deals with unions. First, the spectre of a tight executive race encourages incumbents to woo workers, who are unlikely to vote for an incumbent who refuses to sign off on a substantial wage hike. Minimum wage setting is an issue that union members follow closely. They happen at the same time every year and are highly anticipated. If wage increases are disappointing, voters know whom to blame : the mayor or district head in the region concerned.

Second, in union-dense districts where unions have proven their capacity to paralyse industrial areas with massive actions, mayors and district heads, along with governors, have an interest in accommodating wage demands to preserve industrial peace.

Busting business in Bekasi

The links between minimum wage negotiations and local executive contests are nowhere more evident than in Bekasi, a major industrial areas to the east of Jakarta. In the last quarter of 2011, the 2012 minimum wage negotiations took place just months before the executive election for Bekasi district.

The incumbent district head, Prosperous Justice Party (PKS) member Sa’dudin, was up for re-election. Facing what looked to be a close election in this union-dense district, he made a last ditch effort to win labour votes.

Although he had not been an especially close ally to labour, his administration supported workers in the 2012 minimum wage negotiations. Ignoring the protests of the Employers’ Association, which walked out of negotiations, Sa’dudin recommended the figure demanded by unions. The governor, Ahmad Heryawan who, like Sa’dudin, was a member of PKS, approved the recommendation of the district head.

Having lost the battle locally, the Employers’ Association went to the courts, where money mattered more than votes. Concerned that employers would bribe the judges, unions mounted a series of protests.

The largest of these took place on January 27 after the court ruled against them. Union activists took to the streets, shutting down production in all seven of Bekasi’s industrial zones and blocking the toll road between Jakarta and Bandung.

Proximity to Jakarta and the scale of economic disruption captured the attention of the national media and government. The central government quickly moved to facilitate a settlement. Unions agreed to accept a tiny reduction of Rp.1,000 (A$0.10) to the minimum wage set by the tripartite committee, a face-saving gesture for employers. Once again, workers had prevailed.

Calling Sa’dudin’s bluff

But the story didn’t end there. During the election, which took place almost immediately after the massive protests in January 2012, a number of candidates approached unions. Despite Sa’dudin’s support for unions in the minimum wage negotiations, none of them backed his candidacy. Given his weak track record on labour issues in the district, they saw through his attempts to woo them the previous year and looked to other candidates.

One union, SPN, formalised its backing of the Indonesian Democratic Party of Struggle (PDIP) in a political contract that promised operational support for the union if the PDIP candidates won. In the absence of a clear leader, FSPMI – the union headed by Said Iqbal and Bekasi’s largest federation – hedged its bets by adopting a two-track strategy.

On one hand, FSPMI placed union activists on the campaigns of all of the candidates. On the other hand, it concluded an unwritten political deal with Golkar’s Neneng Hasanah Yasin, and her Democrat Party (PD) running mate, Rohim Mintareja. No official announcement or written commitment was issued by either side. But union leaders agreed to speak favourably about her to members and Neneng indicated that she would be amenable to issuing a moratorium on outsourcing and tighten labour law enforcement.

Neneng and Rohim ultimately won. In the subsequent minimum wage negotiations for 2013, government representatives sided with unions and signed off on a minimum wage increase of nearly 35 per cent.

Going national

As the Bekasi case suggests, tight executive races have led candidates for local executive positions to enter into political bargains with unions, promising to back unions in the wage committees in exchange for a combination of political support and labour peace.

This strategy has paid off in Bekasi and elsewhere, like Tangerang, an industrial town to the west of Jakarta. But it remains to be seen how far Iqbal can push it in the presidential elections.

If Iqbal succeeds in trading union support for pro-worker policy at the national level, unions’ position in the political process will be greatly enhanced. If he fails, there will be serious repercussions not just for him and his union, but for the labour movement as a whole – unless, of course, the unions backing Jokowi manage to make it work instead.


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